Exclusion of Article 14 in contractual matters is not permissible in the Constitutional scheme, and reasonableness and fairness in State actions, even in contractual matters, are essential.

Biswanath Somadder, J.

This appeal has been preferred against a judgment and order dated 14th November, 2011, passed by the learned Single Judge in WP 17296 (W) of 2009 (Smt. Jayanti Paul & Ors. v. Kolkata Metropolitan Development Authority & Ors.). It appears that the writ petitioners had approached the learned Single Judge questioning a decision of the Kolkata Metropolitan Development Authority (hereinafter referred to as the KMDA) dated 15th September, 2009. By the said decision, the offer of allotment of plot no. C-15, HIG made by the KMDA was cancelled and possession of land delivered stood withdrawn. The lease deed so executed also stood cancelled.

2. It appears that the learned Single Judge, without even considering the merits of the case on its factual background or testing the action on the touchstone of reasonableness as opposed to arbitrariness, merely referred to and relied upon his own decision rendered in Haldiram Ltd. v. State of West Bengal & Ors. reported in (2009) 1 Cal LT 158 (HC) in order to hold that the decision of the KMDA to cancel the lease was "in exercise of its pure private law contractual right flowing solely from the terms and conditions of the lease". The learned Single Judge further held that an authority that is a State within the meaning of Article 12 is under an obligation to exercise powers conferred on it in consonance with the provisions of Article 14, meaning thereby that the action must be fair, reasonable and free from arbitrariness. But, when an authority exercises a right conferred on it by a private contract, the said authority is not under any corresponding obligation to exercise the right in consonance with the principles of fairness, reasonableness and non-arbitrariness in State action as enshrined in Article 14, for there is a clear distinction between a public law power and a private law right.

3. A pure and simple question of law, therefore, arises in the instant case and that is, whether applicability of Article 14 of the Constitution of India can be wholly excluded - based on our understanding of the Constitutional scheme - in respect of private law contracts entered into by and between an authority, being a State within the meaning of Article 12 of the Constitution of India and a private person, even if there is arbitrariness present in an action which emanates from a right under a contract ordinarily governed by private law.

4. The personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot co-exist. The Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. Thus, exclusion of Article 14 in contractual matters is not permissible in our Constitutional scheme. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters, but that does not justify the view of its total exclusion, as sought to be held by the learned Single Judge in the impugned judgment and order, merely by following Haldiram (supra). Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Article 14 and permit judicial review, it can be said that the ultimate impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. Therefore, it would be difficult and unrealistic to exclude the State actions in contractual matters, after the contract has been made, from the purview of judicial review to test its validity on the anvil of Article 14. Thus, the wide