CASE NO.: Special Leave Petition (civil) 14833 of 1999 PETITIONER: NETAI BAG & ORS. Vs. RESPONDENT: THE STATE OF WEST BENGAL & ORS. DATE OF JUDGMENT: 27/09/2000 BENCH: <NAME> & <NAME>. JUDGMENT:

SETHI,J.

Leave granted.

L...I...T.......T.......T.......T.......T.......T.......T..J Claiming to be the champions to the cause of vegetarians, the Appellant Nos.5 and 6 along with the heirs of the erstwhile land owners, Appellant Nos.1 to 4 herein, moved <ORG> by way of a writ petition, filed in public interest with prayer for the issuance of a writ in the nature of mandamus commanding the respondents to forbear from using or utilising the acquired lands for the purposes other than the one for which the acquisition was made. It was further prayed that directions be issued to give back the lands in question to the erstwhile land owners or to sell the land by public auction only for the public purpose. Prayer for the issuance of writ of prohibition was also made for restraining the respondents to use the land for slaughter house or abattoir by respondent No.5. Pending adjudication of the main petition an injunction was prayed for restraining the respondents from using or utilising any part or portion of land in question for any slaughter house/ abattoir and restraining the respondent No.4 from allowing respondent No.5 to establish or operate any slaughter house/ abattoir on the land in question. Vide order dated 25.5.1988, the learned Single Judge of <ORG> dismissed the writ petition and the appeal filed against the order of the learned Single Judge was dismissed by <ORG> of <ORG> vide the judgment impugned in this appeal.

The facts leading to the filing of the present appeal are that by notification dated 22nd August, 1961 issued under the Land Acquisition Act , <ORG> acquired land measuring 151.18 acres for a public purpose, namely, construction of Mourigram-Dankuni Link Project of South-Eastern <ORG>. After completion of the project, the <ORG> surrendered the surplus land measuring 77.36 acres to <ORG> on 7.7.1972. On 12.5.1973, <ORG> handed over the possession of 74.21 acres of the surplus land to <ORG>, now <ORG>. <ORG> was authorised to set up <ORG> on this land. In furtherance of the establishment of abattoir, a Memorandum of Understanding was signed between India and Australia by which <ORG> agreed to provide assistance for the establishment of an abattoir, in the year 1977. The consultants of <ORG> prepared a detailed three-volume Feasibility Report stating therein that <ORG> was feasible. By that time <ORG> had established another abattoir project at Durgapur which, after commissioning, was running into losses. The appellants apprehended that <ORG>, in collusion with some outsiders, was negotiating to sell out and to transfer the land in fiduciary manner exclusively for a profit purpose allegedly to defraud and mislead the people of the <ORG>. The private party referred to was <ORG>, a Dubai based concern for the purposes of establishing a slaughter house/abattoir. Some correspondence ensued between the appellants and the respondents 1 to 4. It was contended that the respondents were encroaching upon the Constitutional Rights of the appellants by establishing a slaughter house/abattoir on the land acquired for a specified public purpose. It was submitted that after the completion of the project, the excess land should have been transferred to the land owners or sold in public auction but could not be utilised for any private purpose particularly for the establishment of a slaughter house/abattoir. The petitioners alleged that the establishment of the slaughter house/abattoir was not in conformity with List III Entry 17 of the Seventh Schedule of the Constitution. The action was further alleged to be contrary to List III Entry 17(B) and violative of the mandate of Articles 31(2), 48, 48A, 49 and 51 of the Constitution. The delay in filing Writ Petition was sought to be explained on the ground that respondents had allegedly kept the deal a guarded secret.

The disputed land comprises of an area measuring 46.42 acres, being part of the unutilised surplus land. It appears that realising its inability to profitably run the abattoir at Durgapur, <ORG> was in search of some private party to take over the said abattoir along with the proposed Project of establishing abattoir at Mourigram. Newspaper advertisements appears to have been issued by <ORG> in 1986, inviting private parties to take over the Durgapur Abattoir which is shown to be running in losses and for which the Comptroller & Auditor General had severely criticised the aforesaid <ORG> vide its Report submitted in 1993. Respondent No.5 is stated to have been invited by <ORG> vide letter dated 19th October, 1993 for taking over Durgapur Abattoir. In reply <ORG>, a sister concern of respondent No.5 intimated that "we are willing to take over the existing facilities at Durgapur on 'as is where is basis' at reasonable terms for subsequent development into an export oriented integrated complex". On 22nd December, 1993 they informed the Minister concerned that to effectively utilise the State's agro based materials being livestock, fruits and vegetables, fresh water and sea fish in addition to milk based product, the concern proposed to create integrated food processing and preservation facilities. For that purpose, they promised that factory would be complete in accordance with the highest international standards and specifications for conversion and production of food products. They declared that the pulp of mango fruits besides mango slices and other fruits and vegetables from Bardhaman, Malda and Murshidabad Districts would be received at their proposed preliminary and processing centres to be set up in the Districts to ensure direct linkage with the farmers and for maintaining steady supply to their processing unit. Upon the suggestion of the Secretary, <ORG>, the representatives of <ORG> inspected the vacant plot of land at Mourigram and found the same to be suitable for their proposed venture. They desired that the entire site be leased out to them on a long term basis as per the standard terms of the concerned <ORG> West Bengal Government at reasonable terms. On 14th January, 1994, the said concern was offered the land at Mourigram and Durgapur upon the following terms:

"Through long-term lease for 99 years on realisation of 100% market value only.

2. Approximate market value at Mourigram has been assessed at Rs.1,92,800/- per acre for Danga/ Bastu/Bagan land, Rs.1,54,240/- per acre for 'Sali', Rs.77,120/- per acre for 'Doba', Rs.1000/- per acre for 'Khal'.

3. The market value in respect of Durgapur land will be communicated to you shortly.

4. If you do not use the land within a reasonable time for the purpose for which it is given, <ORG>. will reserve the light suo moto to determine the lease." The offer was accepted by the company on 18th January, 1994 with intimation that the leased property shall be utilised for development of integrated multipurpose product food processing plants. The market value of the Durgapur land, building, plant and machinery was communicated to respondent No.5 on 1.2.1994 which was accepted the same day. On 25th February, 1994, <ORG> granted approval to respondent No.5 for setting up of Mourigram and Durgapur Projects. On 2nd March, 1994, <ORG>, Howrah was requested to furnish a report as to whether the entire 46.42 acres of land was fit for settlement for the proposed project and also to furnish the details of the land which would be fit for settlement by mentioning specifically the exact extent for each class and area involved. A decision was taken on 18.4.1994 for transferring the land to the respondent No.5 on long term basis, initially for a period of 99 years on payment of Rs.71,59,820.80. On 13th June, 1994, respondent No.5 was informed that possession of the land would be handed over after payment of the lease premium. Respondent No.5 is stated to have made the payment of Rs.87,27,000/- for the purchase of building, plant and machinery of Durgapur Slaughter House and on 13th July, 1994 and sum of Rs.71,59,820/- as lease premium for Mourigram Abattoir. The lease deed was executed between the parties on 9th June, 1995 on terms and conditions which were incorporated in Part II of the Schedule attached to the said lease deed. Feeling aggrieved, the appellants are stated to have filed the writ petition on 13.4.1998 without impleading respondent No.5 as party thereto. Respondent No.5 is shown to have been impleaded as party in the writ petition on 17th August, 1998. The writ petition was dismissed on 25th September, 1998 and appeal filed against it met the same fate on 10.5.1999, vide the judgment impugned in this appeal. <NAME>, learned Senior Counsel appearing for the appellants has challenged the action of the respondent solely on the ground of arbitrariness and violation of Article 14 of the Constitution. He has contended that the <ORG> largesse in the form of the land, the subject matter of the litigation has been bestowed upon respondent No.5 merely for a song without adhereing to the settled norms of fair play and equity. It is contended that the respondent <ORG>, without issuing any advertisement or resorting to the procedure of auction and tender, has secretly leased out the land which has resulted in huge monetary loss worth crores of rupees to the <ORG> exchequer. Elaborating the arguments, it was submitted that <ORG> is not and should not act as free as an individual in selecting the recepient for its largesse, as has been allegedly done in this case. The Government cannot lay down arbitrary and capricious standards for choice of persons for the conferment of <ORG> benefits. Referring to a host of documents, the learned Senior Counsel submitted that the arbitrary action of the respondent-<ORG> is writ large in this case. The respondents are stated to have not satisfied either <ORG> or this <ORG> about their bonafides in initiating, processing and concluding the lease agreement with respondent No.5. Inviting our attention to the lease deed, the learned Senior Counsel submitted that the said document in fact was a sale deed in cloak of a lease agreement. The consideration of the sale deed has been termed to be "on throw away price". Conceding that the appellants had not made allegations of malafides against any one of the respondents, it is contended that though not actual but legal malafides are discernible from the pleadings of the parties and the record produced by them. Per contra <NAME>, Senior Counsel who was followed by <NAME>, Additional Solicitor General contended that the writ petition is not a bonafide action of the appellants. Four of whom are stated to be the erstwhile owners interested only to get back the land legally acquired from them. The petition is stated to be suffering from unexplained delay and latches. The appellants are stated to have not pleaded or argued the points including the plea of arbitrary action of the respondents before <ORG>. It is submitted that in the light of the pleadings and the record produced before it, <ORG> was justified in dismissing the writ petition filed by the appellants. The proposed setting up of the industry is stated to have provided job opportunities to more than 300 people and is likely to earn foreign exchange to the extent of Rs.50 crores per year. It is argued that there is no defect or error of law in the decision making process of <ORG> by which the land has been leased out to respondent No.5. It is conceded that though the documents executed between the parties is styled as a lease deed, yet in fact it is a sale as the whole of the then prevalent market value of the land has been paid by the respondent No.5. The lease deed is stated to have been got executed for keeping interests of the <ORG> alive in the land which in no way affects the public interest but in effect is adverse to the interests of the respondent No.5. The deed is stated to have been concluded on the basis of negotiations, a recognised method of transferring the <ORG> property. The learned Single Judge formulated the three questions for his adjudication which read as under: "(a)@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ Whether the writ petitioner nos.3 to 6 can as a matter of right get back the land which was acquired from the predecessor in interest or not;

(b) Whether a property which has been vested under the Acquisition Act , 1894 can be dealt with and/or used by <ORG> otherwise than public purpose or not;

(c) Whether granting of lease of a vested land to a private company for the purpose of industrial development and for earning foreign exchange is public purpose or not."

Learned counsel who appeared in <ORG> for writ petitioners 3 to 6 conceded that his clients had no right to ask for return of the surplus land. Relying upon the judgments of this Court in [AIR 1977 SC 448] and [1997 (2) SCC 627, the learned Single Judge held that "once the property has been vested unto the <ORG> under Section 17 of the Land Acquisition Act, neither the previous owner nor their successors-in-interest can question the dealing and disposal of the property by the <ORG>". Referring to the decisions of this Court reported in [AIR 1986 SC 72 and AIR 1986 SC 910] and analysing the facts of the case the learned Single Judge held:-

"There are enough materials placed before me which unmistakably substantiate that Mr.<NAME>'s client has brought a promise and/or hope that at least 400 employed youths would be provided in this industry. This industry will also bring foreign exchange to the public exchequer nearly worth 40 crores per annum. It is now accepted position that one of the prime economic policies of this country is to earn foreign exchange as much as possible. So, in my view, when the <ORG> utilizes a land in furtherance of development of industry and/or earning foreign exchange the same is nothing short of public purpose, notwithstanding a statement made in clause 16 of the lease deed. The statements made in clause 16 of the lease at best operate as admission. This admission however is displaced by the above fact to prove the fact of public purpose. My view has been expressed accepting the decision of case reported in AIR 1978 Pat.136. Moreover, here the <ORG> <ORG> instead of leaving the land being unutilised has gainfully utilized by granting long lease to Mr.<NAME>'s client with a premium of Rs.71,59,820.80 which has gone to the <ORG> exchequer." The construction of a slaughter house was also held to be a public purpose. In appeal, while upholding the judgment of the learned Single Judge, <ORG> dealt with the submissions of the appellants to the effect that the land should have been sold by public auction, if after acquisition it was not used for any other public purpose by the <ORG>. The Division Bench held that the surplus land in question need not have been sold in auction when the <ORG> had declared to utilise the land by leasing out the same for 99 years in favour of Respondent No.5. Agreeing with the learned Single Judge, it was held by <ORG> in appeal, that:

"We are, however, of the opinion that this court is not at all required to be satisfied whether a surplus land has been utilised for a public purpose. After acquisition of the land in accordance with the procedure established by law a surplus land has vested in the <ORG> free from all encumbrances. Article 298 empowers the <ORG> to carry on any trade or business and make contracts for any purpose."

Finding that no allegations of malafide and discrimination had been pleaded in the petition, <ORG> was held competent to enter into contracts with private persons for disposal of the property irrespective of the purpose of such acquisition or disposition subject only to the condition of compliance with the relevant provisions of the Constitution. The appellants were held to be having no locus standi to question the agreement executed between the respondent-State and the respondent No.5.

As noticed earlier, Dr.<NAME>, learned Senior Counsel appearing for the appellants has not challenged the@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ legality or constitutionality of the lease agreement or the@@ JJJJJJJJJJJJ action of the respondent-<ORG> on the grounds alleged in the writ petition. He has conceded that the erstwhile owners of the land had no right to ask for the return of the land to them. Similarly, <ORG>, petitioner No.5 was not justified in seeking the relief of restraining the respondents from utilising the land for the purposes of abattoir at Mourigram. The sole point urged before us was with respect to the alleged arbitrariness of <ORG>. To appreciate the only submission made before us we scanned the writ petition, the counter affidavit and the accompanying documents and found that no basis for such a plea was laid in the writ petition and the arguments addressed before <ORG> were not referable to any pleadings. It is contended that as the issue had specifically been pleaded in the appeal before <ORG> and has been urged in the grounds of appeal in this <ORG>, a decision on the point was warranted, notwithstanding the absence of sufficient pleadings. We are not impressed with such an argument. Whether any advertisement was issued or not, or whether public auction or floating of tenders should have been dispensed with or not, are such matters which require pleadings in order to enable <ORG> to explain or justify their action in the circumstances of the case. The appeal before <ORG> of <ORG> and in this <ORG> being in continuation of the original proceedings in the form of writ petition, cannot enlarge the scope of inquiry at this belated stage. In the absence of specific allegations of the malafides attributed to any of the respondents, it cannot be said that mere violation of some alleged statutory provisions are safeguards as spelt out by this <ORG>, would render the <ORG> action to be arbitrary in all cases. To buttress his arguments, the learned counsel for the appellants submitted that as the land was transferred to respondent No.5 for a song and at throw away price, resulting in corresponding loss to the <ORG> exchequer, it reflected the legal malafides and the arbitrary action of the respondents. The argument has to be noted to be rejected inasmuch as nowhere in their writ petition the appellants had alleged that the land had been sold at a throw away price. Referring to the lease agreement it is contended that as in fact transaction is sale under the cloak of lease, the legal malafides are writ large exhibiting the arbitration action of the respondents. Learned counsel appearing for the respondents have brought to our notice that in fact the value charged from respondents No.5 was the market value of the land and not lease money as urged. In this regard, in the counter affidavit filed on behalf of the respondent No.1 in this <ORG> it is stated:

"In order that the proper and correct lease premium and lease rent were arrived at a valuation of the land in question was caused to be made by the Special Land Acquisition Officer. By the memo no.49(c) dated 12th January, 1994 of the District Magistrate, Howrah, a copy whereof is annexed hereto and marked "Annexure R1/8", the valuation Report (in L.V. Case No.46/93) was forwarded to the Secretary, <ORG> of the Government of West Bengal Officer. A photocopy of the said valuation report is annexed hereto and marked "Annexure R1/9". From the memo dated 12.1.94 it would be seen that a part of the land which was ultimately leased out to the respondent No.5 was under water and hence demarcation could be done only in respect of 30 acres of the land. On the basis of the said valuation the selami, i.e., lease premium, annual rent and cess payable by the respondent no.5 for the lease to be granted were calculated as per the circulars issued by <ORG> for determination of land revenue and <ORG>, West Bengal respectively, copies whereof are annexed hereto and marked Annexure R1/10. copy of the documents evidencing the manner in which the value of the lands at both Mourigram and Durgapur were arrived at and the lease premium, annual rent, cess etc., arrived is annexed hereto and marked Annexure R1/11. The lease premium so arrived at was of a sum of Rs.71,59,820.80 on the basis of the market value of the land then prevailing. The ground rent arrived at was RS.418/- per annum and cess Rs.296/- per annum without granting any concessions whatsoever.

From the above-mentioned valuation report of the Land Acquisition Officer, the manner in which the market value of the said land which was to be given on lease basis to the respondent no.5 for setting up of the above-mentioned project and the documents relied upon for the said purpose, which included five numbers of executed lease deeds as available in <ORG> at Howrah for the year 1992 and applying appreciation percentage thereon, as well as the order of the Collector dated 29th April, 1993 in a land acquisition case were taken into account. The same clearly shows that, contrary to what had been alleged in the Special Leave Petition, the lease in question has been granted taking into consideration the market price of subject land on the relevant date."

The public purpose, which the <ORG> had in mind has been spelt out in its affidavit as under:

"In finalising the lease terms and conditions and the proposal of the respondent no.5, the fact that setting up of the said industry in the low lying land at Mourigram would not only provide employment to more than 300 persons (which estimate was provided even by <ORG>, Australia in its feasibility study report carried out in the year 1983 as aforesaid) and indirect employment to large number of persons in West Bengal were taken into consideration. It was also taken into consideration that setting up an industry in such a semi-rural area in Mourigram, a Gram Panchayat area under Duillya Gram Panchayat of Zilla Parishad Howrah would help in industrialisation of the said area and consequently the State of West Bengal. The fact that the proposed unit would be an export oriented which would earn valuable foreign exchange of more than Rs.50 crores under export obligation in terms of the EPGC Scheme of <ORG> where-under machinery and equipment for setting up the Project would be imported, as represented by the respondent no.5 during the course of negotiation, was also taken into account."

Learned counsel for the appellant has not referred to any statutory provision mandating the <ORG> to adhere to a specified procedure in the matter of transfer of its property either by way of sale or by lease. In the absence of a statutory restriction imposed upon the <ORG>, it is to be seen whether the impugned action is against public interest or actuated by extraneous considerations or is opposed to fair play or the <ORG> is shown to have conferred undue benefits upon undeserving party.

It has been consistently held by this Court that in a democracy governed by the rule of law, the <ORG>@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ Government or any of its officers cannot be allowed to@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJ possess arbitrary powers over the interests of the individual. Every action of <ORG> must be in conformity with reason and should be free from arbitrariness. The Government cannot be equated with an individual in the matter of selection of the recepient for its largesse. Dealing with the limits on the exercise of <ORG> authority in relation to rule of administrative justice, Mr.Justice <NAME> in <NAME> v. <NAME> [(1959) 359 US 535: 3 L Ed 2d 1012] said:

"An executive agency must be rigorously held to the standards by which it professes its action to be judged.... Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed. ...This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword."

This Rule of Administrative law, was accepted as valid and applicable in India by this Court in <NAME> v. The State of Punjab & Ors. [1975 (3) SCR 82], <CITATION> . [1975 (3) SCR 619] and <CITATION> . [AIR 1979 SC 1628].

Though the <ORG> cannot escape its liability to show its actions to be fair, reasonable and in accordance with law,@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ yet wherever challenge is thrown to any of such action,@@ JJJJJJJJJJJJJ initial burden of showing the prima facie existence of violation of the mandate of the Constitution lies upon the person approaching the Court. We have found in this case, that the appellants have miserably failed to place on record or to point out to any alleged constitutional vice or illegality. Neither the High Court nor this Court would have ventured to make a rowing inquiry particularly in a writ petition filed at the instance of the erstwhile owners of the land, whose main object appeared to get the land back by any means as, admittedly, with the passage of time and development of the area, the value of the land had appreciated manifold. It may be noticed that in the year 1961 the erstwhile owners were paid about Rs.5.5 lakhs and the <ORG> Government assessed the market value of the property which was paid by respondent No.5 at Rs.71,59,820/- The appellants have themselves stated that the value of the land round about the time, when it was leased to respondent No.5 was about Rs.11 crores. There cannot be any dispute with the proposition that generally when any <ORG> land is intended to be transferred or the <ORG> largesse decided to be conferred, resort should be had to public auction or transfer by way of inviting tenders from the people. That would be a sure method of guaranteeing the compliance of mandate of Article 14 of the Constitution. Non-floating of tenders or not holding of public auction would not in all cases be deemed to be the result of the exercise of the executive power in an arbitrary manner. Making an exception to the general rule could be justified by the <ORG> executive, if challenged in appropriated proceedings. <ORG> cannot be expected to presume the alleged irregularities, illegalities or unconstitutionality nor the courts can substitute their opinion for the bonafide opinion of the <ORG> executive. The courts are not concerned with the ultimate decision but only with the fairness of the decision making process.

The Government is entitled to make pragmatic adjustments and policy decision which may be necessary or called for under the prevalent peculiar circumstances. The court cannot strike down a policy decision taken by the Government merely because it feels that another decision would have been fairer or wiser or more scientific or logical. <CITATION> . [1986 (4) SCC 566] it was held that the policy decision can be interfered with by the court only if such decision is shown to be patently arbitrary, discriminatory or malafide. In the matter of different modes, under the rule of general application made under the M.P. Excise Act, the Court found that the four different modes, namely, tender, auction, fixed licence fee or such other manner were alternative to one another and any one of them could be resorted to. <CITATION> . [1987 (2) SCC 295], it was held that as regards the question of propriety of private negotiation with an individual or corporation, it should be borne in mind that <ORG> owned or public owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed, public interest being the paramount consideration. One of the methods of securing the public interest when it is considered necessary to dispose of the property is to sell the property by public auction or by inviting tenders. But such a rule is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule. As and when a departure is made from the general rule, it must be shown that such an action was rational and not suggestive of discrimination. In that case on facts the Court found that on the commercial and financial aspect, the lease granted in favour of a group of hoteliers, not arbitrary as the method of "nett sales" was held to be fairly well-known method adopted in similar situations. To the same effect is the judgment in <CITATION> . [1995 Supp. (2) SCC 512]. <CITATION> . [AIR 1980 SC 1992], this Court, after referring to various judgments, including the judgment in <NAME> case, held:

"It is imperative in a democracy governed by the rule of law that governmental action must be kept within the limits of law and if there is any transgression, the <ORG> must be ready to condemn it. It is a matter of historical experience that there is a tendency in every government to assume more and more powers and since it is not an uncommon phenomenon in some countries that the legislative check is getting diluted, it is left to the <ORG> as the only other reviewing authority under the Constitution to be increasingly vigilant to ensure observance with the rule of law and in this task, the court must not flinch or falter. It may be pointed out that this ground of invalidity, namely, that the governmental action is unreasonable or lacking in the quality of public interest, is different from that of mala fides though it may, in a given case, furnish evidence of mala fides." <CITATION> [1997 (7) SCC 592] this <ORG> held:

"Although to ensure fair play and transparency in State action, distribution of largesse by inviting open tenders or by public auction is desirable, it cannot be held that in no case distribution of such largesse by negotiation is permissible. In the instant case, as a policy decision protective measure by entering into agreements with selected industrial units for assured supply of sal trees at concessional rate has been taken by the <ORG>. The rate of royalty has also been fixed on some accepted principle of pricing formula as will be indicated hereafter. Hence, distribution or allotment of sal seeds at the determined royalty to the respondents and other units covered by the agreements cannot be assailed. It is to be appreciated that in case, distribution by public auction or by open tender may not achieve the purpose of the policy of protective measure by way of supply of sal seeds at concessional rate of royalty to the industrial units covered by the agreements on being selected on valid and objective considerations."

It was further held that principle of reasonableness and non- arbitrariness in governmental action is the core of our entire Constitutional scheme and structure. On the facts of that case, the action of <ORG> in granting a contract by way of negotiation was held not arbitrary or irrational.

In the backdrop of the legal position noticed herein, it has to be seen, in the instant case, as to whether the action of the respondent No.1 was illegal, arbitrary or malafide. To justify their action of entering into an agreement of lease by negotiation, even in the absence of pleadings on behalf of the appellants, the <ORG> has submitted that the entire transaction of granting the lease to the respondent No.5 for an integrated food processing unit with an abattoir in a semi-rural area, which was a low lying land, despite their best efforts, the state Government were unable to set up any project. The lease was given to respondent No.5 upon consideration of all the facts and circumstances with the object of setting up an industry in the <ORG> of West Bengal which was likely to generate employment to more than 300 persons and earn foreign exchange worth more than Rs.50 crores. The negotiations were resorted to ensure the disposal of the slaughter house at Durgapur which was proved to have been running in losses. The respondent-<ORG> had failed to get any buyer for Durgapur Project despite Newspaper advertisements. The Government had decided to make a package deal for the purposes of transferring the Durgapur Project and establishment of <ORG>. Earlier a memorandum of understanding had been arrived at between <ORG> and Australia which ultimately did not mature in the shape of an abattoir. Due to financial constraints, continuous loss suffered at Durgapur and lack of technical expertise, the respondent-<ORG> could not venture to undertake the <ORG> for setting up of an abattoir. Having failed in all its efforts, the then Minister-in-charge of <ORG> of <ORG> is stated to have written to some Bombay based firms, reputed in the field, to salvage the two projects. Positive response is stated to have been received from some firms including <ORG>, namely, respondent No.5 and <ORG>. The proposal of <ORG> being very vague was not accepted. <ORG> had shown interest in taking over both Durgapur & Mourigram sites under certain terms and conditions for the purpose of revitalising and making operational the existing abattoir at Durgapur and for setting up of <ORG> along with abattoir at Mourigram. It is further stated in the counter-affidavit of the respondent-<ORG>, that:- "Since, no response was received from the advertisements and the personal requests made in the manner above by the Minister-in-charge of the Department from any concern except as aforesaid, the <ORG> took into account the credentials of the group of companies of which <ORG>, was one, including the export award certificate awarded to <ORG> for outstanding contribution for promotion of agricultural and processed food products during the year 1992-93 as proof of their excellence in their field and thereupon proceeded to finalise the lease terms and conditions under which inter alia the Mourigram land would be leased out to the respondent No.5 for setting up of an integrated food processing unit along with an abattoir, products whereof could be exported as well as sold in the <ORG> of West Bengal. <ORG> alongwith its associated companies was the first company in India to export 1000 million rupees on agricultural and process food products (in 1992-93). <ORG> (<ORG>), <ORG>, <ORG> India, had acknowledged and certified the efforts of <ORG> and its associated companies in the export of Meat and other agro products such as rice, tea, coffee, spices, onion, cashew, pulses extractions, marine products and processed Food and vegetable."

In view of the peculiar facts and circumstances of the case we are not persuaded to hold that the action of the@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ respondent-<ORG> in executing the lease deed with respondent@@ JJJJJJJJJJJJJJJJJJJ <ORG> was unreasonable, illegal, arbitrary or actuated by extraneous considerations. In this regard it is worth noticing that none except the erstwhile owners and the propounders of vegetarianism have made any grievance to the effect that the market value of the property, as charged from respondent <ORG>, was either allegedly for a song or at a throw away price. The inaction of the appellants in approaching the <ORG>, almost after three years of the impugned lease deed is an additional circumstance to doubt their bonafides in challenging the impugned action. During the pendency of the litigation between the parties, a huge project has actually, by now, come into existence where the production has also commenced. Respondent <ORG> is claimed to have spent a sum of Rs.73.01 crores as of 30.10.1999 on the project. Interference at this stage will not only adversely affect the business of respondent <ORG> but would also render a large number of people unemployed and deprive the <ORG> its cherished desire of developing the industrial growth.

Under the circumstances, we do not find any ground to interfere with the impugned judgments or the action of the@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ respondent-State in granting the lease to respondent No.5.@@ JJJJJJJJJJJJJJJJJJJJ The appeal is accordingly dismissed but without any order as to costs.


PETITIONER: PODDAR STEEL CORPORATION Vs. RESPONDENT: GANESH ENGINEERING WORKS AND OTHERS. DATE OF JUDGMENT06/05/1991 BENCH: <NAME>, L.M. (J) BENCH: <NAME>, L.M. (J) PUNCHHI, M.M. CITATION: 1991 AIR 1579 1991 SCR (2) 696 1991 SCC (3) 273 JT 1991 (2) 577 1991 SCALE (1)928 ACT: Constitution of India: Articles 226 and 136. Railway contract-Tender notice-Conditions-Payment of earnest money stipulated by cash or demand draft drawn on a specified bank-Acceptance of banker's cheque drawn on a bank other than the stipulated bank-Validity of-Essential and ancilliary conditions-Distinction between. HEADNOTE: The Diesel Locomotive Works, Indian Railway, invited tenders for disposal of one lot of Ferrous scrap. One of the conditions mentioned in the tender notice was that the earnest money should be deposited by cash or by demand draft drawn of <ORG>. The appellant, one of the intending purchasers, submitted his tender accompanied by a cheque of <ORG> drawn on its own branch. The tender of the appellant, being the highest, was accepted and tenders of respondent no. 1 and some others were rejected. <ORG> had verified from <ORG> the bona fide of appellant's cheque and then only decided to accept its tender. Respondent no. 1 filed writ petition in <ORG> challenging the rejection of its tender, and acceptance of appellant's tender on the ground that the latter did not comply with the necessary condition for payment of earnest money with the tender. The appellant contended that it had substantially complied with the requirement by sending with its tender a banker's cheque marked and certified by the <ORG> as good for payment. <ORG> opined that respondent's tender was rightly for failure to deposit the earnest money, but allowed the writ petition holding that the appellant also did not satisfy the condition regarding payment of the earnest money since the cheque sent was from a bank other than <ORG> as stipulated, and as such the authorities had no power to accept appellant's tender. Aggrieved, the appellant preferred the appeal by special leave to this <ORG>. Allowing the appeal, this <ORG> 697 HELD: 1. As a matter of general proposition it cannot be laid down that an authority inviting tenders in bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirement in a tender notice can be classified into two categories-those which lay down the essential conditions of eligibility, and the other which are merely ancilliary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other case it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate case. [699E-G] 2. In the instant case, in submitting the cheque drawn on the <ORG> and not on <ORG>, the relevant condition of the tender notice was not obeyed literally; but the said cheque must be treated as sufficient for the purpose of achieving the object of the condition and <ORG> took the abundant caution by a further verification from the bank. In the situation it could not be said that <ORG> had no authority to waive the technical literal compliance of the clause, regarding manner of payment of earnest money especially when it was in its interest not to reject the said bid which was the highest. [699D-E; 700F-G] GJ Fernandez v. State of Karnataka & Ors., [1990] 2 SCC 488 and <CITATION> bullion Association Ltd. & Anr.,  35 Company Cases 526, relied on. <CITATION> .,  3 SCC 489; Spargo's Case, 1873 LR 8 Ch. App. 407; <CITATION> , AIR 1984 Bombay 351 and <CITATION> , AIR 1982 Kerala, 81, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2272 of 1991.

From the Judgment and Order dated 12.11.1990 of <ORG> in C.M.W.P. No. 11192 of 1990.

<NAME> and <NAME> for the Appellant. Dr. <NAME>, <NAME> and <NAME> for the Respondents.

The Judgment of the Court was delivered by <NAME>, <NAME> Special Leave is granted.

2. In response to a notice inviting tenders by <ORG> <ORG>, in connection with disposal of one lot of Ferrous Scrap, a number of tenders were submitted by the appellant, the respondent no. 1 and other intending purchasers. The tenders of the respondent no. 1 and some other bidders were rejected as defective and the appellant's offer being the highest was accepted, and accordingly the appellant deposited a sum of about Rs.15 lacs. The respondent no .1 challenged the decision by a writ petition before <ORG> contending that there was no defect in its tender and that the tender of the appellant could not have been validly accepted as the necessary condition of payment of Rs. 50,000 as earnest money with the tender had not been complied with. The application was resisted on the grounds (i) that the respondent no. 1 having not deposited the earnest money at all was not entitled to a consideration of its tender and has no locus standi in the present matter; and (ii) that the appellant had substantially complied with the requirement by sending with its tender a Banker's Cheque marked and certified by <ORG> as good for payment. <ORG> accepted the appellant's first ground, holding that the tender of the respondent had been rightly rejected for failure to deposit the earnest money, but allowed the writ petition on the finding that the appellant also did not satisfy the condition no.6 of the tender notice as the earnest money was offered by the Banker's Cheque of a bank other than <ORG> mentioned in the said clause. <ORG> directed the authorities to consider the other valid tenders and further observed that should the other tenders be found to be unacceptable it would be open to the authorities to invite fresh tenders. the present appeal is directed against this judgment.

3. The case of the appellant has been that its tender mentioned the highest amount of one and a half crores rupees for the 2000 M.T. of Ferrous Scrap which was a very fair price, and the authorities were absolutely right in accepting the same. With respect to the alleged deficiency in the matter of deposit of the earnest amount, the stand is that a <ORG>er's Cheque is as good as cash and especially so when a verification from the bank in question about its authenticity was made and the <ORG>'s assurance to honour the same was obtained. Admittedly, <ORG> had taken the precaution of getting the matter confirmed from the appellant's bank before deciding to accept his tender.

4. The relevant clause 6 of the notice required the tender to be accompanied by earnest money calculated at 5% of the offer under the tender subject to a maximum of Rs 50,000 and in terms permitted the deposit by cash or by demand draft drawn on <ORG>. the defect pointed out by the respondent no. 1 and accepted by <ORG> is in the appellant sending the cheque of <ORG> drawn on its own branch and not on <ORG>. By the impugned judgment it has been held that in view of this defect the authorities had no power to accept the appellant's tender.

5. the learned counsel for the appellant has contended that having regard to the circumstances in the case it must be held that <ORG> had the power to accept the appellant's tender. Referring to the books "Bills of Exchange" by <NAME>, and "Cheques in Law and Practice" by M.S. Parthasarathy, it has been argued that certified cheques are as good as cash and the irregularity relied upon in the appellant's submitting his tender could be validly waived by <ORG>. Reliance was also placed on <CITATION> , AIR 1984 Bombay 351 and <CITATION> , AIR 1982 Kerala

6. It is true that in submitting its tender accompanied by a cheque of <ORG> and not of <ORG> the clause no. 6 of the tender notice was not obeyed literally, but the question is as to whether the said non- compliance deprived <ORG> of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories-those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. This aspect was examined by this <ORG> in <NAME> v. State of Karnataka 7 Ors., [1990] 2 SCC 488 a case dealing with tenders. Although not in an entirely identical situation as the present one, the observations in the judgment support our view. <ORG> has, in the impugned decision, relied upon <CITATION> .,  3 SCC 489 but has failed to appreciate that the reported case belonged to the first category where the strict compliance of the condition could be insisted upon. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The judgment indicates that the <ORG> closely examined the nature of the condition which had been relaxed and its impact before answering the question whether it could have validly condoned the shortcoming in the tender in question. This part of the judgment demonstrates the difference between the two categories of the conditions discussed above. However it remains to be seen as to which of the two clauses, the present case belongs.

7. The nature of payment by a certified cheque was considered by this Court in <CITATION> .,  35 Company Cases

526. Several objections were taken there in support of the plea that the necessary condition in regard to payment was not satisfied and in that context this Court quoted the observations from the judgment in an English decision (vide <NAME>'s case: 1873 L.R. & Ch. App. 407) that it is a general rule of law that in every case where a transaction resolves itself into paying money by A to B and then handing it back again by B to A, if the parties meet together and agree to set one demand against the other, they need not go through the form and ceremony of handing the money backwards and forwards. This Court applied that the observations to a transaction requiring payment by one to another. <ORG> decisions in <NAME> case and <NAME> case are also illustrations where literal compliance of every term of the tender notice was not insisted upon.

8. In the instant case the certified cheque of <ORG> drawn on is own branch must be treated as sufficient for the purpose of achieving the object of the condition and <ORG> took the abundant caution by a further verification from the bank. In this situation it is not correct to hold that <ORG> had no authority to waive the technical literal compliance of clause 6, specially when it was in its interest of not to reject the said bid which was the highest. We, therefore, set aside the impugned judgment and dismiss the writ petition of the respondent no. 1 filed before <ORG>. The appeal is accordingly allowed with costs through out.

R.P. Appeal allowed.


JUDGMENT <NAME>, J.

(1) By this order I propose to dispose of I. A. No. 177 of 1987 filed by the plaintiff under Order 12 rule 6 read with Section 151 Civil Procedure Code. with a request that in so far as the defendant has made an admission in a letter dated 25th August, 1985 that a sum of Rs. 5,98,0001- was due to the plaintiff from the defendant a decree be (2) The contention of the plaintiff is that defendant No. 1 firm has been maintaining its accounts and a letter dated 25th August, 1985 now Ex. P. 4 was written by defendant No. 1 to the plaintiff requesting the plaintiff to transfer the then existing outstanding loan against the defendant along with interest to the defendants 'Working Capital Term Loan' Account. It is further submitted by the plaintiff that along therewith the defendant had submitted a balance sheet as on 31st March, 1985 and in the said balance sheet the defendant had admitted that a sum of Rs. 5,98,0001- was due as on that date to the plaintiff from the defendant and as such it is submitted that in view of the said admission a decree for this amount be passed in favor of the plaintiff and against the defendant without waiting for the determination of any other question between the parties.

(3) The contention of the learned counsel for the defendants is that there are as many as five defendants and all of them are contesting the suit on various grounds both legal and factual and the defendants have raised as many as five preliminary objections as well in their written statement. It is also urged that the plaintiff was placing wrong construction on Ex. P. 4 which otherwise is admitted to have been written by defendant No. 1 to the plaintiff. It has further been submitted by the defendants that the said letter has not been signed, or written by all the defendants and the balance sheet referred to therein is wrong, vague, ambiguous and denied and in these circumstances it has been submitted that the application should be dismissed.

(4) A perusal of letter Ex. P. 4 shows that this letter as such does not contain any admission whatsoever. There is nothing to suggest in this letter that any of the defendant has made any admission of the claim of the plaintiff. However, when this letter is considered with reference to a balance sheet and profit & loss account referred to therein, then it can be said that the defendant has made the request referred to above to the plaintiff but would that by itself be enough to accept that the defendant has made admission of the claim of the plaintiff ? In this behalf it would be necessary to refer to the copy of the balance sheet and profit and loss account which have been placed on record along with letter Ex. P. 4. In the said "provisional balance sheet as on 31-3-1985" a sum of Rs. 5,98,367.01 has been shown as secured loan in favor of <ORG> against the defendant. The question is whether this is sufficient admission within the meaning of Order 12 rule 6 Civil Procedure Code so as to entitle the plaintiff to get a decree straightaway.

(5) In this suit issues have already been framed and as many as seven issues have been framed and the said issues are as follows :-

"1. Whether the plaint has been signed and verified and the suit has been filed by a duly authorised person ?

2. Whether the suit is not maintainable against defendants 1, 3 and 5, as alleged in the preliminary objection No. 1 ?

3. Whether the plaintiff obtained the signatures of defendants 2 and 4 on blank forms and papers ? If so, to what effect ?

4. Whether the plaintiff is entitled to recover interest ? If so, at what rate ?

5. Whether the defendant No. 1 is a small scale industry ? If so, to what effect ?

6. Whether the plaintiff is entitled to claim compound interest and at the rate claimed by it ?

7. Relief."

When we consider the defenses raised by the defendant it would be difficult to say that a case has been made out by the plaintiff for passing of a decree for the sum of Rs. 5,98,000.00 against the defendants at this stage because it is yet to be decided as to whether the plaint has been signed and verified by a duly authorised person. It is yet to be determined if the suit has been filed by a duly authorised person. Likewise it is to be considered whether the suit is not maintainable against defendants 1, 3 and 5. Last but not the least it is also to be decided that the plaintiff has obtained the signatures of defendants 2 and 4 on blank forms and papers. It is in the light of these facts that this application has to be disposed of.

(6) Having noted these facts of this case it would be appropriate to refer to Order 12 rule 6 Civil Procedure Code. which lays down as under :-

"6(1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the court may at any stage of the suit, either on the application of any party or of its own motion and without waiting for the determination of any other question between the parties, make such order or give such judgment as it may think fit, having regard to such admissions.

(2) Whenever a judgment is pronounced under sub-rule (1), a decree shall be drawn up in accordance with the judgment and the decree shall bear the date on which the judgment was pronounced".

There is no doubt that Rule 6 of Order 12 has been couched in a very wide language. However, before a court can act under Rule 6, admission must be clear, unambiguous, unconditional and unequivocal. Furthermore a judgment on admission by the defendant under Order 12 rule 6 Civil Procedure Code is not a matter of right and rather is a matter of discretion of the court, no doubt such discretion has to be judicially exercised. If a case involves questions which cannot be conveniently disposed of or a motion under this rule the court is free to refuse exercising discretion in favor of the party invoking it. It is not in each case where Order 12 rule 6 Civil Procedure Code is invoked that the court 528 would be obliged to pass a decree which case would depend upon its own peculiar facts. Where the defendants have raised objections which go to the very root of the case, it would not be proper to exercise this discretion and pass a decree in favor of the plaintiff. The purpose of Order 12 rule 6 Civil Procedure Code is to avoid waiting by the plaintiff for part of the decree when there is a clear, unequivocal, unambiguous and unconditional admission of the defendant in respect of the claim of the defendant. The rule only secures that if there is no dispute between the parties, and if there is on the pleadings or otherwise such an admission as to make it plain that the plaintiff is entitled to a particular order or judgment he should be able to obtain it at once to the extent of admission. But the rule is not intended to apply where there are serious questions of law to be asked and determined. Likewise where specific issues have been raised in spite of admission on the part of the defendants the plaintiff would be bound to lead evidence on those issues and prove the same before he becomes entitled to decree and the plaintiff in that event cannot have a decree by virtue of provision of Order 12 rule 6 Civil Procedure Code without proving those issues.

(7) It was held by a Division Bench of the Calcutta High Court in <CITATION> bux, Air 1918 Calcutta 467 (1) that :-

"A judgment on admission by the defendant under Order 12 rule 6, is not a matter of right ; it is in the discretion of the <ORG> ; so that if a case involves question which cannot be conveniently disposed of on a motion under the rule, the <ORG> may, in the exercise of its discretion, refuse the motion. The discretion is judicial and an erroneous exercise thereof may be open to correction by a court of appeal which, however, on well established principles, will be slow to interfere, unless either of the parties has been manifestly and unfairly prejudiced."

(8) It was similarly held by a Division Bench of Jammu & Kashmir High Court in Union of India vs. M/s. Feroze and Co. Air 1962 J&K 66 (2) that :-

"A judgment on admission under Order 12 rule 6 is a matter of discretion and not a matter of right and the court would not entertain an application for such judgment when the case involves questions which cannot be conveniently dealt with in a motion under the rule. In order that a judgment may be obtained under Order 12 rule 6 the admission must be unconditional, clear and unequivocal".

(9) In the case in hand not only admission is not unequivocal but further also the defendants have raised certain preliminary pleas which must be decided before the plaintiff can be held to be entitled to a decree. The preliminary objections raised by the defendants in this case go to the very root of the suit and are likely to non-suit the plaintiff if these were found against the plaintiff. Keeping in view of all these facts, I do not think that a case has been made out under Order 12 rule 6 Civil Procedure Code . for passing a decree in favor of the plaintiff for the sum of Rs. 5,98,000.00 and as such I find no merit in this application and this application is liable to be dismissed and is dismissed.


JUDGMENT <NAME>, J.

1. Civil Writ Jurisdiction Case No. 1053 of 1975 has been filed by the petitioners for quashing an order of <ORG>, dated the 22nd October, 1974, enhancing the rate of royalty payable by the petitioners in respect of the right granted to them for collection and exploitation of Sal seeds from the forest area belonging to <ORG>., a copy of which is Annexure "8" to the writ application. The said order was communicated to the petitioners by a letter, dated the 2nd November, 1974, under the signature of the Chief Conversator of Forests. A copy of this letter is Annexure "7" to the writ application. According to the petitioners, the revision of the rate of royalty by the respondent State during the subsistence of the lease in question was without any authority in law.

2. Civil Writ Jurisdiction Case No. 1054 of 1975 has been filed by the same set of petitioners for quashing the decision of <ORG> cancelling the aforesaid lease itself for contravention of the terms thereof. The said decision was communicated to the Chief Conservator of Forests under a letter, dated the 15th March, 1975, with a copy to the petitioner No. 1. A copy of the said letter is Annexure "6" to the writ application.

3. As common questions of law and fact are involved in these two writ applications, with the consent of the parties, they have been heard together and are being disposed of by this common judgment.

4. C. W. J. C. No. 1054 of 1975 has been taken up as the main case and will hereinafter referred to as the 'writ petition'. Petitioner No. 1 is a partnership firm and the other petitioners are its partners,

5. Petitioner No. 1 (hereinafter referred to as the 'petitioner') carries on its business at Chakradharpur in the District of Singhbhum. The petitioners approached <ORG> for grant of a lease in favour of the petitioner for collection and exploitation of Sal seeds, a forest produce. After negotiations, an agreement was executed by and between the petitioners and the <ORG> on the 14th May, 1970, incorporating the terms and conditions. A copy of the said agreement is Annexure "1" to the writ petition. Under the terms of the said deed of lease, it was agreed by the respondent <ORG> to grant to the petitioner the r!ght to exploit Sal seeds over the areas fully specified in Schedule A to the said deed for a period of 15 years commencing from the 14th May, 1970 and ending on the 31st December, 1984, in respect of forest divisions of Western and Kazaribagh Circles, and for a period of 13 years commencing from the 1st January, 1972, and ending on the 31st December, 1984, in respect of the forest division Southern Circle, with an option of renewal for a period of another 15 years for all the three circles.

6. The salient terms of the agreement were these. In Clause 2 of the agreement it was stipulated that the annual royalty in respect of Hazaribagh and Western Circles would be Rs. 18,200/- each and in respect of the Southern Circle it would be Rs. 44,300.33 paise. The relevant clause regarding revision of the rate of royalty was as follows:--

"3. The rate of royalty will be revised after every three years cycle in consultation with the lessee and the decision will be binding on the lessee." According to Clause 4, the petitioner lessee had to establish a factory within the State of Bihar for processing of Sal seedg and extraction of oil therefrom within a period of five years from the date of the agreement, failing which the agreement itself was to stand terminated. The other clauses of the deed make provision for other conditions which had to be performed and fulfilled by the petitioner. Clause 25 of the agreement provided, that, in case of breach by the petitioner of any of the terms and conditions therein contained, it will be lawful for the State <ORG> at any time, by notice in 'writing to the lessee, to determine the agreement and thereupon the lessee shall forfeit its security deposit and all its rights under the said agreement. It further provided that in such contingency all forest produce, whether exploited or not, shall become the property of the <ORG>. Clause 30, which is the last clause of the agreement, lays down that it had been mutually agreed between the parties to the said agreement that, in the event of "any dispute or question arising whether during the continuance or after the termination hereof with regard to the terms of these presents or the construction or meaning hereof or of any part of provision hereof or as to the performance of any act hereby required to be done or as to any other matter or thing in connection herewith the decision of the Chief Conservator of Forest, Bihar, upon the matter of such dispute or question shall be final and binding on the parties hereto."

7. The case of the petitioner is that the rate of royalty which the petitioner had agreed to pay was a rate higher than the prevalent rate in the other States. In spite of that, it received a letter, dated the 26th December, 1975, from the Chief Conservator of <ORG>s asking it to appear before <ORG> on the 3rd January, 1974. In pursuance of the said notice, the representative of the petitioner appeared before the said Committee and pointed out that the rate of Royalty which the petitioner was paying was much higher than the rate prevalent in the neighbouring States, and as such, there was no occasion for revision of the rate of royalty. In spite of cause being shown, by a letter, dated the 22nd October, 1974, <ORG> revised the rate of royalty and fixed the royalty at Rupees 1,50,000/- annually for the Hazaribagh and Western Circles, retrospectively with effect from the 1st January, 1973. A copy of the said decision is annexure "8" to C. W. J. C. No. 1053 of 1975. The petitioners have averred that the said revision was the result of mala fide offers made by one <NAME> and one <NAME> of Simdega, who were close associates of the then <ORG> Ministers. A direction was issued or realisation of royalty at the faid rate by the 30th November, 1974. Further case of the petitioner is that a notice, dated the 6th November, 1974, (Annexure "4" to the writ application) was issued to the petitioner asking it to show cause as to why the lease in question be not terminated for violation of the terms of the said lease.

8. The petitioner filed its show cause (Annexure "5") in pursuance of the said notice on the 4th January, 1975. in which it was pointed out that the grounds mentioned in the said notice were, irrelevant and unfounded and that the petitioner had not violated any terms or conditions of the said lease, and, as such no cause had accrued for termination of the lease. Ultimately, without proper consideration of the materials placed by the petitioner and in breach of the principles of natural justice the lease in favour of the petitioner was terminated and the decision was communicated by the aforesaid letter, dated the 15th March, 1975, addressed to the Chief Conservator of Forests, with a copy to the petitioner (Annexure "6"). In the writ petition the petitioners have set out the different clauses of the deed and have tried to justify that the petitioner has not contravened any of the terms o± the lease and, as such, the action of the State Government in terminating the lease in question is arbitrary and without there being any sanction in law.

9. Counter-affidavits have been filed on behalf of <ORG> and the Chief Conservator of Forests justifying their action, that is, the revision of the rate of royalty and later the termination of the lease in question. In the said counter-affidavits it has been pointed out that the lease in respect of Hazaribagh and Western Circles was for a period of 15 years commencing from the 14th May, 1970 and ending on the 31st December, 1984; as such, the first cycle of three years came to an end on the 31st December, 1972. Under Clause 3 of the agreement of lease, the parties had specifically agreed that it will be open to the respondent State to revise the rate of royalty after every three years' cycle in consultation with the lessee and the said decision was to be binding on the lessee. Before revision, the petitioner was consulted and on the basis of higher offers made for the said two circles the amount of royalty payable by the petitioner was enhanced. It is said that for the same area there were offers of Rs. 3,15,000/-annual; nonetheless the rate of royalty payable by the petitioner was fixed at Rs. 1,50,000.00 only. It was further pointed out that, although the petitioner had agreed to install a plant within a period of five years, no step whatsoever had been taken for the same, in spite of the fact that the period was about to expire. Different breaches of the terms of the agreement have also been pointed out in the said counter-affidavits and it has been stated that the petitioner was given ample opportunity to show cause in respect of the said breaches; and its explanation having been found to be not satisfactory, the lease itself was terminated after a careful consideration of the matter by <ORG>. The allegation of mala fides have been denied. A statement showing the offers made by different intending candidates has been annexed marked Annexure "A" in justification of the rate of royalty fixed by <ORG>. Regarding the grievance of the petitioner fixing the enhanced rate of royalty retrospectively, it was pointed out on behalf of the respondent that the first cycle of three years came to an end on the 31st December, 1972 and according to the terms of the agreement the rate could have been revised at any time after that date. As such, the revised rates had to be made applicable with effect from the 1st January, 1973.

10. This <ORG>, while admitting the two writ applications on the 22nd April, 1975, passed an order that "There will be a stay of the realisation of the royalty at the increased rate for the period up to October, 1974. There will be no stay for the dues of royalty at the increased rate for the period from the 1st ot November, 1974." (Vide Order No. 2 in C. W. J. C. No. 1053 of 1975). This <ORG> also stayed the operation of the order of termination of' the lease contained in Annexure "6" pending the hearing of the application in C. W. J. C No. 1054 of 1975. .

11. Dr. <NAME>, learned counsel appearing for the petitioner, first, submitted that in view of the proclamation of Emergency, in accordance with Article 352 of the Constitution and issuance of the Presidential Order. Under Article 359 , the right to move any <ORG> for the enforcement of rights conferred by Part III of the Constitution and "all proceedings pending in any <ORG> for enforcement of the rights so mentioned" are to remain suspended for the period during which the proclamation has to remain in force. Learned counsel submitted that the result is that the two writ applications filed on behalf of the petitioners, in which the said rights are involved, will be deemed to have been suspended for the period during which the proclamation remains in force, and, as such, this court has no jurisdiction to hear or pass any orders in respect of these writ applications at present. In this connection he pointed out the petitioner has made a grievance about discrimination which amounts to enforcement of a right under Article 14 of the Constitution. When the learned counsel was called upon by the <ORG> to take a clear stand on the point as to whether the writ applications are only for the enforcement of any of the rights conferred by Part III of the Constitution, or on other grounds, learned counsel said that the case of the petitioners has been put forward on alternative grounds: Firstly, the petitioners seek the enforcement of the rights guaranteed to them under Article 14 of the Constitution, and, in the alternative, they are questioning the validity of the impugned orders and decision, bereft of the rights guaranteed under Part III of the Constitution. According to learned counsel, because of the Presidential Order, when all such proceedings pending in any <ORG> for enforcement of the rights so mentioned are to remain suspended, it will not mean suspension of the effect of the orders of stay passed by this court at the time of admission and it will be in force.

12. On this plea being taken on behalf of the petitioners, applications have been filed on behalf of the respondent State making a prayer that this court should either hold, that in view of the aforesaid provision under Article 359 of the Constitution, the orders of stay passed by this court in these two writ applications are also under suspension and of no effect, or, if this court is of the view that they are in force, then, in view of the changed circumstances under which the writ applications cannot be heard and disposed of, this Court should vacate the orders of stay passed at the time of admission.

13. Relevant portion of Article 359 of the Constitution reads as follows:--

"359 (1) Where a Proclamation of Emergency is in force the President may by order declare that the right to move any Court for the enforcement of such of the rights conferred by Part III as may be mentioned in the order and all proceedings pending in any court for the enforcement of the rights so mentioned shall remain suspended for the period during which the proclamation is in force or for such shorter period as may be specified in the order."

On issuance of the Presidential Proclamation in terms of the aforesaid article, the rights of every citizen under Part III of the Constitution has to remain under suspension and so will be the fate of the proceedings pending in any Court of Law in respect of enforcement of the said rights. This article was considered by <ORG> in the case of <CITATION> , (AIR 1964 SC 381), wherein it was pointed out in the majority judgment of <NAME> J. (as he then was) as follows:--

"13. Since the object of Article 359 (1) is to suspend the rights of the citizens to move any court, the consequence of the Presidential Order may be that any proceeding which may be pending at the date of the order remains suspended during the time that the order is in operation and may be revived when the said Order ceases to be operative; and fresh proceedings cannot be taken by a citizen after the order has been issued, because the Order takes away the right to move any court and during the operation of the Order, the said right cannot be exercised by instituting a fresh proceeding contrary to the Order. If a fresh proceeding falling within the mischief of Article 359 (1) and the Presidential Order issued under it is instituted after the Order has been issued, it will have to be dismissed as being incompetent. In other words Article 359 (1) and the Presidential "Order issued under it may constitute a sort of moratorium or a blanket ban against the institution or continuance of any legal action subject to two important conditions. The first condition relates to the character of the legal action and requires that the said action must seek to obtain a relief on the ground that the claimant's fundamental rights specified in the Presidential Order have been contravened and the second condition relates to the period during which this ban is to operate."

14. From the aforesaid observations, it is obvious that the blanket ban against the institution or continuance of any legal action is subject to two conditions, that is, the legal action must seek to obtain a relief on the ground that the petitioner's fundamental rights specified in the Presidential Order have been contravened and such legal action is being pursued during the period the ban is in operation. In my opinion, it is up to the petitioners to press their applications on grounds other than infringement of the rights which have been suspended, and, in that case and to that extent, the writ application can be heard and disposed of. The grievances of the petitioners in the present writ applications are not primarily for or against infringement of their rights under Article 14 of the Constitution; but they are challenging the legality of the impugned orders and decision on the ground that they are arbitrary and in contravention of the terms of the agreement. To me it appears that this argument on the basis of the Presidential Orders has been raised on behalf of the petitioners to avail of the orders of stay passed by this Court which authorise them to collect and exploit sal seeds during the pendency of the writ application in spite of their lease having been terminated by the <ORG>.

15. Article 359 of the Constitution speaks of suspension of such proceedings. If the proceedings pending before this <ORG> themselves are suspended the effect in the eye of law will be that no proceeding is pending for the time being. In that view of the matter, it is difficult to hold that during this period, when the proceedings themselves are suspended, the orders of stay passed in the said proceedings will be deemed to be in force. When during the course of hearing this was indicated by the <ORG>, learned counsel for the petitioners proceeded with his alternative case, that is, that the revision of the rate of royalty and the termination of the lease unwarranted, illegal and without any authority in law. It is open to the petitioners to challenge those orders in these writ applications on grounds other than infringement of the rights which have been suspended. This aspect of the matter has been considered in several judgments of the Supreme <ORG> where it was pointed out that the executive actions of <ORG> which are invalid on grounds other than interference with the fundamental rights which are under suspension are not immune from attack merely because a Proclamation of Emergency is in operation. Reference in this connection may be made to the cases of the <CITATION> ., (AIR 1970 SC 1275); <CITATION> , (AIR 1974 SC 366); <CITATION> , (AIR 1973 SC 588) and <CITATION> , (AIR 1967 SC 1170).

16. Learned Counsel then referred to different communications in connection with the revision of the rate of royalty and the termination of the lease in question, and submitted that the actions of the respondent <ORG> are per se arbitrary and against the principles of natural justice calling for interference by this <ORG>. Learned Counsel submitted that the revision of the rate of royalty is not sanctioned by the terms of the agreement and is mala fide based on no material. It was further submitted that the notice of show cause, dated the 6th November, 1974, as to why the lease of the petitioner should not be terminated was itself very vague and as such against the principles of natural justice. In support of his contention that the revision of the rate of royalty and termination of the lease, without a proper opportunity to show cause amounts to breach of the principles of natural justice, learned counsel relied on, amongst others, the cases of <CITATION> , (AIR 1967 SC 1269); <CITATION> , (AIR 1967 SC 1170) and <CITATION> , (AIR 1970 SC 1039).

17. There cannot be a dispute that, if the rate of royalty has been revised and the lease has been terminated in breach of the principles of natural justice, then the person aggrieved can legitimately move this Court for redress of his grievances. But, in the instant case, the rights and liabilities of the parties are governed by the terms of the agreement as incorporated in the deed of lease (An-nexure "1"). On behalf of the <ORG> it has been asserted that the actions covered by the terms of the agreement and before revising the rate of royalty and before terminating the lease, the petitioner was given- notices to show cause. The petitioner did file separate show cause objecting to the version of the rate of royalty and repudiating the allegations of contravention of the terms of the agreement. The representative of the petitioner even appeared before <ORG> to place his own view points on the subject and, as such, in my opinion, there is no question of violation of the principles of natural justice. Even if the impugned decision be incorrect on one ground or the other, it is at the most a case of breach of the terms of the agreement. The impugned action can be held to be invalid if a court comes to the conclusion that the actions are not sanctioned by the terms of the agreement.

18. Learned counsel appearing on behalf of the petitioners submitted that, en the facts and in the circumstances of the case, there has been no contravention of the terms of the agreement by the petitioner and as such the order of ter-mination of the lease is void. Now the question is as to whether the allegation regarding the breach of the terms of the agreement, either by the petitioner or by the respondent <ORG> can be examined by this Court in exercise of its writ jurisdiction. According to the learned counsel appearing for the petitioners the impugned actions are in exercise of executive powers by the <ORG> under Article 298 of the Constitution, which are amenable to the jurisdiction of this court. Whether under the writ jurisdiction such dispute can be agitated and decided has been the subject-matter of controversy. Such disputes can be put under three groups for the purpose of answering the question:

(i) Where a petitioner makes a grievance of breach of promise on the part of the <ORG> in cases wherein assurance or promise made by the <ORG> he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Article 299 of the Constitution;

(ii) Where the contract entered into between the person aggrieved and the <ORG> is in exercise of a power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the <ORG>; and

(iii) Where the contract entered into between the <ORG> 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 <ORG>.

19. So far as the cases under categories (i) and (ii) are concerned, it is almost settled that the person aggrieved can invoke the writ jurisdiction of this <ORG>. <CITATION> , (AIR 1968 SC 718), <CITATION> , (AIR 1971 SC 1021) and <NAME> v. Minister of Pensions, ((1949) 1 KB 227), it was pointed out that public bodies are as much bound as private individuals to carry out representations of facts and promises made by them relying on which other persons have altered their position to their prejudice and in such cases even if the contract has not been embodied in the form prescribed, it can be enforced by a writ in appropriate eases in equity. Similarly, in <CITATION> , (AIR 1954 SC 592), <CITATION> , (AIR 1973 SC 205) and <CITATION> , (AIR 1975 Pat 123), it has been held that, even if the right to relief arose not of an alleged breach of contract, but the action of the authority which was being challenged was of a public authority vested with statutory power, this court, in exercise of its writ jurisdiction, can grant relief to the aggrieved person. On the other hand, in case falling under category (iii), where there is no question of exercise of any statutory power and the rights of the parties flow from mere terms of the contract entered into by the authorities of the <ORG>, a party to such agreement should not be allowed to invoke the writ jurisdiction of this <ORG> for the purpose of finding out as to whether there has been a breach of contract on the part of the <ORG> or on the part of such person. It is apparent that in such cases there cannot be adjudication without evidence on the point. There is no question of infraction of any rules or statutes. <ORG>s have always called upon such petitioners to seek their remedy in the Civil <ORG>. In this connection reference can be made to a Bench decision of this <ORG> in <CITATION> , (AIR 1974 Pat 230), where <NAME>, C. J. (as he then was) after making a reference to the Supreme <ORG> in <CITATION> , (AIR 1973 SC 964): and <NAME> v. <NAME>, (AIR 1966 SC 334) observed;

"Here in the very nature of the contract in question the petitioner had no right to claim its specific performance. The Statute did not impose any legal duty on the authorities concerned that if they thought that the petitioner should not be allowed to complete the work, even assuming they thought so wrongly --they could not stop the work. ............A writ of mandamus cannot issue to compel the authorities to remedy a breach of contract pure and simple." In the same case at page 231 it was further observed:-- "I am, therefore, definitely of the view that until and unless in the breach is involved 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 this Court in exercise of its powers under Article 226 of the Constitution." 20. Learned counsel for the petitioner could not urge that the lease for collection and exploitation of Sal seeds had been granted to the petitioner in exercise of any statutory power; it was a contract pure and simple. Clause 25 of the contract under consideration made a provision for determination of the agreement by the <ORG> at any time by a notice In writing to the petitioner, if there had been any breach of any of the terms and conditions of the lease per se, there was a right to terminate the lease under certain conditions being not fulfilled Clause 30 made a provision similar to arbitration clause where the decision of the chief conservator of <ORG>s over any dispute in connection with the said agreement was to be final. The petitioners can get a declaration that there has been no breach of any of the terms and conditions of the lease and, as such, the termination itself was unlawful; but the forum for that is not the writ jurisdiction of this Court. I am supported in this view by a decision of <ORG> of <ORG> in <CITATION> , (AIR 1975 All 344), the observations of <ORG> in <CITATION> , (AIR 1975 SC 1121 para 21) and the case of <CITATION> . <ORG>, Assam (AIR 1961 Assam 101 (FB)). Learned Counsel for the petitioners, however, submitted that the effect of the aforesaid judgments has been eroded by the decision of <ORG> in <CITATION> , (AIR 1975 SC 266). In that case the person who had moved for a writ for mandamus was on the approved list of the Director General, Supplies and Disposals. But, later, some reports regarding shortage of timber were made and the department put his name on the black list. It was held by <ORG> that this order of black listing had the effect of depriving the person of equality of opportunity in matter of public contract and in such cases when the <ORG> acts to the prejudice of a person it has to be supported by legality. In that case <ORG> was of the opinion that the order of black listing not only involved civil consequences, but it also cast a slur and had created a barrier between the person black-listed and the <ORG> in the matter of transactions. In that case there was no question of breach of the terms of a contract, In my opinion, <ORG> never purported to lay down that breaches of contracts irrespective of their nature will be amenable to the jurisdiction of this court merely because one of the parties to such contracts is the <ORG>. 21. Learned counsel also submitted that the termination of the lease was the result of mala fides on the part of the then <ORG> Ministers. Those allegations have been controverted by the Ministers concerned by filling counter-affidavits and I am of the view, that, on the materials on record, it is difficult to hold that the order of termination of the lease or revision of the rate of royalty was the result of any malice on the part of the <ORG> or any of its authorities. 22. In my opinion, there is no merit in these two writ applications. They are, accordingly dismissed. In the circumstances, there will be no order as to costs. <NAME>, J. I agree and would add a few observations.

2. Learned counsel for the petitioners contended that even in cases of exercise of contractual right of termination of a lease principles of natural justice are attracted. I do not think that it is a correct legal proposition. No case was brought to our notice either of <ORG> or any of <ORG> in India which has taken the view that before exercising the right or option to terminate an agreement or lease in terms thereof contracting party must be given an opportunity to have his say in the matter. Even on principle I do not think that it is possible to accept the contention. Although it is true, as observed by Lord <NAME>, M, R. in <ORG> ex parte <NAME> (1971) 1 AE. RH 1148 that it is not possible to lay down rigid rules as to when the principles of natural justice are to apply", yet cases firmly establish that the circumstances in which or the occasion where the action under challenge has been taken, determines the applicability of the rules of natural justice. It has been held by <NAME> (as he then was) speaking for the <ORG> in <CITATION> , (AIR 1972 SC 896 at p. 899).

"It is the nature of power and the circumstance and conditions under which it is exercised that will occasion the invocation of the principles of natural justice."

I may also usefully refer to what was said by <ORG> in Durayappan, v. <NAME> (1967) 2 A. C. 337 at p. 349. Giving the opinion of the <ORG> Lord <NAME> said "In their Lordships' opinion there are three matters which must always be borne in mind when considering whether the principle should be applied or not. These matters ars ..... Secondly, in what circumstances or upon what, occasion is the person daiming to be entitled to exercise the measure of control entitled to intervene." To put the same matter tersely borrowing the phrase of Lord <NAME>. "Every thing depends on the subject matter". In my view, unless the <ORG> is of the opinion that the occa'sion or circumstances for the exercise of power is such, that it would be unfair or unjust to the party affected by action taken, to be visited by the consequences thereof, unless it had been given an opportunity to have his say in the matter, the principles of natural justice are not attracted. In my view the exercise of contractual right is not such an occasion. There is nothing unjust or unfair in a party terminating a contract, even without giving the other party an opportunity to have his say in the matter, on the basis of the express right conferred by the contract itself. The very nature and occasion of the exercise of right flowing as it does from the contract, is such as to exclude the applicability of the rules of natural justice. Further it is to be observed that when a right to terminate a lease, on the ground of the existence of conditions which give a right of termination, has been exercised, it is open to the party exercising the option to justify the action taken, if properly challenged, not only on the grounds which were under contemplation when the action was taken, but also on other grounds which are available in law to the contracting party in terms of the agreement. This is an additional reason as to why rules of natural justice cannot be held to be attracted in cases where a lease has been terminated in terms of the contract itself.

23. Learned counsel for the petitioners contended that even in cases of breach of contractual rights it is open to this court to give relief to an aggrieved party in exercise of its writ jurisdiction. My learned brother has dealt with this aspect and the cases relating thereto. The cases illustrate that except for occasions where breach of some statutory provision is also involved in relation to contracts <ORG> have consistently refused to interfere. Even if it be accepted that in cases of pure contract there is power to interfere in the exercise of writ jurisdiction, the power, in my view, must be confined to cases where the action under challenge is mala fide or so arbitrary as to shock the conscience of the <ORG>. Such cannot be said to be the case here. The allegation of mala fide, as my learned brother has pointed out, has failed. The action taken cannot, in the circumstances, be said to be arbitrary. The respondents claimed to have the right to terminate the lease, which is a bona fide claim. On the basis of the said claim the lease has been terminated. Ever, if the action taken be not legal, about which I am not expressing any opinion the remedy of the petitioners does not lie by inviting this <ORG> to exercise its writ jurisdiction.