S. Roy, J.

1. Petitioner No. 1 is a Company (Company for short) incorporated under the Indian Companies Act. Petitioner No. 2 is one of its Director and petitioner No. 3 is one of its share holder. They have prayed for quashing Annexure 13, letter written by respondent No. 2, Bihar State Tourism Development Corporation Limited, the (Corporation for short) to the Company on 8-4-1991 by which the Company was informed that as it has failed to pay all outgoing liabilities, which included payment of arrears of electricity dues under Clause 5(a) of the agreement (Annexure 4), the Corporation on 8-4-1991 took possession of the aerial rope way at Rajgir along with connected sheds, buildings and other accessories and for, appropriate order not to interfere with Companys possession.

2. During the pendency of the writ petition by letter dated 15-4-1991 the Corporation gave notice under Clause 13(a) of Annexure 4 to the effect that Annexure 4 would stand revoked terminated on the last date of month completing three months notice, i.e., at the end of July, 1991.

3. On 9-11-1984 the Company entered into an agreement with the Corporation for operating aerial rope way at Rajgir, which belongs to the Corporation, copy of the agreement is Annexure 1 to the writ petition. It was stipulated in Annexure 1 that the Corporation gave to the Company the work of repair and maintenance and right of operation of the old rope way at Rajgir on annual rental for a period of two years and for installation of new rope way by the Company on self-finance basis on annual rental for a period of thirty years from the expiry of the two years period. The Company was required to install a four passenger cabin type new rope way at the existing site on a self-finance Scheme within a period of two years from the expiry of the two years period. The date of the agreement. One of the covenants of Annexure 1 (the agreement) i.e. Clause 5 (a) stipulated that the Company would bear and discharge all taxes, dues, outgoings burdens whatsoever imposed or charged upon or in respect of the said old or new aerial rope way. Any taxes, dues, outgoings, liabilities payable for a period prior to the agreement would be paid by the Corporation.

As the Company could not install a new rope way of four passengers cabin type, the parties entered into a fresh agreement on 17-2-1987, copy whereof is Annnexure 3 to this writ petition. The recital and the covenants in Annexure 3 are same as of Annexure 1, except with regard to the annual rental. In Annexure 1, the Company was required to pay annual of Rs. 2.25 lakhs for using the old rope way. It was increased in Annexure 3 to Rs. 2,475 lakhs. There was also a change in one of the covenants, i.e., Clause 5(a) wherein it was stipulated that any taxes, dues outgoings, liabilities payable for the period prior to this agreement, would be paid by the Company.

4. As installation of four passengers cabin type new rope way was found not economically viable, the Company gave a proposal to renovate the old rope way by replacing the old chairs with new type of single seater semi enclosed gandolas as well as a shed for tourists and make other changes fifteen years commencing from 3rd May, 1989 and terminating on 2nd May, like the replacement of the existing accessories and providing amentities. The corporation accepted this proposal and resolved to extend the agreement as contained in Annexure-3 for a period of 2004. The parties entered into a fresh agreement on 3rd May, 1989, copy whereof is Annexure (sic).

5. It was, inter alia, agreed by between the parties that the Company would complete the renovation work of the existing rope way within one year from the date of Annexure-4. For the purpose of renovation the the Company would undertake and do all major and minor repairs, bear operational charges, obtain risk insurance, replace old gear box, motor, panel and generating set as and when these warrant replacement. It was further agreed that the Company would renovate the existing rope way with introduction of the some enclosed gandolas and other modifications that may be necessary in the rope way system to provide passenger ammenity. All the costs and expenses in this regard shall be borne by the Company. The Company agreed to pay a sum of Rs. 34 lakhs within the aforesaid period of 15 years at gradually increasing rate as stipulated in Clauses 2 and 3 of Annexure 4. The renovation of the existing rope way required to be completed by the Company within one year from the date of Annexure 4. Chase 5(a) of Annexure 4 in verbatim the same as in Annexure 3. Similar to Annexures 1 and 3, there is Clause 13(c) in Annexure 4, which provides for settlement of all disputed claims and question relating to or any way concerning or touching the agreement including the meaning, effects, scope, construction or interpretation of any of its Clauses by sole arbitrator.

6. According to the Company, it observed all the terms and conditions of Annexure 4 and invested Rs. thirteen lakhs for revovation of the rope way. Further, according to the Company outstanding electricity bills prior to 9-11-1984, i.e., the date of Annexure 1, was payable by the Corporation. But it failed to pay it. The grievance of the Company is that on 8-4-1991, the Minister for Tourism accompanied with the district officials came to the rope way and took possession of it. The fact that possession had been taken by the Corporation was confirmed by it by letter as contained in Annexure 13. The Company has seriously disputed the reasons assigned in Annexure 13 for taking possession of the rope way. Thereafter the Corporation gave three months notice as contained in Annexure 14 of its intention to terminate the agreement, Annexure 4. This notice is in terms of Clause 13(a) of Annexure 4.

6-A The action of the Corporation by which forcible possession of the rope way and its accessories was taken as also the notice terminating the agreement, Annexure 4 were challenged on the grounds that it was illegal, arbitrary and mala fide. It was arbitrary because the Company was not heard before possession of the ropeway was taken by the Corporation, nor it was before notice of three months terminating Annexure 4 was issued. It was also alleged that the grounds for which possession was taken and notice of termination of Annexure 4 was issued were not available.

6-B. The reliefs prayed for by the Company are based on two grounds, namely, (a) as there has been no violation of any of the terms and conditions of Annexure 4, Corporation could not have taken possession of the rope way and (b) the action of the Corporation, was arbitrary, inasmuch as the Company was not heard other before possession was taken or notice terminating Annexure 4 was issued.

7. Counter-affidavit has been filed by the Corporation and its Managing Director. They challenged the maintainability of the writ petition on the ground that the rights and liabilities of the parties are governed by Annexure 4, which is non-statutory and purely contractual, and the remedy for the alleged breach of the terms and conditions of Annexure 4 by the Corporation, the the Company could not have invoked the writ jurisdiction. According to the Corporation, the writ petition was also not maintainable on the ground that Annexure 4 provides for settlement of all disputes by arbitration. The maintainability of the writ petition was challenged further on the ground that is terms of Clause 5(1) of Annexure 4, the Company may claim compensation as the agreement has been terminated before expiry of fifteen years.

So far the merit of the case is concerned, it has been stated in the counter affidavit that the Company did not fulfill all the terms and conditions of Annexure 4, which have been stated in detail in the counter-affidavit. The reason for taking possession of the rope way and terminating Annexure 4 was for violation of terms and conditions of Annexure 4.

8. Three questions arose in this cases:

(a) whether in the facts and circumstances of this case, the writ petition is maintainable

(b) whether the Corporation could take possession of the rope way, its accessories in the manner done, and

(c) whether the notice terminating the agreement is bad as none of the grounds mentioned therein was available.

9. Mr. Prasad, learned Counsel appearing on behalf of the petitioners, submitted that although the petitioners have alleged that the Corporation has committed breach of obligations arising out of contract, but as the case of the petitioners is covered by category (i) as enumerated in Radha Krishna Agarwal v. State of Bihar : [1977]3SCR249 , the writ petition was maintainable. In the alternative, he argued that as the case of the petitioners falls under category (iv) as enumerated in Pancham Singh v. State of Bihar : 1991 (1) PLJR 352 [LQ/PatHC/1991/31] , the petition was maintainable. Mr. Saran, learned Counsel appearing on behalf of the Corporation submitted that the case of the petitioners was covered by category (iii) as ennumerated in Radha Krishna Agarwal, (supra) and as such the writ petition was not maintainable.

10. Radha Krishna Agarwal : AIR1977Pat65 , had moved this Court in writ jurisdiction for quashing the order of the State Government enhancing the rate of royalty payable in respect of the right guaranteed for collection and exploitation of Sal Seeds from the forest area belonging to the State of Bihar Another writ petition was filed for quashing the decision of the State Government cancelling the lease of Radha Krishna Agarwal.

11. Whether the writ petition challenging the enhancement of royalty was maintainable, it was held that even if the decision to enhance the royalty was not correct on one ground or the other, it is at the most a case of breach of the terms of the agreement and the action and the order can be held to be invalid if court comes to a conclusion that the actions are not sanctioned by the terms of the agreement. According to the petitioners of that case there had been no contravention of the terms of the agreement and according to the State there had been. Further question that arose in that case was whether the allegation regarding breach of the terms of agreement either by the petitioners or by the State can be examined in writ jurisdiction. In that context this Court held that when dispute arises out of contract, the same can be divided into three categories to decide whether in writ jurisdiction such dispute can be decided. The categories enumerated by this Court are:

(i) where a petitioner makes a grievance of breach of promise on the part of the State in cases on assurance or promise made by the State he has acted to this prejudice and predicament, but the agreement is short of a contract within the meaning of Article 229 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

(ii) where the contract entered into between the State and the peraons 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 after considering a large number of decisions held that a person aggrieved may seek relief in writ jurisdiction if his case falls in category (i) and/ or (ii) but if it falls in category (iii) the writ petition was not maintainable. The judgment of this Court was challenged by Radha Krishna Agarwal, (supra) in the Supreme Court. The Supreme Court : [1977]3SCR249 held that the High Court had rightly divided the cases under three categories where breach of obligations by the State or its agents arising of contract is set up. It held that the case of Radha Krishna Agarwal, was covered by category (iii) as had been held by this Court.

12. Pancham Singh (supra) challenged the order made by the State Government cancelling the work order and the agreement in respect of contract of spill way of Durgawati Reservoir Project. The case was heard by a Full Bench. The Full Bench noticed a number of cases including the case of Radha Krishna Agarwal, (supra). In view of the decisions of the Supreme Court rendered after M/s. Radha Krishna Agarwal, the Full Bench was of the opinion that where breach of obligation under a contract is alleged, there may be a fourth category of case, which is as follows:

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 ground de hors any of the terms of the contract, and which is per se violative of Article 14 of the Constitution.

and if a case is covered by this category, writ petition is maintainable.

13. It was submitted by Mr. Prasad that since on the assurance given by the Corporation that the fight of the Company to operate the rope way would be for a period of fifteen years, it had invested Rs. thirteen lakhs, the case of the petitioners was covered by category (i) as ennumerated in M/s. Radha Krishna Agarwal, (supra).

14. I have qaoted category (i) from which it will appear that for attracting this category two conditions are required to be established, namely, (a) where a person makes a grievance 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, and (b) but the agreement is short of a contract within the meaning of Article 299 of the Constitution. In this case Article 299 has no application because the Corporation may be a State within the meaning of Article 12 of the Constitution being an instrumentality of State of Bihar, but the agreement (Annexure 4) was not by the State of Bihar. There was a concluded written contract between the Company and the Constitution was not attracted to this case, category (i) as enumerated in M/s. Radha Krishna Agarwal, (supra) is not applicable.

15. Mr. Prasad alternatively urged that the case of the Company was covered by category (iv) as enumerated in M/s. Pancham Singh, (supra). When it was pointed out that for the purpose of attracting category (iv) two facts were required to be established, namely, (a) non-statutory and purely contractual contract has been cancelled on ground de hors any of the terms of the contract, and (b) which is per se violative of the Constitution, Mr. Prasad tried to impress on us that we should read and as or. According to Mr. Prasad if it is not so read, it will be contrary to the law laid down by the Supreme Court in Mahavir Auto Stores v. Indian Oil Corporation Limited : [1990]1SCR818 , and Kumari Shrilekha Vidyarthi v. State of U.P. : AIR1991SC537 . .

16. In Ms. Pancham Singh, (supra) the Full Bench after noticing both these cases in detail as also other cases, classified the fourth category of cases. It has been clearly stated therein that cancellation of the contract must be on ground de hors any of the terms of the contract and such cancellation is per se violative of Article 14 of the Constitution. The petitioner, must establish both the facts. We may notice that both of us were parties to the judgment in Ms, Pancham Singh (supra) and after deliberation category (iv) was carved out in that language. There is no scope for reading it in the manner suggested by Mr. Prasad.

17. There is no dispute that the Corporation did not give any opportunity to the Company either before it took possession of the rope way or it issued notice terminating Annexure-4. Even if it is assumed that there has been violation of Article 14 of the Constitution, the case of the petitioners will not be covered by category (iv) unless it is held that the grounds on which the possession of the rope way was taken and the notice terminating the agreement was issued were de hors the contract. The relevant portion of Annexure-13, letter issued by the Corporation to the Company, is as follows:

Please take notice that you have failed to carry out and perform the conditions of the Agreement dated the 3rd May, 1989.

That under Clause 5(a) of the Agreement you were liable to pay all outgoing liabilities which included payment of arrear of electricity dues, the Corporation has requested you vide the letter No. 1169/ 90, dated the 14th June, and 241/91, dated the 14th February, 1991 to pay the arrears of the electricity bill, you have refused to make payment vide your letter No. Nil, dated the 16th June, 1990 and letter No. Nil, dated the 5th March, 1991.

The agreement referred to in Annexure 13 is Annexure-4. The letters of the Corporation referred to are Annexures 7 and 11. The letter of the Company referred to are Annexures-9 and 12.

18. I have already noticed that in Annexure-1 it was stipulated between the parties that so far the payment of arrears of electricity dues to 9-11-1984, the liability would be of the Corporation, described as licensor in Annexure-1, and from 9-11-1984 all the liabilities including payment of electricity bills would be the liability of the Company. However, both in Annexures-3 and 4 it was stipulated that the Corporation described as licenseee in both the annexures, would not only pay all the dues from the date of the agreement, but also the arrears of electricity bills. Annexures-7 and 11, the Corporation wrote the Company to pay the arrear electricity bills, which were replied by the Company by Annexures-9 and 12. The Company took the stand that it was the liability of the Corporation to pay it.

19. In Annexure-14, the Corporation has given ten instances to show that the Company had violated the terms of the agreement. The petitioners have stated that there had been no violation. The Corporation in its counter affidavit has reiterated what has been stated in Annexures-13 and 14. The controversy thus is whether there has been violation of the terms and conditions of the agreement by the Corporation or by the petitioners. The controversy is not that the instances of violation of the terms and conditions of the agreement as given in Annexures-13 and 14 were not referrable to Annexure-4, the agreement. In other words, it is not the case where the petitioners have taken the stand that possession has been taken and Annexure-4 has been terminated on grounds de hors the contract. The case of the petitioners is not, therefore, covered by category (iv) formulated in M/s. Pancham Singh, (supra).

20. I have alreaday noticed that the dispute between the parties is at to whether under the agreement the Company was required to pay the arrear electricity bills even prior to Annexure-1, dated 9-11-1984 in terms of Annexures 3 and 4 or it was the Corporation which was required to pay it in terms of Annexure-1. Again there is dispute between the parties as to whether any of the grounds on which possession of the rope way was taken any notice to terminate the agreement was issued was available or not to the Corporation. These are all disputed question of facts which can be decided only on the basis of evidence. I may gainfully quote the observations of the Supreme Court in M/s. Radha Krishna Agarwal, (supra) which applies to the facts of the case:

...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 Art. 226 of the Constitution. Such proceedings are summary proceedings reserved for extraordinary cases where the exceptional or what are described as, perhaps not quite accurately, prerogative, power of the Court are invoked. We are certain that the cases before us are not such in which powers under Art. 226 of the Constitution could be invoked.

21. I have tested the maintainability of the writ petition by assuming that to the facts of this case Article 14 is attracted. Is Article 14 attracted In M/s. Radha Krishna Agarwal ( supra ) the Supreme Court observed:

In the cases before us the contracts do not contain any statutory terms or obligations and no statutory power or obligation which could attract the application of Art. 14 of the Constitution. Even if cases where the question is of choice or consideration of competing claims before an entry into the field of contract facts have to be investigated and found before the question of a violation of Art. 14 could arise.

22. It is clear that the prerogative power of the Court cannot be invoked as the grounds on which the Corporation has acted are referrable to the agreement. Article 14 of the Constitution is also not attracted.

23. Mr. Prasad took the stand that what was given to the Company was a licence and for terminating it the Company was required to be heard. Mr. Prasad relief on M/s. Raj Restaurant v. Municipal Corporation : AIR1982SC1550 what was given to the Company was right to operate the rope way based on Annexure-4. Submission of Mr. Prasad is misplaced.

24. Mr. Prasad urged that whether the Company had committed any breach of Annexure-4 could not have been decided by the Corporation, the latter had no jurisdiction to decide this. Therefore, all the actions of the Corporation is bad. He relied on State of Karnataka v. Shri Rameshwar Rice Mills : AIR 1987 SC 1359 [LQ/SC/1987/233] . Three cases were decided by that judgment. The facts are that the agreements were terminated and certificate cases were instituted for recovery of damages. The ratio of that case is that damages may be recovered only in case of admitted breach. That has no application to this case.

25. It was submitted by Mr. Prasad that Clauses 13 (a) and 13 (b) of Annexure-4 are unconscionable as the terms are opposed to public policy. It was hit by Section 23 of the Contract Act and Article 14 of the Constitution.

Clauses 13 (a) and 13 (b) read as follows:

13 (a) Either party hereto shall be at liberty to terminate the aforesaid agreement by giving six months notice in writing to the other provided that if the licensee wilfully neglected or refuse to observe or perform any of the stipulations of the agreement aforesaid then the licensor shall terminate the agreement upon giving three months notice to Licensee.

"13 (b) If the rent hereby reserved or any part thereof shall at any time be unpaid for a period of six months after becoming payable whether formally demanded or not or if it fails to observe or perform any of the terms and conditions of the agreement herein contained and on its part to be performed or observed or the Licensee shall suffer any distress or process of the execution be levied on its goods or a receiver to be appointed of its properties then and in any of the said cases it shall be lawful for the licensor at any time thereafter to take physical possession and control of the aerial rope way in question along with its connected sheds and buildings if any and other accessories connected therewith and licensee shall pay rental of first six months in advance and the subsequent instalments after every six months.

26. First part of Clause 13 (a) provides that either party may terminate the agreement by giving six months notice. This right is reserved to both the parties. I find nothing wrong in this terms.

Second part of Clause 13 (a) empowers the Corporation to terminate agreement by three months notice if the Company wilfully neglects or refuses to observe or perform any of the stipulation of the agreement. This power may be exercised only on the happening of certain events. There is nothing wrong with this terms.

27. Clause 13 (b) empowers the Corporation to take possession of the ropeway on happening of one or other of the events mentioned therein. Therefore, possession cannot be taken at the sweetwill, it may be taken only understated situation. The condition is lawful.

28. In view of the findings recorded above, the answer to question No. (a) is that the writ petition is not maintainable. So far question Nos. (b) and (c) are concerned, as no relief can be granted to the petitioners in writ jurisdiction, it is not necessary to decide those two questions.

29. In the result, the writ petition is dismissed. In the facts and circumstances of the case, there shall be no order as to costs. The petitioners may seek relief before appropriate forum. It is made clear that I have consciously avoided expressing opinion on the merit of the case of the parties and if any observation has been made in that regard, the same shall not be binding on any court and/or Arbitrator and/or parties;

30. This Court on 15-5-1991 ordered that in case the petitioners paid Rs. 2, 40, 900/- to respondent No. 2 Corporation then within one week from the date of deposit of the amount possession of the rope way would be restored to them. From order dated 31-7-1991 it appears that Rs. 2, 40,000/- was deposited on 20-6-1991, but the petitioners did not get. possession. It is just and proper that Corporation must refund the amount. It is ordered that the Corporation shall refund the amount to the petitioner No. 1 Company within two months from the date of judgment, failing which it shall be liable to pay interest at the rate of 12% per annum after that period, and may also suffer for default under any other law.

S.N. Jha, J.

31. I agree.