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Bal Krishan Vaid Vs. the State of Himachal Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectContract;Constitution
CourtHimachal Pradesh High Court
Decided On
Case NumberCivil Writ Petn. No. 185 of 1974
Judge
ActsConstitution of India - Articles 14 and 226; ;Mines and Minerals (Regulation and Development) Act, 1957 - Section 30; ;Himachal Pradesh Minor Minerals (Concession) Revised Rules, 1974
AppellantBal Krishan Vaid
RespondentThe State of Himachal Pradesh and ors.
Appellant Advocate S. Malhotra and; D.K. Khanna, Advs.
Respondent Advocate B. Sita Ram, Adv. General and; K.D. Sud, Adv.
DispositionPetition dismissed
Cases ReferredC. K. Achutan v. State of Kerala
Excerpt:
- .....the petitioner prays for the quashing of an order dated june 20/27, 1974 made by the himachal pradesh government terminating a quarrying contract in his favour.2. the central government has undertaken the construction of a hydel project known as the baira siul hydel project. the material required in theconstruction work includes sand, stone and bajri, and for that purpose the material is drawn from the adjoining bed of the river siul. it appears that for the year 1973-74 the project entered into an agreement directly with the himachal pradesh government entitling it to extract and remove the material required for the construction work. in january 1974 the industries department of the himachal pradesh government decided to auction the readies of the river bed to private contractors......
Judgment:

B.S. Pathak. C.J.

1. By this writ petition, the petitioner prays for the quashing of an order dated June 20/27, 1974 made by the Himachal Pradesh Government terminating a quarrying contract in his favour.

2. The Central Government has undertaken the construction of a hydel project known as the Baira Siul Hydel Project. The material required In theconstruction work includes sand, stone and bajri, and for that purpose the material is drawn from the adjoining bed of the river Siul. It appears that for the year 1973-74 the Project entered into an agreement directly with the Himachal Pradesh Government entitling it to extract and remove the material required for the construction work. In January 1974 the Industries Department of the Himachal Pradesh Government decided to auction the readies of the river bed to private contractors. A public auction was held on February 19, 1974. The reach between Kella and Hathni was auctioned to the petitioner for Rs. 27,300/- and the reach between Hathni and Kandla was auctioned to Umesh Kumar for Rs, 10,200/-. Both leases are for one year. It may be mentioned that the reach between Kandla and Sundla had already been auctioned on February 22, 1972 to Vinod Kumar Sud for three years for about Rs. 1400/-. The three reaches are situated contiguously. On March 15, 1974, the petitioner executed a deed of agreement in Form 'K' and entered into possession of his reach of the river bed.

3. The Project was supplied with sand, stone and bajri by all three contractors, the petitioner, Umesh Kumar and Vinod Kumar Sud from their respective reaches. The Project purchased the material at Rs. 15/- per 100 cft. from Vinod Kumar Sud end Umesh Kumar, On March 18, 1974, the petitioner informed the Project that he would also charge Rs. 15/-per 100 cft. It appears that in April, 1974 the sixth respondent. Shri Des Raj Mahajan. Minister for Revenue in the Himachal Pradesh Government visited the region and in a meeting with him the Project authorities drew his attention to the difficulties experienced by them resulting from the auction of the river reaches, including the one auctioned to the petitioner, and he was requested to get the contracts cancelled by the Himachal Pradesh Government The sixth respondent desired the Project authorities to bring their difficulties to the notice of the Government by an official communication, with a copy thereof to him. On April 16, 1974 the Project authorities wrote to the Government that either the petitioner's lease should be cancelled or he should be limited to the rates charged by the Government from the Project in the preceding year. On April 30. 1974, the Chief Engineer of the Project wrote to the Mining Officer of the Industries Department that it was prepared to deposit Rs. 27,000/-, the auction money accepted from the petitioner, and the auction should be cancelled. He intimated that the auction money in respect of the Kandla reach and the Sundla reach could also be deposited for the purpose of setting aside those contracts. Meanwhile, the petitioner continued to press for payment at Rs. 15/-per 100 cft. for the supplies already made by him. On May 30. 1974 the Additional Secretary in the Ministry of Irrigation and Power of the Government of India wrote to the Chief Secretary of the Himachal Pradesh Government requesting that the contract in favour of the petitioner as well as other similar contracts should be set aside because of the apprehended increase in the cost of construction material to the Project. On June 30, 1974 the Chief Engineer of the Project informed the petitioner that he would be paid at the rate of Rs. 10 per 100 cft. pending a decision in the matter by the Himachal Pradesh Government, Then on July 5, 1974 the petitioner received a notice dated June 20/27. 1974, purporting to be under Clause 30 of the agreement between the petitioner and the Himachal Pradesh Government, intimating the intention of the Government to terminate the contract upon the expiry of thirty days from the date of issue of the notice. The validity of this notice has been assailed by the petitioner in this writ petition.

4. The respondents have raised a number of preliminary objections. The preliminary objections are:

(1) The controversy between the parties relates to a breach of contract and, therefore, no writ will issue.

(2) The Union of India is a necessary party and no relief can be granted in its absence.

(3) The petitioner has an alternative remedy by way of revision to the Central Government under Section 30 of the Mines and Minerals (Regulation and Development) Act, 1957 and there is no reason why he should avail of the extraordinary jurisdiction of this Court under Article 226 of the Constitution.

(4) The case involves disputed questions of fact, for which tine appropriate remedy is a suit and not a writ petition. On the merits, the petitioner contends that:

(a) The termination of the contract cannot be justified by Clause 30 of the Agreement because it has not been made in the public interest.

(b) The notice terminating the contract is invalid because Clause 30 contemplates a notice of thirty days from the date of communication of the notice and mot from the date of its issue.

(c) Section 4A (2) of the Act, as amended in 1972, cannot be invoked by the Himachal Pradesh Government as an alternative in support of the termination of the contract, because (i) Section 14 of the Act excludes its operation, (ii) it applies to a mining lease and not to a contract; and (iii) the condition precedent set out therein has not been satisfied.

(d) The termination of the contract has been brought about by the enmity of the sixth respondent, and is therefore, invalid.

(e) The Himachal Pradesh Government is guilty of discriminating against the petitioner inasmuch as similar contracts held by other contractors in respect of contiguous reaches of the same river bed have not been terminated, and the Government hag thereby violated. Article 14 of the Constitution.

5. The first preliminary objection may be considered. The question is whether a writ petition can lie on the petitioner's complaint that his contract has been invalidly terminated. It is settled law that a writ in the nature of mandamus will issue only where there is a breach, of a statutory duty. In Lekhraj Sathramdas Lalvani v. N.M. Shah AIR 1966 SC 334 the Supreme Court laid down:

'A writ of mandamus may be granted only in a case where there is a statutory duty imposed upon the officer concerned and there is a failure on the part of that officer to discharge that statutory obligation. The chief function of the writ is to compel the performance of public duties prescribed by statute and to keep the subordinate tribunals and officers exercising public functions within the limits of their jurisdictions...................'

It was held that the appointment of the appellant in that case as a Manager by the Custodian of Evacuee Property under Section 10 (2) (b) of the Administration of Evacuee Property Act, 1950 was contractual in its nature and there was no statutory obligation between him and the appellant. It was observed that any duty or obligation falling upon a public servant out of a contract entered into by him as such public servant cannot be enforced by the machinery of a writ under Article 226 of the Constitution.

6. What is the position here? The Mines and Minerals (Regulation and Development) Act, 1957 provides for the grant of prospecting licenses and mining leases. The Himachal Pradesh Minor Minerals (Concession) Revised Rules 1971 which have been framed pursuant to Section 15 (1) of the Ad purport to give effect to its provisions so far as they relate to minor minerals. Rules 28 to 33 provide for the grant of contracts to carry, win work and carry away any minor minerals specified in the contract through open auction or by inviting tenders Rule 33 provides :

'When a bid is confirmed or a tender is accepted, the bidder or tenderer shall execute a deed in Form 'K'. The execution of the deed shall be made within three months from the date of communication of acceptance of the bid or tenderto the bidder or tenderer, and if no such contract is executed within the aforesaid period the order accepting the bid or tender shall be deemed to have been revoked and the amounts paid under Rules 30 (2) (iv) or 31 (3) as the case may be shall be forfeited to the Government;

Provided...........................'

The petitioner executed an agreement in Form 'K', within the specified time, and Clause 30 of the agreement stipulates:

'(30) A contract may be terminated by the Government if considered by it to be in public interest by giving one month's notice; provided that in a state of national emergency or war the contract may be terminated without giving such notice.'

Neither in the Act nor in the rules do we find any specific provision empowering the Government to terminate a contract in the public interest. The provision is to be found only in the agreement in form 'K' prescribed by Rule 33.

7. Now the law appears to be this. To claim the issue of a writ a petitioner must establish an infringement of a statutory right possessed by him or a refusal by the authority to perform a statutory obligation. He must show that the right or obligation in question is founded in statute. If the term or condition which creates the right or obligation is contained in the statute and has legal force as a provision of the statute then the violation of the term or condition is a violation of the statute and that is so even if the term or condition is incorporated in a contract between the parties, whether that is required by the statute in such contract or is left to the will of the par-tiles. But if the term or condition has legal force only when it is incorporated in a contract between the parties then violation of that term or condition amounts to a mere breach of contract and that is so even if that term or condition is required by the statute to be incorporated in a contract. The question always is:

Does the term or condition upon which the grievance is founded, have legal force because it is a provision of the statute or only because it is a clause of the contract?

In Prabhakar Ram Krishana Jodh v. A. L. Pande. (1965) 2 SCR 713 the appellant was a teacher in a college affiliated to the University of Saugar and managed by a Governing Body established under the provisions of an Ordinance made under the University of Saugar Act. The appellant was under contract with the Governing Body. The Principal of the college framed charges against the appellant andthereafter the Governing Body terminated his services. It was contended that the Governing Body had violated the provisions of Ordinance 20 framed under the University of Saugar Act. The Supreme Court held that the Ordinance had the force of law and conferred rights on teachers of affiliated colleges, and Clause 8 of the Ordinance relating to the security of the tenure of teachers was a part and parcel of the Teachers' Service Conditions. The Supreme Court observed that an order terminating the services of the appellant in violation of Clause 8 of the Ordinance gave the appellant a right to apply under Article 226 for relief and the consideration that he had entered into a contract was immaterial. On the other side of the line is Vidya Ram Misra v. The Managing Committee Shri Jai Narain College, AIR 1972 SC 1450. Statute 151 framed under the Lucknow University Act, 1920 provides that teachers of an Associated College shall be appointed on written contract and that a contract shall, inter alia, provide the conditions mentioned therein in addition to such other conditions not inconsistent with the Act and the Statutes as the Associated College may include in its own form of agreement. The conditions as regards salary, age of retirement and others are enumerated in the Statute, the statute also specifies the grounds on which a teacher's services can be terminated. Statute 152 requires that the form of agreement to be adopted by each college must be approved by the Executive Council before it is put in force. Statute 153 serves as a model. The Supreme Court observed that Statute 151 merely provides that the terms and conditions mentioned therein must be incorporated in the contract to be entered into between the college and the teacher concerned and that these terms and conditions do not proprio vigore have the force of law. It said:

'They become terms and conditions of service only by virtue of their being incorporated in the contract. Without the contract, they have no vitality and can confer no legal rights' Referring to Prabhakar Ram Krishana Jodh (1965) 2 SCR 713 (supra) and distinguishing it the Supreme Court pointed out:-- 'The terms and conditions of service embodied in Clause 8 ............ had theforce of law apart from the contract and conferred rights on the appellant there; here the terms and conditions mentioned in Statute 151 have no efficacy unless they are incorporated in a contract.'

8. In the case before us, the grievance is that there is a violation of Clause 30 of the agreement inasmuch as the termination of the petitioner's contract had not been effected in the public interest. The provision for such termination is tobe found only in the agreement, it is not a provision of the Act or Rules. It is urged by the petitioner that when Rule 33 refers to the agreement being in Form 'K', it thereby makes all the provisions of the agreement a part of the Rules. It seems to me that the mere reference to Form 'K' in Rule 33 does not clothe the provisions of Form 'K' with statutory operation. The provisions in the agreement become operative when the parties subscribe their signatures to the agreement; Rule 33 does not bring them into operation. To be more specific, the Rules do not mention that the contract can be terminated by the Government in the public interest. Authority for the termination of a contract on that ground is to be found in the contract alone. It is a right founded in contract, it is not a power issuing from the statute.

9. The petitioner urges that the decision in Vidya Ram Misra AIR 1972 SC 1450 (supra) is distinguishable on the ground that it was concerned with a contract between master and servant where the contract cannot be specifically enforced, and a writ was sought against a non-statutory authority and also that the statute in that case did not indicate the form of the contract itself. It seems to me that those considerations make no difference in principle to the application of the proposition laid down by the Supreme Court.

In my opinion, the petitioner's complaint arises out of an alleged breach of contract and as no writ can issue in respect of it, we must decline to enter intothat complaint.

10. The second preliminary objection is that the Union of India is a necessary party and because it has not been impleaded no relief can be granted to the petitioner. The reason for contending that the Union of India should have been impleaded is that the Hydel Project is a Central Government undertaking. It is also pointed out that among other reliefs the petitioner has prayed for a direction to the Project authorities to pay the dues of the petitioner in respect of supplies made to the Hydel Project. As regards this relief, Shri Sushil Malhotra, learned counsel for the petitioner, states that he withdraws it. In the circumstances, the relief will be considered as deleted. The remaining reliefs are directed against the order of the State of Himachal Pradesh and the Director of Industries. Himachal Pradesh Government. No relief is now claimed against the project authorities. The Chief Engineer and the Executive Engineer of the Project have been impleaded as respondents in this writ petition, and the interests of the Project authorities are sufficiently safe-guarded by their presence on the record. It is not necessary that the Union of India should be impleaded. This preliminary objection must fail.

11. The third preliminary objection is that instead of applying by way of writ petition the petitioner should have applied in revision to the Central Government under Section 30 of the Mines and Minerals (Regulation and Development) Act. Section 30 of the Act empowers the Central Government to revise any order made by the State Government or other authority in exercise of the powers conferred on it by or under the Act. When the order terminating the contract has not been made in the exercise of statutory power, the remedy by way of revision under Section 30 cannot be availed of by the petitioner.

12. The last preliminary objection is that inasmuch as complicated questions of fact arise on this writ petition the Court should refer the petitioner to a suit. Upon an overall appreciation of the questions raised in this case, I do not see why the writ petition should be rejected on this particular ground.

13. The petitioner's submissions on the merits have already been detailed above. On careful consideration, it seemsto me that if the termination of the petitioner's contract amounts to a mere breach of contract the petitioner's submission on the merits are barred from consideration in this writ petition.

14. Taking the first two contentions first, whether there is a breach of Clause 30 because the termination of the contract cannot be justified on the ground of public interest or because the period of notice is insufficient are matters which can be examined by the Court only if a writ could issue for such breach. And as regards the contention that Section 4-A (2) of the Act cannot be invoked in support of the termination of the contract, it appears unnecessary to enter into that question because ex facie the impugned notice purports to have been issued under Clause 30 of the agreement and as this Court cannot question the validity of that notice in this writ petition it is not necessary for the Government to have recourse to Section 4-A (2) of the Act.

15. Then there is the submission of the petitioner that the termination of his contract by the Government is mala fide and has been occasioned by the ill-will of the sixth respondent. If the Government has terminated the contract with mala fides it has done so as a contracting party. For that, relief cannot be granted by the issue of a writ.

16. Finally, we are left with the contention that the petitioner has been the victim of discrimination inasmuch as no such action has been taken in respect of the contracts of Vinod Kumar Sud and Umesh Kumar covering the two contiguous reaches. To my mind, this contention must also fail on the finding that the complaint of the petitioner arises out of a breach of contract. The petitioner's case in regard to discrimination is based on Article 14 of the Constitution. To invoke Article 14, it must be shown that the State has acted in the context of law. When the Government is party to a contract, and it exercises a right by virtue of such contract it is a matter falling within the sphere of contract. If the Government, having entered into contracts with different persons, arbitrarily terminates the contract of one person only its action must necessarily be referred to its contractual capacity from which the contract and the impugned action flows. Had the discrimination been applied in the course of granting a contract, as was the case in K.N. Guruswamy v. State of Mysore, AIR 1954 SC 592, the discriminatory action of the Government would be referable to its statutory authority, because the statute empowers the Government to enter into such contracts. But once the contract has been concluded between the Government and an individual any action taken by the Government in the application of a term or condition of the contract must be attributed to the capacity of the Government as a contracting party. When the Government passes from the stage of granting a contract to the stage of exercising rights under it, it passes from the domain of statutory power into the realm of contract. And as was observed by the Supreme Court in C. K. Achutan v. State of Kerala, AIR 1959 SC 490, '...... a contract which isheld from the Government stands on no different footing from a contract _ held from a private party.' In my opinion, Article 14 of the Constitution cannot be invoked by the petitioner.

17. Accordingly, the writ petition must fail.

18. The petition is dismissed, but in the circumstances there is no order as to costs.

Chet Ram Thakur, J.

19. I agree.


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