Radha Krishna Agarwal & Ors. v. State of Bihar & Ors.

###### • ###, 249 RADHAKRISHNA AGARWAL & ORS. _v._ STAIB OF BIHAR & ORS. _March_ 17, 1977 [M. H. BEG, C.J., A. C. GUPTA AND P. S. KAILASAM, JJ.J _Constitution_ _of_ _India,_ 1950- _Article_ 226 _cannot be_ _invoked for_ _alleged_ _breaches_ _of contract-Remedy_ _lies through ordinary civil_ .~uit _for_ _da1nages._ _Constitution of India, 1950-Article 14-Discrimination should_ _be_ _alleged at_ _the stage_ _of_ _entry into the contractual area to attract the application_ _of_ _Art._ 14. _Constitution of India, 1950-Articles_ 298 _and_ _299-Scope_ _of-Whether_ _the_ _State has any special obligations and privileges attached to it even when_ _it_ _acts_ _within the contractual field._ _Plea for adjournment_ _of_ _the hearing_ _of_ _the case until after the emergency is_ _lifted-Stay_ _orders presumably obtained earlier on representation_ _n1ade_ _that_ _no_ _aspect_ _of enforcen1ent_ _of Art._ 14 _of_ _the Constitution_ _was_ _involved-Propriety_ _of_ _the continuance_ _of_ _stay._ D A contract called a "lease:'' to collect and exploit sal-seeds from forest area was entered into in 1970, between the respondent State and the appellants in 1970. Clause (3) in the written contract executed in accordance with the provisions of Art. 299 of the Constitution provided for the revision of the rate of royalty at the expiry of every three· years in consultation with the lessee· and was to be binding on the lessee. Under clause ( 4) of the lease, the lessee had to' establish a factory within the State of Bihar for processing of sal-seeds and extraction of oil therefrom within a period of five· years from the· date of the E agreement, failing which the agreement itself was to terminate. In 1974, the· respondent State revised the rate of royalty payable by the· appellants. and after that, canceUed the lease by a letter dated 15th March 1975. The \Vrit petitions challenging the said orders were dismissed by the Patna High Court. On appeals by certificates, the appellants contended : (i) the State· acting in its executive capacity through its Government or its officers even in the contractual field. can not escape the obligation imposed upon it by Part III of the Constitution; (ii) Article 14 of the Constitution has been infringed and (iii) Principles. of natural F justice have· been violated as no opportunity _ta_ show cause against the cancellation of lease was given. Dismissing the appeals the Court, HELD : ( 1) Article· 14 of the Constitution imports a limitation or imposes an obligation upon the State's executive power unde-r Art. 298 of the Consti~ tution. The rule of law which regulates. the operation are organs of Government functioning under the Constitution is that all constitutional powers carry G corresponding obligations with them. [254 &F] _Erusian Equipment_ _&_ _Chemicals Ltd._ v. _State_ _of_ _West Bengal and Anr._ 1975(2) SCR 674 at 677, referred to. (2) The State acts purely in its executive capacity and is bound by the obligations which dealings of_ the State with the. individual citizens import into every trans.action entered into in exercise of its constitutional powers, only at H the time of entry into the field of consideration of persons with whom the Govemmenl could contract at all. But, after the State or its agents have ent~red 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._ [255 C-D] A B ##### c B ###### c D E F G H ··· iso SUPREME COL'RT REPORTS [1977] 3 S.C.R. (3) Article 14 or of any _othel'. constitutional. provision is not violated when the State or fas agents purporting to act within the contractual 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 and confers some special statutory power or obligation on the State in the contractual field which is apart from contract. In the instant case, 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 is involved. [255 D-E, 260 E-F] (4) The doctrine· of discrimination cannot be availed of against the State's action purporting to be taken solely within the contractual field when no aspect cf any statutory or constitutional obligation appears either from incontrovertible facts or of facts. The appellants', cases do not raise any question of discrimi~ nation alleged at the stage of entry into the contractual area which could attract the application of Article 14. [258 F·G, 259 Al _C. K. Achuthan_ v. _Star._ _of_ _Kera/a and_ _Ors._ 1959 Supp. (I) SCR 787. applied. _Erusian_ E.~quipment &: _Chemicals_ v. _State_ _of_ _West Bengal_ &:. _Anr._ (1975) 2· SCR 674. distinguished.: (5) Before· any adjudication on the question; whether Article 14 of the Constitution could possibly be held to have been violated as between persons governed by similar contracts, they must be properly put in issue and_ established'. The question whether Article 14 could at all be held to operate within the contractual field whenever the State enters into such contracts is such that it cannot be decided without a detailed 'adduction of evidence which is only possible in ordinary civil suits, to establish that the State, acting in its executive· capacity through its officers, has discriminated between parties identically situat-· ed. based are neither properly made nor established. In the instant case allegations on which a violation It is the contract of Art. 14 could beand not [1 ] the executive power regulated by the Constitution. which governed the relation~. of the parties. [259 A-DJ ( 6) Proceedings under, Art. _226_ are: summary proceedings reserved for extra·· ordinary cases where the exceptional and what are described perhaps not quite~ accurately as ~'prerogative" powers of the court are invoked. If the 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 satisfac·· torily decided in proceedings under Art. 226 of the Constitution. Even in casei~ 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 violation of Art. 14 could arise. The appellants' cases are not such in which powers under Article 226 of the Constitution could be invoked. [253 E-G] _Lekhraj Satnam Das Lalvani_ v. _M. M._ _Shah, Deputy_ Custodtan-cum-Manag~ _ing Officer_ AIR 1966 SC 334; _Banchhanidhi Rath_ v. _The State_ _of Orissa_ _&_ _Ors._ AIR 1972 SC 843 @ 845 and _Har Shankar_ _&_ _Ors._ _etc. etc._ v. _The_ _Dy._ Excis(~ _&_ _Taxation_ _Con1111r._ _&_ _Ors._ 3 (1975) 3 SCR 254 @ 265, reiterated. _D._ _F._ _Sout!t Kheri_ v. _Ran1_ _Sanghi Singh_ AIR 1973 SC 205; _K. N. Guru-_ _swamy_ v. _Stare_ _of_ _Mysore,_ AIR 1954 SC 592; _Calcutta Gas_ _Co._ _(Proprietary')_ _Ltd._ v. _State_ _of West Bengal_ & _Ors._ AIR 1962 SC 1044; _Bas!ieshar Nath_ v. _Com-_ _missioner_ _of_ _Income Tax,_ 1959 Supp. (1) SCR 528; _State_ _of_ _M.P._ v. _Thakur_ _Bharat Singh_ 1967(2) SCR 454 and _S. S._ _Sawhney_ v. _D. Ramarathnam, Assistant_ _Pass port Officer, Govt._ _of India, New Delhi_ _&_ _Ors._ 1967 (3} SCR _525,_ held not applicable. (7) The Patna High Court had very rightly divided the types of cases ill which breaches of alleged obligation by the State or its agents can be set up into three types: (i') Where a petitioner makes a grievanc.e of breach. of m~ obligation of the State in cases where on an assurance or representation o!', the State, he has acted to his prejudice and detriment but the agreement is ###### ' ..... ####, RADHAKRISHNA _V._ BlliAR _(Beg,_ C.J.) 251 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 tho part of the State; (iii) Where the contract entered into between the State and the person aggrieved is nonstatutory and purely contractual and the rights ;md liabilities of the parties are governed by the termSi of the contract and the petitioner complains about breach of such contract by the State. The High Court rightly held that the appellants cases should be placed in the third category where questions of pure alleged breaches of contract are involved and that no writ or order can issue under Article 226 of the Constitution in such cases to compel the authorities to remedy a breach of contract pure and simple [255 H, 256 A-B, F-G] _Umakant Saran_ v. _The State_ _of Bihar_ AIR 1973 SC 964 and _Lekhraj Satram_ _Das_ v. _N. M. Shah_ AIR 1966 SC 334, followed. _B. K. Sinha_ v. _State_ _of Bihar_ AIR 1974 Patna 230, approved. B _Union_ _of_ _lndia_ v. _Mis._ _Anglo-Afgan Agencies_ AJR 1968 SC 718; _Cenfury_ C _Spinning and Manufacturing Company Ltd._ v. _Ulhasnagar Municipal Council_ AIR 1971 SC 1021; _Robertson_ v. _Minister_ _of_ _Pensions_ (1949)(1) K.B. 227; _K. N._ _Guruswamy_ v. _State_ _of_ _Mysore_ AIR J954 SC 592; _D._ F. _South Kheri_ v. _Ram_ _Sang/ii Singh_ AIR 1973 SC 205; _Mis._ _Shrikrishna Gyanaday Sugar Ltd._ v. _The_ _State_ _of_ _Bihar_ AIR 1975 Patna 123, distinguished and held inapplicable. (8) The object of the appellants is to hold up any adjudication on the cases, by taking shelter behind Article 14 so that the stay orders obtained by them may continue. To accede to the prayer to adjourn the hearing of the cases D until after the e1nergency is lifted and yet to continue the stay orders is to permit circumvention of the constitutional mandate contained in Art. 359· and to countenance gr05s abuse of the process of the court. [259 D-E] (9) The interim stay or order or injunction could not be justified at all because so long as the Presidential Order under Art. 359 of the Constitution is operative, the enforcement of Fundamental Rights, falling under Art. 14 of the Constitution is suspended. Jn such cases even if a petition or a suit is entertained and can be pending no stay order could be passed because that would E amount _to_ indirectly enforcing the Fundamental Rights conterred by Art. 14 of the Constitution. It is only where a _prima facie_ case {or an injunction of stay can be made out, uqite apart from a right governed by Art. 14 of the Constitution or of any other Fundamental Rights whose enforcement may have been suspended, that an injunction could be granted at all in suitable cases on suitable tertns. [260 C-El _Additional District Magistrate, Jabalpur_ v. _Shivkant Shukla_ AIR 1976 SQ 1207 @ 1288-1976 Supp. SCR, 172 referred to. F (10) The appellai'.its are not entitled to an opportunity' to show cause against the cancellation of the leases. The questipn of distinguishing bet\veen an administrative and quasi-judicial decision can only arise in the exercise of powers exercised under statutory provisions. Rules of natural justice are attached tc. the performance of certain functions regulated by statutes or rules made thereunder involving decisions affecting rights of pa.rties. \.Vhen a contract is sought to be terminated by the officers of the State purporting to act under the terms of an agreement between parties, such action is not taken in purported exercise· of an agreement between parties, such action is not taken in purported exercise cannot operate upon1 powers which are governed by the terms of an agreement exdusively. The only question which normally arises in such cases is whether the action complained of is or is not in consonance with the terms of the agree ment. [259 F-H, 260 Cl G CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 227 and 228/ 1976. H (From the Judgment and Order dated 8-1-1976 of the Patna High Court in C.W.J.C. No. 1053 and 1054 of 1975). A B ##### c D E F G H 252 SUPREME COURT REPORTS (1977] 3 S.C.R. _L._ _M._ _Singhvi,_ _Sri_ _Narain_ and _K._ _J._ _John,_ for the appellants. _L._ _N. Sinha, Sol. Genl._ _U._ _P._ _Singh_ and _Shambhu Nath Iha,_ for the respondents. The Judgment of the Court was delivered by BEG, C.J. These appeals are before us after certification of the cases, raising identical questions of law as fit for appeal to this Court, dealt with by one judgment and orders of a Division Bench of the Patna High Court on two writ petitions. The petitions were directed against orders of the State Government passed in 1974 revising the rate of royalty payable by the petitioners appellants under a lease of 1970, and, after that, cancelling the lease by a letter of 15th March, 1975. The petitioners' case was that the revision of the rate of royalty payable by the petitioners for the lease to collect and exploit sal-seeds from the forest area was illegal during the subsistence of the lease, and, thereafter, cancellation of the lease itself was illegal for various reasons. 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. If the petitioners could establish some right, either contractual or equitable, to continue in possession, the State could be prevented, by appropriate proceedings, from ousting the petitioners from the forest land from whicji the petitioners have be,en gathering sal-seeds. The petitioners had also set up mala fides on the part of the Conservator of Forests, in enhancing the royalty unreasonably and then cancelling the lease, allegedly acting ander 1:he influence of friends and associates of the Forest Minister of Bihar. The relevant clause relating to revision of royalty in the written ;,; ##### contract reads as follows : "The rate of royalty will be revised every three years' cycle in consultation with the lessee and the decision will be binding on the lessee". Apparently, there is no restriction, under the terms of the contract, upou the amount by which the royalty could be increased by a revision after a three years' cycle under this clause. The lessee is only entitled, under the contract, to be consulted before a revisi.on. But, the decision of the Governmental authorities to enhance is binding upon him after that. Hence, if this was the only term of the contract on this question, the petitioners could not complain of unreasonable enhancement in the revised rate of royalty. Under clause 4 of the lease, the lessee had to establish a factory within the State of Bihar for processing of sal-seeds arid extraction of oil therefrom within period of five years from the date of the agreement, failing which the agreement itself was to terminate. The questions which apparently arose appertained to action alleged by the State to fall within the terms of the agreement between the parties regulated by the duly signed contract which was presumably executed in compliance with the provisions of Article 299 of the Constitution. _Prima_ _facie,_ therefore, the appellants can only get their . # RADHAKRISHNA _v._ BlliAR _(Beg,_ _C.J.)_ 253 remedies, if they can obtain any at all, through ordinary suits for A damages or for injunctions to restrain breaches of contract provided they could show how the contracts were broken or were going to be broken. The writ petitions, however, raise questions relating not only to action lying within the sphere regulated by the law of contract, but, according to the petitioners, by constitutional provisions relating to B the exercise of the executive powers of the State Government con##### tained in Article 298 which reads as follows :- · "298. The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property #### and the making of contracts for any purpose : c Provided that ( a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with respect to which Parliament may make Jaws, be subject in each· State to legislation by the State; and (b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws be subject to legislation by Parliament''. It is urged vehemently by Dr. L. M. Singhvi, appearing on behalf of the petitioners-appellants, that the State, acting in its executiw capacity through its Government or its officers, even in the contractual field, cannot escape the obligations imposed upon it by Part III of the Constitution. The only article, however, in Part III of the Constitution relied upon by Dr. Singhvi is Article 14 which'8ays : D E "14. The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India". F It can be and has been urged on behalf of the State that Governmental authorities when acting in the contractual field, could not be controlled by Article 14 of the Constitution at all. When the State had entered into contracts with citizens who carry on their trade and pay the royalties. In accordance ·with the agreemenfs reached between the State and citizens, it does not exercise any G special governmental or statutory powers. In such cases, the State as well as the citizen with whom it contracts are both eqnally subiected to the law of contract. It has been urged on behalf of the respondent State that there has been no breach of contract in the cases before us. The State is, according to the learned Solicitor General, appearing for the State of Bihar, not claiming to be above the law of contract governing all parties which subject themselves H to the law of contract. The dispute whether there is or there is not a breach of contract should, according to the contention on behalf of the State, be determined by ordinary civil courts as in every case ## - A B c D E F 254 SUPREME COURT REPORTS [1977] 3 S.C.R. bdween ordinary litigants who cannot invoke the powers of the High Courts under Article 226 of the Constitution simply because there is a dispute whether an agreement has been broken or not. Equal subjec;tion of all parties, including the State, to the same procedural reqwrements, when such disputes are to be adjudicated upon, means that the State 'should be placed on the same footing a,, an ordinary litigant. It should neither enjoy special benefits and privileges, nor be subjected to special burdens and disadvantages. This should, it is urged, follow from a strict application of Article 14 if the State were to be, as a party to a contract and a litigant, placed on the same footing as other parties who enter into- such contracts. It is true that the special provisions of Article 299 of the Constitution are there to protect public interest so that the contracts by or on behalf of the Government have to comply with the special requirements of form. But, once the State enters into the contraotual sphere after the requirements of form, contained in Article 299, have been complied with, does it .have to take its place, in the eye of law, side by side with ordinary parties and litigants or has it any special obligations or privileges attached to it even when it acts within this field ? Dr. Singhvi's argument that the State Government had some special obligations attached to it would have appeared more plaiisible if it could be shown that the State or its officers or agents had practised some discrimination against the petitioners-appellants at the very threshold or at the time of entry into the field of contract so as to exclude them from consideration when compared with others on any unreasonable or unsustainable ground struck by Article 14 of the Constitution. It is true that the Article 14 of the Constitution imports a limitation or imposes an obligation upon the State's executive power under Article 298 of the Constitution. All constitutional powers carry corresponding obligations with them. This is the rule of Jaw which regulates the operation of organs of Government functioning under a Constitution. And, this is exactly what was meant to be laid down by this Court in _Erusian Equipment_ & _Chemicals_ _Ltd._ v. _State_ _of_ _Wset Bengal_ & _Anr.,(')_ on which learned counsel for the appellants sought to rely strongly. It was held there (at p. ##### 677) : "Under Article 298 of the Constitution the Executive power of the Union and the State shall extend to the carryin2 on of any trade and to the acquisition, holding and G disposal of the property and the making of contracts for any purpose. The State can carry on executive function by making a law or without making a Jaw. The exercise of such powers and functions in trade by the State is subjeot to Part ill of the Constitutiori. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public H contracts. The State has the right to trade. The State has therefore the duty to observe equality. An ordinary individual r (I) [19751 2 S.C.R. 674 at 677. ,-·. RADHAKRISHNA _v._ BIHAR _(Beg,_ _CJ.)_ 255 <:an choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of black-listing has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the. approved list is unable to enter into advantageous relations with the Government because of the order of black-listing. A person who has been dealing with the Government in the matter of sale and puchases of matt>rials has a legitimate interest or expectation. When the State - sets to the prejudice of a person it has to be supported by legality". •.' It is thus clear .. that the _Erusian Equipment_ & _Chemicals Ltd.'s_ ease (supra) involved discrimination at the very threshold or at the time 0£ entry into the field of consideration of persons with whom the Government could contract at all. At this stage, no doubt, the State acts purely in its executive capacity and is bound by the obligations which dealings of the State with the indivilual citizens importinto every transaction entered into in exercise of its constitutional powers. 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 right& and obligations of the parties _inter_ _se._ No question •arises of violation of Article 14 or of any other constitutional provision when the Sta~ 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 sfeps in and confers some special statutory power or obligation on the State in the contractual field which i~ apart from contract. A B ##### c D E F G H \ ###### • In the cases before us the contracts do not contain any statutory terms or obligations and no statutory power of obligation which could attract the application of Article 14 of the Constitution is involved here. Even in 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 <>f a violation of Article 14 could arise. If those facts are dis puled 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. Such proceedings are summary proceedings reserved for extraordinary cases where the exceptional and what are described as, perhaps not quite accurately, "prerogative" powers of the Court are invoked. We are certain that the cases before us are not such in which powers under Article 226 of the Constitution could be invoked . The Patna High Court had, very rightly divided the types of cases in which breaches of alleged obligation by the State units agents can be ###### i;et up into three types. These were st_ated as follows : "(i) Where a petitioner makes a grievance of breach of promise on the part of the State in rnses where an assurance A B #### c D -E F G H 256 SUPREME COURT REPORTS [1977] 3 S.C.R. or promise made by the State he has acted to his prejudice and predicament, bnt the agreement is short of a contract within the meaning of article 299 of the Cpnstitution; (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under cerl'ain Act or Rules framed -thereunder and the ###### petitiol!er alleges a breach on the part of 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." It rightly held that the cases such as _Union of India_ v. _M/s. Anglo-_ _Afghan Agencies,(')_ and _Century Spinning_ & _Manufacturing Co. Ltd._ v. _U!hasnagar Municipal Council(');_ and, _Robertson_ v. _Minister_ _of_ _Pensions,(")_ belong to the first category where it could be held that public bodies or the State are as much bound as private individaal are to carry out obligations incurred by them because parties seeking to bind the authorities have,altered, their position to their disadvantage or have >acled to their detnment on the strength of the representations made by these authorities. The High Court thought that in such cases the obligation could sometimes be appropriately enforced on a Writ Petition even though the obligation was equitable only. We do not propose to express an opinion here on the question whether such an obligation could be enforced in proceedings under Article 226 of the Constitution now, It is enough to observe that the cases before us do not belong to this category. The P'atna High Court also distinguished cases which belong to the second category, such as _K._ _N._ _Guruswami_ v. _The State of Mysore;(•)_ D. _F._ _South Kheri_ v. _Ram_ _Sanehi Singh;(")_ and _M/s,_ _Shree Krishna_ _Gyanoday Sugar Ltd._ v. _The State_ _of Bihar,(_ _[6 ]_ _)_ where the breach complained of was of a statutory obligation. It correctly pointed out that the cases before us cfo not belong to this class either. 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 _U makant Saran_ v. _The State_ _of_ _Bihar;(')_ and _Lekhrai Sathram Das_ v. _N._ _M._ _Shah;(')_ and _B._ _K._ _Sinha_ v. _State_ _of_ _Bihar(')_ that no writ order can issue under Article 226 of the Constitution in such cases "to compel the authorities to remedy are a breach of contract pure and s'mple". (I) A.LR. 1968 S.C. 718. (2) A.I.R. 1971 S.C. 1021. (3) [1949] 1 King's Bench 227. (4) A.I,R. 1954 S.C. 592. (5) A.LR. 1973 S.C. 205. (6) AI.R. 1975 Patna 123. (7) A.LR. 1973 S.C. 964. (8) A.LR. 1966 S.C. 334. (9) A.LR. 1974 Patna 230. ";.- RADHAKRISHNA _v._ BIHAR _(Beg,_ C.J.) 257 Learned counsel for the appellants has, however, relied upon a passage from _Lekhraj Sathram Das's_ case (supra) where this Court observed (at p. 231); " .... until and unless in the breach is involv_ed violation of certain legal and public duties or violation of statutory duties to the remedy of which the petitioner is entitled by issuance of a writ of mandamus, mere breach of contract cannot be remedied by the Court in exercise of its powers under Article 226 of the Constitution". 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 interlerence under Article 226 of the Constitution. We do not consider this to be a sound proposition at al!. I.earned counsel for the appe_llants cited certain authorities in an attempt to support his submission that the State and its Officers are clothed with special Constitutional obligations, including those under Article 14 of the Constitution, in all their dealings with the public even when a contract is there to regulate such dealings. The anthorities cited were : _D._ _F._ _South Kheri_ v. _Ram Sanehi Singh_ (supra) where all that was decided, relying upon _K._ _N._ _Guruswamy_ v. _The State_ _of Mysore_ (supra), was that, where the source of a right was contractual but the action compfained of was the purported exercise of a statutory power, relief could be claimed under Article 226; and, _Calcutta_ _Gas_ _Co._ _(Proprietary) Ltd._ v. _State_ _of_ _West Bengal_ & _Ors.,(')_ where the real question considered was whether the petitioner had a _locus_ _standi_ to question the validity of an enactment; _Basheshar_ _Nath_ v. _The Commissioner_ _of_ _Income Tax, Delhi_ & _Rajasthan and_ _Anr.,_ ( [2] ) which has nothing to do with any breach of contract but only lays down that "Article 14 protects us from both legislative and administrative tyranny of discrimination"; _State_ _of_ _M.P._ & _Anr._ v. _Thakur_ _Bharat Singh.(')_ which lays that even executive action must not be exercised arbitrarily but must have the authoritv of law to support it; S. S. _Sawhney_ v. _D._ _Ramarathnam, Assistant Passport Officer. Govt._ _of India, New Delhi_ & _Ors.,(')_ which repeats requirements of action which satisfy Article 14 and 21 of the Constitution where compliance with these provisions is obligatory. (1) A.l.R. 1962 S.C. 1044. (2) [1959] Suppl. 1 S.C.R. 528 at 551. (3) [1967] 2 S.C.R. 454. (4) [1967] 3 S.C.R. 525. 2-436SCI/77 A B c D E F G H A B #### c D E F G H 258 SUPREME COURT REPORTS [1977] 3 S.C.R. We do not think that any of these cases could assist the appellants or is at all relevant. None of these cases lays down that, when _the_ State or the officers purport to operate within the contractual field and the only grievance of the citizen could be tlrat the contract between the parties is broken by the action complained of, the appropriate remedy is by way of a petitio11- under Article 226 of the Constitution and not an ordinary suit. There is a formidable array of authority against any such a proposition. In _Lekhraj Sathramdas Lalwani_ v. _M._ _M. Shah, Deputy_ _Custodian-cum-Ma1111ging_ _Officer, Bombay_ & _Ors.,_ (supra) this Court said (at p. 337); "In our opinion, any duty or obligation falling upon a public servant out of a contract entered into by him as such public servant cannot be enforced by the machinery of a writ under Art. 226 of the Constitution". In _Banchhanidhi Rath_ v. _The State of Orissa_ & Ors(l) this Court declared (at p. 845) : :,_ "If a right is claimed in terms of a contract such a right cannot be enforced in a writ petition." In _Har Shankar_ & _Ors. etc._ _etc._ v. _The Dy. Excise_ & _Taxation Commr._ & _Ors.,(_ _[2 ]_ _)_ a Constitution Bench of this Court observed (at p. 265): "The appellant have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching contractual obligations". Learned Solicitor General, appearing for the State, contended that there could be no aspect of Article 14 of the Constitution "involved in a case where no comparison of the facts and circumstances of a particular petitioner's case with those of other persons said to be similarly situated is involved. In such a case, he submitted, there was no possibili!y of inferring a discrimination. In reply, learned counsel for the appellants sought to direct our attention towards some allegations showing that there was discrimination between appellants and other parties governed by similar contracts in other areas. We doubt very much whether the doctrine of discrimination can be at all availed of against the State's section purporting to be taken solely within the contractual field when no aspect of any statutory or constitutional obligation appears either from incontrovertible facts or applicable legal provisions. Indeed, it has been held in _C._ _K._ _Achutan_ v. _State_ _of_ _Kerala_ & _Ors.,(')_ that no question of a violation of Article 14 arises even where one out of the several persons' is selected by the State for a particular contractual transaction. Learned counsel for the appellants submitted that there was a conflict between what was laid down here and the law declared by this Court in _Erusian Equipment_ & _Chemicals_ _Ltd.'s_ c~se (supra). We think that the two cases are distinguishable on facts. The propositions of law laid dO\vn in the two cases must b<: read in the context of facts established in each case. In any event, (I) A.l.R. 1972 S.C. 843 at 845. (2) [l975] 3 S.C.R. 254 at 265 (3) 119591 Suppl. (I) S.C.R. 787. ###### ---. ' - __ ...... RADHAKRISHNA _V._ BIHAR _(Beg,_ C.J.) the cases before us do not raise any question of discrimination alleged at the stage of entry into the contractual area which could attract the application of Article 14. In the cases. before us, allegations on which a violation of Article 14 could be based are neither properly made nor established. Before any adjudication on the question whether Article 14 of the Constitution could possibly be said to have been violated, as between persons governed by similar contracts, they must be properly put in issue and established. Even if the appellants could be said to have raised any aspect of Article 14 of the Constitution and this Article could at all be held to operate within the contractual field whenever the State enters into such contracts, which we gravely doubt, such questions of fact do not appear to have been argued before the High Court. And, in any event, they are of such a nature that they cannot be satisfactorily decided without a detailed adduction of evidence, which is only possible in ordinary civil suits, to establish that the State, acting in its exe cutive capacity through its Officers, has discriminated between parties identically sitirated. On the allegations and affidavit evidence before us we cannot reach such a conclusion. Moreover, as we have already inidicated earlier, the correct view is that it is the contract and not the executive power, regulated by the Constitution, which governs the relations of the parties on facfs apparent in the cases before us. The real object of the appellants seems to be to hold up a,ny adjudication on the cases before us by taking shelter behind Article 14 so that the stay orders obtained by them, presumably on representations made to this Court that no oaspect of enforcement of Article 14 of the Constitution 'was involved. We think that to accede to the prayer on behalf of the appellants to adjourn the hearing of these cases until after the Emergency is lifted and. yet to continue the stay orders is to permit a circumvention of the Constitutional mandate contained in Article 359 and to countenance a gross abuse of the processes of the Court. A rather desparate argument which has been addressed to us on behalf of the appellants jg that they were entitled to an opportunity to show cause against the cancellation of the leases. It was urged, on the sfrength of _A._ _K._ _Kraipak_ & _Ors._ _etc._ v. _Union•_ _of_ _India_ & _Ors.,(1)_ that the distinction made between administrative and quasi-judicial action is thin and a vanishing one. This argument appears to us to be wholly irrelevoant inasmuch as a question of the distinction between an administrative and quasi-iudicial decision can only arise in the exercise of powers under statutory provisions. Rules of natural justice are attached to the performance of certain functions ·regulated by stoatutes or rules made thereunder involving decisions affecting rights of parties. When a contract is sought to be terminated by the Officers of the State, purporting to act under the terms of an agreement between parties, such action is not taken in purported exercise of a smtutorv power at all. - · . In _Adlfilional District_ _Maiistrate,_ _Jabalpur,_ v. _Shivakant Shukla,(•)_ 1t was pmnted out (at p. 1288): (\) \1970] 1 S.C.R. 457. (2) A.l.R. 1976 S.C. 1207 _at_ 1288. A B c D E F G H A c D E F 260 SUPREME COURT REPORTS (1977] 3 S.C.R. "The principles of natural justice which are so implied must always hang, if one may so put it, on pegs of statutory provisions or necessarily follow from them. They can also be said sometimes to be implied as necessary parts of the protection of equality and equal protection of laws conferred by Article 14 of the Constitution where one of the pillars of Dicey's principles of the Rule of Law is found embodied. Sometimes, they may be implied and read the legislation dealing with rights protected by Article 19 of the Constitution. They could at times, be so implied because restrictions on rights conferred by Article 19 of the Constitution have to be reasonable". The !imitations imposed by rules of natural justice cannot operate upon powers which are governed by the terms of an agreement exclusively. The only question which normally arises in such cases is whether the action complained of i's .or is not in consonence with the terms of the agreement. As already pointed out by us, even if by some stretch of imagination some case of unequal or discriminatory treatment by the officers of the State of persons governed by similar contracts is sought to be made out, a satisfactory adjudication upon the unusual facts of such a case would necessitate proper pleadings supported by acceptable evidence. In that case, the interim stay order or injunction could not be justified at all because so long as a Residential Order, under Article 359 of the Constitution, is operative, the enforcement of fundamental rights falling under Article 14 is suspended. In such cases even if a petition or suit is entertained and kept pending no stay order could be passed because that would amount to indirectly enforcing the fundamental rights conferred by Article 14 of the Constitution. It is only where a _prima fade_ case for an injunction or stay can be made out, quite apart from a right covered by Article 14 of the Constitution or by any other fundamental right whose enforcement may have been suspended, that an injunction or stay could be granted at all on suitable ·terms. As we have already said it was on such an assumption that t)lis Court had, apparently, granted the interim stay which must now be discharged. Consequently, we dismiss these appeals with costs throughout, and discharge the stay orders. SR. _Appeals dismissed._