SAHAKAR GLOBAL LIMITED JV AND ANR. vs MUNICIPAL CORPORATION OF DELHI

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on: 27.02.2025
% Judgment delivered on:08.04.2025

+ W.P.(C) 2492/2025& CM APPL. 11777/2025

SAHAKAR GLOBAL LIMITED JV AND ANR. …..Petitioners
Through: Mr. Neeraj Kishan Kaul, Sr. Adv and Mr. Percival Billimoria, Sr. Adv. with Mr. Mukesh Butani, Mr. Rakesh Sinha, Mr. Pawan Kumar Bansal, Mr. Anand Srivastava, Mr. Harsh Shukla, Mr. Siddharth Agrawal, Mr. Ahsan UlHaq, Ms. Rachita Sood, Mr. Tushar Bhathija, Mr. Ritwik Mahapatra, Mr. Varun Tyagi, Mr. Varad Kohle and Mr. Asheesh Bhandari, Mr. Anand Srivastava, Mr. Ajay Chawla, Advs.

versus

MUNICIPAL CORPORATION OF DELHI …..Respondent
Through: Mr. Sanjiv Sen, Sr. Adv. with Mr. Sanjay Vashishtha, SC, MCD, Ms. Gunjan Rathore, Mr. Prahalad Balaji, Ms. Harshita Rai and Mr. Siddhartha Goswami, Mr. Sumit, Advs.
Mr. Sumit Kumar, Additional Deputy Commissioner, Toll Tax, MCD.

CORAM:
HON’BLE THE CHIEF JUSTICE
HON’BLE MR. JUSTICE TUSHAR RAO GEDELA

J U D G M E N T

DEVENDRA KUMAR UPADHYAYA, C.J.

-: CHALLENGE :-

1. By instituting this Petition under Article 226 of the Constitution of India, the Petitioners seek to challenge the decision of the Municipal Corporation of Delhi [‘MCD’]/sole respondent, as embodied in the letter dated 05.11.2024 issued by the Additional Deputy Commissioner (Toll Tax), MCD and addressed to the Petitioner no.1 whereby, the respondent/Corporation in its meeting held on 05.10.2024 decided – “to explore the possibility of time gap arrangement by engaging the existing contractor on same terms and conditions of existing contract at new ‘H-1’ rate so that there is no revenue loss to MCD or any other time gap arrangement and parallelly explore how the revenue can be increased by bringing more competition within 6 months”.
2. In fact, the challenge is to the impugned decision whereby the notice inviting tender bearing NIT No. ADC/TT/HQ/MCD/2024/D-894 dated 07.02.2024 (hereinafter referred to as ‘NIT’) has been abandoned. Thus, the prayer made in the writ petition is to set aside the impugned decision of the respondent/Corporation and also to quash the letter dated 05.11.2024 and all subsequent consequential decisions in that regard.
3. The Petitioners have further prayed for issuance of an appropriate writ or order directing the respondent/Corporation to issue a ‘Letter of Award’ in favour of the Petitioner no.1, being the ‘H-1’ bidder in the tender issued pursuant to the NIT dated 07.02.2024.
4. The challenge to the impugned decision of the respondent/Corporation has been made primarilyon the ground that in the tender process undertaken by the respondent/Corporation pursuant to the NIT dated 07.02.2024, the Petitioner no.1 was declared as the ‘H-1’ bidder, whose bid price was higher than the reserve price and accordingly instead of awarding the contract to the Petitioner no.1, the impugned decision has been taken by the respondent/Corporation to explore how revenue can be increased by bringing more competition within 6 months, as a result of which the tender process stands cancelled.
-: FACTS : –

5. The respondent/Corporation issued a notice on 07.02.2024 inviting tender for the engagement of a contractor for the collection of Toll and Environment Compensation Charges to be collected at 154 border points from specified commercial vehicles entering Delhi for a period of three years. The reserve price for the collection of Toll Tax was fixed at Rs.847,00,00,000/- annually.
6. Petitioner no.1 is a Joint Venture Consortium of M/s. Sahakar Global Limited, which is the lead member and the other two firms namely, M/s. Prakash Asphaltings& Toll Highways (India) Ltd. and M/s. Skylark Infra Engineering Pvt. Ltd., which participated in the tender process and made deposit of earnest money of Rs.18.70 Crores with the respondent/Corporation.
7. The Petitioner no.1 was declared to be technically qualified in the meeting dated 03.04.2024 of the High Level Committee of the respondent/Corporation, and accordingly, the said decision declaring Petitioner no.1 to have technically qualified was communicated by way of an email dated 04.04.2024.
8. The financial bids of the technically qualified bidders were opened on 04.04.2024, and the bid for Rs.864,18,18,999/- submitted by Petitioner no.1 was found to be the highest. It is to be noticed, at this juncture itself, that the bid submitted by Petitioner no. 1 was higher by Rs.17.18 Crores than the reserve price per annum.
9. The financial bids of the technically qualified bidders in response to the subject tender dated 07.02.2024 was considered in a meeting of High Level Committee of the respondent/Corporation, and the Petitioner no.1 was found to be the highest bidder [‘H-1’].
10. The Petitioner no.1 having been found to be ‘H-1’ requested the respondent/Corporation, vide its letter dated 24.05.2024, to furnish the information regarding the issuance of the Letter of Award and also enquired about other formalities to be fulfilled for execution of the contract.
11. The respondent/Corporation, by means of a communication dated 24.05.2024, informed the Petitioner no.1 that the competent authority for approval of the rate in the respondent/Corporation is the ‘Standing Committee’, which has not been in existence since January 2023, and therefore, the Corporation was not in a position to issue Letter of Award to the Petitioner no.1. It was further informed by way of the said letter to the Petitioner no.1 that the proposal shall be put up before the Standing Committee as and when the same would be constituted. Since the Letter of Award pursuant to the declaration of Petitioner no.1 as ‘H-1’ bidder was not being issued, a writ petition, being W.P. (C) 9268/2024, was instituted by the Petitioner no.1 before this Court seeking a direction to the respondent/Corporation to award the contract notwithstanding non-availability of the Standing Committee. Since the validity of the bid was to expire on 15.07.2024, the respondent/Corporation requested the Petitioner no.1 to extend the bid validity by three months and further to extend the validity of the Bank Guarantee submitted by the Petitioner no.1 in lieu of earnest money deposited. On 18.07.2024, the Petitioner no.1 extended the bid validity up to 03.11.2024 and also extended the validity of EMD Bank Guarantee. The Commissioner, Toll Tax Department of the respondent/Corporation sent a letter to the Municipal Secretary on 19.08.2024, informing him that a proposal had been sent to the Government of National Capital Territory of Delhi [‘GNCTD’] and Urban Development Department for approval of the project or delegation of powers to approve in terms of the provisions contained in Section 202 of the Delhi Municipal Corporation Act, 1957. It appears that in a meeting of the respondent/Corporation held on 21.08.2024, the issue regarding the award of contract to the Petitioner no.1 was discussed, however, the said consideration was postponed. The respondent/Corporation, by means of its letter dated 22.08.2024, again requested the Petitioner no.1 to extend the Bank Guarantee furnished in lieu of the earnest money deposited by the Petitioner no.1. In response to the said letter dated 22.08.2024, the Petitioner no.1 extended the Bank Guarantee and submitted the same by means of its letter dated 28.08.2024.
12. Thereafter, a meeting of the respondent/Corporation was to be held on 25.09.2024 for consideration of certain agenda, including the agenda relating to the grant of Letter of Award to the Petitioner no.1. However, the said meeting was adjourned without transacting any business. On 05.10.2024, an agenda dated 05.10.2024 (Urgent Business No. 47) was circulated to the members of the House of MCD for considering the issue relating to the issuance of Letter of Award to the Petitioner no.1 and on 05.10.2024 itself the impugned decision was taken by the respondent/Corporation wherein, it was directed to explore how the revenue can be increased by bringing more competition within six months. The said decision taken by the House of the MCD was communicated to the Petitioner no.1 by means of a letter dated 05.11.2024, wherein the resolution passed by the respondent/Corporation is quoted, which is as under: –
“….. Explore the possibility of time gap arrangement by engaging the existing contractor on same terms & conditions of existing contract of new H-1 rate so that there is no revenue loss to MCD or any other time gap arrangement and parallelly explore how the revenue can be increased by bringing more competition within 6 months.

2. Accordingly, as per decision of House, the existing Toll & ECC contractor M/s Sahakar Global SDMC JV LLP was engaged for the subject work at a toll collection remittance @ Rs.16,61,88,827/- per week with other terms and conditions of the Contract Agreement dated 09.04.2021, as an interim measure for six months w.e.f. 09.10.2024 (6.00 AM) or till the engagement of new Contractor, whichever is earlier.

3. Further action as per the decision of the Corporation is being taken.”

13. By the said letter, it has been informed that the existing contractor, M/s. Sahakar Global SDMC JV LLP has been engaged at Toll Collection Remittance at the rate of Rs.16,61,88,827/- per week with other terms and conditions of the earlier contract agreement dated 09.04.2021as an interim measure for six months w.e.f. 09.10.2024 or till the engagement of a new contractor, whichever was earlier.
14. Petitioner no.1 has also been informed by the said letter dated 24.10.2024 that no further action was required in respect of the letter of the Petitioner dated 24.10.2024. The earnest money deposited by the Petitioner no.1 in the form of a Bank Guarantee was also released, and the Petitioner no.1 was informed that he may collect the same or it may be collected by his authorized representative on any working day from the Office of the Additional Deputy Commissioner (Toll Tax) of the respondent/Corporation.
15. We may notice that by the letter dated 24.10.2024, which has been referred to in the impugned letter dated 05.11.2024, wherein it has been stated that no further action was required in respect of the letter dated 24.10.2024, was written by the Petitioner no.1 to the Commissioner of the respondent/Corporation stating therein that since the validity of the bid submitted by the Petitioner no.1 pursuant to the subject NIT was coming to an end on 03.10.2024 and therefore, the Petitioner no.1 extended the validity of its bid for such further period till the process for award of the new contract to the Petitioner no.1 is completed. It is in response to the said letter dated 24.10.2024 that Petitioner no.1 was informed by the Additional Deputy Commissioner (Toll Tax) of the respondent/Corporation, vide his letter dated 05.11.2024, that no further action is required at the end of the Petitioner no.1. That is to say, the extension of validity of the bids submitted by the Petitioner no.1 was not accepted by the respondent/Corporation. As a result of the impugned decision, the tender floated vide NIT dated 07.02.2024 stands abandoned, and accordingly, the instant writ petition has been filed challenging the said decision as also the letter dated 05.11.2024 whereby the proposal to extend the validity of the bid by the Petitioner no. 1 has not been accepted and the Bank Guarantee has been released and the Petitioner no.1 has been required to collect the same. As observed above, apart from challenging the impugned decision and the letter dated 05.11.2024, it has also been prayed on behalf of the Petitioners that an appropriate direction be issued to the respondent/Corporation to issue the Letter of Award in favour of the Petitioner no.1, who is ‘H-1’ bidder in the tender process undertaken pursuant to the NIT dated 07.02.2024.
-: SUBMISSION ON BEHALF OF THE PETITIONERS:-

16. Mr. Neeraj Kishan Kaul, learned Senior Advocate representing the Petitioners has vehemently argued that the tender process in which the Petitioner no.1 was declared ‘H-1’ bidder has been cancelled by the impugned decision of the respondent/Corporation without following due process and giving an opportunity of hearing to the Petitioner no.1 and, as such, the same is not sustainable. Mr. Kaul has further argued that the reason indicated in the impugned decision is also not tenable as the subject tender was adequately publicised and due time was given to the interested parties. He has also argued that the Commissioner of the MCD had recommended on various occasions for issuance of a Letter of Award in favour of Petitioner no.1, however ignoring the said recommendation, the impugned decision has been taken which does not bear any justifiable reason or rationale, and therefore, the same is liable to be set aside.
17. Further argument on behalf of the Petitioners is that in the absence of any plausible and sustainable reason for cancelling the tender process in which the Petitioner no.1 was declared to be ‘H-1’, the sanctity of the tender process has been compromised, and the legitimate expectation of the Petitioners being treated fairly by the respondent/Corporation has been frustrated for the reason that arbitrary cancellation of the tender process violates such legitimate expectation of the Petitioners.
18. Mr. Kaul has also argued that the public tender process must ensure transparency, efficiency and fair treatment to the participating bidders and further that the mere possibility of more money in the public coffer cannot itself constitute public interest and accordingly, the impugned decision cannot be said to be serving any public interest and therefore, is liable to be set aside.
19. Mr. Kaul, drawing our attention to a Circular dated 29.10.2021 issued by the Ministry of Finance, Department of Expenditure, Government of India, which embodies the Procurement Policy, has argued that the practice of going for re-tender as a safe course of action does not appear to be correct for the reason that re-bidding entails costs in two ways; firstly, the actual costs of re-tendering and secondly, the delay in execution of the work with consequent delay in the attainment of the purpose for which procurement is being done. He has emphasised that as per the said procurement policy embodied in the Circular dated 29.10.2021 of the Government of India, lack of competition cannot be determined solely on the basis of number of bidders and that even when only one bid is submitted, the process should be considered to be valid, if the procurement was satisfactorily advertised, sufficient time was given for submission of bids, the qualification criteria were not unduly restrictive, and further that the prices are found to be reasonable in comparison to the market values.
20. On the aforesaid counts, it has been argued on behalf of the Petitioners that the impugned decision cancelling the tender process in which the Petitioner no.1 was declared to be ‘H-1’ is absolutely arbitrary and without any sustainable reason or material and hence is liable to be struck down.
-: SUBMISSION ON BEHALF OF THE RESPONDENT/CORPORATION:-

21. Per contra, learned Senior counsel representing respondent/Corporation, Mr. Sanjiv Sen has vehemently opposed the prayers made in the writ petition and has submitted that in terms of the tender document, the respondent/Corporation reserves the right to reject any/all applications/bids without any reasons. Referring to Note – 12 (on Page 145 of the Writ Petition) of the tender document, it has further been argued by learned Senior counsel for the respondent/Corporation that the Commissioner of the Corporation, on its behalf, reserves the right to accept or reject any or all the proposals or cancel the engagement without assigning any reason(s) whatsoever. It has also been argued on behalf of the respondent/Corporation that merely because the Petitioner no. 1 was declared to be ‘H-1’ bidder, no vested right can be said to have accrued in its favour for the issuance of Letter of Award or for an award of contract pursuant to the subject NIT dated 07.02.2024. It is also argued by the learned counsel representing the respondent/Corporation that no one has got any indefeasible right to do business with the Government.
22. Our attention has also been drawn to ‘Award Criteria’ as spelt out in the tender document (on Page 193 of the Writ Petition), Clause – 2, which provides that notwithstanding any clauses mentioned in the RFP, the MCD reserves the right to accept or reject any proposal offer and to anull or suspend the engagement process and reject all the proposals offers at any time prior to award of contract without any assurance for costs or consequences on the part of the applicants bidding firms as approved by the competent authority. Clause – 2 of the Award Criteria as provided for in the tender documents is quoted herein below:
“I. AWARD CRITERIA

1.0 …..

2.0 MCD Right To Reject: Not withstanding any clauses mentioned in the RFP, the MCD reserves the right to accept or reject any Proposal offer and to null or suspend the engagement process and reject all the proposals offers at any time prior to award of contract without any assurance for costs or consequences on the part of the Applicants bidding Firms as approved by the competent authority.”

23. Reliance in this regard has also been placed on behalf of the respondent/Corporation to Note (12) of the tender document, wherein it has been provided that the Commissioner of the MCD on behalf of the MCD reserves the right to accept or reject any or all the proposals or cancel the engagement process without assigning any reasons whatsoever. Note (12) (available at page 145 of the writ petition) is extracted below:
“12. MCD rights of rejection/acceptance: The Commissioner, MCD on behalf of MCD reserves the Right to accept or reject any or all the Proposals or cancel the engagement process without assigning any reason(s) whatsoever.”

24. We have also been taken to the resolution of the House of the respondent/Corporation wherein, the impugned decision was taken. The said resolution is extracted hereunder:
“Urgent Business No. 47
Subject: Regarding award of contract to H-I Bidder i.e. M/s Sahakar Global Ltd. JV for “Engagement of a contractor by MCD for Toll & Environment Compensation Charge (ECC) Collection at Border Points from specifiedcommercial vehicles entering Delhi” (NIT No.ADC/TT/HQ/MCD/2024/D-894 dated 7-2-2024).

Sh. Mukesh Kumar Goel moved and Sh. Parveen Kumar seconded the following motion:-

Resolution No.334 Resolved that proposal of the Commissioner as contained in his letter No. F.33/Toll Tax/MCD/136/C&C dated 19-8-2024, regarding award of contract to H-1 Bidder i.e. M/sSahakar Global Ltd.-JV for “Engagement of a contractor by MCD for Toll & Environment Compensation Charge (ECC) Collection at Border Points from specified commercial vehicles entering Delhi” (NIT No.ADC/TT/HQ/MCD/2024/D-894 dated 7-2-2024) is approved with the following amendment:-

Explore the possibility of time gap arrangement by engaging the existing contractor on same terms & conditions of existing contract at new HI rate so that there is no revenue loss to MCD or any other time gap arrangement and parallely explore how the revenue can be increased by bringing more competition within 6 months.

The motion was carried.”
25. It has been stated by the learned counsel representing the respondent/Corporation that as is apparent the resolution was passed by the House of the respondent/Corporation on the proposal of the Commissioner of the Corporation as contained in his letter dated 19.08.2024. He has also referred to the contents of the letter of the Commissioner dated 19.08.2024 and has submitted that though in the said proposal, the Commissioner had recommended that the approval may be accorded for entering into a contract with the ‘H-1’ bidder i.e. the Petitioner no.1 at the rate of Rs.864,18,18,999/- per annum (Rs.16,61,88,827/- per week) only for Toll collection with an enhancement of 5% after two years from the date of award of the contract with the condition to remit the weekly collection on actual basis to the Corporation. Further recommendation made in the said proposal was that on approval, the Commissioner of the Corporation or its authorized representative will enter into a contract with the Petitioner no.1 and manage the contract as per the contract agreement. The relevant extract of the said letter of the Commissioner dated 19.08.2024, which was considered by the House and impugned decision was taken, is extracted herein below:
“In view of the aforesaid extraordinary prevailing situation and facts of the case, it is proposed that as an immediate measure, approval may be accorded towards entering into contract with the H-1 bidder i.e. M/s. Sahakar Global Limited-JV for “Engagement of a Contractor by MCD for Toll & Environment Compensation Charge (ECC) collection at border points from Specified Commercial Vehicles entering Delhi’ as per RFP/NIT @Rs. 864,18,18,999/- per annum (Rs. 16,61,88,827/- per week) only for toll collection with the enhancement of 5% after two years from the date of Award of Contract and with the condition to remit the weekly ECC collection on actual basis to the MCD as per the RFP document. On approval the Commissioner, MCD or its authorized representative will enter into Contract with M/s. Sahakar Global Limited-JV and manage the contract as per contract agreement. The proposal is placed before the Corporation, in the form of Preamble under DMC Act, 1957 (as amended till date), as an item of Urgent Business. The matter will be ex post facto placed before the Standing Committee as done in the past.”
26. The submission of the learned counsel for the respondent/Corporation is that though Commissioner had proposed to the House for accepting the Petitioner’s bid pursuant to the subject NIT, however the House, in its wisdom, took a decision to explore the possibility of time gap arrangement by engaging the existing contractor on the same terms and conditions of the existing contract at new ‘H-1’ rate or any other time gap arrangement and further to parallelly explore how the revenue can be increased by bringing more competition within six months. It has been argued that the contents of the agenda which was considered by the House, which culminated into the impugned decision, was not binding on the House and the House, considering all the aspects, took a decision to find an appropriate time gap arrangement and also to explore how the revenue can be increased by bringing more competition. His submission is that, even if the contents of the letter written by the Commissioner dated 19.08.2024 is to be treated as a recommendation, the House was not bound by it, which in its wisdom has taken the impugned decision in public interest.
27. On instructions, learned counsel representing the respondent/Corporation has stated that a period of more than one year has elapsed from the date of issuance of subject NIT and therefore, the House of the respondent/Corporation has taken the impugned decision as a result of which public money/public revenue shall increase which is a valid consideration for cancelling the tender process. He has also stated, on instructions, that the tentative base price in the new tender shall be fixed as more than Rs.900 Crores and on market research the tender is expected to fetch more than Rs.1,000 Crores. Relying upon the judgment of Hon’ble Supreme Court in the case of Indore Vikas Praadhikaran (IDA) and Another v. Shri Humud Jain Samaj Trust and Another, AIR 2025 SC 322, it has been argued that in case the decision in such matters are to achieve public interest, the same cannot be said to be arbitrary or unreasonable. He has also placed reliance on another judgment of Hon’ble Supreme Court in the case of Laxmikant and Others v. Satyawan and Others, (1996) 4 SCC 208, wherein it has been held that State or its authorities or instrumentalities are not bound to accept the highest bid and further that the acceptance of the highest bid is subject to various conditions. It has also been stated on behalf of the respondent/Corporation that matter could not be considered by the Standing Committee on account of a pending litigation in that regard in the Hon’ble Supreme Court.
28. The submission made by the learned counsel representing the respondent/Corporation, thus, is that impugned decision taken by the House of the respondent/Corporation is in public interest, for valid reasons and therefore, the same cannot be termed to be mala fide or arbitrary so as to call for any interference by this Court in the instant writ petition.
-: ARGUMENTS IN REJOINDER ON BEHALF OF THE PETITIONERS :-

29. Refuting the submissions made by the learned counsel representing the respondent/Corporation, Mr. Kaul, learned Senior counsel representing the Petitioners has argued that one year period has elapsed only on account of the procrastination on the part of the respondent/Corporation for which the Petitioners are not responsible. He has further argued that, in fact, the Petitioner’s conduct has been unblemished.
30. Drawing our attention to the language used in the resolution passed by the House, which has culminated in the impugned decision, it has been stated by the learned Senior Counsel for the Petitioner, Mr. Kaul that the said resolution at one place states that the House has approved the recommendation made by the Commissioner of the respondent/Corporation, however, the resolution records further that the recommendation of the Commissioner is approved with the amendment. His submission is that it is this approval with the amendment to the proposal made by the Commissioner which has resulted in the impugned decision. He has further stated that the Petitioner no.1, ever since he was declared to be the highest bidder, has been legitimately expecting to be treated fairly by the respondents. However, such legitimate expectation of the Petitioner has been frustrated by the impugned decision. It is also stated by Mr. Kaul that the material being relied upon by the respondent to submit that more than Rs.900 Crores may be fetched if the re-tendering is resorted to, was not available with the House on the basis of which the impugned decision has been taken. It is his further submission that any decision in such matters cannot be on the ipse dixit of the House of the respondent/Corporation; rather, the decision has to be based on some material. He has reiterated his submission that in case the impugned decision of the respondent/Corporation is not set aside, the sanctity of the tender process shall be compromised.
31. In support of his submission, learned Senior counsel representing the Petitioners, Mr. Kaul has relied on the following judgments:
(i) Subodh Kumar Singh Rathour v. Chief Executive Officer& Ors.,[2024 SCC OnLine SC 1682];
(ii) Ramana Dayaram Shetty v. International Airport Authority of India & Ors.,[(1979) 3 SCC 489];
(iii) Vice Chairman & Managing Director, City & Industrial Development Corporation of Maharashtra Ltd. v. Shishir Realty Pvt. Ltd.,[(2022) 16 SCC 527];
(iv) M.P. Power Management Co. Ltd., Jabalpur v. Sky Power Southeast Solar India Pvt. Ltd.,[(2023) 2SCC 703];
(v) Nagar Nigam v. Al Farheem Meat Exporters Pvt. Ltd.,(2006) 13 SCC 382];
(vi) LIC v. Consumer Education & Research Centre,[(1995) 5 SCC 482];
(vii) Mahabir Auto Stores v. Indian Oil Corporation,[(1990) 3 SCC 752];
(viii) Sivanandan C.?. v. High Court of Kerala,[(2024) 3 SCC 799];
(ix) VasantkumarRadhakisan Vora v. Board of Trustees of Port of Bombay,[(1991) 1 SCC 761];
(x) Noble Resources Ltd. v. State of Orissa,[(2006) 10 SCC 236];
(xi) ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd.,[(2004) 3 SCC 553];
(xii) Kumari Shrilekha Vidyarthi & Ors. v. State of U.P. & Ors.,[(1991) 1 SCC 212];
(xiii) Banshidhar Construction Private Limited v. Bharat Cooking Coal Limited and Others,(2024) 10 Supreme Court Cases 273.
-: DISCUSSION &ANALYSIS :-
(i) Scope of Judicial Review of State Action in matters relating to Government Contracts/tenders
32. The Hon’ble Supreme Court, on reviewing and revisiting the past judgments, has elucidated and summed up the legal principles governing the scope of judicial review of the actions of the State in matters relating to contract/tender in aThreeJudge Bench Judgment in the case of Subodh Kumar Singh Rathour v. Chief Executive Officer and Others, (supra).
33. Elaborating the earlier decisions, concept of public law element, scope of judicial review in contractual matters and import of arbitrariness in State actions in contractual disputes, the Hon’ble Supreme Court in Subodh Kumar Singh Rathour(supra) has concluded finally that although disputes arising out of contracts are not amenable to writ jurisdiction, yet keeping in mind the obligation of the State to act fairly, it is well settled that when contractual power is being used for public purpose, it is certainly amenable to judicial review. The Hon’ble Supreme Court has further observed that wherever State action is found to be arbitrary, unfair or unreasonable, the State is under obligation to comply with the principles enshrined in Article 14 of the Constitution and hence even in contractual matters, where the State is a party to the contract, such action shall be amenable to writ jurisdiction.
34. The exception to judicial review of State action in such matters has also been carved out by Hon’ble Supreme Court in Subodh Kumar Singh Rathour, (supra), according to which certain aspects of the tender process such as matters concerning modalities of the contract, namely, the required work, execution methods, material quality, timeframe, supervision standards, and other aspects impacting the purpose of the tender are to be kept out of the purview of the judicial review and parties in such matters may be relegated to ordinary private law remedy. The conclusions in Subodh Kumar Singh Rathour, (supra) can be found in paragraphs 56 to 59 which are extracted herein below:
“56. What can be discerned from the above is that there has been a considerable shift in the scope of judicial review of the court when it comes to contractual disputes where one of the parties is the State or its instrumentalities. In view of the law laid down by this Court in >ABL (supra), Joshi Technologies (supra) and in M.P. Power (supra), it is difficult to accept the contention of the respondent that the writ petition filed by the appellant before the High Court was not maintainable and the relief prayed for was rightly declined by the High Court in exercise of its Writ jurisdiction. Where State action is challenged on the ground of being arbitrary, unfair or unreasonable, the State would be under an obligation to comply with the basic requirements of Article 14 of the Constitution and not act in an arbitrary, unfair and unreasonable manner. This is the constitutional limit of their authority. There is a jural postulate of good faith in business relations and undertakings which is given effect to by preventing arbitrary exercise of powers by the public functionaries in contractual matters with private individuals. With the rise of the Social Service State more and more public-private partnerships continue to emerge, which makes it all the more imperative for the courts to protect the sanctity of such relations.

57. It is needless to state that in matters concerning specific modalities of the contract — such as required work, execution methods, material quality, timeframe, supervision standards, and other aspects impacting the tender’s purpose — the court usually refrains from interference. State authorities, like private individuals, have a consensual element in contract formation. The stipulations or terms in the underlying contract purpose are part of the consensual aspect, which need not be entertained by the courts in writ jurisdiction and the parties may be relegated to ordinary private law remedy. Judicial review does not extend to fixing contract stipulations but ensures that the public authorities act within their authority to prevent arbitrariness.

58. Thus, the demarcation between a private law element and public law element in the context of contractual disputes if any, may be assessed by ascertaining whether the dispute or the controversy pertains to the consensual aspect of the contract or tender in question or not. Judicial review is permissible to prevent arbitrariness of public authorities and to ensure that they do not exceed or abuse their powers in contractual transactions and requires overseeing the administrative power of public authorities to award or cancel contracts or any of its stipulations.

59. Therefore, what can be culled out from the above is that although disputes arising purely out of contracts are not amenable to writ jurisdiction yet keeping in mind the obligation of the State to act fairly and not arbitrarily or capriciously, it is now well settled that when contractual power is being used for public purpose, it is certainly amenable to judicial review.”
35. As already observed above, Subodh Kumar Singh Rathour, (supra) discusses the past judgments on the issue and has quoted with approval, the judgment of the Apex Court in M.P. Power Management Co. Ltd, (supra) where the scope of judicial review by the Courts in contractual disputes concerning public authorities has been exhaustively discussed. M.P. Power Management Co. Ltd, (supra) finds mentioned in Subodh Kumar Singh Rathour, (supra) in paragraph 55 which is also extracted herein below:
“55. Thereafter, this Court in its decision in M.P. Power Management Co. Ltd., Jabalpur v. Sky Power Southeast Solar India Pvt. Ltd. reported in (2023) 2 SCC 703 exhaustively delineated the scope of judicial review of the courts in contractual disputes concerning public authorities. The aforesaid decision is in the following parts:—
[…](i) Scope of Judicial Review in matters pertaining to Contractual Disputes:—
This Court held that the earlier position of law that all rights against any action of the State in a non-statutory contract would be governed by the contract alone and thus not amenable to the writ jurisdiction of the courts is no longer a good law in view of the subsequent rulings. Although writ jurisdiction is a public law remedy, yet a relief would still lie under it if it is sought against an arbitrary action or inaction of the State, even if they arise from a non-statutory contract. The relevant observations read as under:—
“53. […] when the offending party is the State. In other words, the contention is that the law in this field has witnessed an evolution and, what is more, a revolution of sorts and a transformatory change with a growing realisation of the true ambit of Article 14 of the Constitution of India. The State, he points out, cannot play the Dr. Jekyll and Hyde game anymore. Its nature is cast in stone. Its character is inflexible. This is irrespective of the activity it indulges in. It will continue to be haunted by the mandate of Article 14 to act fairly. There has been a stunning expansion of the frontiers of the Court’s jurisdiction to strike at State action in matters arising out of contract, based, undoubtedly, on the facts of each case. It remains open to the Court to refuse to reject a case, involving State action, on the basis that the action is, per se, arbitrary.
i. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court.
ii. The principle laid down in Bareilly Development Authority (supra) that in the case of a non statutory contract the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, including Radhakrishna Agarwal (supra), may not continue to hold good, in the light of what has been laid down in ABL (supra) and as followed in the recent judgment in Sudhir Kumar Singh (supra).
iii. The mere fact that relief is sought under a contract which is not statutory, will not entitle the respondent-State in a case by itself to ward-off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is, per se, arbitrary.”
(Emphasis supplied)
(ii) Exercise of Writ Jurisdiction in disputes at the stage prior to the Award of Contract:—
An action under a writ will lie even at the stage prior to the award of a contract by the State wherever such award of contract is imbued with procedural impropriety, arbitrariness, favouritism or without any application of mind. In doing so, the courts may set-aside the decision which is found to be vitiated for the reasons stated above but cannot substitute the same with its own decision. The relevant observations read as under:—
iv. An action will lie, undoubtedly, when the State purports to award any largesse and, undoubtedly, this relates to the stage prior to the contract being entered into [See R.D. Shetty (supra)]. This scrutiny, no doubt, would be undertaken within the nature of the judicial review, which has been declared in the decision in Tata Cellular v. Union of India.”
(Emphasis supplied)
(iii) Exercise of Writ Jurisdiction after the Contract comes into Existence:—
This court held that even after the contract comes into existence an action may lie by way of a writ to either (I) obviate an arbitrary or unreasonable action on part of the State or (II) to call upon it to honour its obligations unless there is a serious or genuine dispute as regards the liability of the State from honouring such obligation. Existence of an alternative remedy or a disputed question of fact may be a ground to not entertain the parties in a writ as long as it is not being used as smokescreen to defeat genuine claims of public law remedy. The relevant observations read as under:—
“v. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a Writ Petition.
vi. Without intending to be exhaustive, it may include the relief of seeking payment of amounts due to the aggrieved party from the State. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dispute raised relating to the liability of the State to make the payment. Such dispute, ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence.
vii. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a Writ Petition in a contractual matter. Again, the question as to whether the Writ Petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the Petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the Writ Court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit.
viii. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a Writ Petition (See in this regard, the view of this Court even in ABL (supra) explaining how it distinguished the decision of this Court in State of U.P. v. Bridge & Roof Co., by its observations in paragraph-14 in ABL (supra)].
ix. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a Writ Petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant.
x. The reach of Article 14 enables a Writ Court to deal with arbitrary State action even after a contract is entered into by the State. A wide variety of circumstances can generate causes of action for invoking Article 14. The Court’s approach in dealing with the same, would be guided by, undoubtedly, the overwhelming need to obviate arbitrary State action, in cases where the Writ remedy provides an effective and fair means of preventing miscarriage of justice arising from palpably unreasonable action by the State.”
(Emphasis supplied)

(iv) Exercise of Writ Jurisdiction after Termination or Breach of the Contract:—
A relief by way of a writ under Article 226 of the Constitution will also lie against a termination or a breach of a contract, wherever such action is found to either be palpably unauthorized or arbitrary. Before turning away the parties to the remedy of civil suit, the courts must be mindful to see whether such termination or breach was within the contractual domain or whether the State was merely purporting to exercise powers under the contract for any ulterior motive. Any action of the State to cancel or terminate a contract which is beyond the terms agreed thereunder will be amenable to the writ jurisdiction to ascertain if such decision is imbued with arbitrariness or influenced by any extraneous considerations. The relevant observations read as under:—
xi. Termination of contract can again arise in a wide variety of situations. If for instance, a contract is terminated, by a person, who is demonstrated, without any need for any argument, to be the person, who is completely unauthorised to cancel the contract, there may not be any necessity to drive the party to the unnecessary ordeal of a prolix and avoidable round of litigation. The intervention by the High Court, in such a case, where there is no dispute to be resolved, would also be conducive in public interest, apart from ensuring the Fundamental Right of the Petitioner under Article 14 of the Constitution of India. When it comes to a challenge to the termination of a contract by the State, which is a non-statutory body, which is acting in purported exercise of the powers/rights under such a contract, it would be over simplifying a complex issue to lay down any inflexible Rule in favour of the Court turning away the Petitioner to alternate Fora. Ordinarily, the cases of termination of contract by the State, acting within its contractual domain, may not lend itself for appropriate redress by the Writ Court. This is, undoubtedly, so if the Court is duty-bound to arrive at findings, which involve untying knots, which are presented by disputed questions of facts. Undoubtedly, in view of ABL Limited (supra), if resolving the dispute, in a case of repudiation of a contract, involves only appreciating the true scope of documentary material in the light of pleadings, the Court may still grant relief to an applicant. We must enter a caveat. The Courts are today reeling under the weight of a docket explosion, which is truly alarming. If a case involves a large body of documents and the Court is called upon to enter upon findings of facts and involves merely the construction of the document, it may not be an unsound discretion to relegate the party to the alternate remedy. This is not to deprive the Court of its constitutional power as laid down in ABL (supra). It all depends upon the facts of each case as to whether, having regard to the scope of the dispute to be resolved, whether the Court will still entertain the petition.
xii. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate Forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to act fairly and to eschew arbitrariness in all its actions, resort to the constitutional remedy on the cause of action, that the action is arbitrary, is permissible (See in this regard Kumari Shrilekha Vidyarthi v. State of U.P.). However, it must be made clear that every case involving breach of contract by the State, cannot be dressed up and disguised as a case of arbitrary State action. While the concept of an arbitrary action or inaction cannot be cribbed or confined to any immutable mantra, and must be laid bare, with reference to the facts of each case, it cannot be a mere allegation of breach of contract that would suffice. What must be involved in the case must be action/inaction, which must be palpably unreasonable or absolutely irrational and bereft of any principle. An action, which is completely malafide, can hardly be described as a fair action and may, depending on the facts, amount to arbitrary action. The question must be posed and answered by the Court and all we intend to lay down is that there is a discretion available to the Court to grant relief in appropriate cases.”
(Emphasis supplied)
(v) Other relevant considerations for Exercise of Writ Jurisdiction:— Lastly, this Court held that the courts may entertain a contractual dispute under its writ jurisdiction where (I) there is any violation of natural justice or (II) where doing so would serve the public interest or (III) where though the facts are convoluted or disputed, but the courts have already undertaken an in-depth scrutiny of the same provided that the it was pursuant to a sound exercise of its writ jurisdiction. The relevant observations read as under:—
xiii. A lodestar, which may illumine the path of the Court, would be the dimension of public interest subserved by the Court interfering in the matter, rather than relegating the matter to the alternate Forum.
xiv. Another relevant criteria is, if the Court has entertained the matter, then, while it is not tabooed that the Court should not relegate the party at a later stage, ordinarily, it would be a germane consideration, which may persuade the Court to complete what it had started, provided it is otherwise a sound exercise of jurisdiction to decide the matter on merits in the Writ Petition itself.
xv. Violation of natural justice has been recognised as a ground signifying the presence of a public law element and can found a cause of action premised on breach of Article 14. [See Sudhir Kumar Singh (supra)].”
(Emphasis supplied)”
36. The facts discussed in Subodh Kumar Singh Rathour, (supra) were that pursuant to a tender process, the appellant therein had submitted its bid and his quotation was found to be the highest and was, accordingly, classified as ‘H-1’. On the appellant being found ‘H-1’, two letters of intent were issued in his favour, declaring his firm as the successful bidder for the tender and, thereafter, a formal memorandum of tender for work was also executed and issued to the appellant. Upon completion of the formalities, the work orders were also issued to the appellant in the said case, pursuant to which he had also commenced his work.However, the respondent in the said case issued a notice cancelling the tender for the work issued in favour of the appellant on account of certain alleged technical faults in the tender itself. It was stated in the notice cancelling the tender that the tender was found to be ‘non-specific’ and ‘not well defined’, and that had created ambiguity, resulting in financial losses to the respondent. It is this notice of cancellation which was initially challenged before the High Court of Calcutta by filing a writ petition, which, however, was dismissed by a learned Single Judge on certain grounds. The appellant challenged the judgment of the learned Single Judge before a Division Bench of Calcutta High Cout, which too was dismissed. It is these two judgments, the one rendered by the learned Single Judge and the other by the Division Bench of the High Court of Calcutta, which became the subject matter of challenge before the Hon’ble Supreme Court in Subodh Kumar Singh Rathour(supra). Thus, challenge to the cancellation of tender in Subodh Kumar Singh Rathour, (supra) was made in a fact situation where the tender was allotted pursuant to which the appellant therein was issued letters of intent and also work orders whereupon the appellant had commenced his work in terms of the contract.
37. The Hon’ble Supreme Court in Subodh Kumar Singh Rathour, (supra) further held, on review of previous judgments, that the decision to terminate a contract must be based on public interest duly supported by cogent materials and circumstances in order to ensure that State actions are fair, transparent and accountable. It was further held that public interest cannot be used as a pretext to arbitrarily terminate contracts and there has to be a clear and demonstrable ramification or detriment in public interest to justify any such act.
38. Subodh Kumar Singh Rathour(supra) further underscores the significance of the sanctity of public-private partnership tenders. The Apex Court has observed in the said judgment that the sanctity of public tenders lies in their role in upholding the principles of equal opportunity and fairness and further that the sanctity of contract is a fundamental principle that underpins the stability and predictability of legal and commercial relationships.Paragraphs 126 and 127 of the judgment in Subodh Kumar Singh Rathour, (supra) reads as under:
“126. The sanctity of public tenders lies in their role in upholding the principles of equal opportunity and fairness. Once a contract has come into existence through a valid tendering process, its termination must adhere strictly to the terms of the contract, with the executive powers to be exercised only in exceptional cases by the public authorities and that too in loathe. The courts are duty bound to zealously protect the sanctity of any tender that has been duly conducted and concluded by ensuring that the larger public interest of upholding bindingness of contracts are not sidelined by a capricious or arbitrary exercise of power by the State. It is the duty of the courts to interfere in contractual matters that have fallen prey to an arbitrary action of the authorities in the guise of technical faults, policy change or public interest etc.
127. The sanctity of contracts is a fundamental principle that underpins the stability and predictability of legal and commercial relationships. When public authorities enter into contracts, they create legitimate expectations that the State will honour its obligations. Arbitrary or unreasonable terminations undermine these expectations and erode the trust of private players from the public procurement processes and tenders. Once a contract is entered, there is a legitimate expectation, that the obligations arising from the contract will be honoured and that the rights arising from it will not be arbitrarily divested except for a breach or non-compliance of the terms agreed thereunder. In this regard we may make a reference to the decision of this Court in Sivanandan C.T. v. High Court of Kerala reported in (2024) 3 SCC 799 wherein it was held that a promise made by a public authority will give rise to a legitimate expectation that it will adhere to its assurances. The relevant portion reads as under:—
“18. The basis of the doctrine of legitimate expectation in public law is founded on the principles of fairness and non-arbitrariness in Government dealings with individuals. It recognises that a public authority’s promise or past conduct will give rise to a legitimate expectation. The doctrine is premised on the notion that public authorities, while performing their public duties, ought to honour their promises or past practices. The legitimacy of an expectation can be inferred if it is rooted in law, custom, or established procedure
xxx xxxxxx
45. The underlying basis for the application of the doctrine of legitimate expectation has expanded and evolved to include the principles of good administration. Since citizens repose their trust in the State, the actions and policies of the State give rise to legitimate expectations that the State will adhere to its assurance or past practice by acting in a consistent, transparent, and predictable manner. The principles of good administration require that the decisions of public authorities must withstand the test of consistency, transparency, and predictability to avoid being regarded as arbitrary and therefore violative of Article 14.”
(Emphasis supplied)”

39. The subject matter of discussion in Subodh Kumar Singh Rathour, (supra) was, thus, an arbitrary cancellation of contract, and it is in these circumstances that the Hon’ble Supreme Court has observed that cancellation of a contract deprives a person of his very valuable rights and is a very drastic step. It has further been observed that, therefore, public authorities should be circumspect in disturbing their contractual obligations through means beyond the terms of the contract in the exercise of their executive powers. The Hon’ble Supreme Court, however, in the same breath, also observes that it is not that the State has no power to alter or cancel a contract that it has entered, however, if the State deems it necessary to alter or cancel a contract on the grounds of public interest or change in policy, then such considerations must be bona-fide and should be earnestly reflected in the decision-making process and also in the final decision itself.Paragraph 129 of the judgment in Subodh Kumar Singh Rathour, (supra) is apposite to be referred to, which reads as under:
“129. We caution the public authorities to be circumspect in disturbing or wriggling out of its contractual obligations through means beyond the terms of the contract in exercise of their executive powers. We do not say for a moment that the State has no power to alter or cancel a contract that it has entered into. However, if the State deems it necessary to alter or cancel a contract on the ground of public interest or change in policy then such considerations must be bona-fide and should be earnestly reflected in the decision-making process and also in the final decision itself. We say so because otherwise, it would have a very chilling effect as participating and winning a tender would tend to be viewed as a situation worse than losing one at the threshold.”
40. Thus, Subodh Kumar Singh Rathour(supra) is a case where a contract pursuant to the tender process which was entered into, was cancelled at a stage pursuant to the contract work by the contractor that had already been commenced, whereas, in the instant case, no letter of award or work order has been issued. The contract, pursuant to the declaration of the Petitioner as ‘H-1’ in pursuance of the subject tender, has also not been constituted.
41. M.P. Power Management Co. Ltd, (supra) has been quoted with the approval in Subodh Kumar Singh Rathour(supra) wherein it has been held that an action under writ jurisdiction will lie even at the stage prior to award of contract by the State wherever such award of a contract is imbued with procedural impropriety, arbitrariness, favouritism or without any application of mind. 
42. In Subodh Kumar Singh Rathour, (supra) while arriving at the conclusions, the Hon’ble Supreme Court has referred to Ramana Dayaram Shetty(supra), apart from other earlier judgments.
43. In Vice Chairman& Managing Director, (supra), it has been held that in the matters of Government contracts public authorities are expected to ensure that no bias, favoritism or arbitrariness are shown during the bidding process and further that favoritism and good faith standards are to be observed in the contracts entered into by public authorities which connotes that such public authorities shall conduct themselves in a non-arbitrary manner even during the performance of their contractual obligations. It is also to be noticed that in Vice Chairman& Managing Director (supra), the facts as noticed by the Apex Court were that in the bidding process, a party was declared as the highest bidder and, accordingly, a lease deed was also executed in its favour by the appellant/ corporation. However, subsequently, the lease deed executed by the appellant/ corporation in the said case was cancelled, and it is the cancellation of the lease deed which became the subject matter of challenge before the High Court of Judicature at Bombay and the High Court in writ proceedings quashed the cancellation of the lease. An appeal was thus preferred by the appellant/ corporation against the said judgment of the Bombay High Court, and the Hon’ble Supreme Court found that the cancellation of the lease executed was not based on non-arbitrary reasons. Thus, it is also a case where,atthe conclusion of the bidding process, a lease deed was executed by the tendering authority in favour of the participating firm which had quoted the highest bid.
44. The judgment in M.P. Power Management Co. Ltd, (supra) has extensively been quoted by the Apex Court in Subodh Kumar Singh Rathour, (supra) which has been discussed above. The conclusions drawn in M.P. Power Management Co. Ltd, (supra) by the Apex Court can be found in paragraphs 82 to 82.15 of the said judgment, which are extracted herein below:-
“82. We may cull out our conclusions in regard to the points, which we have framed:
82.1. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court.
82.2. The principle laid down in Bareilly Development Authority [Bareilly Development Authority v. Ajai Pal Singh, (1989) 2 SCC 116] that in the case of a non-statutory contract the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, including Radhakrishna Agarwal [Radhakrishna Agarwal v. State of Bihar, (1977) 3 SCC 457] , may not continue to hold good, in the light of what has been laid down in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] and as followed in the recent judgment in Sudhir Kumar Singh [State of U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706 : 2020 SCC OnLine SC 847].
82.3. The mere fact that relief is sought under a contract which is not statutory, will not entitle the respondent State in a case by itself to ward off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is, per se, arbitrary.
82.4. An action will lie, undoubtedly, when the State purports to award any largesse and, undoubtedly, this relates to the stage prior to the contract being entered into (see Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] ). This scrutiny, no doubt, would be undertaken within the nature of the judicial review, which has been declared in the decision in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651].
82.5. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a writ petition.
82.6. Without intending to be exhaustive, it may include the relief of seeking payment of amounts due to the aggrieved party from the State. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dispute raised relating to the liability of the State to make the payment. Such dispute, ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence.
82.7. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ Petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the Petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the writ court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit.
82.8. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a writ petition [see in this regard, the view of this Court even in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] explaining how it distinguished the decision of this Court in State of U.P. v. Bridge & Roof Co. (India) Ltd. [State of U.P. v. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC 22] , by its observations in SCC para 14 in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] ].
82.9. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a writ petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant.
82.10. The reach of Article 14 enables a writ court to deal with arbitrary State action even after a contract is entered into by the State. A wide variety of circumstances can generate causes of action for invoking Article 14. The Court’s approach in dealing with the same, would be guided by, undoubtedly, the overwhelming need to obviate arbitrary State action, in cases where the writ remedy provides an effective and fair means of preventing miscarriage of justice arising from palpably unreasonable action by the State.
82.11. Termination of contract can again arise in a wide variety of situations. If for instance, a contract is terminated, by a person, who is demonstrated, without any need for any argument, to be the person, who is completely unauthorised to cancel the contract, there may not be any necessity to drive the party to the unnecessary ordeal of a prolix and avoidable round of litigation. The intervention by the High Court, in such a case, where there is no dispute to be resolved, would also be conducive in public interest, apart from ensuring the fundamental right of the Petitioner under Article 14 of the Constitution of India. When it comes to a challenge to the termination of a contract by the State, which is a non-statutory body, which is acting in purported exercise of the powers/rights under such a contract, it would be over simplifying a complex issue to lay down any inflexible rule in favour of the Court turning away the Petitioner to alternate fora. Ordinarily, the cases of termination of contract by the State, acting within its contractual domain, may not lend itself for appropriate redress by the writ court. This is, undoubtedly, so if the Court is duty-bound to arrive at findings, which involve untying knots, which are presented by disputed questions of facts. Undoubtedly, in view of ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] , if resolving the dispute, in a case of repudiation of a contract, involves only appreciating the true scope of documentary material in the light of pleadings, the Court may still grant relief to an applicant. We must enter a caveat. The Courts are today reeling under the weight of a docket explosion, which is truly alarming. If a case involves a large body of documents and the Court is called upon to enter upon findings of facts and involves merely the construction of the document, it may not be an unsound discretion to relegate the party to the alternate remedy. This is not to deprive the Court of its constitutional power as laid down in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553]. It all depends upon the facts of each case as to whether, having regard to the scope of the dispute to be resolved, whether the Court will still entertain the petition.
82.12. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to ac