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2000 Supreme(Pat) 135
PATNA HIGH COURT
S.K.Katriar, J.
S.S.L.Steel Limited
Versus
Union Of India
Civil Writ Jurisdiction Case No. 6044 of 1999 ;
Decided On : JANUARY 24, 2000
Government and governmental agencies are bound by their promises, and arbitrary actions in breach of contracts can be challenged under Article 14 of the Constitution of India.
Headnote:
Mandamus - Government Contracts - AIR 1968 SC 718, Union of India V/s. Anglo Afghan Agencies, and (1948) 2 All England Law Reports 767, Rebertson V/s. Minister of Pensions
Fact of the Case:
The petitioner was contracted to supply 745 pieces of S.S. Mast to the respondent-authorities. After supplying 400 pieces, the authorities abruptly ordered tenders for the remaining 345 pieces, effectively canceling the contract.
Finding of the Court:
The court found that the respondent-authorities were bound by their promise to accept the balance of the goods as per the contract. The impugned order was quashed, and the authorities were directed to issue requisite orders for the supply of the remaining pieces.
Issues: Validity of the impugned action by the respondent-authorities, breach of contract, and the binding nature of government promises.
Ratio Decidendi: The court held that the government and governmental agencies are bound by their promises, citing precedents and principles of estoppel. The absence of any fault in the products supplied made the impugned action arbitrary and violative of Article 14 of the Constitution of India.
Final Decision: The writ petition was allowed, the impugned order was quashed, and the respondent-authorities were directed to issue requisite orders for the supply of the balance 345 pieces of S.S. Mast. Costs were awarded to the petitioner.
S.K.Katriar, J.
1. This writ petition has been preferred with the prayer to issue a writ of mandamus, commanding the respondents to take supply of the total quantity of order placed with the petitioner vide letter dated 4.1.99 (Annexure 4), from the respondent-authorities to the petitioner. The respondent-authorities had placed orders for supply of 745 pieces of 15 metres of S.S. Mast which were to be supplied on the terms arid conditions mentioned therein, and has been cut short by the impugned order.
2. The respondent-authorities had issued tender for supply of 2180 numbers of 15 metres of S.S. Mast, and orders were issued to different manufacturers and suppliers which is summarised hereinbelow:
(i) M/s Telemates India Ltd. for 955 Nos. of masts,
(ii) M/s Superbhat Steel Ltd. for 1225 Nos. of masts (the petitioner) Balance 2820 Nos. of masts was to be procured from the following suppliers during 1998-99 as per approval: (i) M/s Superbhat Steels Ltd. 410 Nos.
(ii) M/s. Telemates India Ltd. 745 Nos.
(iii) M/s. Nirmal Overseas Ltd. 1665 Nos.
Some of these manufacturers/suppliers failed in their commitment, and the respondent-authorities discovered towards the end of 1998 or so that 745 pieces were still needed. Therefore, the respondent-authorities had issued the aforesaid letter dated 4.1.99 (Annexure 4), to the petitioner to supply 745 pieces of S.S. Masts of 15 metres at the rates mentioned therein, apart from various other conditions including the conditions that the supply had to be made by 31.3.1999. According to the writ petition, the products had to be supplied as per the exact specifications of the respondents, and are needed only by the Tele-Communication Department, Government of India. The petitioner had conveyed its unconditional acceptance along with the performance Bank Guarantee, vide its letter No. SSL/STRU/DOT. 2697, dated 26.3.99, which, inter alia, is manifest from the statements made in paragraph 5 of the counter-affidavit. In that view of the matter, the petitioner proceeded to manufacture 745 pieces of S.S. Mast to be in a position to supply the same within the dead-line given to them by the respondent-authorities. The petitioner could supply 400 pieces, and the impugned order dated 26.3.99 (Annexure 10) was abruptly issued which, in substance, conveys to the petitioner that in so far as the balance of the 345 pieces are concerned, tenders would be floated and the petitioner may apply against that. In other words, the effect of the impugned order is that the respondents have resiled from the combined effect of the aforesaid letter dated 4.1.99 (Annexure 4), and the petitioners unconditional acceptance conveyed by letter dated 26.3.99, and the concluded contract has been truncated.
3. While assailing the validity of the impugned action of the respondent-authorities, learned Counsel for the petitioner has submitted that the product in question is as per the exact specifications of the respondent-authorities and, therefore, the same cannot be sold to anyone else. Therefore, in his submission, the respondents are bound to accept the balance 345 pieces of S.S. Mast. The Government and Governmental agencies are bound by their promises.
4. Mr. S.N. Pathak, learned Addl. SCCG, in his attempt to support the impugned action, has submitted that no prejudice is being done to the petitioner by the impugned order. It will be open to him. to submit tenders against the future advertisements, and the same does not amount to stigma.
5. Having considered the rival submissions, I am of the view that this writ petition has to be allowed. It is manifest from a plain reading of the aforesaid letter dated 4.1.99 (Annexure 4), read with the relevant pleadings, that the products in question have to be manufactured as per the exact specifications of the respondents, and that there is no other buyer in the market for the same. Therefore, the petitioner is right in his submission that the respondent-authorities could not have
