Patna High Court
Alok Prasad Verma vs Union Of India (Uoi) And Ors. on 5 June, 2000
Equivalent citations: AIR2001PAT211, 2000(48)BLJR1913, AIR 2001 PATNA 211, (2001) 1 BLJ 262, 2000 BLJR 3 1913, (2000) 4 PAT LJR 4
Author: Sudhir Kumar Katriar
Bench: Sudhir Kumar Katriar
ORDER Sudhir Kumar Katriar, J.
1. This writ petition has been preferred with the prayer to quash the order dated 2-12-1997 (Annexure-16), issued by Indian Oil Corporation Limited (respondent Nos. 2 to 6), along with the covering letter dated 15-12-1997, whereby the Letter of Intent issued in favour of the petitioner for setting up a retail outlet for sale of petroleum products at village Gaunaha, District West Champaran, has been withdrawn. The respondents have not filed counter-affidavit.
2. The respondents had issued an advertisement which appeared in the local dailies of 19-8-1981 (Annexure-1), inviting applications for grant of retail outlet dealership, inter alia, for village Gaunaha, District West Champaran. This was reserved for unemployed graduates, and there was also an income limit. The petitioner submitted his application along with others which were considered by the respondents and the Letter of Intent was issued to the petitioner. Pursuant to the Letter of Intent, the petitioner had arranged a plot of land, and had also deposited the requisite sum of Rs. 46,000/- in the bank. Thereafter, the respondents issued letter dated 8-8-1983 to the petitioner, whereby the Letter of Intent was revoked and cancelled. The petitioner challenged the same by preferring C.W.J.C. No. 4523 of 1984 before this Court which was disposed of by a learned single Judge of this Court by his judgment dated 23-9-1996, whereby the said letter dated 8-8-1983 was set aside, and the respondent-authorities were directed to conduct a fresh enquiry into the matter and pass appropriate orders. I will advert to this judgment in some detail at a later stage. The respondents accordingly issued show-cause notice dated 30-10-1996 (Annexure-14), to the petitioner. Cause was shown by the petitioner by his letter dated 14-12-1996 (Annexure-15). placing all the documents in support of his case. The same has been rejected by the impugned order dated 2-12-1997 (Annexure-16), and the Letter of Intent has been withdrawn. Hence the writ petition.
3. After the impugned order was passed, the respondents issued a fresh advertisment dated 6-1-1999 (Annexure-18), Inviting tenders for settlement of retail outlet at village Gaunaha. By interim order dt. 10-2-1999, passed by a learned single Judge, the respondents have been injuncted from granting the dealership without the permission of the Court. The net result is that the retail outlet dealership for village Gaunaha has not been settled in favour of anybody so far.
4. I would first of all like to indicate briefly controversy in the present case. As stated above, the retail outlet dealership in question is reserved for unemployed graduates and must satisfy the condition as to the income limit. The relevant clause of income limit was in the following terms in the advertisement :--
"i) INCOME LIMIT:
In the case of candidates who are applying against dealership reserved for Unemployed Graduate and Unemployed Engineering Graduate, parents joint income should not exceed Rs. 15,000/- per annum. In the case of married women, husband's income should not exceed Rs. 15,000/- per annum."
After the respondents had issued the aforesaid Letter of Intent to the petitioner, the respondents received objections from various politicians of the area that the petitioner's income exceeded fifteen thousand rupees and he was not entitled to be considered in terms of the advertisement. The respondents conducted an enquiry and came to the conclusion that the petitioner's income had exceeded Rs. 15,000/- and was, therefore, beyond the zone of consideration. Accordingly, the respondents issued the aforesaid letter dated 8-8-1983, revoking the Letter of Intent. The petitioner challenged the same by preferring C.W.J.C. No. 4523 of 1984, which was disposed of by a learned single Judge by his judgment dated 23-9-1996 (Annexure-11), wherein it has been observed as follows :--
"Having considered the submissions made by learned counsel for the parties. I am of the view that the impugned order dated 8-8-1983 cannot be sustained.
Admittedly no opportunity of hearing was given to the petitioner and, therefore, it cannot be said that the cancellation of the Letter of Intent is in consonance with the principle of natural justice. Besides it has not been shown by the respondents that the Income of the mother of the petitioner is more than Rs. 15,000/-, so as to disentitle the petitioner for being considered for grant of detail outlet dealership.
The respondents have not placed on record the enquiry report or any material which had come to their notice on the basis of which the Letter of Intent was cancelled and, revoked. It was open for the respondents to have cancelled the Letter of Intent after giving opportunity of hearing to the petitioner and making available to him the complaints which they have received so that the petitioner could show-cause whether or not the income of his mother was more than Rs. 15,000/- per annum.
Accordingly the writ petition is allowed and the order dated 8-8-1983 (Annexure-8) is quashed. Respondent No. 3. Deputy General Manager, Marketing Division, Eastern Region, Calcutta, shall issue notice to the petitioner to show-cause annexing all such materials within four weeks from the date of receipt of a certified copy of this order and the petitioner shall submit his explanation annexing all such documents on which he desires to place reliance within six weeks from the date of receipt of the show-cause and shall also indicate whether he desires opportunity of personal hearing and in that event respondent No. 3 shall fix a date and intimate the petitioner to appear before him for personal hearing. After the enquiry is completed, respondent No. 3 shall pass appropriate orders and communicate to the petitioner as early as possible.
Till the matter is not finally decided by respondent No. 3, status quo shall be maintained as regards the appointment of retail outlet dealer."
5. Soon after the judgment of the High Court, the petitioner had submitted his letter dated 30-9-1996 (Annexure-13), to the respondents stating therein that "I request you to give me copies of all the letters/complaints/representations made to the authorities of the Corporation alleged by Mukhiyas, Chairman, Zilla Parishad, MLAs etc. so that I can effectively produce my defence before you and explain the points as existing in the year 1981......" The respondents never supplied these letters/ complaints/representations to the petitioner, nor any adverse report that came to the knowledge of the respondent-Corporation, nor copy of enquiry report, if any, was supplied to the petitioner.
6. Thereafter, Deputy General Manager (Sales), issued show-cause notice dated 30-10-1996 (Annexure-14), calling upon the petitioner to show-cause as to why the Letters of Intent be not revoked and cancelled on the following grounds :--
"(1) That Shri Jagannath Pandey, Mukhiya, Gram Panchayat Raj, Parsa Gaunaha, West Champaran vide his letter No. 25/82 (P), dated 16-8-1982 addressed to our Divisional Manager at Patna represented that you own two cinema halls at Narketiaganj, possess a large farm at Dhanauji and your annual income exceeds Rs. 15,000/-. Hence, you do not meet the eligibility criteria. A photocopy of above representation is enclosed herewith.
(2) That a joint petition dated 1-9-1982 to the Hon'ble Minister, Ministry of Petroleum and Chemicals, New Delhi, submitted by Shri Ram Chandra Mishra, MLA, Shri Rajendra Prasad Sliarma. MLA, Sri Mahendra Narayan Jha, MLA and Sri Mithilesh Kumar Pandey, MLA -- all from, Bihar Bidhan Sabha represented that your annual income far exceeded the limit of Rs. 15,000/- per annum as you are owner of two cinema halls at Narketiaganj, a large farm at Dhanauji, own a big house at Chajjubagh, Patna fetching rent of about Rs. 20,000/- per annum from M/s. Hindustan Fertilizers Corporation Ltd, A photocopy of the above representation is enclosed herewith.
(3) That the Chairman, Zilla Parishad, Bettiah vide letter dated 16-9-1982 addressed to our Divisional Manager at Patna and copied to Ministry of Petroleum. New Delhi, represented that you are not unemployed but self-employed as you own two cinema halls at Narketiaganj and have an annual Income much above Rs. 15,000/-. The representation further stated that one of your house at Chhajubagh, Patna alone gets rent of Rs. 21,000/- per annum from M/s. Hindustan Fertilizer Corporation Ltd. A photocopy of above representation is enclosed.
(4) Our enquiries revealed that particulars of income of your parents exceeded than what you had mentioned in your application dated 16-8-1981 and the enclosures thereto. Kindly produce relevant Income-tax clearance certificate dated 16-8-1981 that your parent's income did not exceed Rs. 15,000/- per annum.
You are requested to kindly submit your explanation as laid down in the Order of the Hon'ble High Court."
7. The petitioner had ultimately shown cause by his letter dated 14-12-96 (Annexure-15), stating therein that his father was already dead in 1981, and, therefore, the income of his mother had to be ascertained who has had three sources of income, namely, Himalaya Chitra Mandir, cinema house, Bhagwati Picture Palace, another cinema house, and agriculture. Insofar as Himalaya Chitra Mandir is concerned, according to the petitioner, it belonged to Hindu Undivided Family of which his mother was the Karta and as per the assessment during financial year 1980-81 of the Income-tax Officer, Bettiah, it was Rs 11,210/- per annum. His mother is entitled to one-third of the same, which is Rs. 3,743/- per annum. In so far as Bhagwati Picture Palace is concerned, on account of decline in the business of cinema houses in general on account of the onset of T.V. and V.C.R., as per the assessment of the Income-tax Officer, Bettiah, during the financial year 1980-81, her share of loss was for Rs. 8,266/-. The agricultural Income during the year 1980-81 as per the agricultural Income certificate comes to Rs. 10,000/-. In substance, the income of Smt. Savitri Verma during the financial year 1980-81 was as follows :--
i) Income from HimalayaChitra Mandir (+) Rs. 3,743.00
ii) Income from Agricultural Source (+) Rs. 10,000.00 Rs. 13,743.00
iii) Loss from Bhagwati Picture Palace (-) Rs. 8,266.00 Rs. 5,477.00 Insofar as the Patna house is concerned, the same either in part or whole does not belong to his mother. In that view of the matter, the petitioner submitted that the family's total income was Rs. 5,477/- per annum, which was much below the limit of Rs. 15.000/- and, therefore, submitted that the cause shown by him may be accepted and the Letter of Intent may be carried to its logical conclusion. The cause has been rejected by the impugned order dated 2-12-97 (Annexure-16). As stated above, the respondents Issued another advertisement dated 6-1-99 (Annexure-18), inviting applications for settlement of the retail outlet in question. As stated above, interim orders have been passed with respect to the same by a learned single Judge of this Court by order dated 10-2-99.
8. While assailing the validity of the impugned order, Mr. S.N. Jha, Sr. Advocate, appearing for the petitioner, submitted that the impugned order is not in terms of the remand order passed by this Court. The respondents did not supply to the petitioner, copies of the complaints/letters etc. received by the respondents which led to the enquiry, nor a copy of the enquiry report adverted to in the impugned order was supplied, He next submitted that the impugned order does not assign any reason for revoking the petitioner's cause, and in the same vein does not assign reasons for reaching the conclusion that the family income of the petitioner was more than Rs. 15.000/- during the financial year 1981-82. He lastly submits that the scope of interference with respect to such matters is now sufficiently wide and the present case is covered by the same.
9. Mr. K.D. Chatterjee, Sr. Advocate, submits in opposition that the present matter relates to issues relating to contract which cannot be agitated in writ jurisdiction. Strictly speaking, he submits, even if there is an error of fact, the same cannot be decided by a writ Court. Errors of facts cannot be examined in writ jurisdiction. It is not a case of non-observance of statutory provisions. The respondents have full discretion in commercial matters. He lastly submits that the scope of interference with cancellation of a Letter of Intent is now clearly enunciated in the judgment of the Supreme Court, reported in (1996) 10 SCC 405 : (AIR 1997 SC 66) (Rajasthan Co-operative Dairy Federation Ltd. v. Maha Laxmi Mingrate Marketing Service Pvt. Ltd.).
10. Having considered the rival submissions, I am of the view that this writ petition has to be allowed. Learned counsel for the petitioner is right in his submission that the impugned order is not in terms of the judgment of this Court in ways more than one. Tills Court had clearly stated in its earlier judgment that "the respondents have not placed on record the enquiry report or any material which had come to their notice on the basis of which the Letter of Intent was cancelled and revoked. ....." The respondents have made the same mistake again. In spite of clear direction of this Court and the request made by the petitioner vide his letter dated 30-9-96 (Annexure-13), copies of the letters/complalnts/representa-tlons made to the respondents by the Mukhiyas, Zila Parishad, MLAs., have not been supplied to the petitioner. Furthermore, the impugned order Itself states that "..... as per my direction, the Deputy General Manager. Patna EDO carried out the enquiry through his Field Officers about the income of Shri Alok Prasad Verma and his family and the same has been submitted to me. . . . ." The same is obviously adverse to the petitioner, and a copy of the same has not been supplied to him. In that view of the matter, the impugned order is bad in law, and is fully covered by the judgment of the Supreme Court, reported in AIR 1967 SC 1269 (State of Orissa v. Bina Pani Dei). The impugned order is not in terms of the earlier order of the High Court, and is in fact in clear violation of the same, inasmuch as this Court had clearly intended in its judgment that all the materials on record adverse to the petitioner be supplied to him so that he can effectively answer the same. The petitioner's contention is, therefore, upheld.
11. Learned counsel for the petitioner is right in his submission that the impugned order does not assign any reason as to how the respondents have reached the conclusion that the petitioner's Income exceeded Rs. I5,000/-. This is also clearly in violation of the spirit of this Court's order, and makes the impugned order arbitrary. This Court had clearly observed in its judgment that"..... besides it has not been shown by the respondents that the Income of the mother of the petitioner is more than Rs. 15,000/- so as to disentitle the petitioner for being considered for grant of Retail Outlet Dealership......" It is thus manifest that it was incumbent on the respondents to assign reasons for reaching the conclusion about the income of the petitioner's family. The impugned order states that "the family income of Shri Alok Prasad Verma during 1981/82 i.e. the date of his application for the Retail Outlet Dealership at Gaunaha, Dist. West Champaran, Bihar, was more than Rs. 15,000/-, being the maximum limit of the family income of a candidate for qualifying himself for the said Retail Outlet Dealership which was mentioned in the Advertisement." It is now settled by a long line of cases that order which give rise to civil consequences must conform to the principle of natural justice and all orders rejecting the citizen's claim or stand must assign reasons. Learned counsel for the petitioner has, therefore, rightly relied on the judgment of the Supreme Court, reported in AIR 1979 SC 429 (Manager, Govt. Branch Press v. D. B. BelliappaJ. The following portion occurring in paragraph 24 of the judgment is illuminating (Para 24) :--
"..... the authority cannot withhold such information from the Court on the lame excuse, that the impugned order is purely administrative and not judicial, having been passed in exercise of its administrative discretion under the rules governing the conditions of the service. "The giving of reasons", as Lord Benning put it in Breen v. Amalgamated Engineering Union, (1971) 1 All ER 1148 "is one of the fundamentals of good administration" and, to recall the words of this Court in Khudi Ram v. State of West Bengal, (1975) 2 SCR 832 at p. 854 : AIR 1975 SC 550 at p. 558, in a Government of laws "there is nothing like unfettered discretion immune from Judicial review ability." The executive, no less than the judiciary, is under a general duly to act fairly. Indeed, fairness founded on reason is the essence of the guarantee epitomised in Articles 14 and 16(1)."
Learned counsel for the petitioner is further right in placing reliance on the judgment of the Supreme Court, reported in AIR 1965 SC 1222 (Sardar Govindrao v. State of Madhya Pradesh), paragraph 10 of which is relevant in the present context and is set out hereinbelow for the facility of quick reference:--
"10. The next question is whether Government was justified in making the order of April 26, 1955? That order gives no reasons at all. The Act lays upon the Government a duty which obviously must he performed in a judicial manner. The appellants do not seem to have been heard at all. The Act bars a suit and there is all the more reason that Government must deal with such cases in a quasi-judicial manner giving an opportunity to the claimants to state their case in the light of the report of the Deputy Commissioner. The appellants were also entitled to know the reason why their claim for the grant of money or a pension was rejected by Government and how they were not considered as not falling within the class of persons who it was clearly intended by the Act to be compensated in this manner. Even in those cases where the order of the Government is based upon confidential material, this Court has Insisted that reason should appear when Government performs curial or quasi-judicial functions (See Hari Nagar Sugar Mills Ltd. v. Shyam Sundar Jhunjhunwala, (1962) 2 SCR 339 : AIR 1961 SC 1669."
In the present case, there is no question of any confidential material or sensitive material which could not have been disclosed as part of the reasons in the impugned order. Learned counsel for the petitioner is further right in placing reliance on the judgment of the Supreme Court, reported in (1973) 2 SCC 836 : (AIR 1974 SC 87) (Union of India v. M.L. Capoor), paragraph 28 of which is relevant in the present context and is set out hereinbelow for the facility of quick reference :--
"28. In the context of the effect upon the rights of aggrieved persons, as members of a public service who are entitled to just and reasonable treatment, by reason of protections conferred upon them by Arts. 14 and 16 of the Constitution, which arc available to them throughout their service, it was incumbent on the Selection Committee to have stated reason in a manner which would disclose how the record of each officer superseded stood in relation to records of others who were to be preferred, particularly as this is practically the only remaining visible safeguard against possible injustice and arbitrariness in making selections. If that had been done, facts on service records of officers considered by the Selection Committee would have been correlated to the conclusions reached. Reasons are the links between the materials on which certain conclusions are based and the actual conclusions. They disclose how the mind is applied to the subject-matter for a decision whether it is purely administrative or quasi-judicial. They should reveal a rational nexus between the facts considered and the conclusions reached. Only in this way can opinions or decisions recorded be shown to be manifestly just and reasonable. . . . ."
11.1 The net result is that it is now settled by a long line of cases of high authority that action of Government or Governmental agencies which are quasi-judicial in nature or give rise to civil consequence, must assign reason in support of the conclusion. The impugned order in the present case is woefully inadequate and is completely without any reason at all. It only states the conclusion. The position for the respondents becomes all the more vulnerable because this Court clearly indicated in its judgment that the earlier order impugned therein was without any reason at all and was strongly disapproved of by this Court. The respondents have with inexorable obduracy once again refused to assign reasons in support of the impugned order. The petitioner's contention is, therefore, upheld.
12. The culpability of the respondents is further accentuated by the fact that they refused to disclose factual materials before this Court in spite of repeated questions put to the learned counsel for the respondents during course of oral arguments as to the materials which had led the respondents to the impugned order. The respondents have not filed their counter-affidavit placing on record the materials which would Justify the conclusion in the impugned order. The respondent-authorities have confronted this Court with the conclusion that the impugned order is correct and has been passed after full verification, enquiry, and notice to the petitioner. This Court strongly deprecates this kind of recalcitrant approach on the part of the respondents where they have undertaken upon themselves the task of assigning finality to their orders. It is well settled by a long line of cases that every executive action in this country is subject to the decision of the Court. I am equally reminded of my own judgment, reported in (2000) 2 Pat LJR 140 : (2000 CLC 1560) (Hindeutsch Impex v. State of Bihar), paragraph 9.1 of which is relevant in the present context and is set out hereinbelow for the facility of quick reference:--
"9.1. This Court expresses its strong displeasure on the approach of the respondent authorities in confronting the Court with their conclusion, rather than making a sincere effort to justify their action by placing full materials before the Court, enabling the Court to reach its own conclusions. Reference may be made to the judgments, reported In (1973) 2 Sew LR 659 (Delhi) (Prem Praveen v. Union of India) as well as (1980) 1 Serv LR 788 : (1980 Lab 1C 1311) (Madh Pra) (P.C. Saxena v. State of M.P.). This Court is thus not convinced about the mode and manner in which the respondent au thorities have reached the conclusion which is unsupported by cogent logic. In fact, the Court gets an impression that the respondent-authorities were in an undue anxiety to reject the petitioner's claim, providing only an apology for reasoning for the reason that it was faced with the order dated 19-1-96 of this Court (Annexure-15)."
In fact, as stated above, the Supreme Court has also observed in Manager, Government Branch Press v. D. B. Belliappa (AIR 1979 SC 429) (supra), that ". . . . .the authority cannot withhold such information from the Court on the lame excuse that the impugned order is purely administrative and not judicial, having been passed in exercise of its administrative discretion under the rules governing the conditions of the service. , . ."
13. Learned counsel for the respondents has submitted that matters relating to contract cannot be agitated in writ jurisdiction. Even if there are factual errors in reaching the conclusion, the same cannot be decided by a writ Court, It is not a case of non-observance of statutory matters. I am unable to accede to the contention in the facts and circumstances of the present case for the reason that the Court shall not normally examine matters relating to contracts, but it must survive the test of Article 14 of the Constitution of India. In the present case, the impugned order verges on arbitrariness. Refusal to supply to the petitioner materials adverse to him, failure to assign reasons in the impugned order, non-disclosure of materials before this Court and the absence of counter-affidavit, and its refusal to satisfy the Court during course of oral arguments in spite of persistent queries, verges on arbitrariness. Arbitrariness is anathema to the Constitution of India. Reference may be made to the judgments of the Supreme Court, reported in AIR 1974 SC 555 (E.P. Royappa v. The State of Tami Nadu), AIR 1978 SC 597 (Maneka Gandhi v. Union of India), and AIR, 1981 SC 487 (Ajay Hasia v. Khalid Mujib). Had the respondents assigned reasons in the impugned order and disclosed the materials in support of the impugned order, then this Court may not have been entitled in writ jurisdiction to examine the adequacy of materials in support of the impugned order. I am, in this connection, reminded of the classic judgment of the House of Lords in the case of Council of Civil Service Unions v. Minister for the Civil Service, reported in (1984) 3 All ER 935. Expanding the enunciation of law by Lord Green in Associated Provincial Picture House Ltd. v. Wednesbury Corporation, (1947) 2 All ER 680, Lord Diplock in his speech held that administrative action is subject to Courts by judicial review under three heads: (1) illegality, where the decision-making authority has been guilty of an error of law, e.g. by purporting to exercise a power it does not possesses; (2) irrationality, where the decision-making authority has acted so unreasonably that no reasonable authority would have made the decision; and (3) procedural impropriety, where the decision-making authority has failed in its duty to act fairly. The Government or Governmental agencies have normally full discretion in commercial matters, provided the decision survives the test of Article 14 of the Constitution. As stated hereinabove, the impugned order verges on arbitrariness. Therefore, the reliance placed by the learned counsel for the respondents on the judgment of the Supreme Court, reported in AIR 1996 SC 51 (Sterling Computers Ltd. v. M and N Publications Ltd.), is misplaced for the reason that one proposition of law enunciated therein completely defeats the respondents' case. It has been laid down in paragraph 19 of the judgment that "...... By way of judicial review, the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans, (1982) 3 All ER 141 (supra), the Courts can certainly examine whether "decision-making process" was reasonable, rational, nor arbitrary and violative of Article 14 of the Constitution." As held hereinabove, the present case is surely a case of procedural irregularity, as the decision has not been arrived at fairly. Then it also becomes a case of illegality and irrationality. The impugned order suffers from the vice of arbitrariness, and falls foul of Article 14 of the Constitution of India.
14. Learned counsel for the respondents lastly submits that there is no scope for interference with an order cancelling the Letter of Intent, and cancellation of a contract cannot be considered as arbitrary action violative of any fundamental right. He relied on the judgment of the Supreme Court, reported in (1996) 10 SCC 405 : (AIR 1997 SC 66) (Rajasthan Co-operative Dairy Federation Ltd. v. Maha Laxmi Mingrate Services Pvt. Ltd.). The reliance placed on the judgment is misplaced. The judgment itself states that when the reasons for cancellation are clearly set out in the cancellation letter and are germane to the decision not to enter into a contract with the respondent therein, the extraneous circumstances pointed out by him cannot make the decision mala fide. As has been found herein above. the impugned order is completely devoid of reasons in spite of opportunity given by this Court by its earlier judgment, and the further opportunity given by this Court in the present proceeding.
14.1 The judgment of the Supreme Court further lays down that the doctrine of audi alteram partem also cannot be imported in these circumstances. If the conduct of the respondent therein was such that it did not inspire any confidence in the appellant, the latter was entitled to decline to enter into any legal relationship with the respondent as its selling agent. The Letter of Intent merely expressed an intention to enter into a contract. If the condition submitted in the Letter of Intent were not fulfilled by the respondent therein and its conduct was otherwise not such as would generate confidence, the authorities were entitled to withdraw the Letter of Intent. There was no binding relationship between the parties at this stage and the governmental agency was entitled to look at the totality of circumstances in deciding whether to enter into a binding contract with the respondent therein.
14.2 The proposition does not apply to the facts and circumstances of the present case for the reason that the respondents have not set up any case of lack of confidence in the present petitioner. Secondly, it is only a question of factual verification whether or not the Income of the petitioner's family exceeded more than Rs. 15,000/-during the financial year in question. This Court has already rejected the respondents' conclusion, and accepted the petitioner's version that his family's income was less than Rs. 15,000/-. I have also held hereinabove that the entire approach and action of the respondent-authorities is arbitrary. The culpability of the respondents is accentuated because of its failure and refusal to act according to the directions of this Court specifically made in the earlier judgment, apart from its general duty under the law to act fairly and assign reasons for the impugned order. And I repeat to emphasise that the respondents have not filed any counter-affidavit in the present case and have with inexorable obduracy refused to disclose to this Court the materials in support of the impugned order. Furthermore, the said reported judgment involved acts of fraud on the part of the respondents therein. I am in this connection reminded of the judgment of the Court of Appeal in England, reported in (1956) 1 All ER 341 (Lazarus Estates Ltd. v. Beasley), wherein Lord Denning held that". . . ..I cannot accede to this argument for a moment. No Court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a Court, no order of a Minister, can be allowed to stand, if it has been obtained by fraud. Fraud unravels everything. The Court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts, and all transactions whatsoever. . . . ." Lastly, the reported judgment clearly states that the appellant's action was free from all arbitrariness.
15. The Supreme Court in its judgment in the case of Dwarkadas Marfatia and Sons v. Bombay Port Trust, (1989) 3 SCC 293 : (AIR 1989 SC 1642) has held that all actions including contractual dealings of statutory authority are subject to judicial review. Court can see if such body has followed the statutory purpose and acted in public interest or not, and not in mala fide or arbitrary or for a 'collateral purpose; its action must be reasonable and taken upon lawful and relevant grounds of public interest. Any authority covered under Article 12 of the Constitution cannot act arbitrarily even in contractual matters and must act only to further public Interest. In that view of the matter, I reject the respondents' contention that there cannot under any circumstance be interference with cancellation of Letter of Intent.
16. In the aforesaid premise, I agree with the contention advanced on behalf of the petitioner that the scope of interference with the action of the Government and the governmental agencies even with respect to contractual matters have been increasingly recognized and expanded by the Supreme Court. He relies on the judgment of the Supreme Court, reported in (1999) 6 SCC 667 (Common Cause, a Registered Society v. Union of India). Emphasis has been laid on paragraphs 41 to 45 (of SCC) : (Paras 40 to 44) of the said judgment which are set out hereinbelow :--
"41. In a broad sense, therefore, it may be said that those branches of law which deal with the rights/duties and privileges of the public authorities and their relationship with the individual citizens of the State pertain to "public law", such as constitutional and administrative law, in contradistinction to "private law" fields which are those branches of law which deal with the rights and liabilities of private individuals in relation to one another.
42. The distinction between private law and public law was noticed by this Court in LIC of India v. Escorts Ltd. in which the Court observed as under (1986 (1) SCC 264) (SCC p. 344. para 102): (AIR 1986 SC 1370 at p. 1424) :--
"Broadly speaking, the Court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to private law field. The difficulty will like in demarcating the frontier between the public law domain and the private law field. It is impossible to draw the line with precision and do not want to attempt it. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is engaged when performing the action, the public law or private law character of the action and a host of other relevant circumstances."
43. Public law field, since its emergence, is ever expanding in operational dimension. Its expanse covers even contractual matters, (See Union of India v. A.L. Rallia Ram, (AIR 1963 SC 1685): Mulamchand v. State of M. P. (AIR 1968 SC 1218) wherein the principles of restitution and unjust enrichment were applied). (See also State of W.B. v. B.K. Mandal and Sons (AIR 1962 SC 779) and New Marine Coal Co. (AIR 1964 SC 152) (Bengal (P.) Ltd. v. Union of India ) (sic).
44. Government decisions regarding award of contracts are also open to judicial review and if the decision-making process !s shown to be vitiated by arbitrariness, unfairness, illegality and irrationality, then the Court can strike down the decision-making process as also the award of contract based on such decision. This was so laid down by this Court in Tata Cellular v. Union of India, (AIR 1996 SC 11). Initially the Supreme Court was of the opinion that while the decision-making process for award of a contract would be amenable to judicial review under Article 226 or 32 of the Constitution, a breach of a contractual obligation arising out of a contract already executed would not be so enforceable under such jurisdiction and the remedy in such cases would lie by way of a civil suit for damages. (See Radhakrishna Agarwal v. State of Bihar (AIR 1977 SC 1496)). But the Court changed its opinion in subsequent decisions and held that even arbitrary and unreasonable decisions of the Government authorities while acting in pursuance of a contract would also be amenable to writ jurisdiction. This principle was laid down in Gujarat State Financial Corpn. v. Lotus Hotels (P.) Lid. (AIR 1983 SC 848). This Court even went to the extent of saying that the terms of contract cannot be altered in the garb of the duty to act fairly. See Asstt. Excise Commr. v. Issac Peter (1994 AIR SCW 2616). Duty to act fairly in respect of contracts was also the core question in Mahabir Auto Stores v. Indian Oil Corpn. (AIR 1990 SC 1031) in which this Court relied upon its earlier decisions in E.P. Royappav. State of T.N. (AIR 1974 SC 555); Maneka Gandhi v. Union of India (AIR 1978 SC 597); Ajay Hasia v. Khalid Mujib Sehravardi (AIR 1981 SC 487); Ramana Dayaram Shetty v. International Airport Authority of India (AIR 1979 SC 1678) as also Dwarkadas Marfatla and Sons v. Board of Trustees of the Port of Bombay (AIR 1989 SC 1642).
45. Public law remedies have also been extended by this Court to the realm of tort."
17. This Court is thus convinced on the strength of a long line of cases of high authority that this Court in exercise of its writ jurisdiction can in appropriate cases interfere with matters relating to contract, for example, which are covered by the law enunciated by the House of Lords in Council of Civil Services Union v. Ministry of Civil Services (1984 (3) All ER 935) (supra). As held hereinabove, the respondents-authorities are surely guilty of procedural Impropriety and, therefore, in the facts and circumstances of the present case of Illegality as well as irrationality. This Court is convinced that the decision-making authority has failed in its duty to act fairly. They are also guilty of Irrationality because they have acted so unreasonably that no reasonable authority would have made the decision. They are equally guilty of illegality, because once it is held that the petitioner's version as to his family income is correct, i.e., it was less than Rs. 15,000/- per annum at the relevant point of time, it follows as a matter of natural corollary that the respondents have acted illegally in failing to act as per the terms of the advertisement. As stated hereinabove, culpability of the respondents is accentuated by their inexorable obduracy to observe the directions given by this Court so lucidly in its earlier judgment. The net result is that the impugned action is grossly arbitrary and suffers from procedural impropriety, irrationality as well as illegality.
18. In the result, this writ petition is allowed with costs. The impugned order dated 2-12-97 (Annexure-16), is set aside, the Letter of Intent issued by the respondents is upheld, and the respondents are hereby directed to take further steps in this connection in accordance with law and the prescribed procedure without further delay. The respondents are directed to pay a sum of Rs. 5,000/- to the petitioner by way of costs of this writ petition, and deposit a sum of Rs. 5,000/- with the Member-Secretary, State Legal Services Authority, both within a period of one month from today.