JUDGMENT In this application under Article 226 of the Constitution of India the petitioners have challenged the validity of the action of Jute Corporation of India Ltd. cancelling a contract for supply of 33,300 Quintals of raw jute to the Petitioner No. 1. 2. The Petitioner No. 1 is Nellimarla Jute Mills Co. Ltd. (hereinafter referred to as "Nellimarla"). The Petitioner No. 2 is a Shareholder and Director of the Petitioner No. 1. Nellimarla is engaged in the business of manufacturing jute goods. Its jute mill is situated at Village Nellimarla in the State of Andhra Pradesh. This jute mill is said to be one of the largest of its kind in the country and provides employment for about 7,000 workers. For its manufacturing activity Nellimarla requires huge quantities of raw jute. 3. The Jute Corporation of India Ltd. is the Respondent No. 1 in this proceeding (hereinafter referred to as "JCI"). JCI is a Government Company. The nature of the functions of JCI will be apparent from the following objects specified in the Objects clause of its Memorandum of Association :- "(a) To generally implement such special arrangement for import for internal trade or distribution of jute and Mestas, in public interest. (b) To organise and undertake purchase, sale and transport of Jute and Mestas (imported into or grown in India) including such allied duties as may be entrusted to the Company for such purpose by the Central Government from time to time in India or anywhere else in the world." 4. By a letter dated 4th April, 1988 Nellimarla applied to JCI for purchasing 35,000 Quintals of raw jute and requested JCI to quote its price, payment terms and other conditions. On the very next day, i.e. 5th April, 1988 ICI wrote a letter to Nellimarla offering for sale of 33,300 Quintals of raw jute on the terms and conditions set out in that letter. Since the controversy between the parties basically centers around the payment terms, the same as recorded in JCI's letter dated 5th April, 1988 are extracted here :- "Payment terms : Through confirmed and irrevocable Letter of Credit payable at sight or through Bank Draft." Nellimarla accepted the offer of JCI by its letter dated 8th April, 1988. 5. Then follows the crucial correspondence between the parties. There is no dispute relating to the authenticity or correctness of the contents of this correspondence. 5. Then follows the crucial correspondence between the parties. There is no dispute relating to the authenticity or correctness of the contents of this correspondence. The only question is what is the proper inference to be drawn from such correspondence. It is, therefore, necessary to refer to this correspondence in some detail. 6. After accepting the offer of JCI on 8th April, 1988, Nellimarla by its letter dated 9th April, 1988 referred to a discussion between its representative and the Finance Manager of JCI held on 8th April, 1988 and informed JCI that one Messrs Kabra & Co. of 2, India Exchange Place, Calcutta had agreed to open a third party letter of credit on Nellimarla's behalf and requested JCI to confirm the same at the earliest so that Nellimarla could submit letter of credit in time. This letter was received by JCI on 11th April, 1988. On that very day, viz. 11th April, 1988 JCI forwarded its formal Contract No. JCI/540/87-88/4 dated 11th April, 1988 for sale of 33,300 Quintals of raw jute. Nellimarla returned the duplicate copy of the Contract after signing it in confirmation of acceptance of the contract. This Contract contained the following clauses :- "Payment Terms : Through confirmed and irrevocable Letter of Credit and/or Bank Draft/Pay Order, preferably through a nationalised bank covering the full value of the entire quantity of jute covered by this Contract and other incidental costs to be opened by the buyer and furnished to us by 25th April, 1988 at the latest." 7. By its letter dated 19th April, 1988 Nellimarla requested JCI to amend the contracted quantity of some of the grades of raw jute mentioned in the Contract. In this letter Nellimarla said :- As we have to open the L/C on the basis of actual grade-wise with their value, so please confirm us the amendment requested above to enable us to open the L/C in time. We hope you will consider our above request and oblige." 8. By another letter dated 19th April, 1988 Nellimarla informed JCI that due to some technical problems with its Bankers it was unable to open the L/C by 26th April, 1988 and that as an alternate arrangement Messrs Kabra & Co. We hope you will consider our above request and oblige." 8. By another letter dated 19th April, 1988 Nellimarla informed JCI that due to some technical problems with its Bankers it was unable to open the L/C by 26th April, 1988 and that as an alternate arrangement Messrs Kabra & Co. and Messrs Ghanshyam Jute Traders of 2, India Exchange Place, Calcutta had agreed to open a third party letter of credit on behalf of Nellimarla against the Contract and as such requested JCI to grant permission for opening third party letter of credit. JCI responded to the letter dated 9th April, 1988 requesting amendment of the contracted quantity by its letter dated 19th April, 1988 saying that it was not possible to depart from the stipulations contained in the contract relating to quantities. JCI did not say anything in relation to the other letter of Nellimarla dated 19th April, 1988 asking for permission for opening third party letter of credit. Nellimarla reminded JCI about the request for permission for opening third party letter of credit by its letter dated 25th April, 1988. JCI replied to this letter by its letter of 26th April, 1988 in which it said :- "We have clearly explained to your representative on 21.4.88 in clear terms that the Third Party Letter of Credit will be accepted by us and on the other hand your representative told us that the Third Party Letter of Credit will be executed by you and the same will be submitted to us by 25.4.88. After such discussion, we are really astonished to see your such letter under reference and as such it is not clear to us whether you will establish Third Party Letter of Credit against the above contract." 9. On 30th April, 1988 Nellimarla caused to he established through Oriental Bank of Commerce, Strand Road Branch, Irrevocable Revolving Letter of Credit No. 1/88 in favour of JCI to the extent of Rs. 25,00,000/- to revolve upto Rs. 115.00 lakhs at sight drawn in 100% of Invoice covering 33,300 Quintals of raw jute. This Letter of Credit is dated 30th April, 1988/2nd May, 1988. 10. On 2nd May, 1988 Nellimarla received a letter from JCI dated 29th April, 1988 allowing extension of time upto 30th April, 1988 for making payment arrangement and saying that in case of failure to do so the contract would stand cancelled. This Letter of Credit is dated 30th April, 1988/2nd May, 1988. 10. On 2nd May, 1988 Nellimarla received a letter from JCI dated 29th April, 1988 allowing extension of time upto 30th April, 1988 for making payment arrangement and saying that in case of failure to do so the contract would stand cancelled. The Oriental Bank of Commerce by its letter dated 3rd May, 1988 addressed to JCI confirmed the opening of the Letter of Credit on 30th April, 1988. 11. On the next day, viz. 4th May, 1988 two important events take place: (a) Nellimarla under cover of its letter dated 4th May, 1988 forwards the Original Letter of Credit to JCI and the same is received by JCI on that day. (b) Nellimarla receives the letter dated 3rd May, 1988 written by JCI saying :- "Further to our letter of even number dated 29th April, 1988 we would like to inform you that since you have failed to make payment arrangement in respect of the abovementioned contract our Contract No. JCI-530/87-88/4 dated 11th April, 1988 for sale of 33,300 Quintals of Raw Jute/Mestas stands cancelled." 12. Nellimarla by its letter dated 5th May, 1988 pointed out to JCI that L/C had been opened in time and had been forwarded to JCI on 4th May, 1988 and requested JCI to withdraw the letter dated 3rd May, 1988. JCI replied to this on 10th May, 1988 saying:- "Letter of Credit No. 1/88 on Oriental Bank of Commerce opened in our favour in respect of the above sale contract was received by us on 4.5.88. We have already pointed out, vide our letter of even number dated 3rd May, 1988 that the subject contract No. JCI/530/87-88/4 dated 11th April, 1988 for sale of 33.300 Quintals of Raw Jute/Mestas stood cancelled since you failed to make payment arrangement in respect of this contract within due date. We are, therefore, returning the subject L/C No. 1/88 which we are unable to accept." 13. After issuing the letter of its Advocates dated 11th May, 1988 demanding justice Nellimarla moved this writ petition on 20th May, 1988 challenging the validity of the letters of JCI dated 3rd May, 1988 and 10th May, 1988. We are, therefore, returning the subject L/C No. 1/88 which we are unable to accept." 13. After issuing the letter of its Advocates dated 11th May, 1988 demanding justice Nellimarla moved this writ petition on 20th May, 1988 challenging the validity of the letters of JCI dated 3rd May, 1988 and 10th May, 1988. An interim order was granted on 20th May, 1988 directing JCI to supply 10,000 Quintals of Raw Jute as per the contract on the undertaking of Nellimarla to pay the difference between the rate as on 11th April, 1988, i.e., the date of the contract and the date of delivery. It appears that an appeal was preferred by JCI from the order dated 20th May, 1988 and the Appellate Court sustained the order but with certain modifications relating to payment terms etc. including furnishing of bank guarantees. It also appears that proceedings were initiated by Nellimarla in relation to implementation of the order made by the Appellate Court, including Contempt proceedings and ultimately JCI filed Special Leave Petition before the Supreme Court of India from an order made by a Division Bench of this Court in Contempt Proceedings initiated by Nellimarla. The Division Bench had disposed of the contempt proceedings by its order dated 15th May, 1989 directing Nellimarla to deposit a Pay Order for Rs. 35,12,206/- as a condition for obtaining delivery of 10,000 Quintals of Raw Jute as directed by the order dated 10th May, 1988 on certain terms and conditions. Initially the Supreme Court had granted a stay of the order of the Division Bench of this Court dated 15th May, 1989. Nellimarla applied before the Supreme Court for vacating the stay. 14. Mr. Justice K. Jagannatha Shetty, of the Supreme Court sitting as Vacation Judge made the following order on 3rd July, 1989 on the application of Nellimarla for vacating the stay:- "After hearing Counsel on both the sides. I modify the stay order granted by this Court on May 18, 1989 on the following terms :- I) The respondent shall give pay order as per contract rate for the quantity directed to be supplied as per the order of the High Court within three days tram today. II) The respondent shall also cause to furnish bank guarantee for the difference in price between the market price as on today and the contract price, within seven days from today. III). II) The respondent shall also cause to furnish bank guarantee for the difference in price between the market price as on today and the contract price, within seven days from today. III). The Jute Corporation shall supply the quantity as directed by the High Court immediately on the receipt of the Bank guarantee. IV) The other conditions in the order of the High Court shall remain undisturbed. It is also directed that the respondent shall not sell the jute in question in the open market and it should be used only in his Mill. The Civil Misc. Petition is disposed of accordingly." 15. The Special Leave petition was thereafter finally disposed of by the Supreme Court by directing that the writ petition should be disposed of as early as possible. 16. The matter was mentioned by Sri S. Pal, learned Counsel appearing on behalf of Nellimarla and Sri Abhijit Chatterjee, learned Counsel led by Sri Bhaskar Gupta, Senior Advocate, appearing on behalf of JCI and after brief submissions learned Counsel agreed that written notes of arguments would be submitted to facilitate expeditious disposal of the matter. As such, written notes were submitted by the parties. 17. The main submissions made on behalf of Nellimarla are : i) JCI is an instrumentality of the State and is entrusted with duties and functions which are of public or governmental character. ii) The obligation of JCI to supply Raw Jute necessarily flows from its duty to ensure distribution of Raw Jute or its duty to make available Raw Jute to the producers of Jute goods. iii) In the factual context the action of JCI in cancelling the Contract can be challenged in an application under Article 226 of the Constitution of India. iv) The impugned action of JCI is arbitrary and/or unreasonable, malafide and violative of the concept of fair-play. 18 JCI, on the other hand, had submitted that the application should be rejected for the following reasons :- i) The dispute between the parties is in the domain or realm of contract and as such the writ petition is not maintainable. ii) The contract contains an arbitration clause and as such Nellimarla should have available of the alternative remedy of arbitration. iii) On merits JCI was entitled to cancel the contract and did so in exercise of its undisputed right under the contract. 19. ii) The contract contains an arbitration clause and as such Nellimarla should have available of the alternative remedy of arbitration. iii) On merits JCI was entitled to cancel the contract and did so in exercise of its undisputed right under the contract. 19. Both Nellimarla and JCI have cited a number of authorities in support of their respective submissions. 20. The Principal question which arises is whether this writ application is maintainable. JCI contends that the impugned action was taken in the domain of contract and as such the same cannot be adjudicated upon in an application under Article 226 of the Constitution of India. It is put forward as an absolute proposition. In support of this contention the cases of (1) Radhakrishna Agarwal & Ors. v. State of Bihar & Ors., AIR 1977 SC 1496 ; (2) Divisional Forest Officer v. Vishwanath Tea Co. Ltd., AIR 1981 SC 1368 ; (3) State of Uttar Pradesh & Ors. v. Maharaja Dharmendra Prasad Singh, AIR 1989 SC 997 ; (4) C. V. Enterprises v. M/s. Braithwate Ltd. & Ors., AIR 1984 Cal 306 and (5) M/s. S. Paul & Co. v. State of Tripura, AIR 1984 Cal 378 have been cited. 21. Nellimarla emphasised the broad sweep of Article 226 and stressed the concept of JCI as an agency or instrumentality of the State. Arguments on behalf of Nellimarla were based on functional approach. JCI is not an ordinary trader. Its trading activity is to be carried on keeping in view public interest and in particular socio-economics of jute industry including growers, mills, workers and exports. The principle that the High Court in writ jurisdiction will not entertain the writ petition where disputes arise out of concluded contract is not an absolute principle. In an appropriate case the High Court will interfere and this is such a case. Nellimarla has relied on (6) Md. Hanif v. State of Assam, 1969(2) SCC 782 ; (7) R.D. Shetty v. International Airport Authority of India, AIR 1979 SC 1628 ; (8) Kasturilal v. State of J & K., AIR 1980 SC 1992 ; (9) Andi Mukta S.M.V.S.S.J.M.S. Trusts v. V.R. Rudani, 1989(2) SCC 691 and (10) Dwarkadas Marfatia & Sons v. Bombay Port Trust, 1989(3) SCC 292. 22. Apart from the cases cited by parties there are few other cases which require consideration. 23. 22. Apart from the cases cited by parties there are few other cases which require consideration. 23. The scope of judicial review of administrative action by High Courts in India has to be ascertained from Article 226 of the Constitution of India. The relevant portion of the Article is extracted below:- "226. (1) Notwithstanding anything in Article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases any Government, within those territories, directions, orders or writs, including writs in nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, (for the enforcement of any of the rights conferred by part III and for any other purpose). 24. The Supreme Court has pronounced on a number of occasions on the scope and ambit of this jurisdiction. There are some cases where restrictive approach has been preferred. These are cases where it has been said that the jurisdiction is to give such relief which have been well recognised in England, i.e., circumstances in which the Kings Bench would issue prerogative writs of Mandamus, Certiorari etc. The inspiration for this restrictive approach was based on too literal reliance on the following words of Mr. Justice B.K. Mukherjee (as His Lordship then was) in (11) T.C. Basappa v. Nagappa, AIR 1954 SC 440 :- "We can make an order or issue a writ in the nature of certiorari in all appropriate cases and in appropriate manner, so long as we keep to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law." 25. On the other hand Article 226 has received expansive and liberal construction. This appears to be the trend from mid-sixties and continues to be so. I will refer to four cases decided by the Supreme Court in 1966, 1980, 1986 and 1989 respectively. In (12) Dwarka Nath v. I.T.O., AIR 1966 SC 81 , Mr. Justice Subba Rao (as His Lordship then was) said :- "This article is couched in comprehensive phraseology and it ex facie confers a wide power on the High Courts to reach injustice wherever it is found. In (12) Dwarka Nath v. I.T.O., AIR 1966 SC 81 , Mr. Justice Subba Rao (as His Lordship then was) said :- "This article is couched in comprehensive phraseology and it ex facie confers a wide power on the High Courts to reach injustice wherever it is found. The Constitution designedly used a wide language in describing the nature of the power, the purpose for which and the person or authority against whom it can be exercised. It can issue writs in the nature of prerogative writs as understood in England; but the scope of those writs also is widened by the use of the expression "nature" for the said expression does not equate the writs that can be issued in India with those in England, but only draws an analogy from them. That apart, High Courts can also issue directions, orders, or writs other than the prerogative writs. It enables the High Courts to mould the reliefs to meet the peculiar and complicated requirements of this country." 26. In (13) Gujrat Steel Tubes Ltd. v. Gujrat Steel Tubes Majdoor Sabha reported in AIR 1980 SC 1986, Mr. Justice Krishna Iyer, delivering majority judgment said:- "The basis of this submission, as we conceive it, is the traditional limitations woven around high prerogative writs. Without examining the correctness of this limitation, we disregard it because while Article 226 has been inspired by the royal Writs its sweep and scope exceed hide-hound British processes of yore. We are what we are because our Constitution framers have felt the need for a pervasive reserve power in the higher judiciary to right wrongs under our conditions. Heritage cannot hamstring nor custom constrict where the language used is wisely wide. The British paradigms are not necessarily models in the Indian Republic. So broad are the expressive expressions designedly used in Article 226 that any order which should have been made by the lower authority could be made by the High Court. The very width of the power and the disinclination to meddle, except where gross injustice or fatal illegality and the like are present, inhibit the exercise but do not abolish the power." 27. The very width of the power and the disinclination to meddle, except where gross injustice or fatal illegality and the like are present, inhibit the exercise but do not abolish the power." 27. In (14) The Comptroller & Auditor General v. K.S. Jogannathan reported in AIR 1986 SC 537, the Supreme Court said :- "There is thus no doubt that the High Courts in India exercising their jurisdiction under Article 226 have the power to issue a writ of mandamus or a writ in the nature of mandamus or to pass orders and give necessary directions where the Government or a public authority has failed to exercise or has wrongly exercised the discretion conferred upon it by a statute or a rule or a policy decision of the Government or has exercised such discretion mala fide or on irrelevant considerations or by ignoring the relevant considerations materials or in such a manner as to frustrate the object of conferring such discretion or the policy for implementing which such discretion has been conferred. In all such cases and in any other fit and proper case a High Court can, in the exercise of its jurisdiction under Article 226 issue a writ of mandamus or a writ in the nature of mandamus or pass orders and give directions to compel the performance in a proper and lawful manner of the discretion conferred upon the Government or a public authority and in a proper case, in order to prevent injustice resulting to the concerned parties the Court may itself pass an order or give directions which the Government or the public authority should have passed or given had it properly and lawfully exercised its discretion." 28. In a very recent decision in Andi Mukta S.M.V.S.S.J.M.S. Trust v. V.R. Rudani, 1989(2) SCC 691 , the Supreme Court referring to the law in England said :- "17. There, however, the prerogative writ of mandamus is confined only to public authorities to compel performance of public duty. The "public authority" for them means every body which is created by statute and whose powers and duties are defined by statute. So Government departments, local authorities, police authorities, and statutory undertakings and corporations, are all "public authorities". But there is no such limitation for our High Courts to issue the writ "in the nature of mandamus". The "public authority" for them means every body which is created by statute and whose powers and duties are defined by statute. So Government departments, local authorities, police authorities, and statutory undertakings and corporations, are all "public authorities". But there is no such limitation for our High Courts to issue the writ "in the nature of mandamus". Article 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs. This is a striking departure from the English law. Under Article 226, writs can be issued to "any person or authority". It can be issued "for the enforcement of any of the fundamental rights and for any other purpose." 29. The Supreme Court further proceeded to lay down:- "20. The term "authority" used in Article 226, in the context must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights under Article 32 Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words "any person or authority" used in Article 226 are therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed, if a positive obligation exists mandamus cannot be denied." ............................................................................................. "22. Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. Commenting on the development of this law, Professor de Smith states: "To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract". We share this view. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into watertight compartment. It should remain flexible to meet the requirements of variable circumstances. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract". We share this view. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into watertight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available "to reach injustice wherever it is found". Technicalities should not come in the way of granting that relief under Article 226. We, therefore, reject the contention urged for the appellants on the maintainability of the writ petition." 30. It is quite clear that the trend of the recent Supreme Court authorities is in favour of expansive interpretation. 31. In the notes of submission submitted by Nellimarla Memo of Association of JCI has been referred to and it is stated that JCI was set up by Government of India with twin objects-Keeping a balance in the price of raw jute as purchaser protecting the interest of growers and maintaining steady supply of raw jute to various jute mills. In JCI's reply to the written submission of Nellimarla this fundamental function of JCI is not disputed. What has been said is that JCI is "not under any obligation to maintain any supply of jute to any mill or to provide any-jute at reasonable prices". But it is also says that JCI procures jute from actual growers by paying them the minimum support price and "herein lies the crucial role of Jute Corporation of India to ensure that the actual growers do not have to resort to distress sale and that they do not suffer in the hands of unscrupulous jute brokers and market manipulators". It is now well-settled that Companies incorporated under the Companies Act in which the Government is substantially interested as shareholder or otherwise is an authority within the meaning of Article 12 of the Constitution. (15) Som Prakash Rekhi v. Union of India, AIR 1981 SC 212 ; (16) Workmen of Hindustan Steel Ltd. v. Hindustan Steel Ltd., AIR 1985 SC 251 ; (17) A.L. Kalra v. Project & Equipments Corporation of India Ltd., AIR 1983 SC 1361 ; (18) Central Inland Water Transport Corporation Ltd. v. Brajanath Ganguly, AIR 1986 SC 1571 . 32. (15) Som Prakash Rekhi v. Union of India, AIR 1981 SC 212 ; (16) Workmen of Hindustan Steel Ltd. v. Hindustan Steel Ltd., AIR 1985 SC 251 ; (17) A.L. Kalra v. Project & Equipments Corporation of India Ltd., AIR 1983 SC 1361 ; (18) Central Inland Water Transport Corporation Ltd. v. Brajanath Ganguly, AIR 1986 SC 1571 . 32. In fact the functional approach was recognised as early as in 1958 by Division Bench of the Bombay High Court in the case of (19) Corporation of the City of Nagpur v. The Nagpur Electric Light and Power Co. Ltd. reported in AIR 1958 Bom 498 . One of the questions raised in that case was whether the Nagpur Electric Light & Power Co. Ltd., a company incorporated under the Companies Act was amendable to the writ jurisdiction. The answer given by the Division Bench was in the affirmative. Mr. Justice Mudholkar delivering judgment relied on the following passage from Corpus Juris Secundum:- "As pointed out in 73 Corpus Juris Secundum 998. As a general rule, a public utility has the duty to give the public reasonable and adequate service at reasonable rates and without delay. A public utility has the duty to supply a commodity or to furnish service to the public. This duty exists independently of statutes regulating the manner in which it shall do business or of contracts with Municipalities or individuals, and is imposed because the utility is organized to do business affected a public interest and holds itself out to the public as being willing to serve all members thereof. Broadly speaking, the primary duty of a public utility is to give reasonable and adequate service at reasonable rates and without delay." 33. The ratio of the judgment appears to be whether the authority concerned is engaged to do business having public interest in view so that it can be considered as a public utility concern. 34. The Nagpur Electric Lights and Power Co. Ltd's case was followed by Mr. Justice D.N. Sinha, (as His Lordship then was) in (20) Dr. Sudhir Chandra Neogy v. Calcutta Tramways Co. Ltd., reported in AIR 1960 Cal 396 . Here the learned Judge said :- “…....As I said, a Writ of Mandamus does not normally or ordinarily issue against a private individual. Ltd's case was followed by Mr. Justice D.N. Sinha, (as His Lordship then was) in (20) Dr. Sudhir Chandra Neogy v. Calcutta Tramways Co. Ltd., reported in AIR 1960 Cal 396 . Here the learned Judge said :- “…....As I said, a Writ of Mandamus does not normally or ordinarily issue against a private individual. Such an order is made against a person directing him to do some particular thing specified in the order which appertains to his office or is in the nature of a public duty. Thus, the most familiar instance of the issue of such a Writ is against officials, public bodies or statutory Corporations which are governed by the Statute of their incorporation. It does not follow however that such a Writ does not lie against a Company in any event. There are instances in which such writs have been issued in the case of a company, or even a private individual. But in these restricted cases, it would have to be shown that there does not exist an alternative legal remedy or that such remedy is not sufficient or adequate, It might be said that in the case of a private individual, if there is a violation of the ordinary law, then in that case recourse can be had to the remedies laid down, in the ordinary law of the land, and that in such a case, recourse to a Court of equity would be unnecessary. It is however not necessary for me to go further into this aspect of the question, because the present case, in my opinion, is a case of a public utility concern and in such cases a special principle applies.” 35. Having regard to the objects for which JCI was set up, that it is a government company controlled by the State, the pleadings in this case and the stand taken by JCI in its written notes and applying the principles referred to above JCI is an agency or instrumentality of the State and other authority within Article 12 of the Constitution. 36. Now I turn to the most debated question in this case. When the State or its instrumentality like JCI enters into a contract, is it free to act at its whims or capriciously or arbitrarily vis-a-vis the private party with whom it has entered into the contract in violation of Article 14 of the Constitution? 37. 36. Now I turn to the most debated question in this case. When the State or its instrumentality like JCI enters into a contract, is it free to act at its whims or capriciously or arbitrarily vis-a-vis the private party with whom it has entered into the contract in violation of Article 14 of the Constitution? 37. JCI contends in absolute terms that there is no jurisdiction to review any action of the State in relation to any matter in connection with a concluded contract. Nellimarla refutes this absolute proposition and contends that Court can review such action if it is patently unreasonable or mala fide or grossly unfair established from undisputes facts. 38. The scope of judicial review under Article 226 of the Constitution in matters relating to entering into contracts and concluded contracts have been considered in a number of cases decided by the Supreme Court and this Court. I will refer to the Supreme Court cases first and here there are two streams of authorities. On the once side (21) K.N. Guruswamy v. State of Mysore & Ors. reported in AIR 1954 SC 592 ; Md. Haniff v. State of Assam reported in 1969(2) SCC 782 ; (22) D.F.O. South Kheri v. Ram Sanehi Singh reported in AIR 1973 SC 205 ; R.D. Shetty v. International Airport Authority of India reported in AIR 1979 SC 1628 ; Kasturilal v. State of Jammu & Kashmir reported in AIR 1980 SC 1992 ; (23) Express Newspapers Pvt. Ltd. v. Union of India reported in AIR 1986 SC 872 ; (24) Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd reported in AIR 1983 SC 848 ; (25) State of Karnataka v. Sree Rameswara Rice Mills reported in AIR 1987 SC 1359 ; and Dwarkadass Marfatia & Sons v. Bombay Port Trust reported in 1989(3) SCC 293 . 39. The other line of Supreme Court cases (26) C.K. Achutan v. State of Kerala, AIR 1959 SC 490 ; (27) Harshankar v. Deputy Excise & Taxation Commissioner, AIR 1975 SC 1121 ; (28) Kulchhinder Singh & Ors. v. Hardayal Singh Brar reported in AIR 1976 SC 2216 ; Radhakrishna Agarwal v. State of Bihar reported in AIR 1977 SC 1496 ; Divisional Forest Officer v. Biswanath Tea Co. v. Hardayal Singh Brar reported in AIR 1976 SC 2216 ; Radhakrishna Agarwal v. State of Bihar reported in AIR 1977 SC 1496 ; Divisional Forest Officer v. Biswanath Tea Co. Ltd. reported in AIR 1981 SC 1368 ; (29) Life Insurance Corporation of India v. Escorts Ltd. reported in AIR 1986 SC 1370 ; and State of Uttar Pradesh v. Dharmender Prosad Singh reported in AIR 1989 SC 997 . 40. I will first consider the cases in the first stream. In Guruswamy's case, AIR 1954 SC 592 , the writ petitioner challenged cancellation of a liquor contract awarded in his favour as well as the subsequent sale of the contract in favour of a third party. As far as the cancellation of the contract in his favour is concerned the Supreme Court held on merits that the cancellation was proper. The Supreme Court did not say that the writ petition was not maintainable. 41. In Haniff's case (1969)2 SCC 783, the petitioner challenged a notice of resumption issued by the Deputy Commissioner of Khasi & Jayantia Hills in exercise of his light to do so under clause 5 of a Deed of Lease entered into between the Government and the predecessor-in-interest of the writ petitioner. The High Court of Assam & Nagaland dismissed the writ petition holding inter alia, that the remedy of the petitioner was to file a suit in Civil Court and the petitioner under Article 226 of the Constitution was not maintainable. The writ petitioner raised a constitutional or a Public Law question as to whether the State can evict a lessee without authority of law; i.e., in violation of the terms of the lease. The Supreme Court allowed the appeal saying- "It is also not right to contend that the appellant wag trying to enforce a mere contractual right by way of a writ petition under Article 226 of the Constitution. Several important issues of public law have been raised on behalf of the appellant." But as already pointed out the appellant in the present case is not merely attempting to enforce his contractual right but important constitutional issues have been raised on behalf of the appellant." 42. In D.F.O. South Kheri's case, AIR 1973 SC 204 , the writ petitioner purchased the right to cut timber for a particular period from forest lots at an auction held by the Forest Officer. In D.F.O. South Kheri's case, AIR 1973 SC 204 , the writ petitioner purchased the right to cut timber for a particular period from forest lots at an auction held by the Forest Officer. The Forest Officer cancelled a particular tally. The result of the cancellation was that the timber which had already been removed by the writ petitioner with the sanction of the Forest Authorities under the cancelled tally was to be treated as if it was removed in a subsequent period. This involved the writ petitioner in considerable loss. The Allahabad High Court allowed the writ petition. Before the Supreme Court the Forest Authorities contended that since the dispute arose out of the terms of a contract the remedy of the writ petitioner was to institute an action in the Civil Court and that the writ petition was not maintainable. Repelling this contention the Supreme Court said :- "We are unable to hold that merely because the source of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of public authority he must resort to a suit and not to a petition by way of a writ. In view of the judgment of this Court in K.N. Guruswamy's case, 1955(1) SCR 305 : AIR 1954 SC 592 there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power." 43. Now I come to the land mark decision of the Supreme Court in International Airport Authority’s case reported in AIR 1979 SC 1628 . In this case the Supreme Court highlighted the principle that every executive action must be informed with reason and an arbitrary action is liable to be struck down as violative of Article 14 of the Constitution. Although the facts giving rise to this case related to arbitrary acceptance of tender by a person who was disqualified to participate in the tender because of non-fulfilment of certain norms laid down by the International Airport Authority yet the principles laid down in that case transgress factual frontiers of the case itself. The following observations of the Supreme Court are of considerable importance :- "......Many individuals and many more businesses enjoy larges in the form of Government contracts. The following observations of the Supreme Court are of considerable importance :- "......Many individuals and many more businesses enjoy larges in the form of Government contracts. These contracts often resemble subsidies. It is virtually impossible to lose money on them and many enterprises are set up primarily to do business with Government. Government owns and controls hundreds of acres of public land valuable for mining and other purposes. These resources are available for utilisation by private corporations and individuals by way of lease or licence. All these mean growth in the Government largess and with the increasing magnitude and range of governmental functions as we move closer to a welfare State, more and more of our wealth consists of these new forms. Some of these forms of wealth may be in the nature of legal rights but the large majority of them are in the nature of privileges. But on that account, can it be said that they do not enjoy any legal protection? Can they be regarded as gratuity furnished by the State so that the State may withhold, grant or revoke it at its pleasure? Is the position of the Government in this respect the same as that of a private giver? We do not think so." 44 In Kasturi Lal's case, AIR 1980 SC 1992 the Supreme Court again reiterated the principles laid down in the International Airport Authority's case. However the following observations of the Supreme Court are significant :- "........Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner, it has to be exercised for the public good. Every activity of the Government has a public element in it and it must, therefore, be informed with reason and guided by public interest. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated" 45. In the Lotus Hotel Pvt. Ltd's case. AIR 1983 SC 848 the Supreme Court upheld the judgment of the Gujrat High Court directing the Gujrat State Financial Corporation by a writ of mandamus to disburse the loan which the Corporation had contracted to advance to Lotus Hotels. In the Lotus Hotel Pvt. Ltd's case. AIR 1983 SC 848 the Supreme Court upheld the judgment of the Gujrat High Court directing the Gujrat State Financial Corporation by a writ of mandamus to disburse the loan which the Corporation had contracted to advance to Lotus Hotels. The question of maintainability of a writ petition when the relationship between parties were governed by concluded contract was squarely raised in this case. It is necessary to extract the relevant portions from this judgment:- "......It was also incidentally urged that the dispute raised between the parties is in the realm of contract and at best the corporation can be charged with breach of contract for which the remedy is by way of damages or any other remedy available to the respondent for breach of contract, but in any case, a writ of mandamus cannot be issued compelling the Corporation to perform its part of the contract. There is no merit in either of the contentions." "It was next contended that the dispute between the parties is in the realm of contract and even if there was a concluded contract between the parties about grant and acceptance of loan, the failure of the Corporation to carry out its part, of the obligation may amount to breach of contract for which a remedy lies elsewhere but a writ of mandamus cannot be issued compelling the Corporation to specifically perform the contract. It is too late in the day to contend that the instrumentality of the State which would be "other authority" under Article 12 of the Constitution can commit breach of a solemn undertaking on which other side has acted and then contend that the party suffering by the breach of contract may sue for damages but cannot compel specific performance of the contract........." 46. In Express Newspaper's case, AIR 1986 SC 872 , the Supreme Court was called upon to consider the constitutional validity of a notice of re-entry upon forfeiture of lease issued on behalf of the Government in an application under Article 32 of the Constitution. One of the principal contentions raised on behalf of the Government in that case was that the application under Article 32 was not maintainable. One of the principal contentions raised on behalf of the Government in that case was that the application under Article 32 was not maintainable. The Supreme Court recorded submissions made on behalf of the Government in this context as follows: - "...........Once a contract is entered into or a grant is made the rights and obligations of the parties are not governed by Part III of the Constitution, but by the terms of the document embodying the contract for the grant, and any complaint about the breach of the same cannot be even a matter for the application for the grant of a writ, direction or order under Art. 226 of the Constitution, much less under Art. 32." 47. Dealing with this contention Mr. Justice A.P. Sen, delivering the principal judgment said:- "I regret my inability to accept the contention to the contrary advanced by learned Counsel appearing for Respondent No. 1 indicated above t hat the petitioners are seeking to enforce a contractual right and therefore the questions raised cannot be decided on a petition under Art. 32 of the Constitution. It is urged that the content of the fundamental rights guaranteed in Part III of the Constitution demarcate the area within which the -jurisdiction of the Court under Art 32 can operate and that it is not permissible for the Court to enlarge upon its jurisdiction by a process of judicial interpretation. Placing reliance on certain observations of Ayyangar, J. in (30) All India Bank Employees Association v. Notional Industrial Tribunal, 1962 (3) SCR 269 : ( AIR 1962 SC 171 ) and of Chandrachud and Bhagwati, JJ. in (31) Maneka Gandhi v. Union of India, 1978 (2) SCR 621 : ( AIR 1978 SC 597 ) it is urged that the content of Art. 19(1)(a) of the Constitution would not include the right which is guaranteed by other clauses of Art. 19. According to the learned Counsel, it must therefore logically follow that what facilitated the exercise of a fundamental right did not for that reason become a part of the fundamental right itself. According to the learned Counsel, it must therefore logically follow that what facilitated the exercise of a fundamental right did not for that reason become a part of the fundamental right itself. He read out different passages from the judgments of Bhagwati, J. in (32) E.P. Royappa v. State of Tamil Nadu, 1974 (2) SCR 348 : ( AIR 1974 SC 555 ), Meneka Gandhi v. Union of India (Supra) and Ramana Dayaram Shetty v. International Airport Authority of Indio Ltd., 1979 (3) SCR 1014 : ( AIR 1979 SC 1628 ) and endeavoured to show, to use his own language, that "in spite of some literal flourish in the language here and there, they did not and could not depart from the ambit of Art. 14 which deals with the principle of equality embodied in the Article". He was particularly critical of the dictum of Bhagwati, J. in International Airport Authority's case that "arbitrariness was the antithesis of Art. 14" and commented that this would mean that all Governmental actions which are not supportable by law were per se violative of Art. 14. I am, afraid, it is rather late in the day to question the correctness of the landmark decision in Maneka Gandhi's case and the innovative construction placed by Bhagwati, J. on Art. 14 in the three cases of Royappa, Maneka Gandhi and International Airport Authority (Supra), which have evolved new dimensions in judicial processes." "Even in cases involving purely contractual issues the settled law is that where statutory provisions of public law are involved, writs will issue : Md. Hanif v. State of Assam, 1970 (2) SCR 197 ." 48. In Sri Rameswara Rice Mill's case, AIR 1987 SC 1359 the Supreme Court dealt with four appeals which raised common questions of law. Two of these appeals arose from proceedings initialed by way of civil suits whereas the remaining two arose out of writ petition filed under Article 226 of the Constitution in the Karnataka High Court. The common question which arose was as to whether the Government had right to assess the damages in terms of a clause in the contract empowering it to do so upon the breach of the contract committed by the private party. The Supreme Court dismissed the appeals preferred by the State of Karnataka. The common question which arose was as to whether the Government had right to assess the damages in terms of a clause in the contract empowering it to do so upon the breach of the contract committed by the private party. The Supreme Court dismissed the appeals preferred by the State of Karnataka. What is instructive is the following portion of the judgment :- "The other two appeals relate to two contractors who had entered into agreements with the State of Mysore for constructing certain buildings. As the contractors failed to complete the works their contracts were terminated and in terms of the agreements entered into by them the damages payable by them for breach of contract were assessed and the damages were sought to be recovered as arrears of land revenue. Both the contractors filed writ petitions under Art. 226 of the Constitution and challenged the validity of the assessment of the damages and the recovery proceedings. Following the ruling of the Full Bench referred to above the High Court allowed both the writ petitions and quashed the proceedings for recovery of damages. Against the judgments of the High Court the State has preferred the other two appeals." 49. The Supreme Court did not say that the writ petitions were not maintainable because they related to disputes arising in the contractual filed. 50. The latest pronouncement of the Supreme Court on the subject is in the case of Dwarkadas Marfatia, 1989(3) SCC 293 . In this case the question which ultimately arose for consideration by the Supreme Court was as to whether the Bombay Port Trust had acted arbitrarily in issuing a notice of termination of tenancy. The Bombay Port Trust was the landlord and appellant Dwarkadas Marfatia was the tenant. The Landlord (Bombay Port Trust) had filed Civil Suit against the tenant in the Court of Small Causes, Bombay for ejectment of Marfatia. The trial Court dismissed the suit. It held that the notice of termination was bad. The Appellate Court deversed that decision. Then I quote from the factual narrative in the judgment :- "9. Aggrieved thereby, the appellant filed a writ petition No. 710 of 1984 under Article 227 of the Constitution. The High Court dismissed the said writ petition by the judgment under appeal and upheld the order of eviction. The Appellate Court deversed that decision. Then I quote from the factual narrative in the judgment :- "9. Aggrieved thereby, the appellant filed a writ petition No. 710 of 1984 under Article 227 of the Constitution. The High Court dismissed the said writ petition by the judgment under appeal and upheld the order of eviction. The High Court accepted the finding of the appellate court that the notice of ejectment was valid notice and there was no waiver of notice. In our opinion, the High Court was right on this aspect and in any event under Article 227 of the Constitution the High Court could not have gone into this question. We, in an appeal under Article 136 of the Constitution cannot reappraise that question. 10. The question that survived after the finding of the appellate court and which was urged mainly before the High Court and also in this appeal was whether the action of the respondent in evicting the appellant and granting the premises in question to M/s. Dhanji Mavji was proper and right. It was contended on behalf of the appellant that the action of the respondent in terminating the appellant's contractual tenancy had a public law character attached to it and was accordingly subject to judicial review. It was asserted that every action of the respondent which was "State" within Article 12 of the Constitution, whether it be in the field of Contract, or any other field, was subject to Article 14 of the Constitution and must be reasonable and taken only upon lawful and relevant ground of public interest. In that light, it was urged that if the eviction of the appellant was not necessary in the public interest and if it had been taken pursuant to any norm or policy which does not permit eviction of the appellant, then the action is arbitrary and discriminatory and not in accordance with any policy which the respondent was enjoined to follow." 51. Further submissions were made by the learned Additional Solicitor General appearing on behalf of the Bombay. Port Trust on the basis of the dichotomy between public law and private law character of State action. Dealing with these submissions Mr. Justice Sabyasachi Mukherjee delivering the principal judgment of the Supreme Court said :- "21. We are unable to accept the submissions. Further submissions were made by the learned Additional Solicitor General appearing on behalf of the Bombay. Port Trust on the basis of the dichotomy between public law and private law character of State action. Dealing with these submissions Mr. Justice Sabyasachi Mukherjee delivering the principal judgment of the Supreme Court said :- "21. We are unable to accept the submissions. Being a public body even in respect of its dealing with its tenant, it must act in public interest and an infraction of that duty is amenable to examination either in civil suit or in writ jurisdiction. 22. Our attention was drawn to the observations of this Court in Radhakrishna Agarwal v. State of Bihar. Reliance was also placed on the observations of this Court in Life Insurance Corpn. of India v. Escorts Ltd., in support of the contention that the public corporations dealing with tenants is a contractual dealing and it is not a matter for public law domain and is not subject to judicial review. However, it is not the correct position. The Escorts decision reiterated that every action of the State or as instrumentality of the State, must be informed by reason. Indubitably, the respondent is an organ of the State under Article 12 of the Constitution. In appropriate cases, as was observed in the last mentioned decision, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. But it has to be remembered that Article 14 cannot be construed as a charter for judicial review of State action, to call upon the State to account for its actions in its manifold activities by stating reasons for such actions." 25. Where there is arbitrariness in State action, Article 14 springs in and judicial review strikes such an action down. Every action of the executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, it should meet the test of Article 14. The observations in paras 101 and 102 of the Escorts case read properly do not detract from the aforesaid principles. 27. If a governmental policy or action even in contractual matters fails to satisfy the test of reasonableness, it would be unconstitutional." 52. So, whatever be the activity of the public authority, it should meet the test of Article 14. The observations in paras 101 and 102 of the Escorts case read properly do not detract from the aforesaid principles. 27. If a governmental policy or action even in contractual matters fails to satisfy the test of reasonableness, it would be unconstitutional." 52. I now proceed to consider the Supreme Court cases in the other stream and begin with C.K. Achutan's case AIR 1959 SC 490 . A careful study of this case will reveal that the petitioner in an application under Article 32 of the Constitution questioned several orders passed by the State authorities including an order cancelling a contract of the petitioner for supplying milk to a Government Department and giving contracts to a Co-operative Society in place of the petitioner. In relation to the question concerning the cancellation of the contract the Supreme Court said :- "...... Whether the exercise of that power in the present case regular or legal, is not a matter on which we are called upon to pronounce, because adjudication of such dispute can appropriately take place only before the ordinary Civil Courts, where evidence can be gone into and examined at length." 53. The observations of the Supreme Court in that case to the effect that the breach of contract if any, may entitle the person aggrieved to sue for damages or in appropriate cases, even specific performance, but he cannot complain that there has been a deprivation of the right to practise any profession or to carry on any occupation trade or business, such as is contemplated by Article 19(1)(g) is difficult to reconcile with the subsequent observations of the Supreme Court in the Express Newspapers case referred to above. Moreover, the Supreme Court did not and was not called upon to consider the question of arbitrary cancellation of contract in violation of Article 14 of the Constitution of India. The precise question which is being considered here did not arise in Achutan's case. The observations of the Supreme Court extracted above, does not support an absolute lack of justiciability in contract cancellation cases under Article 226 of the Constitution. 54. In Harsankar's case AIR 1975 SC 1125 the question for decision before the Supreme Court was somewhat different. The precise question which is being considered here did not arise in Achutan's case. The observations of the Supreme Court extracted above, does not support an absolute lack of justiciability in contract cancellation cases under Article 226 of the Constitution. 54. In Harsankar's case AIR 1975 SC 1125 the question for decision before the Supreme Court was somewhat different. There the appellants (writ petitioners) questioned the validity of the bids offered at an auction for granting liquor licence and the Supreme Court found that the real purpose of filing the writ petition was to avoid the contractual obligation which had arisen consequent upon the acceptance of the bids. 55. Mr. Justice Chandrachud (&s His Lordship then was) said : "the writ jurisdiction of High Courts under Article 226 of the Constitution is not intended to facilitate the avoidance of obligations voluntarily incurred............” 56. In Kulchhinder Singh's case AIR 1976 SC 2216 two questions arose; first, whether the Punjab Co-operative State Mortgage Bank Ltd. is "other authority" within Article 12 of the Constitution and, secondly, whether an agreement between employees and the employer agreeing to a quota of promotion for reconsideration to be a service rules or statutory duty. The Supreme Court did not decide the first question. Having said in general terms that contractual action cannot be siphoned off to the writ jurisdiction, Mr. Justice Krishna Iyer, said :- "12. The controversy before us in substance will turn on the construction and scope of the agreement when the claim to a quota as founded cannot be decided in writ jurisdiction without going back on well-settled guidelines and even subverting the normal processual law - except perhaps in extreme cases which shock the con science of the Court or other extraordinary situation, an aspect we are not called upon to explore here. We are aware of the wide amplitude of Art. 226 and its potent use to correct manifest injustice but cannot agree that contractual obligations in the ordinary course, without even statutory complexion can be enforced by this short, though, wrong cut." 57. Kulchhinder Singh does not support the principle of absolute bar. Moreover, no constitutional issue was raised in Kulchhinder’s case not even the plea of violation of Article: 16. Kulchhinder’s grievance was that promotion to higher post was being made by direct recruitment contrary to the quota fixed by collective agreement. 58. Kulchhinder Singh does not support the principle of absolute bar. Moreover, no constitutional issue was raised in Kulchhinder’s case not even the plea of violation of Article: 16. Kulchhinder’s grievance was that promotion to higher post was being made by direct recruitment contrary to the quota fixed by collective agreement. 58. In Radhakrishna Agarwal's case AIR 1977 SC 1496 , the petitioners held a lease under the State of Bihar. The State of Bihar revised the rate of royalty payable under the lease and thereafter cancelled the lease. The petitioner filled a writ petition questioning the revision of the rate of royalty as well as cancellation of lease. Chief Justice Beg, speaking for the Court said :- “But after the State or its agents have entered into the field of ordinary contract, the relations are no longer governed by the constitutional provision s but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Art. 14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract.” 59. These observations of Chief Justice Beg, should not be read in isolation although they appear to be in absolute terms. This is because later in the same judgment the Supreme Court said :- “In the case before us, allegations on which a violation of Art. 14 could be based are neither properly made nor established. Before any adjudication on the question whether Art. 14 of the Constitution could possibly be said to have been violated as between persons governed by similar contracts, they must be properly put in issue and established. Even if the appellants could be said to have raised any aspect of Art. 14 of the Constitution and this Article could at all be held to operate within the contractual field whenever the State enters into such contracts, which we gravely doubt, such questions of fact do not appear to have been urged before the High Court. Even if the appellants could be said to have raised any aspect of Art. 14 of the Constitution and this Article could at all be held to operate within the contractual field whenever the State enters into such contracts, which we gravely doubt, such questions of fact do not appear to have been urged before the High Court. And, in any event they are of such a nature that they cannot be satisfactorily decided without a detailed adduction of evidence, which is only possible in ordinary civil suits, to establish that the State, acting in its executive capacity through its officers, has discriminated between parties identically situated. On the allegations and affidavit evidence before us we cannot reach such a conclusion. Moreover, as we have already indicated earlier, the correct view is that it is the contract and not the executive power, regulated by the Constitution, which governs the relations of the parties on facts apparent in the cases before us.” 60 If Radhakrishna’s Case is read to be an authority for an absolute bar it would be difficult to reconcile Radhakrishna with Hanif or D.F.O. South Kheri or Express Newspapers. The correct approach should be that Radhakrishna only recognises and stresses the limitation subject to which an application under Article 226 of the Constitution would be maintainable when it raises questions concerning relationship between a citizen and a State in the contractual field. The principles laid down by the Supreme Court in Dwarkanath Marfatia's Case after expressly referring to Radhakrishna Agarwala's Case clearly go to show that as a proposition of law it can no longer be said that the High Court can never entertain a writ petition under Article 226 of the Constitution when the matter relates to disputes arising out of concluded contract. 61. In Bishwanath Tea Co. Ltd’s Case AIR 1981 SC 1369 the writ petitioner was a limited company. It held a lease under the Government which conferred a right on the company to cut and remove trees from leased area. The lease also provided that if such timber was to be utilised for the purpose connected with cultivation and raising tea garden for which the grant had been made concessional rate of royalty would be payable. But if such timber was to be utilised for the purpose unconnected with the grant then full royally would be payable. The lease also provided that if such timber was to be utilised for the purpose connected with cultivation and raising tea garden for which the grant had been made concessional rate of royalty would be payable. But if such timber was to be utilised for the purpose unconnected with the grant then full royally would be payable. The company applied to the authorities for permission to remove timber without payment of any royalty on the ground that although such timber was required for use in Tea Estate which were not situate within the grant it was entitled to use them in Tea Estate situate outside the grant and that would not be a purpose unconnected with the grant. But the Authorities did not agree with the stand of the company and the company had to pay royalty amounting to Rs. 7069.37 at the full rate under protest. The company then filed a petition under Article 226 of the constitution in the High Court for two principal reliefs. First, it prayed for refund of Rs. 7069.37p. and secondly, it prayed for mandamus directing State Authorities for issuing permit without insisting payment of royalty whenever timber was to be cut from the leased area for the purpose connected with exploitation of the grant. The writ petition succeeded in the High Court. Before the Supreme Court one of the contentions was that the writ petition was not maintainable. The question which arose before the Supreme Court was :- "........ The question therefore, really is whether such contractual obligation can be enforced by the writ jurisdiction? How dangerous it is, can be demonstrably established in this case." 62. The Supreme Court held that the contentions of the company that the impugned action of the State had infringed its fundamental right under Article 19(1)(g) of the Constitution was misconceived because the company not being a citizen could not invoke Article 19 of the Constitution. How dangerous it is, can be demonstrably established in this case." 62. The Supreme Court held that the contentions of the company that the impugned action of the State had infringed its fundamental right under Article 19(1)(g) of the Constitution was misconceived because the company not being a citizen could not invoke Article 19 of the Constitution. The Supreme Court then considered as to whether a contractual obligation can be enforced by the High Court in its writ jurisdiction, and it will be apparent from a careful reading of the judgment that it held that originally a writ petition to enforce such an obligation would not lie as the same would involve examining rights and obligations claimed under the contract without proper or adequate material or evidence to reach a conclusion, more so when the petition raised disputed questions of facts which needed investigation. The Supreme Court went into the merits but found that several issues or facts arose which could not be decided in the writ jurisdiction. 63. The decision in Escorts’ case AIR 1986 SC 1371 has been considered at length by the Supreme Court in Dwarkadas Marfatia's case and explained. As such it is not necessary to consider that case separately. 64. Finally, Maharaja Dharmender Prasad Singh's case AIR 1989 SC 997 . In this case, the writ petitioners held a lease under the Government. Before terminating the lease the Government issued a show cause notice as to why the lease should not be terminated. The writ petitioners showed cause. Government found the cause shown unacceptable and proceeded to terminate the lease. On the question as to whether an application under Article 226 of the Constitution was an appropriate remedy in the circumstances of the case the Supreme Court said :- "On a consideration of the matter, we think, in the facts and circumstances of this case, the High Court should have abstained from the examination of the legality or correctness of the purported cancellation of the lease which involved resolution of disputes on questions of facts as well..........." 65. In view of the decisions of the Supreme Court referred to above it is not necessary to consider the judgments of this Court in detail. JCI has relied on Braithwaite's case AIR 1984 Cal 306 and S. Paul & Co's case AIR 1984 Cal 378 . In view of the decisions of the Supreme Court referred to above it is not necessary to consider the judgments of this Court in detail. JCI has relied on Braithwaite's case AIR 1984 Cal 306 and S. Paul & Co's case AIR 1984 Cal 378 . In Braithwaite's case the Division Bench of this Court held that the principle of promissory estoppel has no application after the parties have entered into a concluded contract. This principle has no relevance in the facts of this case. In S. Paul & Co's case AIR 1984 Cal 378 , S. Paul & Co. was appointed as sole agent for sale of Tripura State Lottery Tickets by written agreement. S. Paul & Co. furnished two Bank Guarantees to secure the payment of money realised from the public by way of sale of lottery tickets. According to the Tripura Government Authorities, S. Paul & Co. had failed to submit the vouchers and accounts and according to them (Tripura Government) a sum of Rs. 14,22,480/- was payable by S. Paul & Co. The State of Tripura wanted to invoke Bank Guarantees for satisfying its claim. Mr. Justice Amitabha Dutta, after dealing with the question of maintainability of the writ petition arrived at the following findings :- "...........That apart the petitioner as agent has duty, irrespective of any contract to that effect, to produce vouchers by which items or disbursement are supported as part of the obligation to render proper accounts to the principal on demand under S. 213 of Contract Act. The principal is not estopped from enforcing it. So, there is no prima facie arguable case against the demands for vouchers on the ground of arbitrariness or illegality even if the dispute appertains to the field of concluded contract between the parties." 66. In other words, the learned Judge found against the writ petitioner on merits. It was, therefore, strictly not necessary for the learned Judge to express any view on the maintainability of the writ petition. Such observations may be considered to be in the nature of obiter. 67. In other words, the learned Judge found against the writ petitioner on merits. It was, therefore, strictly not necessary for the learned Judge to express any view on the maintainability of the writ petition. Such observations may be considered to be in the nature of obiter. 67. There are at least two clear authorities of the Division Bench of this Court which have held that a writ petition may lie to enforce a contract in exceptional circumstances: (33) Gupta Biscuits (P) Ltd. v. United Commercial Bark & Anr., 1987(2) CLJ 474 , and (34) Smt. Kanchan Vohra v. West Bengal Housing Board, 1989(1) CLJ 383 . 68. In (35) Sub-Divisional Controller, Food & Supplies, Durgapur v. Amulya Ratan Sadhu & Anr., AIR 1985 Cal 281 , a Division Bench of this Court held that cancellation of an agreement of Modified Ration dealership in violation of the principles of natural justice is liable to be quashed. There are, however, two judgments of the Division Bench of this Court which have held to the contrary, namely, (36) Hindustan Petroleum Corporation Ltd. v. S.S Gunneriwala's 91 Calcutta Weekly Notes 217, and (37) Orient Longman Ltd. v. Jayati Laila Kabir, AIR 1988 Cal 411. In the Hindustan Petroleum Corporation Ltd's case, a dealership of a petrol dealer was suspended. The Division Bench held following Supreme Court's decision in Radha Krishna Agarwal's case upheld the contention that the writ application was not maintainable as dealers rights arose out of an agreement. In Orient Longman Ltd's case the Division Bench referred to Hindustan Petroleum Corporation Ltd's case and some of the Supreme Court cases referred to above and held that the application under Article 226 of the Constitution was not maintainable as the petition assailed alleged arbitrary action of Union of India relating to a contract of bailment. Finally, I refer to my judgment in (38) Alliance Jute Mills (Lessees) Pvt. Ltd. v Union of India, AIR 1985 Cal 112 , where observations were made as to the maintainability of the writ petition when relationships of the parties were governed by a concluded contract. 69. The authorities discussed do not in any way support the absolute proposition advanced by JCI that controversy between State and Citizen in relation to arising out of a concluded contract can never be the subject matter of challenge in an application under Article 226 of the Constitution. 69. The authorities discussed do not in any way support the absolute proposition advanced by JCI that controversy between State and Citizen in relation to arising out of a concluded contract can never be the subject matter of challenge in an application under Article 226 of the Constitution. I cannot lose sight of the fact that Hanif’s case and D.F.O. South Kheri's case were not cited and naturally not considered by the Supreme Court in Radhokrishna Agarwala’s case. Apart from the distinguishing features of Radhakrishna Agarwala's case noted above, if is difficult to consider Radhakrishna Agarwala's case as an authority in support of the absolute proposition advanced on behalf of JCI after the decision of the Supreme Court in Dwarkadas Marfatia's case Orient Longman's case rests on Hindustan Petroleum Corporation Ltd's case which in turn relies on Radhakrishna Agarwala's case. Quite apart from the fact that there are other judgments of the Division Bench of this Court referred to above which are clearly against the principle of absolute bar, Orient Longman and Hindustan Petroleum Corporation Ltd. must be now read in the light of Dwarkadas Marfatia. 70. In principle it is difficult to appreciate why remedy under Article 226 of the Constitution should be denied in a case arising out of a concluded contract when the action is challenged as arbitrary and there are no disputed questions of fact and when the Court is not specifically directing enforcement of the contract in future. Take the case where the cancellation is found to be arbitrary on the admitted facts. Is there any reason as to why the Court should deny relief? By setting aside the cancellation the Court does not direct that either of the parties have to perform their contracts. Performance relates to the future. The Court is not concerned with that future. It is sometimes suggested that the Government would not be able to obtain the relief under Article 226 of the Constitution if the private party arbitrarily cancels the contract. It may be so. But the rule inhibiting arbitrariness is a rule directed against the State and its agencies Article 14 is an injunction against the State. It is sometimes suggested that the Government would not be able to obtain the relief under Article 226 of the Constitution if the private party arbitrarily cancels the contract. It may be so. But the rule inhibiting arbitrariness is a rule directed against the State and its agencies Article 14 is an injunction against the State. Take an example a party enters into a contract with the Government for supply of a particular special commodity which otherwise dots not have a market to be manufactured by it at its factory and the period of supply is 5 years. The contractual quantity is such that the entire factory is geared to meet the contractual commitment. Hundreds of employees are involved. The Government cancels the contract and the facts hading to the cancellation are not in dispute. The only inference that could be drawn from the admitted facts is that the Government acted mala fide, e.g., the owner of the factory has changed his political allegiance from the ruling party. The Court finds mala fides. Will it then be proper for the Court to say that the contractor cannot get relief under Article 226 of the Constitution and his proper remedy is to be initiated to a long drawn process of civil suit? The suit may take years to be decided. What happens to the contractor the factory and the huge number of employees in the meantime? Refusal in such cases cannot be proper exercise of discretion. 71. My judgment in Alliance Jute Mill's case, AIR 1985 Cal 112 , cannot be cited as an authority for the absolute proposition. The observations made therein are confined to the facts of that case and I never intended to lay down any absolute proposition. If it is contended that it is an authority for the absolute proposition, I have no hesitation in saying that it did not correctly lay down the principles. 72. On the basis of the authorities considered above, the correct legal position appears to be :- (a) The proposition that there is an absolute bar to entertaining a writ petition under Article 226 of the Constitution of India when the action of the Government challenged pertains to the domain of concluded contract cannot be accepted as correct. 72. On the basis of the authorities considered above, the correct legal position appears to be :- (a) The proposition that there is an absolute bar to entertaining a writ petition under Article 226 of the Constitution of India when the action of the Government challenged pertains to the domain of concluded contract cannot be accepted as correct. (b) Whether relief can be granted in such a writ petition will depend on the facts and circumstances of each case with particular reference to the question as to whether the petition involves deciding disputed questions of fact which cannot be decided on affidavits. The Court would have to adopt a case-by-case approach. 73. In the light of the above principles I proceed to consider the merits, i.e., whether the cancellation of the contract was arbitrary and unjustified. The cancellation was by JCI's letter dated 3rd May, 1988 on the sole ground that Nellimarla had failed to make payment arrangement in respect of the contract. This will necessarily involve examination of the undisputed facts disclosed in the correspondence and it has to be seen whether the stipulated date i.e. 25th April, 1988, was of the essence of the contract and the date 25th April, 1988 remained a firm date. 74. It has already been pointed out that JCI's offer letter dated 5th April, 1988 did not stipulate any time within which payment arrangement would have to made. It is the formal contract dated 11th April, 1988 which contained the term that the Letter of Credit has to be opened by Nellimarla by 25th April, 1988. The contents of the correspondence which are not in dispute show that Nellimarla had been requesting JCI to grant permission for opening third party Letter of Credit. The offer letter or the formal contract was silent on this question. In the representation of Nellimarla dated 25th April, 1988, it requested the JCI to confirm as to whether opening of the Letter of Credit by a third party on its behalf would be acceptable to JCI and it was specifically mentioned in the representation that after receipt of the confirmation from JCI, Nellimarla would take ten days for submitting the Letter of Credit, and as such, the date for submission should be extended till 5th May, 1988. Admittedly, JCI by its letter dated 26th April, 1988 confirmed that third party Letter of Credit can be opened. Admittedly, JCI by its letter dated 26th April, 1988 confirmed that third party Letter of Credit can be opened. It is also not disputed that this letter was received by Nellimarla on 28th April, 1988. It is obvious that in this factual background, 25th April, 1988 could not remain the stipulated date under the contract. 75. On 30.4.88/2.5.88 Oriental Bank of Commerce issued the Letter of Credit. On 2.5.88 Nellimarla received JCI's letter dated 26th April, 1988 allowing extension till 30th April, 1988 for making payment arrangement. Oriental Bank of Commerce by its letter dated 3rd May, 1988 confirmed to JCI that the Letter of Credit has been established on 30th April, 1988. On 4th May, 1988 Nellimarla submitted the original Letter of Credit to JCI and on that very day it received a letter from JCI Slating that the contract stood cancelled for failing to make payment arrangement. It is well known that the formalities for establishing Letter of Credit take some time and this was pointed out by Nellimarla in its letter dated 25th April, 1988 and not disputed by JCI. JCI granted the extension till 30th April, 1988 by its letter dated 29th April, 1988 which was received by Nellimarla on 2nd May, 1988. This does not appear to be a reasonable or fair approach. After receiving the extension letter of JCI on 2nd May, 1988, the petitioner took only one day to furnish the Letter of Credit. Yet JCI cancelled the contract by its letter of 3rd May, 1988 on the ground of failure to make payment arrangement. On the one hand JCI kept pending the request or Nellimarla for permission to open the third party Letter of Credit for quite some time and thereby prevented Nellimarla from opening the Letter of Credit and on the other hand after granting the permission extended the due date in such a manner that it would be impossible to comply with the same. This action is unfair, unjust and arbitrary. 76. JCI in its written notes has submitted that time was of the essence of the contract as a defence to the charge of arbitrariness. It has relied on certain English Text Books as well as Pollock & Mulla's Indian Contract and Specific Relief Act. This is a case concerning a contract for sale of goods. 76. JCI in its written notes has submitted that time was of the essence of the contract as a defence to the charge of arbitrariness. It has relied on certain English Text Books as well as Pollock & Mulla's Indian Contract and Specific Relief Act. This is a case concerning a contract for sale of goods. Section 11 of the Sale of Goods Act, 1930, provides:- "11 Stipulations as to time-Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale. Whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract." 77. Without going into the question of interpretation of the terms of the contract it can be said that even though the lime originally fixed could be considered to be of the essence of the contract, the undisputed subsequent conduct of the parties clearly show that it did not continue to be of the essence. In any case, reading the contract along with the offer letter it is difficult to find any intention of the parties to displace the general rule stated in section 11 of the Sale of Goods Act, 1930. 78. In the Affidavit-in-Opposition JCI has taken the stand that the contract was cancelled because Nellimarla furnished a revolving Letter of Credit which was inconsistent with the mode of payment stipulated in the contract. There was no mention of this in the letter dated 3rd May, 1988 cancelling the contract or the subsequent letter dated 10th May, 1988 rejecting the representation of Nellimarla for reconsideration of the decision contained in the letter dated 3rd May, 1988. The contract required an irrevocable Letter of Credit to be obtained. The Letter of Credit established by Nellimarla was for the full value on a revolving basis. As per the terms of this Letter of Credit, on drawing bills to the extent of Rs. 25 lacs, the Letter of Credit would be automatically revolving for another sum of Rs. 25 lacs and in this way it was to revolve upto Rs. 115 lacs as mentioned therein. As per the terms of this Letter of Credit, on drawing bills to the extent of Rs. 25 lacs, the Letter of Credit would be automatically revolving for another sum of Rs. 25 lacs and in this way it was to revolve upto Rs. 115 lacs as mentioned therein. It may also be noted that the formal contract specifically required that under the Letter of Credit part shipment by JCI should be permitted and in such circumstances, it is difficult to see what was wrong in opening an irrevocable revolving Letter of Credit or how JCI would be prejudiced in any way or how it disturbed the working out of the contract. But more important is the fact that the letter of cancellation dated 3rd May, 1988 of the letter dated 10th May, 1988 did not mention the ground of "revolving" at all. This appears to be an afterthought and lends support to the charge of arbitrariness made by Nellimarla against JCI. 79. JCI has taken the plea of alternative remedy and has relied on two cases, namely, (39) Rukminibai Gupta v. Collector of Jabbalpore, AIR 1981 SC 479 , and (40) Nagendra Nath Chakraborty v. State of West Bengal & Ors., AIR 1987 Cal 199 . It is well-settled that the existence of an alternative remedy is not a jurisdictional bar but is a discretionary bar. The discretion has to be exercised in the facts and circumstances of each case. In view of the nature of the questions raised including constitutional issues referring the dispute to arbitration would not be a sound exercise of discretion. Moreover, JCI has participated in the present proceedings. This plea should have been raised at the earliest stage. Substantial costs have been incurred by the parties in proceeding with this litigation. JCI has obtained orders in these proceedings at the appellate stage before this Court and also before the Supreme Court. This writ petition has been heard on merits. The Supreme Court on the Special Leave Petition filed by JCI has directed that the writ petition should be disposed of expeditiously. The decision in this case does not involve disputed questions of fact. For all these reasons, the plea of alternative remedy cannot be upheld in this case and accordingly the same is rejected. 80. The Supreme Court on the Special Leave Petition filed by JCI has directed that the writ petition should be disposed of expeditiously. The decision in this case does not involve disputed questions of fact. For all these reasons, the plea of alternative remedy cannot be upheld in this case and accordingly the same is rejected. 80. For the reasons aforesaid, the writ petition should succeed and the decisions contained in the letters dated 3rd May, 1988 and 10th May, 1988 are set aside and quashed. The Bank Guarantees furnished pursuant to the interim orders made in this matter are directed to be returned to the writ Petitioner No. 1 within two weeks from date. 81. The Special Officers appointed in this matter are directed to make over the amounts lying with them to the writ petitioner within two weeks from date and upon which the Special Officers will stand discharged. The undertakings given by the writ petitioners are also directed to stand discharged. There will be no order as to costs. The Special Officers and all parties are directed to act on a signed copy of the operative portion of this order.