Writ Petitions In Contract Matters Maintainable When There Is Arbitrariness By The State: SC [Read Order]

The bench comprising Justice Rohinton Fali Nariman and Justice Vineet Saran observed thus in an appeal filed against the High court order dismissing a writ petition filed by a contractor. The High Court had dismissed the petition on the ground that disputed questions of fact arise and that the amount due arises out of a contract.

Allowing the appeal, the bench observed:

"We are afraid the High Court was wholly incorrect inasmuch as there was no disputed question of fact. On the contrary, the amount payable to the appellant is wholly undisputed. Equally, it is well settled that where the State behaves arbitrarily, even in the realm of contract, the High Court could interfere under Article 226 of the Constitution of India."

The court noted that the grievance raised in the writ petition was that the payment for extra work by the Uttar Pradesh Jal Nigam has not been made though such work was expressly sanctioned and done to their satisfaction. In its reply to the representation made by the contractor, the corporation had admitted its liability, but said that no money is available with it.

The bench then directed the Uttar Pradesh Jal Nigam to make the necessary payment within four weeks.

The court referred to the judgment in ABL International Ltd. and Another v. Export Credit Guarantee Corporation of India Ltd. and Others. In the said judgment, it was observed thus:

"When an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution."

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