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2007 DIGILAW 415 (CAL)

Capt Rajib Lochan Dey v. UNION OF INDIA

2007-06-08

DIPANKAR DATTA

body2007
Judgment :- (1.) WHETHER or not public law remedy of writs would be available to the petitioner, in the given set of facts, is the core question involved in this writ petition. (2.) CERTAIN facts are not in dispute. The petitioner is a retired Air Force officer. After his retirement from service, the petitioner had made an application and was sponsored by the Ministry of Defence for being appointed as Toll collection Agent at Garui near Asansol on National Highway No. 2 in the state of West Bengal between Barwa Adda in Jharkhand and Panagarh in west Bengal. Contract was executed by and between the National Highways authority of India (hereafter NHAI) and the petitioner on 6.6.06 appointing his proprietorship firm Prahari Security Service for the purpose of collection of user fees of the concerned stretch of the highway with effect from 16.6.06. After the petitioner took over the work of collection of user fees, he faced several problems in collecting such fees which were reported to the NHAI as well as to the local police authorities praying for remedial action. The NHAI had also urged the local administration to look into the problems faced by the petitioner and to do the needful. In due course, the NHAI on detecting that realization of user fees was not at par with its expectation had issued a show-cause notice dated 12.9.06 by which the petitioner was informed that user fee collection amount was decreasing day by day and he was asked to show-cause as to why his engagement in terms of the contract shall not be discontinued. The petitioner replied by his fetter dated 18.9.06 citing various grounds for which there had been decrease in collection of user fees. By another letter dated 27.9.06, the petitioner was asked to further show-cause as to why his contract for user fee collection at Garui Toll Plaza shall not be terminated in view of the report submitted by the agency appointed by the nhai which reflected that between 25.6.06 and 30.6.06 a number of users had been successful in crossing the toll plaza after paying lesser amount without issuance of any receipt. The said notice was replied to by the petitioner by his letter dated 6.10.06 explaining therein the circumstances for which there had been decrease in collection of user fees and that remedial steps had taken by him to realize maximum fees. The said notice was replied to by the petitioner by his letter dated 6.10.06 explaining therein the circumstances for which there had been decrease in collection of user fees and that remedial steps had taken by him to realize maximum fees. The NHAI by its letter dated 12.10.06 conveyed to the petitioner that an amount of Rs. 52,777/-had been assessed as penalty arising out of his poor performance which he was required to deposit within a period of seven days from date of issuance of the same. It was further informed that NHAI reserved the right to take further action. The petitioner had duty deposited the amount assessed on account of penalty, on 28.10.06. However, by its letter dated 8.1.07, the NHAI on invoking power conferred by Clause 35 of the contract conveyed "notice of termination" of the said contract with effect from 8.00 hours on 1.2.07. The petitioner was requested to hand over charge of the toll plaza at Garui free from all encumbrances on the stipulated time and date along with necessary documents, as indicated therein. (3.) THE notice dated 8.1.07 issued by the NHAI terminating the contract forms the subject matter of challenge in this writ petition. (4.) MR. Chatterjee, learned Senior Counsel appearing for the petitioner contended that NHAI acted arbitrarily in terminating the contract in purported exercise of power conferred by Clause 35 of the contract. He invited the attention of the Court to Clause 35 of the contract which reads as under:-(1) The authority shall be entitled to terminate this Contract at any time without assigning any reason (s) after giving notice to the collecting Entity as under in writing and in that event, the Franchisee shall not be entitled to any claim, or any compensation whatsoever on account of such termination: (i) By giving fourteen (14) days prior notice in writing. (ii) By giving ninety (90) days prior notice in writing, the Collecting entity may terminate the Contract. (2) Notwithstanding anything contained in Clause (1) above, the authority may terminate the Contract for breach or non-observance of any of the terms and conditions of this Contract or for any misconduct on the part of the Collecting Entity or his personnel or for overcharging of fee from a user, or for harassment of any user. And contended that without remotely suggesting any reason the NHAI could not have resorted to termination. And contended that without remotely suggesting any reason the NHAI could not have resorted to termination. If at all any ground existed for termination of the contract, he further contended that the petitioner ought to have been put on notice as had been done on the earlier occasion in order to enable the petitioner to raise an effective defence. He submitted that the action of terminating the contract being in clear breach of principles of natural justice, the same cannot be sustained. (5.) IN course of submission, he also invited the Court to look into the various correspondences exchanged between the petitioner and the NHAI after the petitioner was appointed for collecting user tees to drive home the point that the petitioner had duty brought to the notice of the NHAI the genuine difficulties which he had been facing (acknowledged by the NHAI) and which were required to be removed with the aid and assistance of the local administration, but had not been done; yet, the petitioner had made all possible efforts to increase the quantum of collection of user fees for the better interest of the NHAI as also for himself and there was no deliberate attemptor evil motive on the part of the petitioner to cause any financial toss to the NHAI. He also referred to the Supplementary Affidavit filed by the petitioner and in particular a letter dated 6.1.07 issued by SOWIL Limited, being an agency appointed by the NHAI, which reads as under:-Sub: Consultancy services for Supervision of short term improvement and routine maintenance contract of National Highways no. 2 from Barwa Adda to Panagarh (Km. 398. 750 to Km. 515. 236)Reg. Six monthly performance report of M/s. Prahari Security Service at Garui Toll Plaza, Asansol. Ref: Your letter No. 11q28/1/2006/piu (DUP)/2851 dated 27.12.2006. Sir, with reference to your above-mentioned letter, I would like to state that since 16.06.2006 to till date the performance of the m/s. Prahari Security Services is satisfactory. The agency is carrying out its duties and responsibilities effectively and efficiently. The management and administration at Toll Plaza is Co-operative and sincere to raise the toll collection. This is for your information please. The agency is carrying out its duties and responsibilities effectively and efficiently. The management and administration at Toll Plaza is Co-operative and sincere to raise the toll collection. This is for your information please. (6.) BY placing strong reliance on the said letter he submitted that the performance of the petitioner having been certified to be satisfactory, even as on 6.1.07, there was no valid ground for terminating the contract and no reason having been assigned in the notice by which termination of the contract was sought to be conveyed, the NHAI had clearly infringed the provisions of article 14 of the Constitution of India. He, accordingly, prayed that the notice of termination be set aside and the petitioner be granted consequential relief. (7.) IN support of his submission, Mr. Chatterjee placed reliance on the following decisions:- (i) 2004 (3) SCC 553 : ABL International Limited v. Export Credit guarantee Corporation of India Limited; (ii) 1988 (1) CLJ 394 : Messrs Omprakash Periwal v. Union of India and Ors; and (iii) 2004 (7) SCC 166 : S.J.S. Business Enterprise (P) Ltd. v. State of Bihar and Ors. (8.) PER contra, Mr. Basak, learned Counsel appearing for the NHAI, contended that the petitioner was not entitled to any relief since no public law element was involved in the present dispute. It is his submission that if there be any breach of contract at the instance of the NHAI, the petitioners remedy lies in a suit for damages and no writ would be maintainable to enforce contractual obligations. He cited the decision reported in 2006 (3) CHN 433 : Coal India Ltd. v. Indian Explosive Ltd. Next he contended that the petitioner had not approached this Court with clean hands. He referred to the earlier show-cause notices issued against the petitioner and the reply given by him thereto as well as the order dated 12. 10. 06 imposing penalty. He submitted that the petitioner had not disclosed these vital facts in the petition and therefore was guilty of suppression of material and relevant facts. He next contended that the contract provided a forum for arbitration and therefore the Writ Court ought to relegate the petitioner to the Arbitrator for resolution of any dispute concerning the contract in question. He submitted that the petitioner had not disclosed these vital facts in the petition and therefore was guilty of suppression of material and relevant facts. He next contended that the contract provided a forum for arbitration and therefore the Writ Court ought to relegate the petitioner to the Arbitrator for resolution of any dispute concerning the contract in question. On merits, he submitted that there were various reports of independent investigation agencies appointed by the NHAI which reveal colossal loss suffered by it as a result of misconduct on the part of the personnel appointed by the petitioner for collection of user fees. He submitted that the petitioner was given an opportunity to make good the loss suffered by NHAI but there being no further improvement in collection of user fees, the NHAI had no other option but to terminate the contract since the petitioner had violated the terms and conditions thereof. In this connection, he referred to Clause 35 of the contract which empowered the NHAI to terminate the contract without assigning any reason. He also referred to Clause 23 of the contract laying down the obligations of the collecting entity and submitted that the petitioner having failed to comply with the terms and conditions of the contract, the NHAI had not acted in an arbitrary and illegal manner in terminating the contract. Inviting the attention of this Court to a subsequent report of SOWIL Ltd., he submitted that collection of user fee had further decreased and there was no good reason to continue with a contractor who failed to live upto the expectations of the NHAI. He, accordingly, prayed for dismissal of the writ petition. (9.) IN reply, Mr. Chatterjee submitted that there being clear violation of article 14 of the Constitution in the present case, the petition deserved to be allowed. He submitted that it was incorrect to contend that public law element is absent in the present dispute. It is his alternative submission that even if public law element is absent, the NHAI being an Article 12 authority and being a party to the contract cannot act arbitrarily in respect of its contractual obligation and claim immunity from judicial review. He further submitted that there has been no suppression of material facts. It is his alternative submission that even if public law element is absent, the NHAI being an Article 12 authority and being a party to the contract cannot act arbitrarily in respect of its contractual obligation and claim immunity from judicial review. He further submitted that there has been no suppression of material facts. The NHAI having imposed a penalty in respect of earlier lapses, he submitted that it was beyond the comprehension of the petitioner that the same lapse would be made the basis of termination of contract and that was precisely the reason for not disclosing the documents in this respect. He submitted that there was no evil intention of the petitioner to hide facts from the Court to obtain any undue advantage. Regarding the objection in respect of availability of alternative remedy, he submitted that the said objection having been overruled at the admission stage, was no longer available to the NHAI. Referring to the subsequent report of SOWIL Ltd. he submitted that the same was of no relevance since during the period of survey a stretch of N. H. 2 had caved in near Asansol resulting in abrupt decrease in plying of vehicles on it which in turn contributed to less collection. (10.) HAVING heard learned Counsel for the parties, this Court is called upon firstly to determine as to whether interference of the Writ Court in the facts of the present case is warranted or not having regard to the objection raised by the learned Counsel for the NHAI that there being no involvement of public law element, seeking remedy of writ (s) is not appropriate and that the petitioner ought to be relegated to a suit for damages. If this objection is found to be without merit and overruled, the other objections regarding suppression of material facts and availability of alternative remedy would come to the fore and only on overruling of these objections can this Court enter into the merits of the controversy raised. (11.) FOR the purpose of determining as to whether a writ petition would be maintainable in view of the facts and circumstances of this case, it would be necessary to take note of the law laid down by the Apex Court in this regard. (12.) IT was held in M/s. Radhakrishna Agarwal v. State of Bihar and Ors. (11.) FOR the purpose of determining as to whether a writ petition would be maintainable in view of the facts and circumstances of this case, it would be necessary to take note of the law laid down by the Apex Court in this regard. (12.) IT was held in M/s. Radhakrishna Agarwal v. State of Bihar and Ors. , air 1977 SC 1496 by the Apex Court that when the State or its agents have entered into the field of ordinary contract the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se and no question of violation of Article 14 of the Constitution or of any other constitutional provisions arises 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. (13.) HOWEVER, the law relating to enforcement of contractual obligations as it stood when M/s. Radhakrishna Agarwal (supra) was decided has undergone a radical change over the passage of time and in this connection one has to take note of the observations of the Apex Court as reflected in its subsequent decisions. (14.) ONE has to start by taking note of the decision of the Apex Court in the case reported in AIR 1979 SC 1628 : Ramana Dayaram Shetty v. The international Airport Authority of India. In this case while considering the applicability of the rule against arbitrariness in State action, it was held that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, it cannot act arbitrarily at its sweet will like a private individual and deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant. (15.) CENTRAL Inland Water Transport Corporation v. Brojo Nath Ganguly, reported in AIR 1986 SC 1571 is the next important decision, wherein it was held as follows:-"90. Should then our Courts not advance with the times? (15.) CENTRAL Inland Water Transport Corporation v. Brojo Nath Ganguly, reported in AIR 1986 SC 1571 is the next important decision, wherein it was held as follows:-"90. Should then our Courts not advance with the times? Should they still continue to cling to outmoded concepts and outworn ideologies? Should we not adjust our thinking caps to match the fashion of the day? Should all jurisprudential development pass us by leaving us floundering in the sloughs of nineteenth-century theories? Should the strong be permitted to push the weak to the wall? Should they be allowed to ride roughshod over the weak? Should the Courts sit back and watch supinely while the strong trample under foot the rights of the weak? We have a Constitution for our country. Our Judges are bound by their oath to "uphold the Constitution and the laws". The constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of the laws. The principle deducible from various precedents is that the Courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. For instance, the above principle wilt apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. In todays complex world of giant corporations with their vast infra-structural organizations and with the State through its instrumentalities and agencies entering Into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power, these cases can neither be enumerated nor fully illustrated. The Court must Judge each case on its own facts and circumstances. 94. . . . . . . . . . . . . . The typos of contracts to which the principle formulated above applies are not contracts which are tainted with illegality but are contracts which contain terms which are so unfair and unreasonable that they shock the conscience of the Court. They are opposed to public policy and required to be adjudged void." (16.) THEN came the decision in Kumari Shrilekha Vidyarthi v. State of U.P. and Ors. : AIR 1991 SC 537 , a classic judgment on the point Excerpts therefrom, relevant for the purpose of deciding the issue raised herein, are quoted below:-"20. Even apart from the premise that the office or post of d. G. Cs. has a public element which alone is sufficient to attract the power of judicial review for testing validity of the impugned circular on the anvil of Article 14, we are also clearly of the view that this power is available even without that element on the premise that after the initial appointment, the matter is purely contractual. Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, can it be said that the State can thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more ? We have no hesitation in saying that the personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Art. 14 and contractual obligations are alien concepts, which cannot co-exist 21. . . . . . . . . . We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. In our opinion, it would be alien to the Constitutional Scheme to accept the argument of exclusion of Article 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals. 22. There is an obvious difference in the contracts between private parties-and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the state or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14, To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the state in any of its actions. 24. The State cannot be attributed the split personality of Dr. Jekyll and Mr. Hyde in the contractual field so as to impress on it all the characteristics of the State at the threshold while making a contract requiring it to fulfil the obligation of Article14 of the Constitution and thereafter permitting it to cast off its garb of State to adorn the new robe of a private body during the subsistence of the contract enabling it to act arbitrarily subject only to the contractual obligations and remedies flowing from it. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. There is a basic difference between the acts of the State which must invariably be in public interest and those of a private individual, engaged in similar activities, being primarily for personal gain, which may or may not promote public interest. There is a basic difference between the acts of the State which must invariably be in public interest and those of a private individual, engaged in similar activities, being primarily for personal gain, which may or may not promote public interest. Viewed in this manner, in which we find no conceptual difficulty or anachronism, we find no reason why the requirement of Article 14 should not extend even in the sphere of contractual matters for regulating the conduct of the State activity. 28. Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Article 14 and permit judicial review, we have no hesitation in saying that the ultimate impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. We, therefore, find it difficult and unrealistic to exclude the State actions in contractual matters, after the contract has been made, from the purview of judicial review to test its validity on the anvil of Article 14.35. It is now too well settled that every State action, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Article 14 of the Constitution and basic to the rule of law, the system which governs us. Arbitrariness is the very negation of the rule of law. Satisfaction of this basic test in every State action is sine qua non to its validity and in this respect, the State cannot claim comparison with a private individual even in the field of contract; This distinction between the State and a private individual in the field of contract has to be borne in the mind." (Emphasis supplied) (17.) THAT Article 226 of the Constitution of India does not make a divide between public law and private law also appears to have been held by the apex Court in the decision in U.P. State Co-operative Land Development bank Limited v. Chandra Bhan Dubey, 1499 (1) SCC 741 (para 27) wherein it has been held as follows:- ". . . . . . . . . It may not be necessary to examine any further the question if Article 226 makes a divide between public law and private law. . . . . . . . . It may not be necessary to examine any further the question if Article 226 makes a divide between public law and private law. Prima facie from the language of Article 226 there does not appear to exist such a divide. . . . . . . . . . . It does appear to us that Article 226 while empowering the High Court for issue of orders or directions to any authority or person, does not make any such difference between public functions and private functions. . . . . . . . The Constitution is not a statute. It is a fountain head of all the statutes. When the language of article 226 is clear, we cannot put shackles on the High Courts to limit their jurisdiction by putting an interpretation on the words which would limit their jurisdiction. When any citizen or person is wronged, the High Court will step into protect him, be that wrong be done by the state, an instrumentality of the State. . . . . . . . . . . . . . . . . . . ". (18.) IT was further held therein that the High Court must be aware of the self-imposed restrictions and must not act like a proverbial "bull in a China shop" in exercise of its jurisdiction under Article 226. (19.) THE question as to whether the action of a body being a State under Article 12 of the Constitution of India even in the field of contracts shall be governed by Article 14 thereof or not came up for consideration before the apex Court once again in 2004. (20.) IN the decision reported in 2004 (3) SCC 214 : Jamshed Hormusji wadia v. Board of Trustees, Port of Mumbai, the Apex Court relied on the decision in Shrilekha Vidyarthi (supra) and held that in all its actions the State must be governed by Article 14 and the position of law is settled that the State and its authorities including instrumentalities of States have to be just, fair and reasonable in all their activities including those in the field of contracts. It was further held that in the field of contracts the State and its instrumentalities ought to so design their activities as would ensure fair competition and non-discrimination, and can augment their resources with the object to serve public cause and to do public good by resorting to fair and reasonable methods. (21.) IN the decision reported in ABL International Limited (supra), the question regarding enforcement of contractual obligation of the State or its instrumentality by filing a writ petition came up for consideration and it was held that the question is no more res Integra and is settled by a large number of judicial pronouncements. In Paragraph 27 of the judgment it was held that in an appropriate case, a writ petition as against the State or an instrumentality of a State arising out of contractual obligation is maintainable. (22.) YET, recently, the Apex Court in its decision reported in 2006 (10) SCC 236 : Noble Resources Ltd. v. State of Orissa, has held as follows:-"15. It is trite that if an action on the part of the State is violative of the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the Courts scrutiny would be more intrusive, in the latter the Court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the Government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter. 27. Contractual matters are, thus, not beyond the realm of judicial review. Its application may, however, be limited. 29. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise the power of judicial review. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise the power of judicial review. In a case where a public element is involved judicial review may be permissible. (See Binny Ltd. V. V. Sadasivan and G.B. Mahajan v. Jalgaon Municipal Council). " (23.) FROM the conspectus of the authorities referred to above and in view of the modern trend of decisions of the Apex Court, the conclusion is inescapable that even in contractual matters approach to the Writ Court is not a "no entry" field, but the Court must be cautious in dealing with the issue presented before it. In an appropriate case, the Writ Court would be justified in exercising its writ powers. However, what would be an appropriate case would depend on the facts and circumstances presented before the Court and no demarcation in this respect can be made with any degree of precision. (24.) THOUGH Srilekha Vidyarthi (supra) and Brojo Nath (supra) cases related to service contracts, the principles laid down therein nevertheless apply with full force even in respect of contracts like the present one, and this Court would proceed to decide the objection raised keeping in mind the same and the other decisions referred to above. (25.) IN the context one cannot forget the enunciation of law in Tulsiram patel v. Union of India, reported in 1985 (3) SCC 398 , wherein the majority view expressed as follows:-"95. The principles of natural justice have thus come to be recognized as being a part of the guarantee contained in Article 14 because of the new and dynamic interpretation given by this Court to the concept of equality which is the subject-matter of that article. Shortly put, the syllogism runs thus: violation of a rule of natural justice results in arbitrariness which is the same as discrimination; where discrimination is the result of State action, it is a violation of Article 14 : therefore, a violation of a principle of natural justice by a State action is a violation of article 14. Article 14, however, is not the sole repository of the principles of natural justice. Article 14, however, is not the sole repository of the principles of natural justice. What it does is to guarantee that any law or State action violating them will be struck down. The principles of natural justice, however, apply not only to legislation and State action but also where any tribunal, authority or body of men, not coming within the definition of state in Article 12, is charged with the duty of deciding a matter. In such a case, the principles of natural justice require that it must decide such matter fairly and impartially. " (26.) MR. Basak, learned Counsel has contended that there is no involvement of public law element. How public law element is absent in the present case, however, has not been argued by him. Although, as noted above, Article 226 does not make a divide between public law and private law, this Court would endeavour to ascertain as to whether public law element exists or is absent in the present case. (27.) IN the humble opinion of this Court, simply put, public law is the set of laws which compel a public body to perform properly the duties it owes to the public. NHAI being an Article 12 authority, its obligation of dealing with the public at large, which would also include a contractor like the petitioner, fairly, justly and non-arbitrarily and in consonance with Article 14 of the Constitution of India in exercise of powers conferred on it by statute as also by the terms of contract to which it is a party, cannot perhaps be questioned. But by mere reason of the NHAI being an Article 12 authority and being a party to the contract, can it be said that public law element is involved in the present case? (28.) THE petitioner was engaged for the purpose of collection of user fees of the highway from the general public and to deposit the same with the nhai. This engagement of the petitioner by the NHAI was made in furtherance of the provisions contained in the National Highways Authority of India Act, 1988. User fee is being collected by the NHAI on the basis of empowerment made vide Notification dated 31.3.03, on the concerned stretch of the highway for which the petitioner has been appointed for its collection. This engagement of the petitioner by the NHAI was made in furtherance of the provisions contained in the National Highways Authority of India Act, 1988. User fee is being collected by the NHAI on the basis of empowerment made vide Notification dated 31.3.03, on the concerned stretch of the highway for which the petitioner has been appointed for its collection. Power in this regard has been conferred by Section 7 of the Act read with Rules 3, 5 and 11 of the National Highways (Fees for the User of National Highway section and permanent Bridge-Public Funded Project) Rules, 1997. The rate of fees to be collected from the mechanical vehicles being plied on the said stretch has also been mentioned in the schedule appended to the notification. The notification also purports to lay down as to who shall collect the user fees. It provides that user fees may be collected by the NHAI departmentally, directly or through private contractor on the basis of competitive bidding. Pursuant to this notification, the NHAI exercised its power of appointing a toll collection agent and the petitioner came to be appointed. The source of appointment of the petitioner is the concerned statute i.e. the Act. It is for the purpose of giving effect to its statutory power to collect fees that an agreement was executed between the NHAI and the petitioner laying down the terms and conditions on the basis whereof user fee/toll was to be collected by him and deposited to it Collection of user fees from the public for using the highway, therefore, is not a private mission of the NHAI to augment its revenue but an initiative in exercise of statutory power. For the purpose of collection of user fees, the petitioner was required to deal with the public. For using the highway, payment of user fee by the user to the NHAI is a concept which is not very old and major section of the general public may not be aware of the fact that for using the highway, they are to pay a fee generally termed as toll tax. It is for the personnel deputed by the petitioner to impress upon the general public of such requirement and to collect the fee on being tendered. It is for the personnel deputed by the petitioner to impress upon the general public of such requirement and to collect the fee on being tendered. The quantum of money collected on account of toll tax by collection agents like the petitioner and deposited with the NHAI are to be utilised for the purpose of maintenance of the highways which have been constructed after incurring substantial expenditure. In the backdrop of these facts, if there be an allegation from the end of the collecting entity that the NHAI unfairly, unreasonably or in an arbitrary manner has terminated the contract without existence of any cogent reason, can It be said in such circumstances that there is absence of public law element and the petition does not call for a judicial review of the impugned administrative action? The answer to the question/in the humble view of this Court, is obvious, the objection must fail. (29.) THE decision of the Division Bench relied on by Mr. Basak is clearly distinguishable on facts. The Division Bench found in the case before It that the contract in question was one for supply of explosives and that no public law element was involved in it. Such is not the case here. Even otherwise, the division Bench held in Paragraph-16 thereof that a writ petition is not absolutely barred in matters of nonstatutory contract with the State and the factual situation has to be tested to see whether the writ petition should be entertained at all. For the reasons discussed above, this Court holds that public law element is involved and therefore the present petition is maintainable. (30.) ACCORDINGLY, this Court would proceed to consider the controversy raised herein on merits overruling the primary objection of Mr. Basak. However, this Court is not oblivious of the other objections relating to maintainability of the writ petition raised by Mr. Basak which shall toe dealt with at a later stage of this judgment. (31.) THE inequality of bargaining power of the NHAI and the petitioner admits of no doubt. Being the weaker party, the petitioner could obtain a means of livelihood only upon acceptance of the terms imposed by the NHAI. If the petitioner had not accepted the contract, the NHAI could have several other intending contractors to choose from. (31.) THE inequality of bargaining power of the NHAI and the petitioner admits of no doubt. Being the weaker party, the petitioner could obtain a means of livelihood only upon acceptance of the terms imposed by the NHAI. If the petitioner had not accepted the contract, the NHAI could have several other intending contractors to choose from. Having accepted Clause 35, it is clear that choice of the petitioner, a retired defence employee, was limited and he had no other option. Clause 35 of the contract, in the manner it is worded, is clearly unconscionable and unreasonable and suffers from the vice of enabling discrimination and arbitrary action. (32.) IF one is conferred a drastic power, it necessarily carries with it a duty to exercise such power with a good degree of circumspection so that it is not abused. By the impugned notice, the NHAI has terminated the contract that was to subsist till 15.6.07. No reason has been assigned since Clause 35 expressly excludes assigning of any reason. Although the contract does not specifically provide that prior to termination of a contract in exercise of power conferred by Clause 35 thereof a notice is to be issued calling upon the contractor to show-cause as to why the contract shall not be terminated, can it be said that NHAI has unfettered and unbridled power to terminate a contract at its sweet will without notice and existence of any cogent reason? The answer has to be in the negative. (33.) THIS Court would not venture to declare Clause 35 as void in the absence of a prayer made by the petitioner in this regard. But even if it had been challenged, on facts and in the circumstances of this case, this Court is inclined to hold that Clause 35 could be saved from being struck down and construed as reasonable if one reads natural justice into it and this would be well nigh-permissible being in consonance with fairness in action. If so read, an opportunity of showing cause ought to have been given to the petitioner prior to taking the harshest step of terminating the contract. In fact, the nhai by reading natural justice in Clause 35 had initially asked the petitioner to show-cause as to why the contract shall not be terminated. If so read, an opportunity of showing cause ought to have been given to the petitioner prior to taking the harshest step of terminating the contract. In fact, the nhai by reading natural justice in Clause 35 had initially asked the petitioner to show-cause as to why the contract shall not be terminated. There appears to be no cogent reason as to what prevented issuance of such notice prior to the impugned action. The NHAI cannot at its option read natural justice in clause 35 at one stage and exclude it at a subsequent stage. One cannot in the context ignore the development intervening the action imposing penalty on 12.10.06 and the impugned termination of contract effected on 8.1.07, i.e. the fact that only two days prior to the order terminating the contract an agency appointed by the NHAI itself to offer consultancy services had, regarding the six monthly performance of the petitioner, duly certified that the performance of the petitioners security agency was satisfactory and that it was carrying out its duties and responsibilities effectively and efficiently and further that the management and administration at the toll plaza is cooperative and sincere to raise toll collection. Importantly, despite opportunity granted to the NHA1 to deal with the contents of the writ petition and the supplementary affidavit by filing a composite counter affidavit, the NHAI has not disputed the contents of the supplementary affidavit. The contents of the supplementary affidavit stand uncontroverted and the same are deemed to have been admitted by the NHAI. In view of such contemporaneous document, the contents whereof have not been disputed by the NHAI, it is hard to accept the contention that the petitioners service being utterly unsatisfactory and resulting in the NHAI incurring financial loss, it was justified in terminating the contract. The submission of Mr. Basak that the NHAI while making the order dated 12.10.06 had reserved its right to take further action does not advance the case of NHAI any further. Right of the NHAI to take further action cannot be in doubt but that too ought to have been preceded by a notice since the NHAI owed a duty to the petitioner to act fairly. The effect of the impugned notice is to curtail the period for which the petitioner was entitled to continue subject to compliance with all formalities. Right of the NHAI to take further action cannot be in doubt but that too ought to have been preceded by a notice since the NHAI owed a duty to the petitioner to act fairly. The effect of the impugned notice is to curtail the period for which the petitioner was entitled to continue subject to compliance with all formalities. If only an opportunity had been granted to the petitioner, for whatever it is worth, such report could have been used by him if not as a sword but as a shield to counter the accusations of the NHAI alongwith any other point available to him in defence. After all, reasons cited by the petitioner for decrease in toll collection were serious in nature warranting serious consideration. That would have necessitated a reasoned decision upon proper application of mind, which in turn, could bear manifestation of a fair, just and reasonable approach to seal the petitioners fate instead of the impugned notice which hardly reflects the mind of the decision maker and the materials considered by him prior to issuing it. Had it been so, the Writ Courts scope of enquiry would have been further restricted and it could well turn out to be not an appropriate case for interference, keeping in mind that it does not act as a bull in a china shop. (34.) IT has been noticed that Clause 35 empowers the NHAI to terminate the contract by issuing a notice but without assigning any reason. Similar expression fell for consideration in Shrilekha Vidharthi (supra). It was held that "without assigning any cause" is not to be equated with "without existence of any cause". It merely meant that the reason for termination need not be communicated but absence of or non-existence of any cogent reason would be arbitrary. (35.) IT is the stand of the NHAI in its counter affidavit that "the decision to terminate the contract was based, inter alia, on the three surveillance reports as also on the reply to the show-cause which were found unsatisfactory". If one were to consider the report of SOWIL Ltd. dated 6.1.07 with an open mind, it really would reveal a chink in the NHAIs armoury and lay to rest any accusation of unsatisfactory performance. If one were to consider the report of SOWIL Ltd. dated 6.1.07 with an open mind, it really would reveal a chink in the NHAIs armoury and lay to rest any accusation of unsatisfactory performance. It is difficult to agree that lapses detected by the NHAI for which a penalty was imposed on the petitioner could form the basis for termination of the contract. That really amounts to double jeopardy, which is not permissible in our constitutional scheme. Also the subsequent report of SOWIL Ltd. is hardly of any relevance since the same was not in existence when the impugned notice was issued. (36.) THIS Court thus holds that in not giving any opportunity to the petitioner to show-cause against proposed termination of contract and there being no sufficient reason to justify the impugned action, the NHAI has acted unfairly, unreasonably, in an arbitrary manner and in violation of principles of natural justice, thereby infringing the petitioners right guaranteed by Article 14 of the Constitution of India. (37.) THIS Court has also considered the objection raised by Mr. Basak regarding suppression of facts and reply given by Mr. Chatterjee thereto. This Court holds that non-disclosure of each and every fact leading to the cause of action does not amount to suppression of material fact which would preclude the Writ Court from examining the issue raised before it. The fact alleged to have been suppressed must be of such vital importance that if disclosed, it would operate to the disadvantage of a party and the Court may, based thereon, refuse relief to him. This Court is inclined to accept the contention of Mr. Chatterjee that having been penalized and the NHAI having realized the amount on account of penalty, the petitioner had reasonably thought the issue to have been closed and had not felt it necessary to place the show-cause notices, replies thereto and the order imposing penalty on record. This Court is of the further considered view that there being no reference to the earlier penal action taken by the NHAI against the petitioner in the impugned notice of termination of contract, there has been no material suppression of facts which disentitles him to relief. The decision in S.J.S business (supra) is apposite in the context. This Court is of the further considered view that there being no reference to the earlier penal action taken by the NHAI against the petitioner in the impugned notice of termination of contract, there has been no material suppression of facts which disentitles him to relief. The decision in S.J.S business (supra) is apposite in the context. (38.) REGARDING the objection of availability of an alternative remedy, this Court finds that while admitting the writ petition similar objection was raised by Mr. Basak which was overruled for the reasons recorded in the said order and therefore this Court refuses to consider this objection at this stage to be a valid one for the purpose of dismissing the writ petition, (39.) WHILE deciding Omprakash Periwal (supra), this Court was faced with a situation similar to the one raised herein. The order terminating the contract was set aside relying on Brojo Nath (supra). There is no important distinguishing feature in the two cases and this Court is in respectful agreement with the law laid down therein. (40.) FOR the reasons aforesaid, the notice terminating the contract dated 8.1.07 stands set aside. The petitioner shall be entitled to all benefits arising from the contract executed by and between the NHAI and him on 6.6.06 as if the notice dated 8.1.07 had not been issued. The NHAI shall, however, be at liberty to proceed against the petitioner in accordance with law if it so choses. (41.) THE writ petition stands allowed to the extent indicated above. There shall, however, be no order for costs.