Writ relief in tender disputes may lie where State action is arbitrary and contractual conduct is unfair.

A writ court may intervene in a contractual tender dispute where State action is alleged to be arbitrary or unfair, because Article 14 can justify relief even though courts do not ordinarily enforce contracts in writ jurisdiction. On the facts, the State's policy change, termination of the agency, and the appellant's continuing insistence on performance without resolving the permit issue supported judicial interference, so the refund-based reliefs were sustained. A government communication treating the appellant as an agent and directing further action did not create a basis for the appellant to insist on strict contractual performance after termination and its own prior concessions. The appeals were found meritless and the High Court's relief stood.

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Issues: (i) whether a writ court could grant relief arising out of a contractual tender arrangement where the State's conduct in refusing refund and insisting on performance was alleged to be arbitrary; (ii) whether the Government communication terminating the agency and directing further action created enforceable rights against the appellant in the circumstances of the case.

Issue (i): whether a writ court could grant relief arising out of a contractual tender arrangement where the State's conduct in refusing refund and insisting on performance was alleged to be arbitrary

Analysis: The relief sought arose from a tender-cum-auction transaction, but the Court found that the matter was not a pure contractual dispute in the ordinary sense. The State had changed the policy after the granite scam came to light, the agency arrangement was terminated, and the appellant's conduct in continuing to insist on payment without clearly resolving the permit issue was found to be unfair. The Court held that although courts do not ordinarily enforce a contract qua contract in writ jurisdiction, Article 14 permits interference where State action is arbitrary or discriminatory. On the facts, the appellant's stand and the surrounding circumstances justified judicial intervention.

Conclusion: The writ relief was maintainable and the challenge to the refund directions failed.

Issue (ii): whether the Government communication terminating the agency and directing further action created enforceable rights against the appellant in the circumstances of the case

Analysis: The Court treated the communication dated 16 January 1996 as a direction from principal to agent in the factual setting, and noted that the appellant was acting only as an agent of the State in disposing of confiscated granite blocks. Even though the communication did not operate as a statutory direction in the abstract, the appellant had itself proceeded on the basis of that communication and had made concessions in the earlier round of litigation. The Court held that the appellant could not insist on further contractual performance while the permit situation remained unresolved and the agency had been terminated.

Conclusion: The appellant could not avoid the consequences of the Government's decision and its own earlier stand.

Final Conclusion: The appeals were without merit and the refund-based reliefs granted by the High Court were allowed to stand, with costs.

Ratio Decidendi: A writ court may grant relief in a contractual matter where State action is arbitrary or unfair, and a party acting as an agent of the State cannot insist on strict contractual performance while disregarding the State's operative policy decision and its own prior concession.

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