J.B. Pardiwala, J.

1. This litigation disappoints us a lot. This is a litigation in which the State (principal) is telling the contractor (writ-applicant) that we did award a work of contract in your favour during the period of crisis, i.e. during the Covid pandemic lock-down, to be completed within a period of ten days from the issue of the work order. The State says that it did fix the terms and conditions of the contract, including the rates to be paid to the contractor. The State further says that the contractor did a remarkable job by completing the entire work to its satisfaction within a period of ten days. The State also says that, in accordance with the work order and the rates fixed, the contractor may be entitled to claim the requisite amount. However, in the end, the State says that we will not pay the full bill amount to the contractor as the State now believes that the fixation of the rates at the relevant point of time was a very hasty decision on their part and that the rates fixed at the relevant point of time were on a higher side.

2. The aforesaid stance of the State has led to the present litigation.

3. Fairness in State action is the soul of good governance. Every action of the State where it infringes the constitutional mandate or is opposed to basic rule of law or suffers from the infirmity of patent arbitrariness, judicial intervention is inevitable. Government enjoys great freedom while entering into contracts with private parties, but even that freedom is circumscribed by the rule of fairness, transparency and objectivity. It is more so where the Government is dealing with State largesse. The State holds monopoly in certain fields and where this privilege of monopoly is utilized for the purposes of allocation of works, it takes the colour of State largesse as both the State or its instrumentalities or public statutory bodies and the bidder are expected to benefit from such distribution and/or allocation of such works by way of contracts.

4. By this writ-application under Article 226 of the Constitution of India, the writ-applicants have prayed for the following reliefs:

"(a) That this Hon'ble Court may he pleased to issue a writ of mandamus and/or any other appropriate writ, order or direction directing the respondents to forthwith release the pending payment qua Work Order No. 209 and Work Order No. 212 to the petitioners;

(aa) That this Hon'ble Court may he pleased to issue a writ of mandamus and/or any other appropriate writ, order or direction quashing and setting aside the letter/order dated 05.08.2021 being a non-speaking order and issued in stark violation of the agreed upon Work Order conditions;

(b) That this Hon'ble Court may be pleased to issue a writ of mandamus and/or any other appropriate writ, order or direction quashing and setting aside the Work Order dated 17.09.2020 and 20.10.2020;

(c) That this Hon'ble Court may be pleased to hold and declare that unilateral alteration of rates by the respondents, after completion of works amounts to arbitrary exercise of powers as also amounts to breach of principles of natural justice;

(d) That pending admission, hearing and final disposal of the present petition, this Hon'ble Court may he pleased to direct the respondents to release the pending payment to the petitioners qua Work Order No. 209 and Work Order No. 212;

(e) That this Hon'ble court may he pleased to issue ad-interim ex-parte relief in terms of Para (d) herein above;

(f) That this Hon'ble Court may be pleased to award cost of the present petition to the petitioners;

(g) Pass such other order(s) as this Hon'ble Court deems fit in the facts and circumstances of the case."

5. The facts giving rise to this writ-application may be summarised as under:

- With the onset of the COVID-19 pandemic in the country from early March 2020 and with the cases being reported in multiples of thousands, the State was immediately confronted with the shortage of hospital beds, oxygen supply, medicines, etc. With a view to adequately increase these resources and make available the maximum benefits to the ailing patients, it was decided by the respondents in a meeting convened on 29.06.2020 chaired by the Collector, Surat, to award to the writ-applicants and other contractors, the various work orders to be carried out on war-footing basis. The minutes of the meeting read as under:

"Minutes of Meeting

A Video Conference was held today, i.e. on 29/06/2020 at Collector Office, Surat, under the Chairmanship of the Chief Secretary Shri Anil Mukim. In order to provide additional facilities to the Covid-19 hospital, it was decided to convert 5 to 10 floors of the building operational for the hospital on urgent basis. The following officers had remained present in the said meeting for taking the decisions to carry out the task:

1. Shri M.S. Patel, Nodal Officer, Covid-19 Hospital, Surat

2. Dr. Dhaval Patel, Collector, Surat.

3. Shri Banchhanidhi Pani, Municipal Commissioner, Municipal Corporation, Surat

4. Shri Hiteshbhai Koya, District Development Officer, Surat.

5. Shri J.M. Brahmbhatt, Dean, Government Medical College, Surat

6. Shri P.L. Patel, Superintending Engineer, Roads & Buildings, Surat-Circle

7. Shri C.P. Patel, Superintending Engineer, PIU Zone-7, Surat

8. Shri Ashok A. Modh, Executive Engineer, PIU Zone-7, Surat

9. Shri J.B. Dhimar, Dy. Executive Engineer (Electrical) PIU Zone-7, Surat

It was discussed in the above Video Conference that the Covid-19 hospital was made operational in the Stem-Cell Building situated in the New Civil Hospital, Surat. At present the ground floor + 3 floors are made operational as the Covid-19 hospital. During the course of the Video Conference, it was decided to keep the 4th floor as a Buffer Zone and to allot 5th to 10th floor as the Covid-19 hospital and to increase the additional facilities for the Covid-19 hospital immediately within 15 days. In order to cope-up with the said task on urgent basis with the help of the laborers and other materials, total four contractors were called upon by the authority. Accordingly, the following contractors and the consultants had remained present:

1. Cube Construction P. Ltd. - Sanjay Shah

2. D.H. Patel - Shri Vishalbhai

3. PSP Project Limited - Shri Chiragbhai

4. R.N. Dobariya - Shri Rameshbhai

5. Sarjan Technocrats - Shri Kamal Parekh

After taking into consideration the nature of urgency, floor-wise different types of work were distributed and thereafter, the contractors had requested to decide the rates for each type of work. In their submissions, the contractors had stated that the whole work is required to be completed within a short span of time and therefore, due to extreme urgency in this work, they shall have to make extra payments for the labors and the materials. They had also stated that they shall have to work in such a building where the first three floors are already made operational for the Covid-19 hospital and they are required to do work from 5th to 10th floor of the same building and they shall have to manage to supply materials and manpower without disturbing those three floothers. Moreover, it is a monsoon season. Thus, after considering all such facts and circumstances and after due conversations, it was decided to grant the rates as per the current year's SOR of the R&B Department, Surat, and in other works except the works coming under the SOR, it was decided to grant rates decided under the PIU or as per the works carried out earlier by the R&B Department according to the put to tender rates. In case the rates of any particular work is not available or not decided, in that case, it was decided to carry out the work as per the market rates. Thereafter, it was decided that each contractor shall take personal visit of the site, i. e. Stem-Cell Building and to discuss about the additional works to be carried out after the physical verification. Pursuant to the aforesaid meeting, the tasks were distributed among the contractors as per the following details:

Sr. No.	Name of the Contractor	Allotment of the Task/Work
1	Cube Construction Pvt. Ltd.	Work of MGPS, Fire Fighting work and all works of Blocks Nos.5 & 6
2	D.H.Patel	Water Supply & Drainage Line work and all works of Blocks Nos.7 & 8
3	PSP Projects Ltd.	Aluminum windows (all floors), Stair Railing (all floors), Staircase
		Trade & Rises (all floors) and all works of Blocks Nos.9 & 10
4	R.N.Dobariya	Electrification & Outer Development

Copy forwarded to:

1. Shri M.S. Patel, Nodal Officer, Covid-19 Hospital, Surat

2. Dr. Dhaval Patel, Collector, Surat.

3. Shri Banchhanidhi Pani, Municipal Commissioner, Surat Municipal Corporation

4. Shri Hiteshhhai Koya, District Development Officer, District Surat

5. Shri J.M. Brahmbhatt, Dean, Government Medical College, Surat.

Copy forwarded with compliments to:

1. Shri P.L. Patel, Superintending Engineer, Rods & Building Department, Surat

Copy to:

1. Shri Ashok A. Modh, Executive Engineer, PIU Zone - 7, Surat - for information and taking necessary action immediately.

2. Shri J.B. Dhimar, Dy. Executive Engineer, (Electric) PIU Zone - 7, Surat - for information and taking necessary action immediately.

The Officers who had remained present in the meeting:

Sr. No.	Name of the Officer	Designation	Signature
1	Dr.M.S.Patel	Nodal Officer, Covid-19 Hospital, Surat	Sd/- Illegible
2	Dr.Dhaval Patel	Collector, Surat	Sd/- Illegible
3	Shri Banchhanidhi Pani	Municipal Commissioner, Surat	Sd/- Illegible
4	Shri Hiteshbhai Koya	DDO, Surat	Sd/- Illegible
5	Shri J.M.Brahmbhatt	Dean, Govt. Medical College, Surat	Sd/- Illegible
6	Shri P.L.Patel	Suptd. Engineer, R&B Department, Surat	Sd/- Illegible
7	Shri C.P.Patel	Suptd. Engineer, PIU Zone-7, Surat	Sd/- Illegible
8	Shri Ashok Modh	Executive Engineer, PIU Zone-7, Surat	Sd/- Illegible
9	Shri J.B.Dhimar	Dy. Exec. Engineer, Electric PIU Zone-7, Surat	Sd/- Illegible

- On 30.06.2020, the respondents awarded three work orders in favour of the writ-applicant no. 1.

(i) Work Order No. 209: Providing and Fixing Medical Oxygen Gas Pipeline System at the Stem Cell Building for the COVID-19 Hospital at the NCH Campus, Surat (Part-2).

(ii) Work Order No. 212: Providing and Fixing Medical Oxygen Gas Pipeline System at the Stem Cell Building for the COVID-19 Hospital at the NCH Campus, Surat (Part-1).

(iii) Work Order No. 221: Civil Work of constructing the 5th and the 6th Floor at the Stem Cell Building for the COVID-19 Hospital at the NCH Campus, Surat.

- It may not be out of place to state that the Stem Cell Building already had four floors (Ground + 3) constructed. Under the Work Order No. 221 the writ-applicant no. 1 was to construct the 5th and the 6th floor respectively of the building. One another contractor was awarded the construction work of the 7th and the 8th floor respectively and a third contractor was awarded the construction work of the 9th and the 10th floor respectively. The time limit for the construction was stipulated as fifteen days.

- Simultaneously, the writ-applicant no. 1 under the Work Orders Nos. 209 and 212 respectively was required to undertake the Medical Oxygen Gas Pipeline System work and provide oxygen supply to all the ten floothers The time limit for completing the work under these Work Orders was ten days. An enormous amount of coordination and cooperation was required not only between the contractors but also with the respondents for completing the work in time.

- The Work Orders mentioned the rates at which the various components were to be charged, however the quantity of the items could vary. Based on the rates provided in the Work Orders, the writ-applicant no. 1 satisfactorily completed the job within the stipulated period sometime around mid July 2020. There is no dispute on this aspect.

- Upon completion of the entire work of contract, the writ-applicants raised a Final Bill of Rs. 8,12,20,049/- for the Work Orders Nos. 209 and 212 (combined) and Rs. 3,47,72,379/- for the Work Order No. 221.

- The respondents initially paid Rs. 2,75,18,581/- on 05.09.2020 for the Work Order No. 221. Later, the balance amount was also paid sometime in May 2021. There is no dispute with respect to the said Work Order No. 221.

- For the Work Orders Nos. 209 and 212 respectively, the respondents first issued a new Work Order dated 17.09.2020 (three months after the work was completed) and reduced the total Work Order value to Rs. 6,54,78,625/-. Unexpectedly, three conditions came to be added in the said Work Order.

- The respondents thereafter unilaterally issued an amended Work Order on 20.10.2020 (four months after the work was completed) reducing the payable amount under the Work Orders Nos. 209 and 212 respectively to Rs. 5,32,35,908/-.

- Finally, on 09.11.2020, the respondents paid a sum of Rs. 5,88,85,404/- (minus cess) for the Work Orders Nos. 209 and 212 respectively.

- The writ-applicants objected to the aforesaid vide their letters dated 15.10.2020, 23.11.2020, 21.12.2020 and 11.01.2021 respectively for the short payment made towards the Work Orders Nos. 209 and 212 respectively. The respondents thought fit not to respond. The State did not raise any grievance with regard to the satisfactory performance of the work.

- The writ-applicants through their advocate sent a Legal Notice dated 15.02.2021, which was responded on 05.08.2021 (after filing of the present writ-application) wherein the respondents declined to make any further payment.

- In such circumstances referred to above, the amount that remains to be paid for the Work Orders Nos. 209 and 212 respectively is Rs. 2,23,34,645/-. Additionally, the Defect Liability Period for both these Work Orders is also over and, therefore, according to the writ-applicants the security deposit deducted also needs to be refunded.

SUBMISSIONS ON BEHALF OF THE WRIT-APPLICANTS:

6. Mr. M.R. Bhatt, the learned senior counsel appearing for the writ-applicants, vehemently submitted that the State could not have changed or altered the rates fixed in a concluded contract and that too after the successful completion of the work of contract. In other words, according to Mr. Bhatt, it was not fair on the part of the State to unilaterally issue a new work order dated 17.09.2020, three months after the completion of the work in July 2020. Mr. Bhatt would also submit that it was not fair on the part of the State to issue a further amended work order dated 20.10.2020, four months after the completion of the work only with a view to make a less payment to the writ-applicants compared to what was promised in the work orders dated 30.06.2020.

7. Mr. Bhatt vehemently submitted that it was too much on the part of the State to compare the work undertaken by his client with one another contractor, namely Malani Construction Company, for the reason that the writ-applicants completed the work of contract while the Covid-19 pandemic was at its peak. According to Mr. Bhatt, his client worked day and night and completed the entire work of construction within fifteen days. Mr. Bhatt pointed out that the Malani Construction Company although was given thirty days to complete the work, yet the company took two months to complete the work.

8. Mr. Bhatt pointed out that his clients completed the work of contract when the four floors of the hospital were operational and were being used for treating the Covid-19 patients. He pointed out that the materials had to be procured on war-footing basis having regard to the nature of the work which was assigned by the State.

9. Mr. Bhatt submitted that if it is the case of the State that the Work Orders Nos. 209 and 212 respectively were not issued in accordance with the Minutes of the meeting dated 29.06.2020, then it was expected of the State to atleast inform the writ-applicants about the so-called mistake. The State permitted the writ-applicants to carry out and complete the work. The writ-applicants were also called by the State several times during the one year defect liability period to cure certain defects but at no point of time informed the writ-applicants about their unilateral decision.

10. Mr. Bhatt submitted that the modalities for prescribing the rates was decided on 29.06.2020 and the work order was issued on 30.06.2020. According to Mr. Bhatt, there is no merit in the stance of the State that the work order dated 30.06.2020 was issued by an officer who was not a party to the meeting. According to Mr. Bhatt, such stance of the State is fallacious. Mr. Bhatt invited the attention of this Court to Page-22 of the paper-book to show that the Deputy Executive Engineer and the Executive Engineer jointly issued the work order and the very same officers were present in the meeting convened on 29.06.2020.

11. Mr. Bhatt also pointed out that one copy each of the work order was forwarded to all the dignitaries/officers who were party to the meeting held on 29.06.2020.

12. In the last, Mr. Bhatt pointed out that the stance of the respondents in the affidavit-in-reply that, the materials supplied by the Malani Construction Company was of superior quality compared to the products supplied by the writ-applicants, is very unreasonable and unfair.

13. According to Mr. Bhatt, at no point of time, the respondents raised any issue as regards the defects or inferior quality of products used by the writ-applicants. It is pointed out that in the Work Orders Nos. 209 and 212 respectively, there is no specification of any particular type of pipes to be used. According to Mr. Bhatt, best of the quality pipes were used by his clients, i.e. copper pipes BSIN : 2016.

14. Mr. Bhatt, in support of his aforesaid submissions, has placed reliance on a recent pronouncement of this Court in the case of Maruti Enterprise Through Jigneshbhai Bharatbhai Tarpara vs. State of Gujarat (Special Civil Application No. 20864 of 2019, decided on 24.08.2021). Mr. Bhatt also seeks to rely upon the decision of the Supreme Court in the case of Punjab National Bank and others vs. Atmanand Singh and others, reported in .

15. In such circumstances, Mr. Bhatt prays that there is merit in his writ-application, the same be allowed and a writ of mandamus be issued.

SUBMISSIONS ON BEHALF OF THE RESPONDENTS -STATE:

16. Mr. Ayan Patel, the learned AGP appearing for the respondent-State, has vehemently opposed this writ-application submitting that the writ-application itself is not maintainable. He highlighted the following:

In the meeting held on 29.06.2020, which was also attended by the writ-applicants, the modalities for determining the rates payable for the work to be allotted was decided. As per the modalities:

(i) First option was to take the current schedule of rates of the R&B Department, Surat.

(ii) If these rates are not available, then the second option was to take the rates put to tender in similar projects.

(iii) In case this option is also not available, the third option was to take rates as per prevalent market rates.

The rate list though approved by the Medical Superintendent, New Civil Hospital, Surat, for the Work Order No. 209, the same was an accessory based rate list in which items were not specifically defined. The said rate list was for ordinary minor work such as maintenance and routine repair. Therefore, these rates were not as per the modalities for determining the rates as per the meeting dated 29.06.2020.

Since the writ-applicants insisted on issuance of the Work Orders, the same were prepared in extreme haste and therefore, the rates were accordingly mentioned in the Work Order No. 209.

For the Work Order No. 212, the rates adopted were on the basis of Phase-1 rates for the construction of the Kidney Hospital at Surat in 2013-14 and the comparison of these rates with the rates awarded to the writ-applicants indicates that there has been an upward revision in the rates, therefore, the writ-applicants cannot be said to be aggrieved in any manner.

After the completion of the work in July 2020, and on learning that the rates mentioned in the Work Orders are not as per the minutes of meeting held on 29.06.2020, the revised rates came to be mentioned in the Work Order dated 20.10.2020. Since some of the items have seen an upward revision, the writ-applicants cannot be said to be aggrieved by the decision of the respondents.

The respondents further seek to rely on a Work Order issued to one Malani Construction Company on 07.09.2020 to carry out similar work, i.e. providing and fixing oxygen gas pipeline system at the neighboring Kidney Hospital in the same campus. The respondents state that if the rates made applicable to the Malani Construction Company are compared with the rates made applicable to the writ-applicants, it is learnt that: (i) Malani Construction Company has used imported goods bearing CE certifications; (ii) Malani Construction Company has been paid less as compared to the writ-applicants for the same work.

17. In such circumstances referred to above, Mr. Patel, the learned AGP, prays that there being no merit in this writ-application, the same be rejected and the writ-applicants may be relegated to the remedy of filing a civil suit for recovery of the money.

ANALYSIS:

18. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether the writ-applicants are entitled to the relief as prayed for in the present writ- application.

MAINTAINABILITY OF THE WRIT APPLICATION UNDER ARTICLE 226 OF THE CONSTITUTION:

19. As regards the issue of maintainability, we can do no better than refer to a recent pronouncement of the Supreme Court in the case of Unitech Limited and others vs. Telangana State Industrial Infrastructure Corporation (TSIIC) and others, reported in, wherein, His Lordship Hon'ble Dr. Justice Dhananjaya Y. Chandrachud speaking for the Bench, has observed as under:

"...However, to clear the ground, it is necessary to postulate that recourse to the jurisdiction under Article 226 of the Constitution is not excluded altogether in a contractual matter. A public law remedy is available for enforcing legal rights subject to well-settled parameters.

39. A two Judge Bench of this Court in ABL International Ltd. vs. Export Credit Guarantee Corporation of India (2004) 3 SCC 553 [ABL International] analyzed a long line of precedent of this Court [K.N. Guruswamy vs. State of Mysore, : AIR 1954 SC 592; Gujarat State Financial Corporation v. Lotus Hotels (P) Ltd. (1983) 3 SCC 379; Gunwant Kaur v. Municipal Committee, Bhatinda,  (1969) 3 SCC 769] to conclude that writs under Article 226 are maintainable for asserting contractual rights against the state, or its instrumentalities, as defined under Article 12 of the Indian Constitution. Speaking through Justice N Santosh Hegde, the Court held:

"27. ...the following legal principles emerge as to the maintainability of a writ petition:

(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.

(b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.

(c) A writ petition involving a consequential relief of monetary claim is also maintainable.

40. This exposition has been followed by this Court, and has been adopted by three Judge Bench decisions of this Court in State of UP vs. Sudhir Kumar and Popatrao Vynkatrao Patil vs. State of Maharashtra 1 [Civil Appeal 1600 of 2000 (Supreme Court of India)]. The decision in the ABL International, cautions that the plenary power under Article 226 must be used with circumspection when other remedies have been provided by the contract. But as a statement of principle, the jurisdiction under Article 226 is not excluded in contractual matters. Article 23.1 of the Development Agreement in the present case mandates the parties to resolve their disputes through an arbitration. However, the presence of an arbitration clause within a contract between a state instrumentality and a private party has not acted as an absolute bar to availing remedies under Article 226 [Harbanslal Sahnia v. Indian Oil Corporation Ltd. (2003) 2 SCC 107; Ram Baral Singh & Co. v. State of Bihar, (2015) 13 SCC 592]. If the state instrumentality violates its constitutional mandate under Article 14 to act fairly and reasonably, relief under the plenary powers of the Article 226 of the Constitution would lie. This principle was recognized in ABL International:

"28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. (See Whirlpool Corpn. vs. Registrar of Trade Marks (1998) 8 SCC 1]) And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction."

(emphasis supplied)

41. Therefore, while exercising its jurisdiction under Article 226, the Court is entitled to enquire into whether the action of the State or its instrumentalities is arbitrary or unfair and in consequence, in violation of Article 14. The jurisdiction under Article 226 is a valuable constitutional safeguard against an arbitrary exercise of state power or a misuse of authority. In determining as to whether the jurisdiction should be exercised in a contractual dispute, the Court must, undoubtedly eschew, disputed questions of fact which would depend upon an evidentiary determination requiring a trial. But equally, it is well-settled that the jurisdiction under Article 226 cannot be ousted only on the basis that the dispute pertains to the contractual arena. This is for the simple reason that the State and its instrumentalities are not exempt from the duty to act fairly merely because in their business dealings they have entered into the realm of contract. Similarly, the presence of an arbitration clause does oust the jurisdiction under Article 226 in all cases though, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked. The jurisdiction under Article 226 was rightly invoked by the Single Judge and the Division Bench of the Andhra Pradesh in this case, when the foundational representation of the contract has failed.."

20. The principle enunciated in the ABL International (supra) has been consistently upheld by the Supreme Court in Noble Resources vs. State of Orissa and another (2006) 10 SCC 236 (at paragraph 15); Food Corp. of India and another vs. SEIL Ltd. and others 2008) 3 SCC 440 (at paragraph 16); Central Bank of India vs. Devi Ispat Ltd. and others  (2010) 11 SCC 186 (at paragraph 28); and Surya Constructions vs. State of U.P. and others(2019) 16 SCC 794 (at paragraph 3).

21. The judgement of the Supreme Court in the case of Radhakrishna Agarwal and others vs. State of Bihar and others, (1977) 3 SCC 457 was also discussed. It was a judgment in which a writ petition against the State Government's revision of the rates of royalty payable to it under a lease, and the cancellation of the said lease, was held to be governed by contract between the parties, no unreasonableness being made out by way of State action so as to attract the provisions of Article 14 of the Constitution of India. The broad proposition that all such questions are to be settled by civil courts, and not by writ petitions, has been expressly dissented from, as "much water has floated" since this judgment, which was delivered during the emergency when the fundamental rights of persons were suspended. Thus, in Verigamto Naveen vs. Government of A.P. and others (2001) 8 SCC 344, the Supreme Court stated:

"21. On the question that the relief as sought for and granted by the High Court arises purely in the contractual field and, therefore, the High Court ought not to have exercised its power under Article 226 of the Constitution placed very heavy reliance on the decision of the Andhra Pradesh High Court in Y.S. Raja Reddy v. A.P. Mining Corpn. Ltd. [(1988) 2 An LT 722] and the decisions of this Court in Har Shankar v. Dy. Excise & Taxation Commr.  (1975) 1 SCC 737], Radhakrishna Agarwal v. State of Bihar  (1977) 3 SCC 457], Ramlal & Sons v. State of Rajasthan  (1976) 1 SCC 112]. Shiv Shankar Dal Mills v. State of Haryana (1980) 2 SCC 437], Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489] and Basheshar Nath v. CIT  AIR 1959 SC 149]. Though there is one set of cases rendered by this Court of the type arising in Radhakrishna Agarwal case (1977) 3 SCC 457] much water has flown in the stream of judicial review in contractual field. In cases where the decision-making authority exceeded its statutory power or committed breach of rules or principles of natural justice in exercise of such power or its decision is perverse or passed an irrational order, this Court has interceded even after the contract was entered into between the parties and the Government and its agencies. We may advert to three decisions of this Court in Dwarkadas Marfatia & Sons vs. Board of Trustees of the Port of Bombay (1989) 3 SCC 293]. Mahabir Auto Stores vs. Indian Oil Corpn (1990) 3 SCC 752] and Shrilekha Vidyarthi (Kumari) vs. State of U.P.  (1991) 1 SCC 212]. Where the breach of contract involves breach of statutory obligation when the order complained of was made in exercise of statutory power by a statutory authority, though cause of action arises out of or pertains to contract brings it within the sphere of public law because the power exercised is apart from contract. The freedom of the Government to enter into business with anybody it likes is subject to the condition of reasonableness and fair play as well as public interest. After entering into a contract in cancelling the contract which is subject to terms of the statutory provisions, as in the present case, it cannot be said that the matter falls purely in a contractual field. Therefore, we do not think it would be appropriate to suggest that the case on hand is a matter arising purely out of a contract and, therefore, interference under Article 226 of the Constitution is not called for. This contention also stands rejected."

(emphasis supplied)

22. In Rishi Kiran Logistics vs. Board of Trustees of Kandla Port and others (2015) 13 SCC 233, the Supreme Court held that a writ petition under Article 226, being a public law remedy, a "public law element" should be present on facts before Article 226 can be invoked - see paragraphs 37 and 38. The law on this subject has been laid down exhaustively in Joshi Technologies International Inc. vs. Union of India and others (2015) 7 SCC 728, the Supreme Court stating:

"69. The position thus summarised in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, it can refuse to exercise. It also follows that under the following circumstances, "normally", the Court would not exercise such a discretion:

69.1. The Court may not examine the issue unless the action has some public law character attached to it.

69.2. Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said mode of settlement, particularly when settlement of disputes is to be resorted to through the means of arbitration.

69.3. If there are very serious disputed questions of fact which are of complex nature and require oral evidence for their determination.

69.4. Money claims per se particularly arising out of contractual obligations are normally not to be entertained except in exceptional circumstances.

70. Further, the legal position which emerges from various judgments of this Court dealing with different situations/aspects relating to contracts entered into by the State/public authority with private parties, can be summarised as under:

70.1. At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness.

70.2. State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practise some discrimination.

70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. In such cases the Court can direct the aggrieved party to resort to alternate remedy of civil suit, etc.

70.4. Writ jurisdiction of the High Court under Article 226 of the Constitution was not intended to facilitate avoidance of obligation voluntarily incurred.

70.5. Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business.

70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages.

70.7. Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if it can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice.

70.8. If the contract between private party and the State/instrumentality and/or agency of the State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitution of India and invoking its extraordinary jurisdiction.

70.9. The distinction between public law and private law element in the contract with the State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract, this Court has maintained the position that writ petition is not maintainable. The dichotomy between public law and private law rights and remedies would depend on the factual matrix of each case and the distinction between the public law remedies and private law field, cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions under Article 226 of the Constitution of India to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision making process or that the decision is not arbitrary.

70.10. Mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirements of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness.

70.11. 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 their rights by resort to remedies provided for adjudication of purely contractual disputes."

23. It may be added that every case in which a citizen/person knocks at the doors of the writ court for breach of his or its fundamental rights is a matter which contains a "public law element", as opposed to a case which is concerned only with breach of contract and damages flowing therefrom. Whenever a plea of breach of natural justice is made against the State, the said plea, if found sustainable, sounds in constitutional law as arbitrary State action, which attracts the provisions of Article 14 of the Constitution of India - see Nawabkhan Abbaskhan vs. State of Gujarat (1974) 2 SCC 121 at paragraph 7.

24. The case on hand is, therefore, a case which involves a "public law element". The writ applicant has alleged that the action on the part of the Corporation, leading to the termination of the contract, blacklisting the writ applicant and forfeiting the entire amount towards the security deposit without taking into consideration any of the aspects pointed out by the writ applicant, could be termed as a very arbitrary action.

MEANING AND TRUE IMPORT OF ARBITRARINESS:

25. In Ramana Dayaram Shetty vs. The International Airport Authority of India and others AIR 1979 SC 1628], the Supreme Court held:

"This rule also flows directly from the doctrine of equality embodied in Article 14. It is now well settled as a result of the decisions of this Court in E.P. Royappa vs. State of Tamil Nadu, AIR 1974 S.C. 555 and Maneka Gandhi vs. Union of India, AIR 1978 S.C. 597 that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is nondiscriminatory; it must not be guided by any extraneous or irrelevant consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by Article 14 and it must characterize every State action, whether it be under authority of law or in exercise of executive power without making of law- The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory."

26. In Dwarkadas Marfatia and Sons vs. Board of Trustees of the Port of Bombay A.I.R. 1989 SC 1642], the matter was reexamined in relation to an instrumentality of the State for applicability of Article 14 to all its actions. Referring to the earlier decisions of this Court and examining the arguments for applicability of Article 14, even in contractual matters, Sabyasachi Mukherji, J. (as the learned Chief Justice then was), speaking for himself and Kama, J., reiterated that every action of the State or an instrumentality of the State must be informed by reason......actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution.

27. In Kumari Shrilekha Vidyarthi etc. etc. vs. State of U.P. and others AIR 1991 S.C. 537], a two Judges Bench of the Supreme Court made an extensive and in depth analysis of the scope of equality clause and laid down the following propositions:

"It can no longer be doubted at this point of time that Article 14 of the Constitution of India applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test of reasonableness, it would be unconstitutional. (See Ramana Dayaram Shetty vs. The International Airport Authority of India, AIR 1979 S.C. 1628 and Kasturi Lal Lakshmi Reddy vs. State of Jammu and Kashmir, AIR 1980 S. C. 1982). In Col. A.S. Sangwan vs. Union of India, AIR 1981 S.C. 1545, while the discretion to change the policy in exercise of the executive power, when not trammelled by the statute or rule, was held to be wide, it was emphasized as imperative and implicit in Article 14 of the Constitution that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touch-stone, irrespective of the field of activity of the State, has long been settled. Later decisions of this Court have reinforced the foundation of this tenet and it would be sufficient to refer only to two recent decisions of this Court for this purpose.

It is now too well settled that every State action, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Article 14 of the Constitution and basic to the rule of law, the system which governs us. Arbitrariness is the very negation of the rule of law. Satisfaction of this basic test in every State action is sine qua non to its validity and in this respect, the State cannot claim comparison with a private individual even in the field of contract."

28. The meaning and true import of arbitrariness is more easily visualized than precisely stated or defined. The question, whether an impugned act is arbitrary or not, is ultimately to be answered on the facts and in the circumstances of a given case. An obvious test to apply is to see whether there is any discernible principle emerging from the impugned act and if so does it satisfy the test of reasonableness. Where a mode is prescribed for doing an act and there is no impediment in following that procedure, performance of the act otherwise and in a manner which does not disclose any discernible principle which is reasonable, may itself attract the vice of arbitrariness. Every State action must be informed by reason and it follows that an act uninformed by reason, is arbitrary. Rule of law contemplates governance by laws and not by humour, whims or caprices of the men to whom the governance is entrusted for the time being. It is trite that be you ever so high, the laws are above you.

29. In S.G. Jaisinghani vs. Union of India AIR 1967 S.C. 1427 at p. 1434], the Court indicated the test of arbitrariness and the pitfalls to be avoided in all State actions to prevent that vice, in a passage as under:

"In this context it is important to emphasize that the absence of arbitrary power is the first essential of the rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion, when conferred upon executive authorities, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predictable and the citizens should know where he is. If a decision is taken without any principle or without any rule it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law. (See Dicey - "Law of the Constitution" - Tenth Edn., Introduction ex). "Law has reached its finest moments", stated Douglas, J. in United States v. Wunderlick,1951-342 US 98 : 96 Law Ed 113), "When it has freed man from the unlimited discretion of some ruler.....where discretion is absolute, man has always suffered". It is in this sense that the rule of law may be said to be the sworn enemy of caprice. Discretion, as Lord Mansfield stated it in classic terms in the case of John Wilkes (1770-98 E.R. 327), "means should discretion guided by law. It must be governed by rule, not humour: it must not be arbitrary, vague and fanciful."

30. In Liberty Oil Mills vs. Union of India,  AIR 1984 S.C. 1271, the Supreme Court held that the expression 'without assigning any reason' implied that the decision has to be communicated but reason for the decision has to be stated; but the reason must exist, otherwise the decision would be arbitrary. This decision was relied upon in Shrilekha Vidyarath's case (supra) to reject the argument made on behalf of the State of Uttar Pradesh that in term of Clause 3 of para 7.06 the services of the Government Pleaders could be terminated at any time without assigning any cause as would appear from the following extract of the decision of Supreme Court:

"The other part of Clause 3 which enables the Government to terminate the appointment at any time without assigning any cause can also not be considered in the manner, suggested by the learned Additional Advocate General. The termination may be made even during the subsistence of the term of appointment and without assigning any cause means without communicating any cause to the appointee whose appointment is terminated. However, without assigning any cause is not to be equated with without existence of any cause. It merely means that the reason for which the termination is made need not to be assigned or communicated to the appointee. It was held in Liberty Oil Mills vs. Union of India, AIR 1984 S.C. 1271 that the expression without assigning any reason implies that the decision has to be communicated, but reasons for the decision have not to be stated; but the reasons must exist, otherwise, the decision would be arbitrary. The non-assigning of reasons or the non-communication thereof may be based on public policy, but termination of an appointment without the existence of any cogent reason in furtherance of the object for which the power is given would be arbitrary and, therefore, against public policy. Clause 3 of para 7.06 must, therefore, be understood to mean that the appointment of a District Government Counsel is not to be equated with appointment to a post under the Government in the strict sense, which does not necessarily mean that it results in denuding the office of its public character; and that the appointment may be terminated even during currency of the term by only communicating the decision of termination without communicating the reasons which led to the termination. It does not mean that the appointment is at the sweet will of the Government which can be terminated at any time, even without the existence of any cogent reasons during the subsistence of the term..............In our opinion, the wide sweep of Article 14 undoubtedly takes within its fold the impugned circular issued by the State of U.P. in exercise of its executive power, irrespective of the precise nature of appointment of the Government counsel in the districts and the other rights, contractual or statutory, which the appointees may have. It is for this reason that we base our decision on the ground that independent of any statutory right, available to the appointees, and assuming for the purpose of this case that the rights flow only from the contract of appointment, the impugned circular, issued in exercise of the executive power of the State, must satisfy Article 14 of the Constitution and if it is shown to be arbitrary, it must be struck down."

31. In Dwarkadas Marfatia's case (supra), Sabyasachi Mukharji, J. (as he then was), indicated the extent of the power of judicial review by observing as under:

"......Where there is arbitrariness in State action, Article 14 springs in and judicial review strikes such an action down. Every action of the executive authority must be subject to rule of law and must be informed by reason. So, whatever, be the activity of the public authority, it should meet the test of Article 14......"

32. There may be a case, where the demand for payment made by a contractor is disputed or there may be a cross-claim raised by the State against the contractor. There may also be cases, wherein the claim made by the contractor is admitted and there is no cross-claim between the parties to be determined. In such cases, there is really no dispute as regard the facts. There may, however, be cases like the one on hand, wherein the claim made by the contractor is disputed on a very flimsy ground that the rates were fixed and accordingly the contract was awarded, but such rates were fixed in haste and are on the higher side. Would it, in such a case, be necessary for the writ court to revert the party to the remedies available through the civil court The answer to this crucial question hinges on the principle that if an alternative efficacious remedy is available, the writ jurisdiction shall not be exercised. What is, of course, necessary to point out is that the existence of an alternative remedy is not an absolute bar to the jurisdiction of the court under Article 226, but is always a matter of exercise of discretion and remains, therefore, in the realm of prudence. What is, however, of great relevance to note is that though a disputed question of fact is not normally entertained by a High Court in its writ jurisdiction, it will not, as a corollary, follow that if there is no disputed question of fact, the remedy under Article 226 would be available.

33. Before proceeding further, what may be noted is that a writ of mandamus is a public remedy and this remedy lies, when a public authority fails to perform the duty entrusted to it by law. In other words, a writ is issued against a person, who has a legal duty to perform, but has failed or neglected to do so. Distinguishing a case, wherein a public duty of a State is sought to be enforced, and a case, wherein a contractual obligation of a State is sought to be enforced, Professor Wade, in his well-known treatise, 'Administrative Law', makes it clear that while a public duty is enforceable by the public law remedy of a writ of mandamus, a contractual duty is enforceable, as a matter of private law, through the avenues of civil courts. The observations made, in this regard, by Professor Wade read, thus,-

"...A distinction which needs to be clarified is that between public duties enforceable by mandamus, which are usually statutory and duties arising merely from contract. Contractual duties are enforceable as matters of private laws by the ordinary contractual remedies, such as damages, injunction, specific performance and declaration. They are not enforceable by mandamus, which in the first place is confined to public duties and secondly is not granted where there are other adequate remedies."

34. What, now, needs to be noted is that howsoever thin and subtle may be, there is, indeed, a real and definite line of demarcation not only between a public wrong and a private wrong, but also between a public law remedy and private law remedy. Article 226 is pre-eminently a public law remedy and is not, generally, available as a remedy against private wrongs. Resort to Article 226 can be had to enforce various rights of the public or to compel the public or statutory authorities to discharge their public duties and/or to act, in the realm of their public functions, within the bounds of law. The remedy under Article 226 can, no doubt, be availed of even against a private body or person; but the scope of the right of mandamus is limited to the enforcement of public duty. In minimum possible words, but with extreme exactitude, clarified the Supreme Court, in Binny Limited and Another vs. Sadasivan and others, reported in (2005) 6 SCC 657, the position of law, in this regard, in these words:

"Thus, it can be seen that a writ of mandamus or the remedy under Article 226 is pre-eminently a public law remedy and is not generally available as a remedy against private wrongs. It is used for enforcement of various rights of the public or to compel public/statutory authorities to discharge their duties and to act within their bounds. It may be used to do justice when there is wrongful exercise of power or a refusal to perform duties. This writ is admirably equipped to serve as a judicial control over administrative actions. This writ could also be issued against any private body or person, specially in view of the words used in Article 226 of the Constitution. However, the scope of mandamus is limited to enforcement of public duty. The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial, but, nevertheless, there must be the public law element in such action." (See also Kamala Kanta Kalita (DR.) and others v. Assam Cricket Association and others (2006) 1 GLT 528).

35. Thus, in the face of succinctly laid down position of law with regard to the issuance of a writ of mandamus under Article 226, what one has to bear in mind is that in a case of private wrong, in order to invoke the writ jurisdiction under Article 226, two conditions must be satisfied, namely, (i) the identity of the person, against whom the writ is sought, as a person or body, which is amenable to writ jurisdiction, and (ii) the nature of duty, which is sought to be enforced, is a public duty or has an element of public interest. In a given case, one may, perhaps, ignore the first pre-requisite, namely, the identity of the person or body as a person or body amenable to writ jurisdiction, but the second prerequisite, as indicated hereinbefore, cannot be ignored, for, in the absence of public interest or in the absence of breach of public duty or in the absence of any public wrong having been committed, no recourse to Article 226 is possible.

36. What also needs to be cautiously noted is that a constitutional or statutory duty is a public duty and enforceable by a writ of mandamus. To put in differently, the rights and duties go hand-in-hand. When a right is given to a person by a State, the State cast upon itself a duty to enforce such a right. Logically, therefore, when a person is given fundamental right by the Constitution, a duty rests on the State to ensure that the person realizes his fundamental rights. In a given case, therefore, if a person, aggrieved by a breach of contract, shows that though the breach is in the realm of a contract, the duty, sought to be enforced, is a constitutional or statutory duty, the remedy of a writ of mandamus may not be refused, for, it is the constitutional obligation of the High Court, under Article 226, to enforce the constitutional and statutory duties of the State and its instrumentalities.

37. The present writ-application essentially raise a demand for payment of dues and seek a writ in the nature of mandamus, forcing the respondents to pay its dues. Though the fact that the writ-applicant was entitled to receive the dues claimed by him in accordance with the terms of the contract is not in dispute, the question raised is as to whether such a demand can be raised at all in a writ petition and be enforced by a writ to be issued in the nature of mandamus. Is it possible to recover from the State its unpaid dues arising out of a contract by invoking writ jurisdiction merely because of the fact that one of the parties to the contract is a State. That a writ petition, under Article 226, will not lie for mere recovery of an amount due and payable, under a contract, by the Government is clear from the decision, in Improvement Trust, Roper vs. S. Tejinder Singh Gujral and others (1995) Supp (4) SCC 577, wherein the Supreme Court has held, in no uncertain words thus:

"No writ petition can lie for recovery of an amount under a contract. The High Court was clearly wrong in allowing and entertaining the writ petition."

38. The question, therefore, is as to whether every breach of governmental obligation to pay its dues, under a contract, falls outside the purview of Article 226: This brings us to a more important question and the question is : Will the constitutional remedy of Article 226 never be available against a State even if the State refuses to carry out its contractual obligations with ulterior motives, malafide, irrationally, arbitrarily, unreasonably, unfairly, whimsically or when the State, demonstratively discriminates, while making payment of its dues Shall the writ court withdraw its hand resignedly and helplessly by saying that a writ of mandamus is a public law remedy and no writ of mandamus would be issued to any State directing it not to discriminate or act irrationally, arbitrarily, unreasonably, unfairly, whimsically, malafide or with ulterior motives, while refusing or omitting to make payment of its dues arising out of contracts Can a breach of contract ever give rise to any constitutional obligation of the State to make payment of its dues In Radha Krishna Agarwal vs. State of Bihar, 1977 AIR 1496, the Supreme Court held that every breach of contract by the State or by its officers is not a breach of public duty, for, such a proposition would make every breach of contract by the State or its agents subject of interference by the High Court in its extraordinary jurisdiction under Article 226 and, hence, remedy of a writ of mandamus cannot be had for every breach of contract. The relevant observations made, in this regard, in Radha Krishna Agarwal (supra), run, thus:

"Learned Counsel contends that in the cases before us breaches of public duty are involved. The submission made before us is that, whenever a State or its agents or officers deal with the citizen, either when making a transaction or, after making it, acting in exercise of powers under the terms of contract between the parties, there is a dealing between the State and the citizen which involves performance of "certain legal and public duties". If we were to accept this very wide proposition, every case of a breach of contract by the State or its agents or its officers would call for interference under Article 226 of the Constitution. We do not consider this to be a sound proposition at all."

39. What is, now, of immense importance to note is that the case of Radha Krishna Agarwal (supra) was a case of pure and simple breach of contract. In such cases of breach, the remedy of payment of damages is available to the person, who suffers alleged breach of contract. It is in such fact situation that the law with regard to invoking of the High Court's extraordinary jurisdiction, under Article 226, was discussed in Radha Krishna Agarwal (supra). The law, laid down in Radha Krishna Agarwal (supra), cannot, therefore, be extended to cases, which are not cases of mere breach of contract, but much more than that. This is clear from the fact that in paragraph 2 of Radha Krishna Agarwal (supra), the Supreme Court observed:

"...Primarily, the case of the petitioners is that of a breach of contract for which the State would be liable, ordinarily, to pay damages if it had broken it."

40. What emerges from the above discussion is that the remedy, available under Article 226, is an extraordinary remedy and is not intended for the purpose of declaring private rights of the parties. For the purpose of enforcing contractual rights and obligations, the remedy of filing of a civil suit is available to the aggrieved party and, hence, a High Court will not exercise its prerogative writ jurisdiction to enforce such contractual rights or obligations. A writ or direction in the nature of mandamus would not, therefore, lie to enforce private rights or contractual rights or obligations or even to avoid such obligations or rights. Contracts, which are non-statutory, and the rights, which are purely contractual and governed only by the terms of the contract, cannot be enforced by any writ or order under Article 226 of the Constitution of India. There is formidable array of authorities, which may be referred to in this regard. (See Lekhraj S. Laluani vs. N.M. Shah Deputy Custodian-Cum-Managing Officer, Bombay; Radha Krishna Agarwal (supra); Divisional Forest Officer vs. Biswanath Tea Co Ltd.; State Bank of Haryana vs. Jage Ram,  AIR 1980 SC 2018; Bihar Eastern Gangetic Fishermen Cooperative Society Ltd. vs. Sipahi Singh; Bareilly Development Authority vs. Ajay Pal Singh; Life Insurance Corporation of India vs. Escorts Ltd.; and Kulchinder Singh vs. Hardayal Singh Brar).

41. However, the principle that in an appropriate case, writ jurisdiction can be invoked even to enforce a contractual obligation of the State or its instrumentality was made clear by the Supreme Court, in K.N. Guruswamy vs. State of Mysore, AIR 1954 SC 992.

42. Where there is arbitrariness in State action, Article 14 springs in and judicial review strikes such an action down. Every action of the Executive Authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, it should meet the test of Article 14.

43. If the decision, in Dwarka Das Marfatia & Sons (supra) is carefully read, it becomes more than abundantly clear that though at the first blush, the decision, in Radha Krishna Agarwal (supra), appears to have laid down that the remedy of every breach of contract lies in civil suits and writ jurisdiction would never be applicable to enforce even constitutional obligations of the State in contractual matters, the later decision of the Supreme Court, in Dwarka Das Marfatia (supra), clearly shows that having considered the decision in Radha Krishna Agarwal (supra) and also the Constitution Bench decision in Life Insurance Corporation of India vs. Escorts Ltd., 1986 AIR 1370, it has clearly held that there is no absolute bar to the exercise of jurisdiction under Article 226 in a contractual matter, particularly, when the act or conduct of the State or its instrumentality is challenged on the anvil of Article 14. It is also clear from Dwarka Das Marfatia (supra) that a writ court will enforce even a contractual obligation of the State if the breach of obligation by the State fails to satisfy the test of reasonableness under Article 14, for, in such a case, what the writ court would be enforcing is the constitutional duty of the State, though such a duty might have arisen in the realm of contractual obligation. It has been further made clear, in Dwarka Das Marfatia (supra), that even in contractual matters, the State's action must be reasonable, lawful and 'on relevant ground of public interest'.

44. What emerges from the above discussion is that when a writ petition is filed alleging breach of contractual obligation by the State or its instrumentality, the High Court shall determine whether the writ petitioner is merely demanding to enforce his contractual rights or he has raised some important questions of law and/or constitutional issues. If he aims at merely enforcing his contractual rights and raises no important question of law or constitutional issue, the writ jurisdiction will not be invoked; but if the writ petitioner raises a constitutional issue, there is no absolute bar to the exercise of jurisdiction under Article 226 even in a contractual matter. This position of law was made clear in Life Insurance Corporation of India vs. Asha Goel, (2001) 2 SCC 160, wherein the court observed as under:

"Article 226 of the Constitution confers extraordinary jurisdiction on the High Court to issue high prerogative writs for enforcement of the fundamental rights or for any other purpose. It is wide and expansive. The Constitution does not place any fetter on exercise of the extraordinary jurisdiction. It is left to the discretion of the High Court. Therefore, it cannot be laid down as a general proposition of law that in no case the High Court can entertain a writ petition under Article 226 of the Constitution to enforce a claim under a life insurance policy. It is neither possible nor proper to enumerate exhaustively the circumstances in which such a claim can or cannot be enforced by filing a writ petition. The determination of the question depends on consideration of several factors like, whether a writ petitioner is merely attempting to enforce his/her contractual rights or the case raises important questions of law and constitutional issues, the nature of the dispute raised; the nature of inquiry necessary for determination of the dispute, etc. The matter is to be considered in the facts and circumstances of each case. While the jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution cannot be denied altogether, courts must bear in mind the self-imposed restriction consistently followed by High Courts all these years after the constitutional power came into existence in not entertaining writ petitions filed for enforcement of purely contractual rights and obligations which involve disputed questions of facts. The courts have consistently taken the view that in a case where for determination of the dispute raised, it is necessary to inquire into facts for determination of which it may become necessary to record oral evidence a proceeding under Article 226 of the Constitution, is not the appropriate forum. The position is also well settled that if the contract entered between the parties provide an alternate forum for resolution of disputes arising from the contract, then the parties should approach the forum agreed by them and the High Court in writ jurisdiction should not permit them to bypass the agreed forum of dispute resolution. At the cost of repetition it may be stated that in the above discussions we have only indicated some of the circumstances in which the High Court have declined to entertain petitions filed under Article 226 of the Constitution for enforcement of contractual rights and obligation; the discussions are not intended to be exhaustive. This Court from time to time disapproved of a High Court entertaining a petition under Article 226 of the Constitution in matters of enforcement of contractual rights and obligation particularly where the claim by one party is contested by the other and adjudication of the dispute requires inquiry into facts. We may notice a few such cases; Mohd. Hanif vs. State of Assam; Banchhanidhi Rath vs. State of Orissa; Rukmanibai Gupta vs. Collector, Jabalpur; Food Corpn. of India vs. Jagannath Dutta (1993) Supp 3 SCC 635 and State of H.P. vs. Raja Mahendra Pal.

The position that emerges from the discussions in the decided cases is that ordinarily the High Court should not entertain a writ petition filed under Article 226 of the Constitution for mere enforcement of a claim under a contract of insurance. Where an insurer has repudiated the claim, in case such a writ petition is filed, the High Court has to consider the facts and circumstances of the case, the nature of the dispute raised and the nature of the inquiry necessary to be made for determination of the questions raised and other relevant factors before taking a decision whether it should entertain the writ petition or reject it as not maintainable. It has also to be kept in mind that in case an insured or nominee of the deceased insured is refused relief merely on the ground that the claim relates to contractual rights and obligations and he/she is driven to a long-drawn litigation in the civil court it will cause serious prejudice to the claimant/other beneficiaries of the policy. The pros and cons of the matter in the context of the fact-situation of the case should be carefully weighed and appropriate decision should be taken. In a case where claim by an insured or a nominee is repudiated raising a serious dispute and the court finds the dispute to be a bona fide one which requires oral and documentary evidence for its determination then the appropriate remedy is a civil suit and not a writ petition under Article 226 of the Constitution. Similarly, where a plea of fraud is pleaded by the insurer and on examination is found prima facie to have merit and oral and documentary evidence may become necessary for determination of the issue raised, then a writ petition is not an appropriate remedy."

45. Moreover, when a writ court finds that the refusal to extend constitutional remedy of Article 226 to enforce a contractual right or obligation would drive a person, knocking at the doors of a writ court, to a long-drawn litigation in the civil court causing serious prejudice to the person seeking relief against the State, the writ court may not, according to Asha Goel (supra), decline to interfere in such a matter and hence, reminds the Supreme Court in Asha Goel (supra), thus:

"the pros and cons of the matter in the context of the fact situation of the case should be carefully weighed and appropriate decision should be taken."

46. From the law, so laid down in Asha Goel (supra), it becomes transparent that when non-interference by a writ court would drive a person to a long-drawn civil litigation causing serious prejudice to him, the writ court's interference is not only desirable, but even necessary. As a corollary to this proposition of law, one can safely say that when a contractor's dues are admitted or unfairly and unreasonably disputed by a State and the fact situation of a given case satisfies the writ court that asking the contractor to take recourse to the civil court would cause serious prejudice to the contractor, the writ court should step in.

47. From the decision in Asha Goel (supra), what emerges is that ordinarily, a High Court should not entertain a writ petition, under Article 226, for mere enforcement of claims under a contract of insurance; however, the Constitution having not placed any fetters on the exercise of extraordinary jurisdiction by the High Court under Article 226, it is in the discretion of the High Court to interfere or not to interfere in a contractual matter. No exercise of discretionary power can be unfettered, unguided, unsettled or arbitrary, and, hence, the position of law, on a given subject, should not be completely unforeseen and legal decisions must have some standards or parameters in order to enable the people at large to know as to what the position of law, on a given subject, is. Considered, thus, the exercise of jurisdiction under Article 226 cannot be unfettered or arbitrary. However, it is not possible to enumerate exhaustively the circumstances in which a writ application even in contractual matter would lie, for, exercise of jurisdiction would depend upon a considerable number of factors, such as, the question as to whether the writ applicant is merely attempting to enforce his or her contractual rights or has raised important questions of law or constitutional issues, the nature of the dispute raised and the nature of enquiry necessary for determination of the dispute, etc. In short, the exercise of jurisdiction would depend on the facts and circumstances of each given case. While jurisdiction of the High Court to entertain a writ petition, under Article 226, should not be denied altogether, the courts must bear in mind the self-imposed restrictions constitutionally followed by the High Courts not to, ordinarily, entertain writ petitions for enforcement of purely contractual rights and obligations, particularly, when determination of such questions necessitates taking of oral evidence or when the parties had agreed to resolve their disputes, arising out of the contract, in the alternative forum selected by them.

48. Having taken note of the various judicial pronouncements with regard to the maintainability of writ petitions aimed at enforcing contractual obligations of the State or its instrumentality and having discussed the law on the subject, the Supreme Court, in para 27 of the ABL International Ltd. (supra) culled out the legal principles governing the maintainability of such a writ petition in the following words:

"From the above discussion of ours, following legal principles emerge as to the maintainability of a writ petition:

(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.

(b) Merely because some disputed questions of facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.

(c) A writ petition involving a consequential relief of monetary claim is also maintainable."

49. From what has been culled out above, there remains no manner of doubt that in an appropriate case like the present case, the remedy under Article 226 would be available to enforce the contractual obligations of the State, its instrumentality and all public bodies.

50. From what has been held in Suganmal vs. State of M.P. and others, AIR 1965 SC 1740, it becomes transparent that 'ordinarily', a writ petition solely praying for direction to the State to refund money is not maintainable, for, the aggrieved party has the right to approach civil court for relief and it would, then, be open to the State to raise all possible defences, which it may have. In a case, therefore, where the State admits the claims and has no defence to offer, the issue of writ of mandamus has not been barred by the Constitution Bench in Suganmal (supra), particularly, when a writ applicant challenges the withholding of his dues by the State as an act of unfairness, unreasonableness, arbitrariness and contrary to the principles governing Article 14. It is for this reason that the Constitution Bench, in Suganmal (supra), has used the word 'normally,' while laying down that "petitions solely praying for refund of money against the State by way of writ petition are not to be entertained".

51. Moreover, we may also point out that in ABL International Ltd. (supra) too, it was argued, on behalf of the first respondent, that since the writ petition was one for recovery of money, it was not permissible to allow such a writ petition. While turning down this submission, the Supreme Court, in the ABL International Ltd. (supra), observed as follows:

"In support of the submission that a writ petition seeking mandamus for mere refund of money was not maintainable, the decision in Suganmal v. State of M.P. was cited. In AIR para 6 of the said judgment, it is stated that-

We are of the opinion that though the High Courts have power to pass any appropriate order in the exercise of the powers conferred under Article 226 of the Constitution, such a petition solely praying for the issue of a writ of mandamus directing the State to refund the money is not ordinarily maintainable for the simple reason that a claim for such a refund can always be made in a suit against the authority which had illegally collected the money as a tax."

Again in AIR para 9, the court held:

We, therefore, hold that normally petitions solely praying for the refund of money against the State by a writ of mandamus are not to be entertained. The aggrieved party has the right of going to the civil court for claiming the amount and it is open to the State to raise all possible defences to the claim, defences which cannot, in most cases, be appropriately raised and considered in the exercise of writ jurisdiction.

The judgment cannot be read as laying down the law that no writ petition at all can be entertained where claim is made for only refund of money consequent upon declaration of law that levy and collection of tax/cess as unconstitutional or without the authority of law. It is one thing to say that the High Court has no power under Article 226 of the Constitution to issue a writ of mandamus for making refund of the money illegally collected. It is yet another thing to say that such power can be exercised sparingly depending on facts and circumstances of each case. For instance, in the cases on hand where facts are not in dispute, collection of money as cess was itself without the authority of law; no case of undue enrichment was made out and the amount of cess was paid under protest; the writ petitions were filed within a reasonable time from the date of the declaration that the law under which tax/cess was collected was unconstitutional. There is no good reason to deny a relief of refund to the citizens in such cases on the principles of public interest and equity in the light of the cases cited above.

However, it must not be understood that in all cases where collection of cess, levy or tax is held to be unconstitutional or invalid, the refund should necessarily follow.

We wish to add that even in cases where collection of cess, levy or tax is held to be unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending on facts and circumstances of a given case.

Therefore, this objection must also fail because in a given case it is open to the writ court to give such monetary relief also."

52. From the above observations made in the ABL International Ltd. (supra), it becomes abundantly clear that there is no absolute bar in entertaining a writ application, under Article 226, if the writ applicant aims at enforcing contractual obligation of the State to make payment of its unpaid dues to the writ applicant, though it will depend, we must hasten to point out, on the cumulative effect of all the facts of a given case as to whether the High Court will or will not entertain such a writ petition and pass directions for payment of dues.

53. In the last, we may refer to and rely upon the recent decision of the Supreme Court in the case of Punjab National Bank and others vs. Atmanand Singh and others, reported in , wherein the Supreme Court, in paragraph 23, observed thus;

"We restate the above position that when the petition raises questions of fact of complex nature, such as in the present case, which may for their determination require oral and documentary evidence to be produced and proved by the concerned party and also because the relief sought is merely for ordering a refund of money, the High Court should be loath in entertaining such writ petition and instead must relegate the parties to remedy of a civil suit. Had it been a case where material facts referred to in the writ petition are admitted facts or indisputable facts, the High Court may be justified in examining the claim of the writ petitioner on its own merits in accordance with law."

54. Section 4 of the Contract Act, 1872, provides that the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made, and that the communication of an acceptance is complete as against the proposer when it comes to the knowledge of the proposer. Section 8 of the Contract Act provides that the performance of the conditions of a proposal or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the proposal. Section 8 of the Contract Act thus provides that the performance of the conditions of a proposal or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the proposal.

55. In the instant case, the two Work Orders Nos. 209 and 212 respectively dated 30.06.2020 issued by the respondents, on the face of it, constituted a proposal. As against the proposal, the writ-applicants agreed to carry out the work of contract. Under Section 8 of the Contract Act, this tantamounted to acceptance of the proposal of the promisee. Therefore, a concluded contract came into existence. In our considered view, a concluded contract having thus come into force, it was binding on the respondents unless there were allegations of fraud or misrepresentation as against the writ-applicants, based whereupon the requisite declaration from a competent court of law could have been sought. No such fraud or misrepresentation has been alleged against the writ-applicants.

56. A Division Bench of the Delhi High Court in the case of Government of NCT of Delhi vs. Bhushan Kumar [LPA Nos. 141 and 168 of 2006 and WP(C) No. 2040 of 2007 decided on 18.3.2008], held that the allotment having been made specifically mentioning the area and the property number allotted to the applicant and consideration having been paid by the applicant, a concluded contract came into existence between the parties. It was held that the terms and conditions of the allotment following a concluded contract can only be modified (novation under Section 62 of the Contract Act) with mutual consent and not unilaterally unless there exists a provision in the law or in the contract itself. Similarly, no policy decision could obstruct the operation of a concluded contract. A party to a contract cannot unilaterally alter the terms and conditions of the contract. Consequently, no escape from the inexorable effect of a contract was available to any of the parties to the contract. It was further held that even in cases of unilateral mistake, which was not occasioned by the successful allottees who had acted upon proposal and accepted it, a duly concluded contract could not be cancelled. A reference was also made to Section 22 of the Contract Act, which provides a contract is not voidable merely because it was caused under a mistake as to a matter of fact, and where allottees were not guilty of fraud, misrepresentation or unfair dealing, their rights could not be stalled by arbitrary action. In the aforesaid case, where the allottees parted with money and deposited the sale consideration with the authority, which was accepted and retained by the authority, the sanctity of the contract had to be maintained as contrarily the allottees would apart from arbitrary action of the authority also suffer loss and damages in circumstances not of their making.

57. Section 62 of the Indian Contract Act, 1872, reads as under:

"62. Effect of novation, rescission, and alteration of contract- If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed."

58. Thus, it is clear that although novation, rescission, alteration of contract is permissible, but that can be done only with the consent of the parties to the contract. In the present case, it is not the case of the respondents that the consent of the writ-applicants was ever taken for changing the rates.

59. The Supreme Court, in the case of Delhi Development Authority and another vs. Joint Action Committee, Allottee of SFS Flats and others, reported in (2008) 2 SCC 672, has held as under:

"62. It is well known principle of law that a person would be bound by the terms of the contract subject of course to its validity. A contract in certain situations may also be avoided. With a view to make novation of a contract binding and in particular some of the terms and conditions thereof, the offeree must be made known thereabout. A party to the contract cannot at a later stage, while the contract was being performed, impose terms and conditions which were not part of the offer and which were based upon unilateral issuance of office orders, but not communicated to the other party to the contract and which were not even the subject matter of a public notice. Apart from the fact that the parties rightly or wrongly proceeded on the basis that the demand by way of 5th installment was a part of the original scheme, DDA in its counter affidavit either before the High Court or before us did not raise any contra plea. Submissions of Mr. Jaitley in this behalf could have been taken into consideration only if they were pleaded in the counter affidavit filed by DDA before the High Court.

66. The stand taken by DDA itself is that the relationship between the parties arises out of the contract. The terms and conditions therefore were, therefore, required to be complied with by both the parties. Terms and conditions of the contract can indisputably be altered or modified. They cannot, however, be done unilaterally unless there exists any provision either in contract itself or in law. Novation of contract in terms of Section 60 of the Contract Act must precede the contract making process. The parties thereto must be ad idem so far as the terms and conditions are concerned. If DDA, a contracting party, intended to alter or modify the terms of contract, it was obligatory on its part to bring the same to the notice of the allottee. Having not done so, it, relying on or on the basis of the purported office orders which is not backed by any statute, new terms of contract could (sic not be) thrust upon the other party to the contract. The said purported policy is, therefore, not beyond the pale of judicial review. In fact, being in the realm of contract, it cannot be stated to be a policy decision as such."

60. Thus, it is clear that any term of contract cannot be altered in the midway without the consent of other party to the contract. In the case on hand, the respondents have gone to the extent of changing the rates after the completion of the work.

61. A fundamental principle for an orderly society which has been enunciated by the Supreme Court is that of the sanctity of contract. Sanctity of contract cannot be allowed to be lost to unilateral action that would promote breaches of contract. In the case of ONGC Ltd. vs. Saw Pipes Ltd. (2003) 5 SCC 705], the Supreme Court in the context of Arbitration and Conciliation Act, 1940, has held that it is a duty of the Arbitrator to have enforced the compromise which the parties made and to uphold the sanctity of the contract which forms the basis of a civilized society.

62. In the case of Barauni Refinery Pragatisheel Shramik Parishad vs. Indian Oil Corporation Limited  (1991) 1 SCC 4] in the context and backdrop of the Industrial Disputes Act, 1947, the Supreme Court has again emphasized that even in conciliation proceedings between the management and its workers a settlement arrived at will be binding on all workers of the establishment, even those who belong to the minority union which had objected to the same. The object, the Supreme Court has held was obviously to uphold the sanctity of settlement reached with the active assistance of the Conciliation Officer and to discourage an individual employee or a minority union from scuttling the settlement. It is thus evident that sanctity of a contract is inviolable and binding.

63. In case of J.P. Builders vs. A. Ramadas Rao (2011) 1 SCC 429] with reference to the doctrine of marshalling, which is fundamentally an equitable doctrine, the Supreme Court has held that even the doctrine of marshalling cannot be permitted to become a device for destroying the sanctity of a contract. Contracts thus hold even against equity and only cede to legislation. No legislation has been set up in defence in the present case.

64. The Supreme Court, in the case of Citi Bank N A vs. Standard Chartered Bank, (2004) 1 SCC 12, held that novation, rescission, and alteration under Section 62 requires that both the parties should agree to substitute, rescind or alter the existing contract with a new one. Such substitution, rescission or alteration has to be done bilaterally. In the case of Polymat India P. Ltd. and another vs. National Insurance Co. Ltd. and others, (2005) 9 SCC 174, it was held that the terms of a contract cannot be varied without the mutual agreement of the parties.

65. The Supreme Court, in the case of United India Insurance Co. Ltd. vs. MKJ Cooperation, (1996) 6 SCC 428, held that a material alteration in a contract can only be done by mutual consent of the parties. In V. Kameshwararao and others vs. M. Hemalathammarao (Appeal No. 722 of 1954 C.M.A. No. 10971 of 1958, decided on 20.01.1959), the Andhra Pradesh High Court observed that a material alteration is one that varies the rights and liabilities of the parties ascertained by the deed or varies the legal effect of the instrument originally expressed.

Difference between Novation and Alteration:

66. The basic difference between novation and alteration can be studied under the following table:

Sr. No.	Novation		Alteration
1	Parties     to    the may change.	contract	Parties     do    not remain the same.	change.	They
2	The existing contract is substituted with a new one.		There is no substitution of  a new contract, only certain terms and conditions of the contract changes.

UNJUST ENRICHMENT:

67. The Supreme Court, in the case of Sahakari Khand Udyog Mandal Ltd. vs. CCE and Customs, reported in (2005) 3 SCC 738, has explained the concept of unjust enrichment as under:

"Stated simply, 'unjust enrichment' means retention of a benefit by a person that is unjust or inequitable. 'Unjust enrichment' occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else. The doctrine of 'unjust enrichment', therefore, is that no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of 'unjust enrichment' arises where retention of a benefit is considered contrary to justice or against equity."

68. Having regard to the facts of the present case, it could be said without any hesitation that the stance of the respondents is unfair and unreasonable. Having fixed the rates and having asked the writ-applicants to undertake the work of contract as fast as possible and being fully satisfied with the work undertaken by the writ-applicants within the stipulate time period, the respondents cannot turnaround and say that the rates at the relevant point of time were fixed on a higher side and, therefore, the writ-applicants should not insist for the full payment. Had the respondents told the writ-applicants at the inception that they would pay a particular amount only, then probably the writ-applicants might have declined to accept the contract. Having fixed the rates in a concluded contract and having got the entire work of the contract completed, it is not fair on the part of the respondents to compare the rates of the writ-applicants with any other contractor. The another contractor which the respondents are talking about might have used imported materials, but it is not the case of the respondents that the writ-applicant has used inferior quality of materials.

69. We are left with no other option but to agree with each and every submission put forward by Mr. M.R. Bhatt, the learned senior counsel appearing for the writ-applicants. It will be too much for this Court to tell the writ-applicant to go and file a civil suit in a competent civil court and recover the balance amount from the respondents.

70. In such circumstances referred to above, this writ-application succeeds and is hereby allowed. The amended Work Orders dated 17.09.2020 and 20.10.2020 are hereby quashed and set-aside. The letter/order dated 05.08.2021 is also hereby quashed and set-aside. The respondents are directed to forthwith release the balance amount with respect to the original Work Orders Nos. 209 and 212 respectively.