The judgment establishes the principle that a completed contract is necessary to create rights and liabilities under the terms and conditions of an agreement. It emphasizes the court's intervention to prevent unfair and arbitrary actions by a state-owned corporation.

This petition under Article 226 of the Constitution is filed by United Breweries Limited (hereinafter referred to as "the Company"), a Company registered under the Companies Act, 1956, engaged in manufacture of beer under different brand names. The petitioner has approached this Court against the alleged highhanded action of the respondent-Bihar State Beverage Corporation Limited (hereinafter referred to as 'the Corporation') in charging extension fee, cancellation fee, demurrage' etc. in respect of the offer for supply of a quantity of beer not accepted by the Company.

2. It appears that the procurement and supply of liquor in the State of Bihar is controlled by the State of Bihar. In 2006, the State of Bihar established the respondent-Bihar State Beverage Corporation Limited, a company registered under the Companies Act, 1956 to regulate the procurement and supply of liquor in the State of Bihar; to control the supply and sale of illicit liquor; to control the exploitation of the consumers and to generate revenue for the State. It is not in dispute that the Corporation is wholly owned by the State of Bihar and is a 'State' within the meaning of Article 12 of the Constitution. For procurement of liquor on large scale, the Corporation has framed "Liquor Sourcing Policy 2008-09" (hereinafter referred to as 'the LSP 2008-09'). The policy is still in operation. It is not in dispute that the Corporation acts as a wholesaler in the State of Bihar and enjoys monopolistic privileges. Any manufacturer wishing to sell its product/s in the State of Bihar has to sell it to the Corporation and the Corporation sells it to the retail sellers licenced to make retail sale of the liquor to the consumers. Thus, the procurement, storage, retail supply and pricing of the liquor is wholly controlled by the Corporation.

3. Under the said LSP 2008-09, the Corporation has determined the terms and conditions, procedure etc. for sale of liquor to the Corporation.

4. Having regard to the LSP 200809, we can say in a nutshell that it is the Corporation which assesses the demand for various brands of liquor in the State of Bihar; the Corporation receives offer for sale from manufacturers/suppliers; the Corporation determines the price and the location for bulk supply and places order for supply to the manufacturers/suppliers. For default in supply within the time specified, the supplier is charged with certain fees. If the supply is not consumed within the specified period, the supplier is charged with certain demurrage. The terms and conditions for bulk purchase and supply forms part of the LSP 2008-09. The said agreement also includes arbitration clause.

5. The Company has no dispute in respect of the above referred terms and conditions under the LSP 2008-09. The dispute relates to the demand of the Corporation for bulk supply of liquor which the Company had not offered to sell/supply and the amount of extension fee, cancellation fee and• the demurrage charged by the Corporation for non-supply of unsolicited orders.

6. Learned counsel Mr. Jitendra Singh has appeared for the Company. He has taken us through the terms and conditions under the LSP 2008-09. He has submitted that the Company and its subsidiaries manufacture beer at the breweries situated in various parts of the country and sell their products under various brand names. Certain brands of the beer manufactured by the Company are very popular and have• a great demand allover the country. In the State of Bihar also, the brands of the Company have a great demand. The Company, depending upon its capacity to supply and demand in the State of Bihar, offers to sell specified quantity of its beer to the Corporation. Pursuant to the said offer, the Corporation issues Order For Supply (hereinafter referred to as 'the OFS'). He has submitted that in the financial year 2011-12, pursuant to the offer for sale made by the Company, the Company received certain OFS issued by the Corporation. The Company d