@JUDGMENTTAG-ORDER
1. Governmental action cannot but only be fair. Fair deal, therefore, is the basis of all State action and in the event of any departure therefrom, Law Courts shall rise up to the occasion to declare it to be illegal and set right the wrong and to do so would be, a plain exercise of judicial power. In the event of any lodgement of complaint against a State; action, being unfair and in the event the Law Court finds the same to be of substance, the Court will lend its assistance to the complainant so as to compel the State to act fairly vis a vis the complainant. Technicality may arise but in my view sheer technicality ought not to outweigh the course of justice. Law Court exists for doing justice between the parties -- Law Court exists to remedy the wrong.
2. In the present day context, State''s involvement in ordinary trade and commerce cannot be undermined and as a matter of fact is a regular feature -- As such State action shall have to be scrutinised and in the event of there being any departure from fair dealing, State action cannot but be struck down since the most acceptable methodology of a Governmental action is fairness as stated above.
3.At this juncture it would be convenient to advert to the factual aspects briefly.
4. It appears that on 15th July, 1989 a wagon-load C. I. Skull arrived at-Shalirnar Siding of Eastern Railway from Rourkella Steel Plant of the Respondent SAIL Authority. The original purchaser did not take delivery of this particular wagon-load C. I. Skulls. M.S.T.C. being the selling agent of SAIL invited offers but apparently no one was prepared to accept the same. In the process however, the petitioner came on to the scene and there was a tacit understanding that the quantity of C. S. Skull at the listed price of Rs. 3,745/ - shall be purchased by the petitioner from M.S.T.C. and the latter in turn agreed to sell 240 M.T. of C.l.S. Roll above 11 M.T. per piece and 300 M.T. of rejected steel rolls above 20 M.T. per piece at the prevailing prices on certain terms and conditions.
5. It further appears on the factual score that in implementation of this transaction M.S.T.C. issued two sale orders, one in respect of cast iron roll for 240 M.T. dated 6th September, 1989 and a further 352 M.T. of rejected steel rolls. In terms of its obligation admittedly the petitioner lifted the entire wagon-load of damaged C.I. Skulls which were lying at Shalimar Siding upon payment of the entire price together with a sum of Rs. I,12,000/- on account of demurrage charges. The petitioner at this juncture, however, contended that the petitioners suffered a loss of approximately Rupees 2,00,000/- by reason of acceptance of such a damaged C.I. Skulls which the others have refused. Subsequently, however, some deliveries were effected of the material contracted for and payments made by the petitioner but there was a failure and neglect to effect further delivery of C.l.S. Rolls and rejected steel rolls. It is the petitioner''s definite case before this Court that instead of honouring its commitment and effecting delivery of the .material in terms of the agreement between the parties and in terms of the sale order issued by M.S.T.C. further attempts are being made to auction the self-same contracted goods and it is this arbitrary action according to the petitioner, which has prompted the writ petitioner to move this Court under Art. 226 of the Constitution on the ground that the action of the respondent authorities being SAIL and M.S.T.C. are violative of the Constitutional safeguard as enshrined in Art. 14 of the Constitution.
6.Before adverting to the rival contentionts further two documents both emanating from M.S.T.C. to Rourkella Steel Plant (i.e. SAIL) viz., the letter dated 7th December, 1989 and the other being letter dated 16th March, 1990 from the same source ought to be noted and the relevant extracts of which are set out herein below-
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Re: Letter dt. 7th December, 1989.
"This has reference to your recent telex of 10-11-89 received by us on 23-11-1989 wherein we are advised about R.S.P. Management''s decision of disposing of Rejected Rolls in auction and not by fixed price sale as it was being done earlier.
2. Nevertheless, in view of our other letter of date and also in view of the fact sale orders as detailed above have already been issued three months back, i.e. on 6-9-1989 we would only urge R.S.P. to honour this commitment from M.S.T.C. to the customer and thereafter the present decision of disposal through auction may be implemented, if so desired by R.S.P.
3. We trust that R.S.P. will definitely honour the commitment made by M.S.T.C. to customer earlier to this revised decision."
Re: Letter dated 16th March, 1990.
"We do appreciate your having withdrawn, on our request, Rej. Steel Rolls (above 20 tonnes per piece) and Rejected C.I. Rolls (up to 10 tonnes per piece) from 16-1-90 and 29-1-90 auctions, although they were included due to over sight.
2. We do trust that you have already started despatching Rej. Steel Rolls (above 20 tonnes) of about 250 tonnes and Rej. Cast Iron Rolls (up to 10 tonnes), 60 tonnes since you must have provided due cognizance to M.S.T.C.''s sale orders of 6-9-89, which were two months prior to R.S.P.''s revised decision of 10-11-1989 for disposal of these items through auction sale.
3. In ''the meantime, we have received reminders from the customer mentioning that they have not yet received balance quantity of 310 tonnes as detailed above and we do suppose this must be in pipeline for dispatch.
7. It is on these two letters strong reliance was placed by Mr. Pal appearing in support of this application with an assertion that there was in fact, admittedly a commitment made by a Governmental agency which cannot be allowed to be frustrated by administrative caprice. Mr. Pal commented on the unfairness on the part of the Governmental agency viz., persuading the petitioner to accept the damaged wagon-load of C. I. Skulls but not supplying the C.I.S. rolls and rejected steel rolls which was more or less a compensatory element in the transaction.
8. Mr; Mitra appearing for the respondent SAIL Authority, however, submitted that rights and, obligations of the parties are absolutely governed by the terms and conditions of the sale orders issued in ordinary trade and commerce and as such question of interference by the writ court does not and cannot arise. In support of his contentions strong reliance was placed on to Clauses 2 and 7 of the conditions of the sale order and for convenience sake the same are set out herein-below:--
Clause 2.
"The price payable on the goods shall be the price prevailing on the date of delivery as fixed and/or published by the appropriate authority irrespective of whether (I) the property in the goods has passed to the buyer before delivery and (2) any payment has already been made towards the price mentioned herein, such price being merely tentative and such payment being deemed to be paid on account but subjective always to adjustment, if any, according to such terms and conditions, may be prescribed by the Metal Scrap Trade Corporation Limited from time to time. The date of delivery in case of Rail Delivery is the date of Railway Receipt and in all other cases, the date of actual (physical) delivery."
Clause 7.
"No commitment of supply within the Sale Order validity period can be given. Any quantity outstanding after the expiry date of the sale order will stand automatically cancelled."
9. Mr. Mitra submitted that prices mentioned in the sale orders are indicative and not firm. That prices prevailing at the time of delivery is required to be paid by the purchaser. It was contended that the writ petition contains no averment that the SAIL is obliged to deliver at the price indicated in sale orders neither it is the case of the petitioner that SAIL Authority cannot revise the price from time to time or that the petitioner is not liable to pay the price as may be fixed at the time of delivery. It is the contention of Mr. Mitra that the Court cannot direct delivery at a specified price.
10. Before proceeding further on to Mr. Mitra''s contention certain factual backgrounds as submitted by Mr. Mitra ought to be noted.
In November, 1989 the respondent No. 2 viz., SAIL Authority found that the scraps and rejects of rolls which are bought out items are not obtaining proper value when offered for sale to particular consumers at a price tentatively fixed. It was therefore, decided by the respondent No. 2 SAIL Authority as a policy to remove the rolls from the jurisdiction of the Order Department and to sell them by open auction. As a result, the cast iron rolls up to 10 metric tonnes piece and steel rolls above 20 metric tonnes piece amongst other rejects of bought out items were taken out from the Order Department of the SAIL Authority and were given to another Department for disposal. The department concerned evolved a mechanism for fixing price of scrap of bought out items and decided to ascertain market price by putting the materials up for auction through the auctioneer, M.S.T.C., being the respondent No. 1. Mr. Mitra submitted that as a matter of fact, the auction did take place in the month of June, 1990 and the maximum price obtained was approximately Rs. 5,222/- for which the sale order in favour of the petitioner mentions the price of Rs.4,270/- per M. T. Mr. Mitra further submitted that as a matter of fact, the petitioner himself purchased about 71 metric tonnes of the materials at Rs.5,222/- per M. T. So far as the steel rolls above 28 metric tonnes are concerned some interested persons have given offers in writing to buy the same ranging between Rs. 8,000/-to Rs. 9,500/-per metric tonne. No auction could be held by reason of an order of injunction passed by this Court and on that count Mr. Mitra contended that the petitioner has prevented SAIL Authority to follow the mechanism evolved for ascertainment of the market price.
11, On this factual backdrop Mr. Mitra contended that the contract is not enforceable under the Specific Relief Act, and the petitioner at best be entitled to damages if there is any breach of the terms and conditions since the articles contracted for are ordinary commercial articles and in that view of the matter Mr. Mitra contended that the writ petition is not maintainable. It was further contended that there is no legal right and Art. 14 of the Constitution of India cannot be construed as a charter for judicial review of State action after the contract has been entered into. It was submitted that fixation of price is the policy decision of the respondent and ordinary public property should be sold by public auction which fetches the highest price so as to ensure fairness in the matter. The real motive of the petitioner is to get the goods at a low price. Mr. Mitra on the basis, as above, submitted that an opportunity should be given to SAIL to ascertain the market price and thereupon the goods to be sold at the price so ascertained by way of public auction and in the event the same fetches a higher price, there shall not be any difficulty in making over the goods to the petitioner at the price so obtained as otherwise, Mr. Mitra contended, question of any relief in this writ application does not and cannot arise.
12. Mr. Som appearing for M.S.T.C. in the same vent tried to defend SAIL with fore or less identical submission that by reason of the factum of the existence of contractual dispute between the parties the invocation of the writ jurisdiction by the petitioners is wholly unwarranted and the writ petition ought to be dismissed on this count.
13. On a scrutiny of Mr. Mitra''s submission in regard to the factual backdrop one, therefore, finds that M.S.T.C. was authorised to deal with the matter in terms of the request of the Order Department of SAIL. M.S.T.C. did, in fact, enter into an agreement to sell materials to the petitioner at a particular price though, however, with the price variation clause. Subsequently one finds that due to some internal formalities the jurisdiction of the Order Department have been taken away and some other departments of SAIL has been asked to look into the matter -- That particular department, however, envisages a formula for ascertainment of price by public auction through M,S.T.C.:-- In my view on the state of facts as above, the Court cannot take any exception to the same. But this issue what would happen to the agreement already entered into by and between a third party and M.S.T.C. acting as a disclosed agent of S.A.I.L. According to Mr. Mitra, it is of no consequence whatsoever. The other consideration is in regard to the factum, the persuasion of M.S.T.C. to accept the damaged wagon-load of C.I. Skulls which was not acceptable to any of the dealer -- Would that still be of no consideration whatsoever -- In my view, the answer cannot but be in the negative. A Governmental organisation inducing an ordinary trader to accept the damaged C. I. Skulls and in return may have given some advantage to private trader but by no stretch it cannot be unconscious bargain which would prompt a Governmental agency to retort back and subsequently say that the price is too low when in fact, an agreement has been arrived at by and between the parties. There was in fact, a consideration for sale of the materials at the price noted in the sale order -- The consideration being acceptance of damaged C.I. Skulls. Mr. Mitra''s contentions does not, however, take note of that situation.
14. As a matter of fact, the two letters noted above go to suggest that even the auctioneer was imploring the principal viz., Rourkella Steel Plant -- to honour its commitment since the supply position was in the pipeline and there should not be any departure from the commitment of a Governmental agency. In this perspective the criticism levelled by Mr. Pal, in my view, has definite justification. Technicalities may be there but would that subserve the ends of justice -- In my view, the answer is in the negative more so in the facts and circumstances of the matter under consideration. Concept of justice cannot be put on a straight jacket formula and law Courts would not be justified to refuse relief on sheer technicality to a person who prays for justice before the Courts. Mr. Mitra''s submission about the non-maintainability of the action under Article 226 cannot in my view be accepted on this ground alone. Some ethics ought to be maintained in a Governmental action and the law Courts ought to decry anything which is not reasonable, fair or arbitrary. There is no scope of any administrative whim or caprice since law Courts cannot withstand arbitrariness and be a mere passive spectator because of certain technicalities. Technicalities ought not to outweigh the course of justice.
15. The other contention of Mr. Mitra ought to be noted at this juncture viz., the Court cannot compel a party to sell its goods at a price to be so determined by the Court. While it is true that the same would neither be fair nor reasonable since the Court cannot substitute an agreement between the parties but the Court has the jurisdiction to direct the State Authority to stick to the bargain and it is on this basis, however. Clause 2 of the conditions of contract ought to be noted. Clause 2 as set out above records that the price payable on the goods shall be the price prevailing on the date of delivery as fixed and/or published by the appropriate authority, in my view, the duty of the Court is to see that the party complained of arbitrariness is prepared to pay the price for the goods, contracted for in terms of the agreement between the parties, but in the event there''s refusal to effect delivery and subsequently the governmental agency turns round and says that the prices have been increased and, therefore, the increased price ought to be paid, that cannot be said to subserve the ends of justice. Parties ought to be directed to stick to the bargain, but that does not mean, and imply that a deliberate act on the part of party in dominant position resulting in a further price rise and failure to pay the increased price cannot be termed to be a failure neither refusal to effect delivery by reason of nonpayment cannot be stated to be in accordance with law.
16. On the factual score it appears that there was considerable delay in effecting delivery so far as the Stale Respondents are concerned, but in my view that ought not: to entitle the State to charge a higher price. In any event further attempt to hold an auction, therefore, does not and cannot arise though, however, Mr. Mitra submitted that the auction is for the purpose of ascertaining the price and not for actual sale of materials and in the event the petitioner is prepared to pay the price there will not be any refusal to effect delivery of materials to the applicant. Mr. Mistra further contended that the endeavour of the State-respondent is to obtain highest possible price under the circumstances but is it justifiable in the facts and circumstances of the matter under consideration by reason of certain change in the internal administration. The concerned department have been denuded with its power and another department have been asked to deal the matter. The new department in its turn thought it fit, however, to hold a further auction, for the purpose of ascertainment of price but in fact, there is a published price list on the date when the parties entered into an agreement for the purpose of sale and delivery of the materials in dispute and one private trader on the basis thereof has entered into an agreement with the State-respondent, is it fair on the part of the State-respondent to turn back and say that since the market price might go higher up, the State cannot effect delivery of the materials as per the printed price. In my view, the State action in that event is within the mischief of being arbitrary. The new department obviously justifying its engagement has evolved a different principle than what was followed earlier but would that affect a pending contract, the answer cannot but be in the negative. A private trader on the basis of certain assumptions has entered into an agreement with a State-respondent, the State-respondent cannot in turn alter or change its policies thereby affecting the existing contractual obligations. If it does, the law Courts should rise up to the occasion and declare it to be arbitrary and there ought not to be any hesitation in regard thereto. What was the need for such a further auction? It is only to pressurise the party on the other side or for future guidance. There ought to be some sort of certainty in a governmental action even a policy of a State cannot be changed in the manner which would affect a pending agreement; Commercial element cannot be ignored but that does not clothe the State-respondent to go in for more profitability and thereby affect a pending contract. The governmental agency must act in a commercial venture to earn more profit but that does not obviously clothe the governmental agency to affect persons who have already entered into transactions with the Government on the basis of the declared policy. Law Courts shall not permit affectation of an individual by reason of an attempt to be wiser after the event. It must act on the basis of a declared policy. There cannot possibly be any objection if the persons manning the Government become wiser but this would have its effect only in future and not in present. The common man acts on the basis of the declared policies. Change of policy cannot affect the present transaction though it may have its due effect. on the future transition.
17. While it is true that the doctrine of promissory estoppel may not be said to be strictly applicable in the facts and circumstances of the matter under consideration but the principles akin thereto cannot, however, altogether be ignored. Governmental participation in every day trade and commerce is no longer in the realm of consideration but a practical reality of which the Court cannot shut its eyes. When a governmental agency has made a representation to an ordinary individual of a particular set of facts or circumstances, by reason wherefor the individual concerned was wilfully induced to act upon that representation, the governmental agency is estopped as against that individual from contending otherwise. The process of refinement of law on this branch commenced in the decision of the Supreme Court in
18. Considering the exposition of law as above and applying the same on the factual score in the present context, I am of the view that the action of the State-respondent in holding a further auction cannot be sustained.
19. Viewed as above, the attempt to hold an action cannot but be termed to be arbitrary.
20. The other aspect of the matter on which both Mr. Mitra and Mr. Som laid emphasis, viz., the writ jurisdiction cannot be invoked in contractual matters ought also to be noted. But in my view, it is too late in the day to contend the same. The recent trend of decisions both of English Courts as also of our Courts leaves no manner of doubt that there exists a judicial commitment to set right the arbitrariness of a governmental action. This view finds support from the decisions in
21. In that view of the matter the writ petition succeeds. There shall be a writ in the nature of mandamus directing the respondent to desist from auctioning the goods which are subject matter of the sale order being annexure ''D'' to the petition without first effecting the delivery of the contracted quality and quantity of goods to the petitioners in terms of the sale-orders dated 20th July, 1989 and plant instruction memo dated 6th September, 1989 at a price as appears from the last published price-list of the respondent authority. There shall have no order as to costs.
22. Petition allowed.
