Honble J.R. CHOPRA, J.—This Special Appeal is directed against the judgment of the single Judge dated 27.07.1993 whereby the learned Judge has dismissed the writ petition of the petitioner on the ground that this being a pure question of contract he is not required to interfere in writ jurisdiction and left the petitioner to file a suit or pray for a remedy if there is a clause about the contract. 2. Facts necessary to the noticed for the disposal of this appeal briefly stated are that the petitioner firm of which Shri Ramgopal Menda is a working partner is an A class contractor firm and was awarded a contract for conrtruc-tionof274 quarters of 75V type quarters for Indira Gandhi Nahar Project Jaisalmer in the year 1989. The copy of the work order is dated 1.9.89 marked as Anx. 1. The quarters could not be constructed in a period of one year mentioned in the contract. However, 130 quarters have been constructed upto roof level and construction of rest of the quarters is in progress. As the petitioner was not to be blamed for the slow progress in the work, a committee was appointed by the Additional Chief Engineer that Committee recommended for grant of extension to the petitioner for construction of these quarters up to 6-9-93 and further recommended grant of price escalation to the petitioner under clause 45 of the agreement. Accordingly the Additional Chief Engineer recommended to the Chief Engineer for grant of extension of time and price escalation. The Chief Engineer himself recommended to the Board for grant of extension upto 31.3.93 and further accepted to recommendation for the grant of price escalation to the petitioner and accordingly price escalation was granted to the petitioner to the tune of Rs. 8.66 lacs. However the Board in its meeting dated 20.06.1992 i.e. 140th meeting not only ordered for the withdrawal of the price escalation granted to the petitioner but imposed a penalty of Rs. 10,000/- in addition to it for default and delay in completion of the work. 8.66 lacs. However the Board in its meeting dated 20.06.1992 i.e. 140th meeting not only ordered for the withdrawal of the price escalation granted to the petitioner but imposed a penalty of Rs. 10,000/- in addition to it for default and delay in completion of the work. It, however, accepted the recommendation of the Chief Engineer for extension of time to the Contractor upto 31-3-93, The petitioner has filed this writ petition claiming that this withdrawal of the price escalation and deduction of that amount from his running bill was done by the Board without giving the petitioner-appellant any notice and without affording him an opportunity of hearing and similarly the penalty of Rs. 10.000/- was also imposed without notice and hearing to him and, therefore, it is against the principles of natural justice. Consequently, this order of the Board should be quashed and it be ordered that the respondent Board will refund to the petitioner a sum of Rs 876173 which they have deducted from his. running bill pertaining to the price escalation granted to him and benefit the amount of the penalty imposed against him, on the dual ground that firstly, it violates the principles of natural justice and secondly, the imposition of the penalty disentitles him to claim price escalation because he has been condoned unheard and it had been determined as if the delay is not due to negligence or non-cooperation of the department or on account of certain difficulties faced by the department in the shape of legal proceedings etc., but it is due to the negligence and inaction of the peti-tioner-appellant. The learned single Judge felt that it raises number of disputed questions of fact as to whether extensions were granted to him on account of certain difficulties which were faced by the department or the delay in completion of the quarters was due to the negligence or inaction of the petitioner and therefore, according to the learned single Judge the appropriate remedy that can be availed by the petitioner is a suit; rather than a writ petition and it was further felt by the learned Single Judge that this being a case of deduction of the amount pertaining to price escalation which was granted to the petitioner by the Chief Engineer and imposition of penalty which is squarely covered by the terms of the contract and as such writ petition is not an appropriate remedy to be availed. 3. We have heard Mr. Vineet Kothari appearing for the petitioner and Mr. K.N. Joshi appearing for the respondents. 4. Mr. Kothari has submitted that no disputed question of fact has been raised by the petitioner. Certain questions have been referred to in the writ petition to show that the department admitted, that on account of non supply of adequate quantity of water and there being land disputes and stay orders issued by the Court being in force and there being change in the specification of the construction, delay in completing work was due to the departmental action as observed by the Committee and, therefore, price escalation was righlty granted to him. These facts were mentioned only to substantiate the contention that delay was not due to the fault of the petitioner. What has been claimed through the writ petition is a pure question of law which has nothing to do with the disputed questions of facts and it is this that once an advantage in the shape of price escalation is sanctioned in favour of the petitioner-appellant by a competent authority i.e. the Chief Engineer it could not have been withdrawn by the Board vide Anx. R.1 without giving him a notice and without affording him an opportunity of hearing because a right got vested in him and that could not have been divested without following the principles of natural justice. R.1 without giving him a notice and without affording him an opportunity of hearing because a right got vested in him and that could not have been divested without following the principles of natural justice. Secondly, when the Chief Engineer sanctioned extension of time as also the price escalation on the basis of the recommendation of a high power committee headed by Superintending Engineer and two Executive Engineers who were unconcerned with the execution of the contract and when that recommendation of the committee was approved by the Additional Chief Engineer and the Chief Engineer for sanction, then the Board could not have cancelled that order without affording him an opportunity of hearing and could not have imposed any penalty on him for inaction or negligence when the committee has itself felt that the delay in execution of the work was because of the aforesaid three circumstances i.e. non-supply of adequate water, land disputes pending in the Courts and change of specification of the construction. If the Board wanted to impose any penalty it should have given him a notice and heard him before doing so firstly because it results in condemning him unheard and secondly it disentitles him to claim price escalation benefit and this adversely affects him financially. 5. In the return that has been filed on behalf of the defendant it has been claimed that initially contract was given for a period of one year and the work should have been finished on 31.8 90; whereas even when we are in the midst of 1993 still the work has not been completed. Before the price escalation sanctioned in favour of the petitioner was withdrawn and the penalty was imposed on him his letter dated 8-6-92 marked as Anx.3 was already before the learned Chairman of the Board and after considering that letter the aforesaid price escalation sanctioned by the Chief Engineer was withdrawn and the penalty was imposed. The petitioner also personally met the Chairman of the Board explaining his difficulties to him and, therefore, it is not a case of condemning the petitioner-appellant unheard. The petitioner also personally met the Chairman of the Board explaining his difficulties to him and, therefore, it is not a case of condemning the petitioner-appellant unheard. It was also claimed that according to the schedule of powers the Chief Engineer can sanction work upto eighty lacs rupees whereas this sanctioned work was for more than a crore and, there-fore, Chief Engineer was not competent to grant price escalation and consequently the Board alone was competent to do it and this was a further reason to withdraw the price escalation granted in favour of the petitioner-appellant. A copy of the schedule of powers, and a copy of the contract have been filed on the date when the case was finally argued by the learned counsel for the respondents and the petitioner respectively. They were not filed before the learned single Judge. These three documents have been advanced by Mr. K.N. Joshi when the case was argued before us. He has further submitted that a man who is guilty of scanty progress of work even after the expiry of 4 years deserves no sympathy from the Court. Moreover it was claimed that he has filed a suit and a temporary injunction has been refused and when he has already availed the alternative remedy his action in filing the writ petition cannot be appreciated and deserves to be condemned in most uncertain terms and the judgment of the learned single Judge deserves to be sustained and upheld. 6. We have bestowed our most earnest consideration to the rival submissions made at the Bar. It may be stated at the out set that in this case the writ petition was filed on 28-8-92 in which a second stay petition was filed on 10-5-93. No stay order was granted by the Court on the second stay application and when that was refused the petitioner filed a suit on 13-5-93 under a mistaken advice as alleged. As soon as that fact was brought to the notice of the Court the petitioner filed an application on 20th May itself that the suit will be withdrawn and accordingly the suit was withdrawn on 31-5-93. It is not a case of filing of a suit prior to the filing of the writ petition. As soon as that fact was brought to the notice of the Court the petitioner filed an application on 20th May itself that the suit will be withdrawn and accordingly the suit was withdrawn on 31-5-93. It is not a case of filing of a suit prior to the filing of the writ petition. The writ petition was filed as early as on 28-8-92 which was already pending before the Court and the suit was only filed when the second stay petition was refused. This is not a case of availing alternative remedy before filing of the writ petition. It is not a case where unsuccessful litigant who did not get relief from a competent Civil Court has come before this Court in writ petition. It is rather vice-versa i.e. when the second stay petition of the petitioner was not granted by the Court, he went before the Civil Court and ultimately after submitting an undertaking before the Court on 20-5-93 he withdrew the suit which was filed on 13-5-93 on 31-5-93. 7. Mr. Vineet Kothari has claimed that even in contractual matters, writ jurisdiction is not totally barred. If it occasions breach of principles of natural justice and if the action of the State Government is contrary to the terms of the contract and is unreasonable and arbitrary, Court is not powerless to interfere in such matters under writ jurisdiction rather the position of law is that Court will scrupulously guard the rights of the parties where Art. 14 is violated or principles of natural justice are not complied with. He does not dispute this proposition that where disputed questions of fact are involved, the proper remedy available to the petitioner is to file a civil suit but when the facts are not disputed and the action of the State Government is arbitrary or unreasonable and has statutory overtones, then the proper remedy is by way of writ petition rather than by a civil suit. In this respect he first drew our attention to a Division Bench decision of the Orissa High Court rendered in M/s. Doki China Gurul Balu & Sons vs. State of Orissa (1), wherein the learned Judges observed that- "It cannot be said as an absolute rule of law, that in no circumstances, a writ application for issue of mandamus can lie if the right involved flows from a contract. That would be circumscribing the extra-ordinary jurisdiction of writ Court which was intended by the Founding Fathers to function as the sentinel always on the alert. Where without any authority of law, by an executive fiat, rights are trampled arbitrarily, writ Court cannot and should not shut its door to the aggrieved party. Where valuable civil rights are taken away without any authority of law or by violation of principles of natural justice, High Court cannot fold its hands and look on as an helpless on looker asking the party to approach the civil court." Of course the learned Judges have observed that where there are disputed questions of fact and evidence has to be led by the parties and it would be necessary to scan and assess the Same, suit is a proper remedy. But when such is not the case then of course the Court cannot fold its hands and look on as a helpless on looker to mitigate the arbitrariness of the State action. Our attention was next drawn to a single Bench decision of the Gujarat High Court rendered in Vadi and Patwa Vs. Union of India (2). It was observed by the learned single Judge that the State has be just, fair and reasonable from the stage of entering into the contract to its conclusion. Even in respect of contractual rights and obligation of the parties the State is not relieved of its obligation to comply with the provisions of Art. 14 i.e. to act justly, fairly and reasonably. The State action should be governed by reason and should be free from arbitrariness. It has to be just and reasonable. Not only at the time of the stage of entering into the contract but also during its execution of the contract or even at the conclusion stage of the contract i.e. at all stages the State is bound by Art. 14. The decision is based on the decision of their Lordships of the Supreme Court rendered in Shri Lekha Vidhyarti Vs. State of U.P. (3) wherein their Lordships observed that in respect of the contractual rights and obligations of the parties, the State is not relieved of its obligation to comply with the provi-sions of Art. 14 of the Constitution of India i.e. to act justly, fairly and reasonably. State of U.P. (3) wherein their Lordships observed that in respect of the contractual rights and obligations of the parties, the State is not relieved of its obligation to comply with the provi-sions of Art. 14 of the Constitution of India i.e. to act justly, fairly and reasonably. Their Lordships observed that whenever a challenge is made on the ground of violation of Art. 14 alleging that the impugned act is arbitray, unfair or unreasonable the fact that the dispute falls within the dimension of contractual obligation would not relieve the State of its obligation to comply with the basic requirement of Art. 14. Their Lordships have observed that in addition to contractual obligation it cannot divest the claim of the petitioner guarantees under Art. 14 of non-arbitrariness at the hands of the State in any of its actions. Reliance was also placed by Mr. Kothrai on the decision of their Lordships of the Supreme Court rendered in M/s Dwarkadas Marfatia and Sons Vs. Board of Trustees of Port of Bombay (4). The Bombay Rents Hotel and Lodging House Rates Control Act exempts the State from its purview. When such an exemption is granted to the local bodies and public authorities which are State their Lordships observed that the basis of the exemption is that, such bodies will not be actuated by any profit making motive so as to unduly enhance rents for eject the tenants from their respective properties say as private landlords are or are likely to be. They are not acting for their own purpose as private landlords but must act for public purposes and in public interest being a public body even in respect of its dealings that its tenants where the relations are governed by a contract of tenancy it is expected of them to act in public interest and an infraction of that duty is amenable to examination either in a civil suit or in a writ jurisdiction. Their Lordships further observed in para 25 that where there is arbitrariness in State action, Art. 14 springs into action and judicial review directs such an action down. Every action of the Authority must be subject to rule of law and must be informed by reasons. Thus whatever be the activity of the public authority it should meet the test of Art. 14. Every action of the Authority must be subject to rule of law and must be informed by reasons. Thus whatever be the activity of the public authority it should meet the test of Art. 14. Reliance was further placed on the decision of the Supreme Court rendered in Mahaveer Auto Store Vs. Indian Oil Corporation (5). That was a case where a firm was carrying on business of sale and distribution of lubricants for the last 18 years. Supply to them was stopped by the Indian Oil Corporation without notice or intimation. It was held that the action is totally arbitrary and, therefore, violative of Art. 14 of the Constitution and, therefore a writ can be entertained. 9. In this respect Mr. K.N. Joshi has stoutly contended that when State has entered into non-statutory contract and the rights of the parties are therefore governed by the terms of the contract and not by constitutional provisions then the proper remedy is by way of suit. In this respect he placed reliance on a decision of their Lordships of the Supreme Court rendered in Bareilly Development Authority Vs. Ajaipal Singh (6). If the brochure itself indicated that the cost mentioned therein was only an estimated cost subject to change enhancement or amendment at the time of allotment and if the price has been increased on account of the actual cost factor, then such an action cannot be labelled as arbitrary or discriminatory and no writ petition can be entertained about it. Hence in this case the Honble Judges came to the conclusion that the case is totally governed by the terms of the contract. There was no arbitrariness or discrimination. In para 19 of the judgment their Lordships have observed that in the case before them the contract between the respondents and the Bareilly Development does not contain any statutory terms and/or conditions. When the equitable possession is sought the High Court was wrong in placing reliance on the decision in Ramanna Dayaram Shettys case (7). In para 19 of the judgment their Lordships have observed that in the case before them the contract between the respondents and the Bareilly Development does not contain any statutory terms and/or conditions. When the equitable possession is sought the High Court was wrong in placing reliance on the decision in Ramanna Dayaram Shettys case (7). In para 21 their Lordships observed that there is a line of decisions that where the contract entered into between the State and the persons aggrieved is non statutory and purely contractual and the rights are governed only by the terms of the contract no writ or order can be issued under Art. 226 of the Constitution of India so as to compel the authorities to remedy the breach of the contract pure and simple. In para 22 their Lordships observed that in case of non-statutory concluded contract like one in hand, the High Court went wrong in its finding that there is arbitrariness or unreasonableness on the part of appellant in increasing the cost of the houses and flats. Thus this authority clearly shows that in case of concluded contracts which are non-statutory in character, Article 14 will not apply and the matter will be governed by terms of the contract. But if the action of the State has statutory overtones or/and it is arbitrary or unreasonable then of course Art. 14 will be attracted as has been held in Shrilekha Vidhyarthis case (supra) by their Lordships of the Supreme Court. Our attention was drawn by Mr. Joshi to another decision of their Lordships of the Supreme Court which has been relied upon in the aforesaid decision of Dwar-kadas Marfatias case in para 2 i.e. M/s Radhakishan Agrawal Vs. The State of Bihar (8). In that case their Lordships observed that no question arises of violation of Art. 14 or of any other constitutional provisions by the State and it is appropriate for it to act within this field and perform any act under a legally valid contract. In this sphere one can only claim rights conferred upon them by the contract and are bound by the terms of the contract only, unless some statute confers some special statutory power or obligation on the State in contractual field which is apart from the contract. In this sphere one can only claim rights conferred upon them by the contract and are bound by the terms of the contract only, unless some statute confers some special statutory power or obligation on the State in contractual field which is apart from the contract. Thus if the State action has any statutory overtones and that act is unreasonable and unfair, Art. 14 is certainly attracted. Mr. K.N. Joshi further drew our attention to the decision of their Lordships of the Supreme Court in M/s Andhra Industrial Works Vs. Chief Controller (9) where in para 19, their Lordships observed that if there is no plea of hostile discrimination alleged in the writ petition, there can be no question of violation of Art. 14. It must be said to the credit of Mr. K.N. Joshi that he frankly conceded before the Court that if the State action is arbitrary, unjust or unreasonable even in contractual matters, then Art. 14 will be attracted and the Court can hear such matter and grant relief. But his contention is that in this case there is no arbitrariness or unreasonableness and the State action is absolutely fair and reasonable. 9. Mr. Vineet Kothari further drew our attention to the decision of their Lordships of the Supreme Court in M/s Motilal Padam Path Sugar Mills Co. Ltd. Vs. State of U.P. (10). In para 32 their Lordships have observed as under:— "Now the letter dated 23rd January 1969 clearly shows that the 4th respondent made this representation in his capacity as the Chief Secretary of the Government, and it was, therefore, a representation on behalf of the Government. It was faintly contended before us on behalf of the State that this representation was not binding on the Government, but we cannot countenance this argument, because, in the first place, the averment in the writ petition that the 4th respondent made this representation on behalf of the Government was not denied by the State in the affidavit in reply filed on its behalf, and secondly, it is difficult to accept the contention that the 4th respondent, who was at the material time the Chief Secretary to the Government and also advisor to the Governor who was discharging the functions of the Government during the Presidents rule, had no authority to bind the Government. We must, therefore, proceed on the basis that this representation made by the 4th respondent was a representation within the scope of his authority and was binding on the government." In the above case their Lordships have held that Advisor to the Governor and Chief Secretary of the State certainly binds the State Government and if a promise has been made by him as Chief Secretary and Advisor to the Governor it cannot be contended that it does not bind the Government. That is a case of application of the principles of promissory estoppel. But its help is being sought on the ground that if the Chief Engineer issued certain orders in exercise of the powers conferred upon him under the contract, then it binds the Board and the Board cannot wriggle out of it as its own will without giving a notice and affording opportunity of hearing to the affected parties. That is unreasonable and arbitrary and is violative of Art. 14 of the Constitution. It was also submitted by Mr. Kothari as an ancillary argument that even if there is any alternative remedy available by way of a suit the jurisdiction of the Courts to hear the matter and grant relief under Art. 226 of the Constitution is not barred and in this respect he has placed reliance on three decisions (i) A.V. Venketswaram Collector of Bombay Vs. Ram Chandra, Sobhraj Vadwani (11) It was a Constitution Bench judgment of their Lordships of the Supreme Court, (ii) Kishangopal Joshi Vs. Municipal Board Phalodi (12) and (iii) R.K. Gupta Vs. Delhi Administration (13). It has been held in these authorities that alternative remedy by way of suit is no bar to the maintainability of the writ petition. 10. In this case the writ petition has not been filed after rejection of T.I. in the Civil suit it but was filed much prior to the filing of the suit. The Single Bench decision of this Court rendered in J. S. Rawat Vs. National Airport Authorities (14) has no application. It was contended by Mr. Joshi that writ jurisdiction should not be allowed to be exercised to perpetuate injustice. The High Court will refuse to interfere if there is failure of justice and in this respect he placed reliance on the Full Bench decision of this Court rendered in Jagan Singh Vs. State Transport Appellate Tribunal (15). 11. It was contended by Mr. Joshi that writ jurisdiction should not be allowed to be exercised to perpetuate injustice. The High Court will refuse to interfere if there is failure of justice and in this respect he placed reliance on the Full Bench decision of this Court rendered in Jagan Singh Vs. State Transport Appellate Tribunal (15). 11. Having discussed the entire legal position now we have to examine the matter on facts whether the learned single Judge was right in holding that it is a pure case of interpretation of contractual terms and therefore no writ petition lies. Anx. 1 is the work order which has been granted by the Executive Engineer in favour of the petitioner-appellant. It is dated 9.1.89 whereby the petitioner has been ordered to commence the work and it clearly contains the condition that on account of the departmental reasons any difficulties arise in execution of the contract the time for execution of the contract will have to be extended without levying any penalty. Thus this is the basic term of the work order. 12. Now we may refer to certain conditions of the general rules and Instructions which have been issued by the department for the guidance of the contractors. Actually they form part of the contract that has been executed between the petitioner and his Excellency the Governor of Rajasthan. Rule 5 provides that the Chief Engineer or any other duly authorised Engineer alone will open the tenders in presence of the intending contractors. Rule 6 says that the Chief Engineer or other authorised Engineer shall have the right of rejecting or accepting any of the tenders without assigning reasons. Thus the sole authority for acceptance or rejection of the contract and its execution has been left on the Chief Engineer or other duly authorised Engineer. Of course the contract has to be executed in favour of the Government in the name of His Excellency the Governor of Rajasthan and Anx. 1 shows that the works contract has been approved in favour of the petitioner-appellant by I.G.N.P. Board. Cl. Of course the contract has to be executed in favour of the Government in the name of His Excellency the Governor of Rajasthan and Anx. 1 shows that the works contract has been approved in favour of the petitioner-appellant by I.G.N.P. Board. Cl. (2) of the agreement provides that the time allowed for carrying out the work as entered in the tender shall be strictly observed by the contractor and the work must processed through within the stipulated period with all diligence, time being treated as the essence of the contract on the part of the contractor and the contractor shall pay as compensation an amount equal to one per cent or such similar amount as Chief Engineer or his authorised Engineer, whose decision shall be final, may decide on the tender amount for every work which remains uncommended. As per Cl. (3) the Chief Engineer or the duly authorised Engineer has absolutely power to determine the contract in the conditions mentioned in Cl. (3). Cl. (5) deals with extension of time for completion of work and in this respect the Chief Engineer or any other authorised Engineer has been given final authority i.e. it has been provided therein that the Chief Engineer or other duly authorised Engineer shall if he is of opinion (which shall be final) on reasonable ground being shown therefor may authorise for such extension of time if any as may in his opinion be necessary or proper. If the period of completion of contract expires before the expiry of the period of one month provided in this clause the application of extension shall be made before the expiry of the period stipulated for completion of the contract. Thus clause (5) clearly invests the Chief Engineer or other duly authorised Engineer or for that matter the Divisional Officer, power to grant extension of time for completion of the contract if in their opinion reasonable ground exists therefor. It is nowhere provided in the agreement that this power is vested in the Board. Cl. Thus clause (5) clearly invests the Chief Engineer or other duly authorised Engineer or for that matter the Divisional Officer, power to grant extension of time for completion of the contract if in their opinion reasonable ground exists therefor. It is nowhere provided in the agreement that this power is vested in the Board. Cl. (12) of the agreement provides that the petitioner in charge shall have power to make any alteration or addition to the original specifications drawing designs and instructions that may appear to him to be necessary or advisable and such alterations will not invalidate the contract and any additional work which the contract may be directed to do in the matter above specified as part of work shall be carried out by the contract on the same terms and conditions in all respects on which he agreed to do the work. However, the time for completion of the work shall be extended in the proportion that the additional work bears to the original contract work and the certificate of the Engineer Incharge shall be conclusive as to such proportion. Cl. 22 reads as under:- "Clause 22. - All the works to be executed under the contract shall be executed under the direction and subject to the approval in all respects of the Chief Engineer of the Government of Rajasthan for the time being, who shall be entitled to direct at what point or points and in what manner they are to be commenced and from time to time carried on." Cl. 45 provides that if during the progress of the contract of value exceeding rupees five lacs and where the stipulated completion period is more than six months, the price of any material incorporated in the works (not being material supplied from the department) and/are wages of labour increases or decreases and such increase/decreases exceed ten per cent of the price and/or wages prevailing at the time of the opening of the tender for the work, the amount payable to the contractor for work shall be adjusted for increase or decrease in the rates of the labour and materials according to formula provided in cl. 45. Price adjustment clause shall be applicable only for the work that is carried out within the stipulated time, or extensions thereof, as are not attributable to the contractor. No claim for price adjustment other than provided herein shall be entertained. 45. Price adjustment clause shall be applicable only for the work that is carried out within the stipulated time, or extensions thereof, as are not attributable to the contractor. No claim for price adjustment other than provided herein shall be entertained. Thus according to cl. 22 Chief Engineer is the sole authority as regards the execution of work in all respects and the price escalation that has to be granted according to cl. 45 of the Contract also relates to the execution of the work and, therefore, the Chief Engineer alone is the final authority in the matter so far as the terms of the contract are concerned. There is no mention of the Board in the terms of the contract; as regards the grant of extension of time or grant of price escalation as per Cl. 45 of the contract. Chief Engineer is the final authority. The Board does not come into picture so far as the contractor is concerned. It is alleged that the Board comes into the picture on account of the revised schedule of powers delegated to the Chief Engineer, Superintending Engineer etc. Cl. 6A of the Schedule provides authority to the Chief Engineer to accept tender upto eighty-lacs rupees. Beyond eighty-lacs of rupees the contract has to be approved by the Board. As per these revised schedule of powers cl. 13 of the revised schedule of powers provides that for reasons to be recorded in case of a contract for execution of work or supply of material or other performance of work the Chief Engineer has full powers upto the monetary limits of acceptance of tender for extension of time or other performance of the contract and the reasons for that have to be recorded. In the remark-column it has been mentioned that these powers will be exercised as under:— (i) Approval of next higher authority will have to be obtained in case extension is for a period of equal to more than that allowed for execution in the original contract. (ii) Under the Head Notes, note No. 6 says that the word next higher authority used from time to time in this appendix means Central Board/ State Government in case of Chief Engineer. (ii) Under the Head Notes, note No. 6 says that the word next higher authority used from time to time in this appendix means Central Board/ State Government in case of Chief Engineer. Thus although the Chief Engineer has full power for extension of time the approval of next higher authority is essential, when the contract is extended beyond the period of one year because in the original contract the time limit given for performance of the contract was one year only. No such limit has been prescribed in the schedule of powers as regards grant of price escalation. It is pertaining to the extension of time and extension of time as recommended by the Chief Engineer has been accepted by the Board. Whether after this extended period the petitioner should be granted further extension or not is not out concern. But upto that time price escalation can be granted by the Chief Engineer as per Cl.45 of the contract. If that has been done by the Chief Engineer a right gets vested in the petitioner-appellant as regards payment of price escalation made to him and that right vested in him cannot be divested by the Board without giving him a notice and affording him an opportunity of hearing because that is against the principles of natural justice "audi-alterem-partem". A right vested in a person cannot be divested without giving him a notice and without affording him an opportunity of hearing. These powers have been exercised by the Board under the revised schedule of powers which have statutory overtones. These terms do not form part of the terms of the contract. The distribution powers between various functionaries of the Government are internal-matters of the department governing the exercise of powers by the Board vis-a-vis the Chief Engineer and they are framed in exercise of the statutory powers conferred on the Government or Board as the case may be and therefore, if the Board acts in exercise of the statutory powers conferred on it in pursuance of the revised schedule of powers, then that does not form part of the contractual terms. This is an exercise of the statutory powers conferred on the Board and, therefore, when this is not a power granted to the Board under the contract it cannot be treated as a term of the contract and, therefore, once it goes out of the purview of the terms of the contract, it does not remain pure and simple case of contractual terms, but it amounts to an exercise of statutory powers by the Board conferred upon it under the Rules framed by the Government or the Board as regards the distribution of powers amongst the Board and its officers and, therefore, the authorities cited by Mr. Vineet Kothari whether that be of Orissa High Court or Gujarat High Court or the decisions of their Lordships of the Supreme Court in Shri Lekha Vidhyarthis case (supra) reported in AIR 1991 S.C. 537 or Mahaveer Constitution Stores case, they all become applicable to the facts of the case and it has to be held that the advantage of price escalation which was conferred on the petitioner by the Chief Engineer could not have been withdrawn from him by the Board without giving him a notice and affording an opportunity of hearing or, at least to make his written submissions about it. The reference that has been made to Anx. R.3 is of no avail. That was a letter which was written by the Contractor to the Chairman of the Board that the recommendation of price escalation and extension of time made by the Chief Engineer should be accepted and in this respect he has submitted that he has already met him and has explained to him the entire difficulties which were faced by him on account of the department inaction and on account of other difficulties faced by the department. This request made by the petitioner could not be treated as a compliance of principles of natural justice where a specific notice of show cause has to be issued to the petitioner to show cause as to why the advantage of price escalation granted to him by the Chief Engineer should not be withdrawn and an opportunity should be afforded to the contractor either to make a written submission about it or to show cause against it personally and if that is not done, action of the Board is totally arbitrary and unreasonable and violates not only the principles of natural justice but violates Art. 14 of the Constitution. The order of the Board to impose penalty of Rs. 10,000/- is also arbitrary and unreasonable and it is contradictory to the orders that have been passed by the Board. When a high power committee headed by a Superintending Engineer and two Executive Engineers have recommended vide Anx. 16 that the progress of the work i.e. the construction of 274 quarters has been thwarted on account of the difficulties faced by the department and/or faults or inaction of the department then it did not lie with the Board to unilaterally reject other benefit which have been extended to the petitioner for that extended period. The Committee further recommended for the grant of price escalation benefit to the petitioner and that report of the High Power Committee of Engineers who were not concerned with the execution of the work was accepted and recommended by the Additional Chief Engineer and has been accepted by the Chief Engineer and the extension of time recommended by the Chief Engineer has been approved by the Board then it had no authority to impose the penalty upon the petitioner within that period because the Chief Engineer recommended for the extention of time without resorting to cls. (2) and (3) of the contract. In the work order Anx. 1 that has been issued in favour of the petitioner it has been categorically mentioned that if the extension has to be granted on account of departmental inaction or difficulties or for departmental reasons then that time will have to be extended without imposing any penalty. (2) and (3) of the contract. In the work order Anx. 1 that has been issued in favour of the petitioner it has been categorically mentioned that if the extension has to be granted on account of departmental inaction or difficulties or for departmental reasons then that time will have to be extended without imposing any penalty. The Chief Engineer or for that matter the Additional Chief Engineer and high power committee did not recommend for the extension of time for completion of the quarters holding the contractor guilty for the delay in completion of the quarters and when that was not the report of the High Power Committee as also the Additional Chief Engineer and the Chief Engineer, then the Boards action in imposing the penalty against the recommendation of the High Power Committee and the Additional Chief Engineer and the Chief Engineer is totally arbitrary, unreasonable and unjust specially in the light of the fact that no notice was given to the petitioner to show cause why penalty should not be imposed on him holding him guilty for laches and inaction in completion of the work and why penalty should not be recovered from him. Till that is done, the action of the Board in imposing the penalty of Rs. 10,000/-is totally arbitrary and unreasonable and cannot be sustained because it violates the principles of natural justice as also Art. 14 of the Constitution. The extension of time and price escalation was granted in favour of the petitioner vide Anx. 17 that was not a letter written by the Chief Engineer to the Contractor but it was a letter written by the Chief Engineer to the Additional Chief Engineer and it was accordingly complied with and the price escalation benefit was extended to the petitioner. The Board by resolution Anx.1 not only has withdrawn that benefit but has imposed a penalty without any basis or reasonable cause and without following the principles of natural justice. This again is arbitrary, unreasonable and unjust because no factual foundation exists for taking this action. Committees report goes against it and the recommendation of the Additional Chief Engineer and the Chief Engineer also goes against it. The petitioner was informed about the deduction of the escalation benefit and deduction of the penalty amount, after that order of the Board was executed. This was done vide Anx. R. 2 dated 1-9-92. Committees report goes against it and the recommendation of the Additional Chief Engineer and the Chief Engineer also goes against it. The petitioner was informed about the deduction of the escalation benefit and deduction of the penalty amount, after that order of the Board was executed. This was done vide Anx. R. 2 dated 1-9-92. This information does not amount to any notice of show cause or a reasonable opportunity of hearing. It is only an information of the action which was already taken by the Board against the petitioner after it has already been executed. We are, therefore, firmly of the opinion that this action of the Board has statutory overtones and this being unreasonable, unjust and arbitrary and violative of principles of natural justice and Art. 14 of the Constitution cannot be sustained. We, therefore, quash Anx. R. 1, the resolution of the Board whereby the price escalation benefit granted in favour of the petitioner by the Chief Engineer vide Anx. 17 was withdrawn and a penalty of Rs. 10,000/ was imposed on the petitioner in its meeting held on 24-6-92. The Board will now issue a notice to the petitioner to show cause why this advantage which has been conferred on him may not be withdrawn and why penalty should not be imposed against him. After he has been afforded an opportunity to show cause either by making written submissions or oral submissions before the Board, the Board will be free to pass an appropriate order about both these things. Till that is done, they cannot withdraw the benefit granted to the petitioner regarding price escalation and extension of time and cannot impose penalty on him quashing order Anx. 17 without complying with the principles of natural justice. If after affording the petitioner an ex-post-facto opportunity to show cause and affording to him an opportunity of hearing written submissions or oral submissions before the Board, if the Board sustains the order of the Chief Engineer then the amount of the escalation benefit and the penalty of Rs. 10,000/-i.e. Rs. 8, 76, 173/-should be refunded back to the petitioner with 18% interest p.a. but if they do not choose to do so, the petitioner will be free to avail any remedy available to him before an appropriate forum challenging that order of the Board which is passed after following the principles of natural justice as aforesaid. 10,000/-i.e. Rs. 8, 76, 173/-should be refunded back to the petitioner with 18% interest p.a. but if they do not choose to do so, the petitioner will be free to avail any remedy available to him before an appropriate forum challenging that order of the Board which is passed after following the principles of natural justice as aforesaid. The decision of this writ petition has nothing to do with the disputed questions of fact. They have not been agitated before us in this appeal and they also cannot be agitated before us. This decision will also not affect the rights of the appropriate authority to take any action under the contract against the contractor after 31-3-93, because that period does not form part of the challenge that has been made before the learned single Judge through the writ petition. 13. In the result, the judgment of the learned single Judge is set aside and the Special Appeal is decided as aforesaid with no order as to costs.