1982 Supreme(Raj) 455
RAJASTHAN HIGH COURT
S.C.Agrawal, J.
Shreeji Industries - Appellant
Versus
The State Of Rajasthan - Respondent
S.B. Civil Writ Petition No. 1731/82.
Decided On : 2-11-1982
The principles of natural justice cannot be invoked where the State or its officers act in exercise of powers which are governed exclusively by the terms of contract.
Headnote:
CONTRACT - TERMINATION - JUDICIAL REVIEW - AVAILABILITY OF ALTERNATIVE REMEDY - ARBITRATION CLAUSE - PRINCIPLES OF NATURAL JUSTICE - APPLICABILITY - DISTINCTION BETWEEN AWARDING CONTRACT AND TERMINATING CONTRACT - REASONABLENESS AND PUBLIC INTEREST TEST.
Fact of the Case:
The petitioner, a manufacturer of polyethelene bags, submitted a tender in response to a public notice issued by the State Government inviting tenders for the supply of polyethelene bags. The petitioner's tender was accepted, and a contract was executed. Subsequently, the State Government issued an order canceling the contract on the ground that the petitioner's products did not meet the specifications required in the tender. The petitioner challenged the cancellation order, arguing that it was passed without affording him an opportunity of being heard and that the principles of natural justice were violated.
Finding of the Court:
The court held that the petitioner's writ petition was not maintainable since the dispute between the parties was governed by the terms of the contract and that the principles of natural justice could not be invoked. The court further held that the action of the State Government in canceling the contract was not unreasonable or against public interest.
Issues: 1. Whether the petitioner's writ petition was maintainable. 2. Whether the principles of natural justice were violated in the cancellation of the contract. 3. Whether the action of the State Government in canceling the contract was unreasonable or against public interest.
Ratio Decidendi: 1. The court held that the petitioner's writ petition was not maintainable since the dispute between the parties was governed by the terms of the contract and that the principles of natural justice could not be invoked. The court relied on the decision of the Supreme Court in Radhakrishna Agrawal v. State of Bihar, AIR 1977 SC 1496, which held that in a case where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and one of the parties to the contract complains about breach of such contract by the State, no writ or order can be issued under Article 226 of the Constitution to compel the authorities to remedy a breach of contract pure and simple. 2. The court held that the principles of natural justice were not violated in the cancellation of the contract. The court held that the error in accepting the petitioner's tender was apparent from the documents submitted by the petitioner himself and that the technical committee was justified in recommending the cancellation of the contract. 3. The court held that the action of the State Government in canceling the contract was not unreasonable or against public interest. The court held that the State Government was justified in canceling the contract in order to protect the public interest.
Final Decision: The court dismissed the petitioner's writ petition.
JUDGMENT
1. - The petitioner in this writ petition filed under Article 226 of the Constitution of India, carries on business of manufacturing polyethelene bags. By public notice published in the Rajasthan Patrika, Jodhpur Edition, dated August 7, 1981, the State Government invited tenders for supply of polyethelene bags. In the tender the various requirements with regard to the physical and strength properties of the films used in the products were prescribed. In response to the said notice, the petitioner submitted his tender on 14th September, 1981. The petitioner also submitted a test report of his products obtained from M/s. I.P.C.L., Baroda. The tender of the petitioner for supply of goods was accepted and the petitioner executed an agreement and submitted the same before the State Government Thereafter, a Circular (Annexure P/3) No. 16/82 dated 16th March, 1981 was issued by the Store Purchase Officer, Central Store Purchase Organisation, Finance Department of the Government of Rajasthan (respondent no. 2 herein ), whereby the name of the petitioner vyas included amongst the suppliers of polyethelene bags for a period upto 30th September, 1982. The rates were prescribed in a separate order No. 10/82 dated March 16, 1982. By order dated 24th August, 1982 passed by respondent no. 2, the circular No. 16/82 and the order 10/82 dated 16th March, 1982 whereby the rate contract for supply of polyethelene bags upto 30th September, 1982 had been given to the petitioner was cancelled. In the said order, it is stated that on a re-examination by the technical committee of the test report submitted by the petitioner, it was found that the products of the petitioner were not satisfactory. Being aggrieved by the aforesaid order dated 24th August, 1982, the petitioner has filed this writ petition wherein the petitioner has prayed that a writ in the nature of certiorary may be issued to quash the order 24th August, 1982 and a writ in the nature of mandamus be issued directing the non-petitioners to accept the supply from the petitioner in terms of the agreement entered into between the petitioner and the non-petitioner uptil September 30, 1982.
2. In the writ petition aforesaid, the petitioner has submitted that the impugned order dated 24th August, 1982 has been passed in disregard of the principles of natural justice in as much as the petitioner was not afforded any opportunity of being heard before the passing of the said order. The case of the petitioner is that since the impugned order adversely affects the interests of the petitioner, it was incumbent upon the non-petitioners to have given an opportunity of a hearing to the petitioner before passing the said order. The case of the petitioner is further that the test report that was submitted by the petitioner had been examined by the technical committee before the tender of the petitioner was accepted and that the non petitioners were estopped from questioning the quality of the products of the petitioner on the basis of the second report received from the technical committee and that, in any event, the report of the technical committee should have been disclosed to the petitioner before taking any action against the petitioner on the basis of the said report.
3. A notice was issued to the non-petitioners requiring them to show cause as to why the writ petition should not be admitted & in response to the said notice, a reply has been filed on behalf of the non-petitioners. In the said it has been submitted that the tender for supply of polyethelene bags contained the specifications detailing the various sizes & minimum qualities qua the various strength requirements and other requirements and that there was big variance between the specifications as required in the tender & the specifications as mentioned in the test report submitted by the petitioner with regard to his products. In the said reply, it has been further submitted that the aforesaid difference between the specifications
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