1997 Supreme(Cal) 138

High Court Of Calcutta
B. N. MAITRA
GREEN HUT PRIVATE LIMITED - Appellant
Versus
STATE OF WEST BENGAL - Respondent
C. O.  1357 (W)  Of  1996
Decided On : 03/19/1997

The actions of the State, which bear the insignia of public law elements or public character, and the State actions must bear the imprint of public interest element in the behaviourial pattern of the officers of the State, are amenable to judicial review on the anvil of the twin concepts of equality and absence of arbitrariness. The conduct of the agents of the State must be reasonable and unreasonableness of their conduct cannot be allowed to eat into the very vitals of the investors made on honest belief that State and/or its agents would discharge their functions fairly.

Headnote:

CONTRACT - WRIT JURISDICTION - MAINTAINABILITY - LEGITIMATE EXPECTATION - PUBLIC LAW ELEMENT - REASONABLENESS - JUDICIAL REVIEW - MANDAMUS - INJUNCTION. - The High Court, in exercise of its jurisdiction under Art. 226 of the Constitution of India, can interfere in a matter of contract or demand of money under a contract if there exists a public law element. The actions of the State, which bear the insignia of public law elements or public character, and the State actions must bear the imprint of public interest element in the behaviourial pattern of the officers of the State, are amenable to judicial review on the anvil of the twin concepts of equality and absence of arbitrariness. The conduct of the agents of the State must be reasonable and unreasonableness of their conduct cannot be allowed to eat into the very vitals of the investors made on honest belief that State and/or its agents would discharge their functions fairly.

Fact of the Case:

The petitioner company, a private limited company, applied for allotment of a plot of land for the purpose of construction of a three-star hotel in Salt Lake area. The respondents, the concerned authorities, issued an offer letter to the petitioner company for grant of lease of an area of land approximately measuring about 1 acre. The petitioner company paid the required amount as salami and other charges. Subsequently, the respondents sent a letter to the petitioner company asking them to pay a further sum of money on account of balance residuary amount of salami and interest. The petitioner company paid the interest for delayed payment and also paid the balance amount of salami. The petitioner company was intimated that the exact area of land proposed to be allotted to them was actually found out to be 1.0069 acres instead of 1 acre and demanded payment of the balance amount, which was also paid. The petitioner company applied to the Collector of Stamp Revenue for adjudication of stamp duty chargeable on the lease deed. The stamp duty was assessed and the petitioner company purchased the requisite stamp paper. The petitioner company sent a draft of the lease deed to the respondents for execution and registration. The respondents directed the petitioner company to submit certain documents for completing the execution and registration of the said lease deed. The petitioner company furnished the said documents. The petitioner company sent reminders to the respondents for taking action in the matter, but the respondents did not respond. The petitioner company filed a writ petition seeking issuance of a writ of mandamus directing the respondents to execute and register the lease deed and a writ of certiorari calling for records and issuance of writ of prohibition restraining the respondents from withholding the prayer for execution and registration of the lease deed.

Finding of the Court:

The Court held that the actions of the State, which bear the insignia of public law elements or public character, and the State actions must bear the imprint of public interest element in the behaviourial pattern of the officers of the State, are amenable to judicial review on the anvil of the twin concepts of equality and absence of arbitrariness. The conduct of the agents of the State must be reasonable and unreasonableness of their conduct cannot be allowed to eat into the very vitals of the investors made on honest belief that State and/or its agents would discharge their functions fairly. In the instant case, the Court found that the conduct of the agents of the State respondents by embarking into a roving enquiry about any suspicion either of financial capacity of the petitioners or of the bona fides of their move for investment was not justified.

Issues: 1. Whether the High Court can interfere in a matter of contract or demand of money under a contract if there exists a public law element? 2. Whether the actions of the State, which bear the insignia of public law elements or public character, and the State actions must bear the imprint of public interest element in the behaviourial pattern of the officers of the State, are amenable to judicial review on the anvil of the twin concepts of equality and absence of arbitrariness? 3. Whether the conduct of the agents of the State must be reasonable and unreasonableness of their conduct cannot be allowed to eat into the very vitals of the investors made on honest belief that State and/or its agents would discharge their functions fairly?

Ratio Decidendi: The Court held that: 1. The High Court, in exercise of its jurisdiction under Art. 226 of the Constitution of India, can interfere in a matter of contract or demand of money under a contract if there exists a public law element. 2. The actions of the State, which bear the insignia of public law elements or public character, and the State actions must bear the imprint of public interest element in the behaviourial pattern of the officers of the State, are amenable to judicial review on the anvil of the twin concepts of equality and absence of arbitrariness. 3. The conduct of the agents of the State must be reasonable and unreasonableness of their conduct cannot be allowed to eat into the very vitals of the investors made on honest belief that State and/or its agents would discharge their functions fairly.

Final Decision: The Court issued a writ of mandamus directing the respondents to execute and register the lease deed in favour of the petitioner company in respect of their allotted plot and also issued an order of injunction restraining the State respondents from allotting the aforesaid plot to any other person till execution of the lease deed in question.