N.P. SINGH, J.

(1.) This writ application has been filed for quashing an order dated 17-5-1990 issued by the Superintending Engineer, Durgawati Construction Circle, Rohtas, cancelling the work order dated 2-3-1990 and the agreement dated 9-3-1990, in respect of the construction of Spill-way of Durgawati Reservoir Project. Petitioner No. 1 is the firm and petitioner No. 2 is the partner of the said firm. Petitioner No. 1, the firm, being the main petitioner, is hereinafter referred to as the petitioner.

(2.) Tenders were invited for construction of the aforesaid Project. The tender notice was in two parts. Part I related to pre-qualifications of the tenderers. This part of the tender was opened on 15-6-1989. After scrutiny, according to the petitioner, it was found that the petitioner possessed the basic requirements and qualifications under part I of the said tender notice. Part II of the tender notice related to commercial offer containing rates etc. This part was opened on 19-7-1989.

(3.) It appears that the tenders submitted on behalf of different contractors were placed before the Departmental Tender Committee consisting of Commissioner of Water Resources, the two Engineers-in-Chief Sri R. K. Thakur and Sri H. P. Singh, Chief Engineers Sri L. S. Prasad and Sri Binay Krishna Sahay. The Tender Committee accepted the tender of the petitioner in respect of the said project. The respondent-Engineer-in-Chief by his letter dated 24-2-1990 and the Chief Engineer by his letter dated 1-3-1990 allotted the work to the petitioner. On the basis of the aforesaid orders the Superintending Engineer on 2-3-1990 issued a formal order accepting the tender of the petitioner and advising the petitioner to execute the agreement after depositing the requisite security money in the prescribed form. The petitioner deposited the requisite security money of about Rupees 10,000,00/- (ten lacs) in the prescribed form and a formal agreement was signed between the parties on 9-3-1990.

(4.) It has been alleged by the petitioner that pursuant to the agreement and work order aforesaid the petitioner took steps for securing machines, equipments and materials for construction of the reservoir project in question. It has been asserted that the petitioner purchased four Hindustan 1025 Dumpers, the cost of each Dumper being Rs. 19,48,314. The petitioner also claims to have placed orders for one 300 CK Hydrolic excavator at the estimated cost of Rupees 66,87,109 for execution of the work. It is alleged that two excavators, two dodgers, 50 trippers were shifted from Ranchi to the construction site. The details of other purchases made by the petitioner in connection with the construction of the project have been given in the writ application.

(5.) On 17-5-1990 by the impugned communication, the aforesaid work order dated 2-3-1990 and the agreement dated 9-3-1990 were cancelled by the Superintending Engineer on the basis of the orders of the Engineer-in-Chief and the Chief Engineer dated 10-5-1990 and 12-5-1990 respectively.

(6.) The petitioner filed representations before the competent authorities including before the Minister, Water Resources Department, making a grievance that the work allotted to it and agreement executed in its favour have been cancelled without assigning any reason.

(7.) A counter affidavit has been filed on behalf of the respondents. The stand of the State is that in the tender notice, the estimated quantity of work was based on estimated P.M.F. of 8217 cumecs. On that basis the design was worked out and the quantity of work was also estimated. The estimated quantity of work shown under the head hard rock excavation was 233.81 lacs cft. and hard rock removal by manual labour with the help of chiesel and hammer was at 48.89 lacs cft. It has been pointed out that the then Engineer-in-Chief Sri K. N. Lal before the acceptance of tender had expressed his view that there was scope of substantial reduction in the estimated cost. He had also raised the issue for change of design. But when the matter was placed before the Departmental Tender Committee on 15-1-1990 in the said meeting the Engineer-in-Chief, who had raised the issue of change of design and doubted about the estimated cost, was not present and in his absence a decision was taken by the Committee to allot the work to the petitioner. It has been admitted in the counter affidavit that pursuant to that decision the petitioner was directed to execute the agreement. According to the respondent, later the Central Water Commission (hereinafter referred to as the said Commission) was consulted. The Commission doubted with regard to the estimate of cost. The Engineer-in-Chief apprised the Government that the Commission was of the view that if 233.81 cft hard rock is required to be cut and removed, the Government should consider an alternative design. It has been stated that according to the hydrological and geological perspectives, which are available now in the department, it has been found that the original design, which was worked out on the basis of P.M.F, at 8217 cumecs was wrong because it should have been at 4000 cumecs which has been considered by the Commission to be appropriate and acceptable. It has also been stated that on the basis of revised date and design, now total quantity of hard rock excavation has been reduced from 233.81 lacs cft to 15 lacs cft only. Similarly, the item of work of hard work removal by manual labour with chiesel and hammer has been reduced from 48.89 lacs cft to 3.5 lacs cft. It has been alleged that on the basis of the revised design the estimate cost of the project has been reduced from Rs. 31.40 crores to Rs. 15.2 crores. Because of the aforesaid later development, in public interest and in order to safeguard the public revenue the work order and the agreement executed in favour of the petitioner were cancelled.

(8.) In the affidavit filed on behalf of the petitioner in reply to the counter affidavit aforesaid it has been pointed out that in the notice inviting tenders, the specification of the drawing and design, which had been notified, had been obtained from the same Commission for Construction of the Project in question. It has been asserted that as the drawing and design had been approved by the Commission, there was no occasion on the part of the respondents to cancel the agreement executed in favour of the petitioner, without assigning any reason. According to the petitioner, the plea that the Commission has revised the design and the estimated cost of the Project, has been taken as a plea for cancellation of the contract in favour of the petitioner. In that connection in the reply filed on behalf of the petitioner to the counter affidavit filed on behalf of the State it has been stated as follows : -

".... on the basis of the specifications drawings of the Central Water Commission and after due examination by the Government and Technical wing of the Water Resources Department and with full concurrence thereof the tender was invited....."

It has been further stated in the said reply to the counter affidavit filed on behalf of the States-

"..... the Central Water Commission has not been consulted nor it has given any final specification of drawing, which could have formed the basis for such calculations....."

It has been also stated : -

"..... there is no material to show that the Central Water Commission has suggested any change in the design. Even then the petitioner submits that the Respondents should have acted under the different clauses of Contract to meet these situations, if at all it is the ground for consideration."

Reference has been made to some of the terms of the agreement to show that the respondents were at liberty to revise the design or drawing of the Project, including the estimated cost in terms of the Contract itself and as such there was no occasion to cancel the contract itself. According to the petitioner, the cancellation of a duly executed agreement in favour of the petitioner is a result of malice on the part of the Minister of the Department concerned, who assumed office after the execution of the contract in favour of the petitioner.

(9.) From time to time the Courts have been defining the extent and the limit of the High Court while exercising power under Art. 226 of the Constitution in respect of contractual obligations between a citizen and the State. In some cases it was discovered that persons have acted on the basis of assurances given by the authorities of the State, before formal agreements in accordance with Art. 299 of the Constitution could be executed. But later the authorities repudiated such contracts. In other cases, in exercise of statutory power leases of licences had been issued which were later cancelled, yet another category of dispute came before Courts where even after execution of formal agreements under Art. 299 of the Constitution State purported to terminate such contracts on the ground of alleged breach of the terms of the contracts. These aspects were examined by the Supreme Court in the case of M/s. Radhakrishna Agarwal v. State of Bihar, AIR 1977 SC 1496 . In respect of different types of contracts, in connection with the exercise of power under. Art. 226 of the Constitution it was said as follows : -

"The Patna High Court had, very rightly divided the types of cases in which breaches of alleged obligation by the State or its agents can be set up into three types. These were stated as follows: - (i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Art. 299 of the Constitution; (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the State; and (iii) Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State."

This Court had held that so far cases coming under categories (i) and (ii) were concerned, a writ application under Art. 226 of the Constitution was maintainable. So far a case falling in category (iii) is concerned, i.e. where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the petitioner complains about the breach of such contract by the State, no application invoking jurisdiction of this Court under Art. 226 of the Constitution was maintainable. After referring to cases falling under category (iii) it was said by the Supreme Court as follows : -

"It then, very rightly, held that the cases now before us should be placed in the third category where questions of pure alleged breaches of contract are involved. It held, upon the strength of Umakant Saran v. State of Bihar, AIR 1973 SC 964 and Lekhraj Sathram Das v. N. M. Shah, AIR 1966 SC 334 and B. K. Sinha v. State of Bihar, AIR 1974 Pat 230 that no writ or order can issue under Art. 226 of the Constitution in such cases "to compel the authorities to remedy a breach of contract pure and simple. "

(10.) The stand of the petitioner is that they are not making any grievance regarding any breach of the terms of the contract; the grievance is in respect of the cancellation of the contract itself without assigning any reason. In this connection it was pointed out that in the counter affidavit filed on behalf of the State there is no assertion that the contract in question has been cancelled because of any alleged breach of the terms of the contract by the petitioner. Our attention was drawn to some of the paragraphs of the counter affidavit. In the said counter affidavit, it has been admitted that the Departmental Tender Committee in its meeting held on 15-1-1990 took a decision to allot the work to the petitioner at the rate quoted by it and an agreement was executed pursuant to that decision. Thereafter, it has been stated as follows: -

"9. That the C.W.C. was consulted and the then Engineer-in-Chief Shri K. N. Lal, had a discussion at Delhi with the C.W.C. officials. The C.W.C. doubted with regard to estimate of work. The Engineer-in-Chief apprised the Government that the C.W.C. was of the view that if 233.81 lac cft. hard rock is required to be cut and removed, the Government should consider an alternative design. The C.W.C. also expressed its surprise as to on what basis is the estimate hard rock removal has been shown as nearly 233.81 lac cft. 10. That after decision of contract, the then Engineer-in-Chief in his note dated 19-3-1990 (File No. 33/Yojna 202/90/Part 1 at page 48) again insisted that the design must be modified to make the scheme more economical. 11. That now Hydrological and Geological prospectives are available with the Department and it is found that the original design, which was worked out on the basis of PMF as 8217 cumecs was wrong and as a matter of fact now it has been found that the PMF is 4600 cumecs, which has been considered by the C.W. C. appropriate and acceptable. This is evident from the Brochure (Government of India, Central Water Commission, Design Flood Studies for Durgawati Dam Project). In that Brochure, this aspect of the matter has been dealt at page 10 read with Table-15. 12. That since the matter with regard to design and the quantity of work was doubted to be excessive, the Government immediately took decision not to proceed with the work and ordered to collect further reliable data and to consult C.W.C. The Government considered it expedient that it is better to arrive at correct date and correct design at this stage instead of inviting disputes and litigation with the contracting parties. The Government also considered it expedient that in project like this, it is better to avoid future litigation and dispute with regard to design and quantity of work. It was also considered that if on the basis of reliable date, the design is required to be changed, it is necessary not to proceed with the work rather it is better to cancel the work at this stage. 13. That now the correct date have been obtained and it has been found on the basis of the reliable data that PMF is 4600 cumecs. On the basis of the earlier PMF the contracts documents contain that the work involves of cutting the total hard rock is 233.81 lac cft., whereas on the basis of the revised data and design now total quantity of hard rock excavation is reduced from 233.81 lac cft. to 15 lac cft. only. Similarly with regard to item of work of hard rock removal by manual labour with chiesel and hammer was at 48.89 lac cft. whereas now it is 3.5 lac cft. Similar is the case with regard to other items. 14. That on the basis of change in design, which is based on P.M.F. 4600 cumecs, the total estimated amount on the same estimated rate which was adopted in the tender notice has been reduced to Rs. 15.2 crores instead of Rs. 31.40 crores. Thus, there is a reduction of at least 50% in the cost."

(11.) In view of the plea taken on behalf of the respondents in respect of cancellation of the work order and agreement executed in favour of the petitioner for construction of the spillway in question, it has been urged that the contract has been cancelled not on ground of any breach of the terms of the agreement by the petitioner but because of the alleged revision of the design and the drawing in respect of the project in question resulting in reduction of the estimated cost of construction. In other words, even according to the respondents, the ground for cancellation of the work order and the agreement is not referable to any of the terms of the agreement but is de hors the said agreement. It has been pointed out that the ground for cancellation does not flow from the terms of the agreement, but based on a subsequent development in connection with the project in question. In this background the question, which has to be answered, is as to whether on the facts and in the circumstances of the present case it can be said that this case is covered by category (iii), indicated in the judgment of the case of Radhakrishna Agarwal (supra), so that the writ application is to be dismissed, directing the petitioner to seek remedy before the appropriate forum.

(12.) Apart from the case of Radhakrishna Agarwal (supra) Supreme Court has considered the scope of Article 226 of the Constitution in connection with contractual obligations of the State with the citizen, in other cases in the light of Article 14 of the Constitution. In the well known case of Ramana Dayaram Shetty v. The international Airport Authority of India (AIR 1979 SC 1628 ) it was pointed out that "modern welfare State which is committed to egalitarian values and dedicated to the rule of law", has to act while awarding contract, under the constitutional mandate of Article 14, as also the judicially evolved rule of administrative law. It was pointed out : -

"It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant. "

It was also pointed out : -

"It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. " (Emphasis added)

It was also said: --

"This rule also flows directly from the doctrine of equality embodied in Art. 14. It is now well settled as a result of the decisions of this Court in E. P. Royappa v. State of Tamil Nadu, (1974) 2 SCR 348 : (AIR 1974 SC 555 ) and Maneka Gandhi v. Union of India, (1978) 1 SCC 248 : AIR 1978 SC 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 non-discriminatory 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 characterise 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."

(13.) In the case of M/s. Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir (AIR 1980 SC 1992 ) again it was reiterated: -

"Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner."

(14.) It was impressed in the case of Maneka Gandhi v. Union of India (AIR 1978 SC 597 ), that rule of reason, rule against arbitrariness and discrimination, rule of fair play and natural justice are part of the rule of law applicable in the actions by the State instrumentality.

(15.) Recently in the case of Mahabir Auto Stores v. Indian Oil Corporation, (AIR 1990 SC 1031 ) the same question was considered. In that case the petitioners firm was carrying on business of sale and distribution of lubricants for 18 years on the basis of supply being made by Indian Oil Corporation. Abruptly the supply of lubricants was stopped to the firm by the Indian Oil Corporation without any notice or intimation. In that connection it was pointed out as follows :

"In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi monopoly dealings, it should meet the test of Article 14 of the Constitution. If a Government action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. .... It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination in the type of the transactions and nature of the dealing as in the present case." (Emphasis added)

(16.) In yet another case of M/s. State Enterprises etc. v. The City and Industrial Development Corporation of Maharashtra Ltd. (1990) 2 JTSC 401 it was said by the Supreme Court : -

"In recent times, judicial review of administrative action has become expansive and is becoming wider day by day. The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. State activity too is becoming fast pervasive. As the State has descended into the commercial field and giant public sector under-takings have grown up, the stake of the public exchequer is also large justifying larger social audit, judicial control and review by opening of the public gaze; these necessitate recording to of reasons for executive, actions including cases of rejection of highest offers. That very often involves long stakes and availability of reasons for action on the record assures credibility to the actio disciplines public conduct and improves the culture of accountability. Looking for reasons in support of such action provides an opportunity for an objective review in appropriate cases both by the administrative superior and by the judicial process;"

(Emphasis added)

(17.) Recently in connection with termination of the appointment of the District Government Counsel by the State Government of Uttar Pradesh the same question was considered by the Supreme Court in the case of Kumari Shrilekha Vidyarthi v. State of U.P. ((1990) 3 SCJ 336) where it was pointed out : -

"Applicability of Article 14 to all executive actions of the State being settled and for the o same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, can it be said that the State can thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more We have no hesitation in saying that the personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merel because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot co-exist." (Emphasis added)

It was further said: -

"We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. In our opinion, it would be alien to the constitutional Scheme to accept the arguments of exclusion of Article 14 in the contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard from contracts between unequals."

It was then said : -

"However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions."

(18.) Learned Advocate-General, appearing for the State, in view of the aforesaid judicial pronouncements could not contend that as the dispute relates to contractual obligations between the petitioner and the State, a writ application under Article 226 of the Constitution is not maintainable, where grievance has been made about arbitrariness and lack of fair play on the part of the State, violative of Article 14 of the Constitution. But according to the learned Advocate-General in none of the cases referred to above, any formal agreement had been executed in terms of Article 299 of the Constitution and, as such, any observation or direction in connection with those contractual obligations shall not be applicable to the facts of the present case. In other words, this case is covered by category (iii) mentioned in the case of Radhakrishna Agarwal (supra). It was also pointed out on behalf of the respondents that in the case of Radhakrishna Agarwal (supra) Supreme Court held that once the State or its agents have entered into the field of ordinary contracts, no question of violation of Article 14 or of any other constitutional provision arises. In this connection reference was made to the following observations: -

"But, after the State or its agents have entered into the field of ordinary contract, the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Art.14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in & confers some special statutory power or obligation on the state in the contractual field which is apart from contract."

(19.) It is true that in none of the cases referred to above any formal agreement had been executed between the persons concerned and the State; the observations in respect of applicability of Article 14 of the Constitution, in connection with contractual obligations has been made in connection with the contracts in general. But at the same time the observation in the case of Radhakrishna Agarwal (supra) that once the State or its agents have entered into the field of ordinary contract no question arises of violation of Article 14 or any other constitutional provision, must be read in connection with the grievances referable to breach of the terms of duly executed agreement. I have already pointed out above, that there will be difference, where the cancellation is because of the breach of any of the terms of the contract and where cancellation of the contract, is on a ground de hors the terms of the contract. In my view, where an agreement executed in accordance with Article 299 of the Constitution is cancelled on a ground which is not referable to any of the terms of the contract, and is per se violative of Article 14 of the Constitution, this Court can exercise the jurisdiction under Article 226 of the Constitution. This can be appreciated by an example. After execution of an agreement in accordance with Article 299 of the Constitution, the contractor is asked by the authority concerned not to proceed with the construction of the project on the ground that later it has been discovered that such contractor is not resident of the district in which the project is to be constructed. Can it be urged in such a situation, that as the contractor has entered into an agreement with the State Government he cannot invoke the jurisdiction of this Court under Article 226 of the Constitution and he should be directed to knock the door of civil Court for damages or specific performance of the contract although the order is per se violative of Article 14 of the Constitution

(20.) Faced with the situation that the ground mentioned in the counter affidavit for cancellation of the contract is not referable to any of the terms of the contract, learned Advocate-General took a stand that the contract should be deemed to have been cancelled in terms of clause 3.11 of the Agreement. Clause 3.11 of the Agreement is as follows: -

"3.11. If at any time after award of the contract, the Government for any reason whatsoever shall decide to abandon, reduce the scope of the work or shall not require the whole or any part of, the works to be carried out, the Engineer-in-charge shall give notice in writing to that effect to the contractor. The contractor shall not have claim to any compensation whatsoever on account of any profit or advantage which he might have derived from the execution of such works in full but which he did not derive in consequence of the foreclosure or curtailment of the whole or part of the work."

In view of the aforesaid clause 3.11 the Government for any reason whatsoever may decide to abandon or to reduce the scope of the work. The expression abandon means, the abandonment of the project itself. In other words, the Government does not want to proceed with the construction of the project. In the present case it is not the stand of the State that the project itself has been abandoned. In the present case the State is very much anxious to proceed with the construction of the project but on the basis of a different drawing and design. As such the action of the State is not referable to clause 3.11 of the agreement. There is no escape from the conclusion that the ground for cancellation of the contract does not flow from any of the terms of the agreement, it is de hors any terms of the contract and as such can be subject matter of judicial review. If the action of the State is within the purview of the judicial review, then it has to be examined as to whether the State has acted in an unreasonable, arbitrary manner, without observing the rule of fair play, which is the imperative requirement of every executive action of the State.

(21.) There is no dispute that before the impugned order dated 17-5-1990 was issued cancelling the work order and the agreement executed in favour of the petitioner, neither any opportunity to show cause was given nor any reason was disclosed for such action. Even if the allegation of the petitioner that on the basis of the work order and the agreement, the petitioner has already invested several lacs of rupees in purchase and in movement of the machineries to the work site is not taken into consideration for applying the principle of estoppel against the State, the rule of fair plays required the State Government to inform the petitioner at least the reasons for cancellation of the agreement.

(22.) The learned Advocate-General submitted that in view of the reasons disclosed in the counter affidavit for the cancellation of the agreement in question, the requirement of disclosing the reason for the impugned action has been fulfilled. I have already pointed out that the petitioner is seriously disputing the statements made on behalf of the State in the counter affidavit that the Commission has given any final revised drawing or design in respect of project in question. According to the petitioner, the commission has not taken any final decision on that question and for the present it is only under the stage of re-examination. In this connection our attention was drawn to a letter dated 6-12-1990 addressed by the Commission to the Chief Engineer, Water Resources Department, Government of Bihar, in respect of the project in question, a copy whereof has been produced (marked as Annexure-17) to the "reply on behalf of the petitioners to the supplementary counter affidavit of the respondents". In the aforesaid communication the Commission has stated as follows : -

"Subject : Durgawati Reservoir Project, Bihar. Regarding Design Data. Sir, Kindly refer this office letter No. 2/14/89 Pat-K14/655-657 Dt. 21-9-90 wherein certain details regarding right bank canal outlet, feeder outlet and schedule of construction and division of river during construction were asked. These informations are still awaited from your end with the result the spill-way design is held up......"

Attention was also drawn to a copy of telegram dated 21-12-1990 by the Commission to the Chief Engineer, Water Resources Department (Annexure-18), asking for certain information in respect of the design of the said project. Whatever may be the position after 17-5-1990 i.e. after the issuance of the impugned order, in respect of revision of the drawing and design by the Commission, it appears to be an admitted position that on the day the work order and the agreement in favour of the petitioner was cancelled, there existed only a thinking in the Department in respect of revision of the drawing, design and the estimate of the cost, in respect of the project in question. I may point out that a different consideration would have arisen if there existed a ground for cancellation of the work order and the agreement in question on 17-5-1990.

(23.) The judgments of the Supreme Court referred to above have repeatedly impressed that every action of the executive Government must be informed with reason which is part of the rule of law and its bare minimal requirement. In the present case the work order and the agreement in favour of the petitioner has been cancelled without assigning any reason, on a ground which did not exist on the date the impugned order was issued. The step for the cancellation of the contract is said to have been taken with an object to save the public exchequer. But rule of law as interpreted by Courts required the State Government to inform the petitioner that the drawing, design and the estimated cost were likely to be changed on the basis of fresh datas to be received. As such, it has to be held that action of the State does not satisfy the test of reasonableness and fair play. In my view, apart from three categories mentioned by the Supreme Court in the judgment of Radhakrishna Agarwal (supra), under the changed circumstances, there should be a fourth category of cases: -

"Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual but such contract has been cancelled on a ground, dehors any of the terms of the contract, and which is per se violative of Article 14 of the Constitution."

Even in such cases applications under Article 226 of the Constitution are maintainable.

(24.) I am quite conscious that this Court while exercising jurisdiction under Article 226 of the Constitution which is discretionary in nature cannot issue a writ of mandamus in the nature of a decree for specific performance of contract, when a doubt has been raised about the original drawing, design and the estimated cost of the project. According to the State, the Commission is of the opinion that the scheme can be completed on the basis of a revised drawing and design, at estimated cost of about Rs.15 crores instead of about Rs. 31 crores. In this background it shall not be proper exercise of discretion on part of this Court to direct the State to allow the petitioner to proceed with the construction of the project on the basis of the agreement entered into by the petitioner, even if the impugned order dated 17-5-1990 is quashed.

(25.) Perhaps, being conscious of this limitation on the part of this Court, during hearing of the writ application a supplementary affidavit on behalf of the petitioner was filed on 9-1-1991. In paragraph 2 thereof it has been stated as follows: -

"2. That without prejudice to the rights and contentions of the petitioner including any contention in relation to the validity of clause 3.11 relating to foreclosure of contract it is stated that the petitioner does not wish to pursue any path of self-gain at the expense of public revenue and public interest. The petitioner expresses his willingness to abide by the terms and conditions of the contract in relation to the final design and work as prescribed by the Central Water Commission. The petitioner further undertakes to agree to a proportionally reduced value of the contract dependent upon reduction of work and change of design by Central Water Commission. The petitioner makes the instant offer solely with the view to prove his bona fide and to place on record before the Honble Court his unequivocal commitments to the construction of the Spill-way Project and satisfactory execution thereof pursuant to the possible revised, if any, design and specification of Central Water Commission New Delhi."

It as pointed out on behalf of the petitioner that even under the terms of the agreement it was open to the State Government to direct the petitioner to proceed with the project on the basis of a revised design and estimated cost.

(26.) This writ application is, accordingly, allowed. The impugned order dated 17-5-1990 is quashed. It will be open to the State Government to inform the grounds for cancellation to the petitioner. It will be also open to the State Government to furnish the revised drawing, design and estimated cost in respect of the project in question as approved by the Commission, to the petitioner. Thereafter, respondents shall proceed in accordance with law.

(27.) S. ROY, J.: - . I agree.

(28.) S. N. JHA, J. - . I also agree. Petition allowed.