2006 Supreme(SC) 845

`2006(9) Supreme 162
SUPREME COURT OF INDIA
(From Orissa High Court)
S.B. Sinha and Dalveer Bhandari, JJ.
Noble Resources Ltd. - Appellant
versus
State of Orissa & Anr. - Respondents
Civil Appeal No. 4108 of 2006
(Arising out of SLP (Civil) No. 915 of 2005)
Decided on 13-9-2006
Counsel for the Parties :
For the Appellant : Ashok Desai, Sr. Advocate, Amit Sibal, Udaya Kumar Sagar, A Venayagan, Arif Iqbal Chaudrfy (for M/s. Lawyer’s Knit & Co.) Advocates.
For the Respondents : Rajiv Dhawan, Sr. Advocate, Ms. Suman Kukrety, Raj Kumar Mehta, Advocates.

IMPORTANT POINTS
1. It is trite that if an action on the part of the State is violative of the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field.
2. Where serious disputed questions of fact are raised requiring appreciation of evidence, and, thus, for determination thereof, examination of witnesses would be necessary, it may not be convenient to decide the dispute in a proceeding under Article 226 of the Constitution.
.

Headnote:(i) Constitution of India - Article 226 - Writ petition in contractual matters - Maintainable - Interplay between writ jurisdiction and contractual disputes - Held, contractual matters are not beyond the realm of judicial review - Its application may, however, be limited - Although terms of the invitation to tender may not be open to judicial scrutiny, but the courts can scrutinize the award of contract by the Government or its agencies in exercise of their power of judicial review to prevent arbitrariness or favouritism - However, the court may refuse to exercise its jurisdiction, if it does not involve any public interest - Another field where judicial review is permissible would be when mala fide or ulterior motives is attributed - However, where serious disputed questions of fact are raised requiring appreciation of evidence, and, thus, for determination thereof, examination of witnesses would be necessary, it may not be convenient to decide the dispute in a proceeding under Article 226 of the Constitution.

       Held : It is trite that if an action on the part of the State is violative the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the courts scrutiny would be more intrusive, in the latter the court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on its part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter.(Para 15)

       (ii) Constitution of India - Article 226 - Writ petition - Government contract - Maintainability of writ jurisdiction - In terms of a contract, respondent State was to supply Grade A, Grade B and Grade C iron ore fines by September 2003 - Parties also agreed that supply of full tender quantity would be made in the sequence of C, B and A Grades iron ore fines at the prices offered by appellant - Supply of C-Grade and Grade B iron ore fines had been made - Respondent 2 offered 25000 MT of Grade A iron ore fines to appellant which was not accepted - It was informed that balance quantity of A Grade was not available - Writ petition filed by appellant dismissed - High Court held that it involved enforcement of a contract qua contract and thus not maintainable - Reasons for non supply of iron ore may constitute a breach of contract - However, having regard to the conduct of parties, it cannot be held as arbitrary - Certain serious disputed questions of fact have arisen for determination - Whether writ petition filed was maintainable - (No).

       Held : For determining the dispute; conduct of the Appellant was also relevant. Indisputably, the Respondent No.2 in its letter dated 28.02.2003 offered consignment of 25,000 MT of iron ore fines. It did not lift the same on the ground that a small load would be unacceptable. On 13.05.2003, it lifted the quantity of 46,280 MT of iron ore fines, although the said quantity would also be small load. Although the consignment was to be on monthly basis, it had been rescheduled. (Para 31)

       The contractual terms came to an end in September, 2003. It participated in the bids of prices much higher than the contractual prices during the period 12.11.2003 and 03.02.2004. The stand of the Respondents that only having regard to the fact that there had been increase in the prices, the Appellant filed a writ petition only in February, 2004, cannot be said to be wholly misconceived.(Para 38)

       Moreover, certain serious disputed questions of fact have arisen for determination. Such disputed questions of facts ordinarily could not have been entertained by the High Court in exercise of its power of judicial review. (Para 40)

       The questions as to whether OMC had the available stock of iron ore fines or the only ground to refuse supply thereof was the rise in international prices, are matters which could not have been fully and effectively adjudicated in the writ proceedings. It was difficult for the High to go into the other questions which have been raised before us by the Appellant, namely, the effect of the purported decision of OMC to offer to the Appellant 60,000 MT of A Grade iron ore fines provided the Appellant gave up all other contractual rights which stating the bad faith on the part of OMC. We may, however, notice that although a decision had allegedly been taken by OMC not to supply iron ore fines prior to the expiry of the contractual period, but the same had not been communicated. Its effect has to be determined keeping in view the fact as to whether the Appellant suffered any loss thereby. The reasons for non-supply, we may reiterate, may constitute a breach of contract but having regard to the conduct of the parties, it cannot be said that the same was so arbitrary so as to attract the wrath of Article 14 of the Constitution of India. Before us also what has been emphasized is the purported breaches of contract by the Respondent. A contention has also been raised by Mr. Desai that keeping in view the facts and circumstances of this case, this Court should mould the relief. We do not intend to do so and leave the parties to raise all contentions before an appropriate forum. (Para 42)

       For the reasons aforementioned, we are of the opinion that although the approach of the High Court was not entirely correct, its ultimate decision to refuse to exercise its discretionary jurisdiction cannot be faulted with.(Para 43)

       (iii) Constitution of India - Article 226 - Writ petition in contractual matters - Ordinarily, a specific performance of contract would not be enforced by issuing a writ or in the nature of mandamus, particularly when keeping in view the provisions of the Specific Relief Act, 1963 damages may be an adequate remedy for breach of contract. (Para 41)