LexNOBLE RESOURCES LTD. versus STATE OF ORISSA AND ANR
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NOBLE RESOURCES LTD. A v. STATEOFORISSA AND ANR. SEPTEMBER 13. 2006 [S.B. SINHA AND DAL VEER BHANDARI, JJ.] B ~ Constitution of India, 1950; Articles 12, 14 and 226: Contract-Supply of iron ore fines of grading A, B and C within a c stipulated time period-Rise in price of C grade variety in international market-Non-supply of agreed quantity by the supplier .. md issuance of fresh ) / tender-Challenge to--Dismissed by High Court holding that i~ involved enforcement of a contract qua contract and thus not maintainable-On appeal, Held: Supplier-Corporation is a State in terms of Article 12 of the. Constitution-A writ petition would be maintainable against the State if it D acted in violation of equality clause in terms of Article 14 of the Constitution- it could also be subjected to judicial review by the Courts to prevent arbitrariness or favouritism on its part-However, it would not be appropriate to decide serious disputed question of fact in exercise--of writ jurisdiction- Though rise in international price of the commodities in question would not ., E by itself be a relevant consideration for the supplier to rescind the contract / but it was not the sole ground to rescind the contract-flon-supply of the co;11modities in question may constitute a breach of contract but having ,; regard to conduct of the parties it cannot be said that such decision was so arbitrary as to attract the wrath ·of Article 14 of the. Constitutio~ontract Act, 1872-Specijic Relief Act, 1963. F ... 'Breach of Contract' and 'Threshold ofContract'-Distinction between- Discussed. 'Judicial Review'-Scope of in contractual matter-Discussed. The question which arose for consideration in this appeal was as to G -~ whether a writ petition is maintainable in contractual matter or not. Appellant-buyer and Respondent No.2-supplier, a Corporation entered into a contract in terms whereof the Corporation was to supply certain quantity ------ 53' H 54 SUPREME COURT REPORTS [20061 SUPP. 6 S.C.R. A each of Grade A, Grade Band Grade C iron ore fines at the agreed price. Later, a fax was sent by the buyer to the Supplier followed by another fax, stating that it had signed further sale contracts with some of its long term buyers and was looking forward for completing the balance shipments. But the respondent did not supply the requisite quantity of 'C' Grade iron ore B fines in terms of the contract nor did it extend the validity of the tender beyond the due date. In the meantime, the Supplier-Corporation invited another tender, wherein the buyer also participated. Aggrieved, the appellant filed a writ petition which was dismissed by the High Court. Hence the present appeal Appellant-buyer contended that when a State-owned monopoly acts C unfairly and unjustly, their action being violative of the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable; that a contract of supply should not be terminated on the premise that the price of the commodity has gone up in the international market; that arbitrarint.'SS and unreasonableness on the part of the supplier was self-evident as he has taken two different stands before the High Court; that the High D Court committed a manifest error insofar as it failed to take into consideration that a monopoly concern should be directed to honour its contractual obligations; and that remedies available in a suit per se cannot be a ground to refuse relief under Article 226 of the Constitution of India. The Respondent-supplier submitted that the Appellant-buyer itself E having shown its inability to lift iron ore fines in accordance with the schedule &nd there being no complaint in respect of supplies made earlier, the writ jurisdiction of the High Court under Article 226 of the Constitution of India could not be invoked; that a writ petition involving disputed questions of fact would not ordinarily lie and in that view of the mater the High Court rightly F refused to exercise its extra ordmary jurisdiction; that when a decision is taken for business purposes, the courts should not readily infer arbitrariness on the part of the State; and that in any event, a writ petition for specific perf.,rmance of contract would not lie when damages could be awarded for breach of contract. G Dismissing the appeal, the Court H HELD:t.1. Respondent No.2 is a 'State' within the meaning of Article 12 of the Constitution
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