LexM/S. KARNATAKA STATE FOREST INDUSTRIES CORPORATION versus M/S. INDIAN ROCKS
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2008] 15 S.C.R. 96
A
MIS. KARNATAKA STATE FOREST INDUSTRIES
CORPORATION
V.
MIS. !NDIAN ROCKS
(Civil Appeal No. 6274 of 2008 etc.)
B
OCTOBER 24, 2008
[S.B.- SINHA AND CYRIAC JOSEPH, JJ.]
:--
Contract - Contract of sale of granite blocks - Between
c the Corporation as an agent of State and Companies - State
was required to give permit for transportation of the blocks -
Agency of the Corporation terminated in view of a scam in
respect of the granite blocks and Corporation was asked to
refund the amount to the Companies - Corporation showing
D its inability to refund - Corporation insisting on the companies
{
to perform the remaining part of the Contract - Contracting
Companies asking for issuance of the permits - Permits not
issued by the Corporation - Dispute between the contracting
parties - Litigation resulting in direction to Corporation to
E refund the amount - Counsel for Corporation also conceding
before High Court showing its readyness to refund - On
appeal, held: Corporation had no authority to ask the
Companies to perform their part of contract as the agency
under which the~ Corporation entered into the contract had
~
F been terminated - Also because it failed to issue the permits ·
to the Companies - Corporation as well as State were guilty
of suppressing before the Court its position when its authority
was questioned - The Counsel for the Corporation having
conceded to refund, was bound to give effect to the same -
G Constitution of India, 1950 - Article 162 - Karnataka Minor
Mineral Concession Rules, 1994 - r. 42.
;.._
Constitution of India, 1950 -
Article 226 -
Writ
Jurisdiction - scope of - In respect of contract - Held:
Ordinarily superior courts not required to enforce the terms
H
96
KARNATAKA STATE FOREST INDUSTRIES
97
""
CORPORATION v. INDIAN ROCKS
of a contract qua contract- Writ to be issued only where exists A
a legal right and a corresponding duty on the pa1t of the State
- But if the action of the State is unfair, arbitrary or
discriminatory, such writ is maintainable.
State appointed the appellant-Corporation as its
agent for issuing tender for sale of confiscated granite
B
blocks. Pursuant to tender, contract was entered into with
the respondent-Companies. Part of contract was
performed. In the meantime agency of the Corporation
was terminated by the State, vide its letter dated 16.1.1996 ·C
pursuant to a report of a Committee appointed for looking
into the scam in respect of the granite blocks. State asked
the Corporation to refund the amount to the Companies.
But the Corporation showed its inability to refund the
amount. Dispute arose between the Companies and the
D
Corporation. The Counsel for the Corporation in one writ
petition conceded before High Court that it was ready to
refund the amount. However in subsequent writ petition
it denied. The litigation resulted in direction to the
Corporation to refund the amount to the Companies.
Hence the present appeals.
E
Dismissing the appeals, he Court
,.
HELD: 1.1. The confiscated granite blocks belonged
to the State. They did not belong to the appellant-
F
Corporation. Appellant was merely appointed as an agent
of the State. It is only in that c~pacity, the tender was
issued by it. Although in terms of the said tender, the
concerned respondents and others were bound to
deposit the price of the granite blocks as also the
G
amount of tax payable thereunder ; one of the essential
..J,
conditions therefor, was issuance of permits to transport
the same. [Para 29] [116-C-D]
Bharat Sanchar Nigam Ltd. and Anr. v. BPL Mobile
Cellular Ltd. and Ors., (2008) 8 SCALE 106 and Mis. New
H
98
SUPREME COURT REPORTS
[2008] 15 S.C.R.
A Bihar Biri Leaves Co. and Ors. v. State of Bihar and Ors.,
[1981] 1 sec 537, distinguished.
1.2. The letter dated 16th January, 1996 is to be
treated as a communication from a Principal to an Agent.
As an agent of the State Government, the appellant,
B which, itself is a 'State' within the meaning of Article 12.
of the Constitution of India, was bound to act thereupon.
It is true that it had responded to the aforesaid
communication of the State dated 16th January, 1996
stating its own reasons therefor. But there is nothing to
C show that the State Government acted upon the request
of the corporation to issue permits for transportation of
granite blocks or withdrawn its direction contained in its
letter dated 16th January, 1996. [Para 3Excerpt shown. Read the full judgment & AI analysis in Lexace.