The main legal point established in the judgment is the obligation of the State to act reasonably and fairly, even in contractual matters, and the scope of judicial review in cases of termination of contracts by the State or its instrumentalities.

JUDGMENT

Sabyasachi Bhattacharyya, J. - The petitioner no. 1-company and the petitioner no. 2, its director/shareholder, have moved the instant writ petition against a notice of termination of contract to supply various food products under the name of the respondent no. 2 to financially underprivileged sections of the society, entered into between the parties on February 17, 2017. The notice was dated November 5, 2020 and set out alleged violation of Clauses 6, 7, 8, 22 and 23 of the said contract as grounds for cancellation of the same. The distribution of food items pertain to a government scheme named "21se Annapurna".

2. Learned counsel for the petitioner argues that the respondents violated Article 14 of the Constitution of India by arbitrarily terminating the contract. As such, irrespective of the existence of a contractual relation between the parties, this court can interfere with such termination under Article 226 of the Constitution of India.

3. In support of such contention, learned counsel cites a judgement reported at ( Mahabir Auto Stores and Ors. vs. Indian Oil Corporation and Ors, (1990) AIR SC 1031 .) for the proposition that every action of the State or an instrumentality of the State, in exercise of its executive power, must be informed by reason. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution shall be applicable to such exercise of power. The Supreme Court held that having regard to the nature of the transaction it would be appropriate to state that in cases where the instrumentality of the state enters the contractual field, it should be governed by the incidence of the contract; it may not be necessary to give reasons but, in the field of this nature fairness must be there to the parties concerned. Having regard to the large number or the long period and the nature the dealings between the parties the appellant, it was held, should have been taken into confidence. Equality and fairness at least demands this much from an instrumentality of the State dealing with a right of the State not to treat the contract as subsisting. However, the Supreme Court proceeded to evolve a process which would work.

4. Learned counsel next places reliance on a judgement reported at ( Union of India (UOI) and Ors. vs. Tantia Construction Pvt. Ltd, (2011) 5 SCC 697 .) for the proposition that even if there is an arbitration clause in the agreement between the parties, an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court. Injustice, whenever and wherever it is there, has to be struck down as an anathema to the rule of law and the provisions of the Constitution. The Supreme Court endorsed the view of the High Court that notwithstanding the provisions relating to the arbitration clause, the High Court was fully within its competence to entertain and dispose of the writ petition filed on behalf of the respondent company.

5. Next placing reliance on Kumari Shrilekha Vidyarthi and Ors. vs. State of U.P. and Ors., (1991) 1 SCC 212 , learned counsel for the petitioners argues that although the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of the rights by resort to remedies provided for adjudication of purely contractual disputes, to the extent challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, as held in the report, the obligation is of a public character invariably in every case irrespective of there being any other right or ob