2020 Supreme(Guj) 518

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Vikram Nath, J.B. Pardiwala, JJ.
The Danta Majur Kamdar Sahakari Mandli Limited – Petitioner
Versus
The Deputy Conservator of Forests – Respondent
R/Special Civil Application No. 3937 & 3940 of 2020
Decided On : 06-07-2020

Point of Law:
The State must act fairly and reasonably does not only flow from Art.14 of the Constitution. A State is always expected to act fairly to its subjects for which no law is necessary. Art.14 merely enshrines this principle. Even in the matter of entering into contract under Art.229, right flowing from Art. 298 for carrying on trade etc. the State is always expected to act fairly and reasonably. The act of fairness by the State is always expected right from the stage of initiating of the contract, entering into the contract, performance of the terms of the contract of enforcement of the contract."

Headnote:

Contract and Specific Relief – Constitution of India, 1950 – Article 226 – Cooperative society – Registration of society cancelled – Termination of Contract – Tender Notice – Seeking quashing and setting aside the impugned communication by which the work orders given to the petitioner is cancelled and thereby the petitioner Society may be permitted to continue to complete the work orders till December, 2020, as stated in the Tender Notice and also the communication accepting the Tender – Held, It is true that ordinarily the High Court should be loath in interfering with disputes relating to contract. However, it would all depend on the nature of the action complained before the Court. The termination Clause No.17 in the contract does not give an unbridled power to the respondent acting on behalf of the State to terminate the contract on the say of the local MLA and other persons interested in the matter. The manner in which the respondent proceeded to pass the order terminating a concluded contract and has tried to justify his illegal action in the name of transparency and public interest has really disturbed us a lot. The respondent having entered into a contract must, in all fairness, be held bound by its terms. Only on compelling, lawful and just reason, can it be allowed to wriggle out of the terms of an agreement. The “State”, while entering into contracts and in the field of business, is expected to be consistent and fair in its relationship with the citizens or association of citizens. That is the difference between the dealings between the State and ordinary self interested businessman. Any action of the State, which is not informed by fairness and reason, is constitutionally invalid on the touchstone of Article 14 of the Constitution and merely because the right sought to be enforced by a citizen is based on a contract, is no reason to refuse him the constitutional remedy under Article 226 of the Constitution – Application is allowed. (Paras 29 to 33)

Facts of the case:

Since issues raised in both the captioned writ applications are same, those were heard analogously and are being disposed of by this common order – For sake of convenience, the Special Civil Application No.3937 of 2020 is treated as lead matter – By this writ application under Article 226 of Constitution of India, writ applicant, a registered cooperative society through its Chairman, has prayed for following reliefs – Respondent herein invited tenders for carrying out various civil works within the forest area of different ranges falling within his jurisdiction. In this regard a tender notice came to be uploaded on the website of n-procure – Last date for filling up tender was 12.12.2018 – Tender was for the purpose of SMC (Soil and Moisture Conservation) and building. Ultimately, the writ applicant’s society was allotted tender for the civil works for the Danta (East), Danta (West), Ambaji (North) and Ambaji (South) range vide the communication.

Findings of the court:

It is true that ordinarily the High Court should be loath in interfering with disputes relating to contract. However, it would all depend on the nature of the action complained before the Court. The termination Clause No.17 in the contract does not give an unbridled power to the respondent acting on behalf of the State to terminate the contract on the say of the local MLA and other persons interested in the matter. The manner in which the respondent proceeded to pass the order terminating a concluded contract and has tried to justify his illegal action in the name of transparency and public interest has really disturbed us a lot. The respondent having entered into a contract must, in all fairness, be held bound by its terms. Only on compelling, lawful and just reason, can it be allowed to wriggle out of the terms of an agreement. The “State”, while entering into contracts and in the field of business, is expected to be consistent and fair in its relationship with the citizens or association of citizens. That is the difference between the dealings between the State and ordinary self interested businessman. Any action of the State, which is not informed by fairness and reason, is constitutionally invalid on the touchstone of Article 14 of the Constitution and merely because the right sought to be enforced by a citizen is based on a contract, is no reason to refuse him the constitutional remedy under Article 226 of the Constitution of India.

Result: Application is allowed