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1993 Supreme(Cal) 365
High Court Of Calcutta
U.C. Banerjee, J.
Peerless Drive United - Appellants
Vs
Union Of India - Respondents
Decided on: Aug 02, 1993
The Writ Court has jurisdiction to intervene and interfere in a matter where there is administrative ipse dixit or arbitrary action. Legitimate expectation of a citizen can also form the basis of a cause of action in the event the action is contrary to such an expectation.
Headnote:
WRIT JURISDICTION - EXPANSION - CONTRACTUAL FIELD - BANK GUARANTEE - INVOCATION - ARBITRARINESS - ADMINISTRATIVE LAW - LEGITIMATE EXPECTATION - FORCE MAJEURE.
Fact of the Case:
The petitioner submitted its tender in pursuance of the global tender notice published by the Respondent No. 6 for charter hire of onshore-drilling rig for Rajasthan Project of the Oil India. The petitioner was informed that the mobilisation of the rig should be completed and the work to commence on 25th March, 1991 i.e. 180 days from the date of the issuance of the Letter of Intent. The petitioner duly furnished Bank Guarantee for Rs. 89,59,854.00 as and by way of Performance Guarantee, through United bank of India in terms of the agreement. Upon furnishing of the performance Guarantee a contract in writing being Drilling Contract No. RPF/330 was executed by and between the parties on 18th January, 1991 containing various terms and conditions including termination, mobilization, performance security, force majeure, etc.
Finding of the Court:
The court found that the delay in performance of the contract was not attributable to the petitioner but was occasioned by the actions of the other non-appearing respondents. The court held that the delay in performance of the contract cannot be attributed to the petitioner but has been occasioned by reason of the actions of the other non-appearing respondents. The court also held that the invocation of the bank guarantee, in view of the existence of an arbitrary action so far as the governmental agency is concerned, cannot be said to be in accordance with law.
Issues: 1. Whether the Writ Court has jurisdiction to entertain a private contractual dispute between the parties? 2. Whether the invocation of the bank guarantee was arbitrary and mala fide? 3. Whether the delay in performance of the contract was attributable to the petitioner?
Ratio Decidendi: 1. The jurisdiction of the Writ Court is not restrictive in nature and usurpation of the Civil Court's jurisdiction does not arise. The Writ Court is within its jurisdiction to intervene and interfere in a matter where there is administrative ipse dixit or arbitrary action. Legitimate expectation of a citizen can also form the basis of a cause of action in the event the action is contrary to such an expectation. 2. The invocation of the bank guarantee was arbitrary and mala fide as the governmental agency refused to extend the time for performance of the contract despite the existence of Force majeure conditions and the provisions of the agreement which allowed for suspension of obligations and extension of time. 3. The delay in performance of the contract was not attributable to the petitioner but was occasioned by the actions of the other non-appearing respondents.
Final Decision: The writ petition was allowed. The order of imposition of liquidated damages as also invocation of the bank guarantee were set aside and quashed. The respondents were directed to render all possible assistance to the writ petitioner for the purpose of importation of the rig with utmost expedition and all formalities therefor be completed within a period of eight weeks from the date of communication of the order.
1. WITH the changing structure of society, the Law Courts in its bid and relevant to the context of time, have also kept pane so as to do complete justice between the parties. Since the days of Radha Krishna Agarwal in 1977 (AIR 1977 SC 1496) the Supreme court has been seriously considering the expansion of the horizon in administrative law with particular reference to the concept of fairness in a governmental action culminating into however, the decision in Shrilekha Vidyarthi. The jurisdiction of the Civil Court has not been ousted as such, but the purview of writ jurisdiction has undoubtedly been widened. In Srilekha Vidyarthi (AIR 1991 SC 537) the Supreme Court in no uncertain terms suggested that contractual matters even, can come up for consideration before the Writ Court since all governmental agencies are supposed to act fairly and reasonably and in the event, there being any departure, the Writ Court ought not to hesitate to entertain the issue irrespective of the fact that the matter pertains to the contractual field. The introduction of the concept of promissory estoppel was undoubtedly a welcome advancement in this regard also, so far as the Writ jurisdiction is concerned. The decision of this Court in Surendra Prasad Mishra vs. O. N. G. C. (AIR 1987 CAL 1) express laid down that the doctrine of promissory estoppel ought not to be restrictive in nature and thus be made applicable only in the matter of discharge of statutory functions but it ought to have its necessary extension to all fields including a contractual field. The subsequent decision of this Court in Steel Crackers vs. The State (1991 (1) CLJ 491) lends support to the view that the Writ Court is within its jurisdiction to interfere or intervene where occasion so arises in regard to matters which cannot but be termed to be contractual in nature.
2. THE Supreme Court subsequently, however, has in Kamdhenu Cattle feed Industries [JT 1992 (6) SC 259] applied the doctrine of legitimate expectation in administrative action vis-a-vis the jurisdiction of the Writ court. This is however, inspite of the factum of a different note being sounded by the Supreme Court in the case of Jalgaon Municipality. Whereas Pathak, J. in Somprokash Rekhi's case (AIR 1981 SC 212) has left it to be decided at a future point of time by reason of involvement of a wider debate in regard to the public law element in the contractual field. Venkatachaliah J. in Jalgaon Municipality stated it to be a relevant consideration in regard to the involvement of a public law element before any judicial review is called by the Writ Court. Be that as it may, in Kamdhenu Cattle Feed Industries (supra) Verma J. applied the doctrine of legitimate expectation in administrative action being the basis of a cause of action in a petition under Article 226 of the Constitution. It is therefore, no longer in the realm of consideration but a well settled principle of law, so far as the doctrine of legitimate expectation is concerned. Verma, J, in Paragraph 8 of the Report very succinctly laid down that failure to consider and give due weight to the legitimate expectation of a citizen may render the decision arbitrary and this is how the requirement of due consideration of a legitimate expectation forms part of the forms part of the principle of non-arbitrariness, being a necessary concomitant of the rule of law. Verma, J. observed that the doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system to the extent indicated.
3. HAVING discussed the law on the subject as above, it would be convenient to refer to the factual aspect of the matter at this juncture.
4. THE petitioner submitted its tender in pursuance of the global tender notice published by the Respondent No. 6 for charter hire of onshore-drilling rig for Rajasthan Project of the Oil India. Incidentally it is to be noted that the tender as above, was invited in respect of Oil India petroleum Projec
