APHC010549542023

IN THE HIGH COURT OF

ANDHRA PRADESH

AT AMARAVATI

WRIT APPEAL NO: 1060/2023

Bench

Sr.No:-___

[3446]

M/s.srinivasulu Reddy And Co, ...APPELLANT

Vs.

The State Of Andhra Pradesh and Others ...RESPONDENT(S)

**********

M.V.PRATAP KUMAR, Advocate representing vice AISHWARYA

NAGULA, Advocate(s) for Appellant(s)

GP FOR ROADS & BUILDINGS, Advocate(s) for Respondent(s)

CORAM : THE CHIEF JUSTICE DHIRAJ SINGH THAKUR

SRI JUSTICE R RAGHUNANDAN RAO

DATE : 04.04.2024

Per DHIRAJ SINGH THAKUR, CJ :

The present appeal under Clause 15 of the Letters Patent has

been preferred against the judgment and order dated 01.03.2023

passed in W.P.No.41906 of 2018 whereby the petition filed by the

petitioner has been dismissed.

2. It is pertinent to mention briefly the material facts in the light

of which the present controversy has arisen:

The petitioner was allotted the contract for construction of a

court complex at Kurnool on 05.05.2012 and an agreement came to

be executed between the petitioner and the Superintending

Engineer, R & B Circle, Kurnool, on 23.11.2012. According to

Clause 46 of the contract so entered between the parties, price

adjustment was envisaged for both increase and decrease in the

prices for the works completed within the original agreement

period. Clause 46.2 & 46.4 are relevant and are reproduced

hereunder:

“46.2 – Price adjustment shall be both for increase

and decrease in the prices for the works completed within

the original agreement period.

46.4 – The variation clause will be when the

variation in rates is more or less than 5% of the rate

provided in the technical sanctioned estimate based on

which bids are invited or all India wholesale price Index of

the respect item.”

3. The agreement among others also envisaged resolution of

disputes through arbitration in terms of Clause 23 of the said

contract only if the amount in dispute was less than Rs.50,000/-.

For facility of reference, Clause 23 of the said contract is

reproduced hereunder:

“23. Settlement of disputes:

……..

Settlement of Claims for Rs.50,000/- and below by

Arbitration:

All disputes or difference arising of or relating to

the Contract shall be referred to the adjudication as

follows:

a) Claims up to a value of Rs.10,000 /- -

Superintending Engineer, (R&B), Kadapa.

b) Claims above Rs.10,000/ - and up to

Rs.50,000/- - Engineer-in-Chief, (R&B), Admn

& N.H, Hyderabad

The arbitration shall be conducted in accordance

with the provisions of Indian Arbitration and

Conciliation Act, 1996, or any statutory modification

thereof.”

4. According to the stand taken by the petitioner, the

Government of Andhra Pradesh issued a G.O. Ms.No.23, dated

11.02.2014 with regard to the treatment of price adjustment in

contracts pertaining to Transport, Roads and Buildings. According

to which, the price variation over and above 5% was to be applied

whether there was an increase or decrease in the price. According

to the said G.O., recovery was to be made from the contract beyond

5%. In other words, if there was a variation in the rate to an extent

of 9%, the amount that would be payable to the contractor would be

4% i.e. 9% - 5% since the contractor would have factors into his

original bid, such an increase up to 5%. Similarly if the price is

decreased by 9%, the contractor would be permitted to retain 5%

and what would be deducted is 4%.

5. Subsequently, another G.O.Ms.No.67, dated 27.11.2015 was

issued reiterating that the price variation clause would apply to

both increase and decrease wherever the variation was more than

5%. It is stated that a supplemental agreement was executed on

27.06.2016, which in effect took away the benefit of price

adjustment in the event of decrease in the cost as was otherwise

envisaged under G.O.Ms.Nos.23 & 67. It is stated that the

supplemental agreement was executed by the petitioner on account

of “financial problems and due to the urgency in settling payments

to the workers and the suppliers”. Additionally, it is stated that the

supplemental agreement was executed by the petitioner, as it was

always under the impression that the benefit of price adjustment as

reflected in the G.O.’s would be implemented.

6. After the execution of the supplemental agreement, the

petitioner addressed two communications, one, dated 20.07.2016,

to the Superintending Engineer, R&B Circle, Kurnool, and the other

dated 17.08.2016 to the Engineer -in-Chief (R&B), Buildings,

Hyderabad (A.P.), seeking the benefit of price adjustment in the

case of decrease in prices. In response of the aforementioned

communications, the Superintending Engineer vide the letter,

dated 29.08.2016, addressed to the petitioner that the benefit of

price adjustment on decrease of prices could not be given to the

petitioner inasmuch as the petitioner had executed the

supplemental agreement without any protest. It was also stated in

the said communication that report had also been submitted in that

regard to the Chief Engineer and action would be taken thereupon.

The Chief Engineer finally vide the communication, dated

22.12.2016, directed the Superintending Engineer to follow the

guidelines issued by the Government from time to time in regard to

the price adjustment for building works. Much after the aforesaid

communication, for the first time, the petitioner addressed a

communication, dated 15.11.2017, to the Superintending Engineer

explaining the circumstances in which the supplemental agreement

came to be executed. For facility of reference, the relevant portion

of the letter is reproduced herein below:

“We wish to submit that in spite of GO’s and

instructions of the Engineer-in-Chief regarding the price

adjustment calculations methods for the above work,

this office had worked out in wrong method by which we

are incurred huge loss.

As we were held up with huge amounts in the final

bill, and due to repeated pressures from the workers and

material suppliers to clear their dues, there was no

alternative for us at the time to clear the dues of the

above except to sign on the supplemental agreement for

the price adjustment which was done wrong method.

Further, we submit that however, we protested for

the final bill in the measurement book by writing “under

protest for the price adjustment is not done properly”.

Hence, we request once again that the price

adjustment calculations may please be done as per GO’s

and the instructions of the Engineer-in-Chief (R&B), as

per the memo order No.DEE.1/AE -2/CTS/17722/2009,

dt:22-12-2015 by the Engineer-in-Chief (R&B).”

7. It is not however denied by either of the parties that the

amount reflected in the final bill, dated 16.08.2016, was received

under protest by the petitioner on 17.09.2016.

8. It is in the background of the aforementioned facts that

the petitioner approached the learned Single Judge seeking writ of

mandamus for enforcem ent of the price adjustment clause as

contained in the contract, dated 29.11.2012, as also G.O. Nos. 23 of

2014 and 67 of 2015 with a further direction in the nature of

mandamus to recalculate the price adjustment amount in

connection with the said contract and to pay the differential

amount to the petitioner. The learned single Judge, by virtue of the

judgment and order impugned, observed that the differential

amount claimed by the petitioner cannot be ordered by the writ

Court and that the petitioner had accepted the final bill issued by

the Executive Engineer on 17.09.2016 and further that the

petitioner had filed the writ petition in the year 2018 when the final

bill was prepared in the year 2016 and therefore, the writ petition

was filed ‘beyond the period of limitation for claiming the

differential amount’ and dismissed the petition in the light of the

fact that there was a dispute resolution clause which envisaged that

claims above Rs.50,000/- would be settled by a Civil Court of

competent jurisdiction by way of a civil suit and not by arbitration

and in that view of the matter, directed the petitioner to approach

the competent Civil Court for redressal of his grievances. For

facility of reference, what the learned single Judge held in the

impugned judgment and order is reproduced hereunder:

“7.On a perusal of the material placed on record, the relief

sought for by the petitioner is to direct the respondent Nos. 2 and

3 to recalculate the price adjustment amount in connection with

the said contract dated 23.11.2012 and to pay the differential

amount to the petitioner, which in fact cannot be ordered by this

Court and on the other hand, the petitioner has also accepted the

final bill issued by the Executive Engineer, Roads and Buildings

Division, Kurnool on 17.09.2016, and thereafter, he approached

this Court in the year 2018 which is admittedly beyond the

period of limitation for claiming the said differential amount.

8. In view of the same, the redressal of the grievance of the

petitioner is not here, but elsewhere. Therefore, this Court feels it

appropriate to direct the petitioner to approach the competent

Civil Court for payment of said differential amount.”

Hence, the present writ appeal.

9. Learned counsel for the appellant would submit that only

because there was a dispute resolution clause as per the agreement

envisaged settlement of disputes by way of a civil action before the

Civil Court would not take away the right of the petitioner to

approach the High Court seeking exercise of jurisdiction under

Article 226 of the Constitution of India inasmuch as the action of

the respondent - State was totally arbitrary and contrary to the

terms and conditions as envisaged in the agreement, dated

23.11.2012, as also was contrary to the G.O.Nos.23 and 67 of 2014.

10. Reliance was placed upon the Apex Court judgments in the

cases of ABL International Limited and another Vs. Export Credit

Guarantee Corporation of India Limited and others

1; R L Kalathia

and Company Vs. State of Gujarat

2; and M.P. Power Management

1

(2004) 3 SCC 553

2

(2011) 2 SCC 400

Company Limited Vs. M/s. Sky Power South Ea st Solar India

Private Limited and Others

3.

11. Learned counsel for the respondents on the other hand

questioned the very maintainability of the writ petition under

Article 226 of the Constitution of India in a contractual matter

which is non-statutory in character and did not possess any public

law character. Even otherwise, it was stated that assuming that the

contract in question was held to be one having such a statutory

character and public law character, yet there was no arbitrariness

in the action of the official respondents in not giving the benefit of

price adjustment on the decrease of the prices in view of the fact

that the petitioner had executed the supplemental agreement,

dated 27.06.2016. It was urged that the petitioner had executed

the supplemental agreement and accepted the price adjustment

calculation on 29.06.2016 on the following basis:

* When variation is more than +5%, say +6%, price

adjustment computed for 1% (6% - 5%)

* When variation is -6%, recovery computed for 6%,

which is advantageous to the Government.

* When variation is within +/-5%, no recovery was

made.

3

(2023) 2 SCC 703

12. It was also stated that the G.O.No.23, dated 11.02.2014, was

issued by the Panchayat Raj & Rural Development of the

Government of Andhra Pradesh, which related to the road works

related to the Panchayat Raj only and not for all the Engineering

Departments especially the current contract which related to the

Roads and Building Department and hence it is stated that the said

G.O. was not followed. It is however stated that the supplemental

agreement having been executed by the petitioner without any

murmur, the petitioner cannot be permitted to go back on the same

and claim that the price adjustment as envisaged under G.O.No.67

r/w Clause 46 of the agreement ought to have been granted to the

petitioner.

13. Heard learned counsel for the parties.

Maintainability of the writ petition under Article 226 of the

Constitution of India:

14. The issue of maintainability of a petition under Article 226 of

the Constitution of India in contractual matters where the State is a

party, has been a subject under consideration by Courts from time

to time. One of the earlier cases in this regard where the issue was

considered was in the case of Radhakrishna Agarwal v. State of

Bihar

4 wherein the Apex Court held as under:

“10. It is thus clear that the Erusian Equipment &

Chemicals Ltd.'s case (supra) involved discrimination at the very

threshold or at the time of entry into the field of consideration of

persons. with whom the Government could contract at all. At this

stage, no doubt, the State acts purely in its executive capacity

and is bound by the obligations which dealings of the State with

the individual citizens import into every transaction entered into

in exercise of its constitutional powers. But, after 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. No question arises of violation

of Article 14 or of any other constitutional provision when the

State of 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.”

15. However, in Kumari Shrilekha Vidyarthi v. State of UP

5, the

Apex Court expanded the scope of applicability of Article 14 beyond

the threshold stage of making a contract and held that even after

entering into the contract, Article 14 required the State to adhere

to the requirements of Article 14. It was held as under:

“20 ……………… Applicability of Article 14 to all executive

actions of the State being settled and for the same reason its

4

(1977) 3 SCC 457

5

(1991) 1 SCC 212

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 Article 14 and

contractual obligations are alien concepts. which cannot co-exist.

21. The Preamble of the Constitution of India resolves to

secure to all its citizens Justice, social, economic and political;

and equality of status and opportunity. Every State action must

be aimed at achieving this goal. Part IV of the Constitution

contains ‘Directives Principles of State Policy which are

fundamental in the governance of the country and are aimed at

securing social and economic freedoms by appropriate State

action which is complementary to individual fundamental rights

guaranteed in Part III for protection against excesses of State

action to realise the vision in the Preamble. This being the

philosophy of the Constitution, can it be said that it contemplates

exclusion of Article 14-non-arbitrariness which is basic to rule of

law from State actions in contractual field when all actions of the

State are meant for public good and expected to be fair and just?

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 it s

instrumentality. It is a different matter that the scope of judicial

review in respect of disputes failing 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

fails 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.”

16. Subsequently, in Verigamto Naveen v. Govt. of A.P.

6, it was

held as under:

“21……. In cases where the decision making authority

exceeded its statutory power or committed breach of rules or

principles of natural justice in exercise of such power or its decision

is perverse or passed an irrational order, this Court has interceded

even after the contract was entered into between the parties and

the Government and its agencies. We may advert to three decisions

of this Court in Dwarkadas Marfatia & Sons v. Board of Trustees of

the Port of Bombay; Mahabir Auto Stores v. Indian Oil Corporation;

and Srilekha Vidyarthi v. State of U.P. Where the breach of contract

involves breach of statutory obligation when the order complained

of was made in exercise of statutory power by a statutory authority,

though cause of action arises out of or pertains to contract, brings

within the sphere of public law because the power exercised is apart

from contract.”

In Praga Tools Corporation v. Shri C.A. Imanual

7, it had been

held that if the challenged action did not have any public element,

writ of mandamus could not be issued as the action would

essentially be of a private character.

17. The issue was also considered at length in ABL International

Limited v. Export Credit Guarantee Corporation of India

Limited

8, and after noticing the various judgments on the point,

the following legal principles were crystallized regarding

maintainability of the writ petition:—

6

(2001) 8 SCC 344

7

1969 1 SCC 585 = 1969 AIR SC 1306

8

(2004) 3 SCC 553

a. In an appropriate case, a writ petition as against the

State or an instrumentality of the State arising out of the

contractual obligations is maintainable.

b. Merely because some disputed questions of fact

arise for consideration, same cannot be a ground to refuse to

entertain a writ petition in all cases, as a matter of rule.

c. A writ petition involving the consequential benefit

of monetary claims is also maintainable.

The Court further proceeded to hold that in entertaining the

writs under Article 226, the Court has the discretion to entertain

or not to entertain the petition and with reference to Whirlpool

Corporation v. Registrar of Trade Marks, Mumbai

9, it was held

that the Court has imposed upon itself certain restrictions in the

exercise of this power. It was further held that the prerogative

writ will not normally be exercised by the Court to the exclusion

of other available remedies unless such action of the State or its

instrumentality is arbitrary and unreasonable so as to violate the

constitutional mandate of Article 14 or for other valid and

legitimate reasons, for which the Court thinks it necessary to

exercise the writ jurisdiction.

9

(1998) 8 SCC 1

18. In “Joshi Technologies International Inc. v. Union of

India”

10 , the Apex Court on a detailed conspectus of the ratio of

the judgments rendered from the said Court from time to time

crystallized the legal position in regard to exercise of writ

jurisdiction in paragraph Nos. 68 & 69. It was held thus:—

“68. The position thus summarized in the aforesaid

principles has to be understood in the context of discussion

that preceded which we have pointed out above. As per this,

no doubt, there is no absolute bar to the maintainability of

the writ petition even in contractual matters or where there

are disputed questions of fact or even when monetary claim

is raised. At the same time, discretion lies with the High

Court which under certain circumstances, can refuse to

exercise. It also follows that under the foll owing

circumstances, ‘normally’, the Court would not exercise

such a discretion:

(a) the Court may not examine the issue unless the action has

some public law character attached to it.

(b) Whenever a particular mode of settlement of dispute is

provided in the contract, the High Court would refuse to

exercise its discretion under Article 226 of the Constitution

and relegate the party to the said made of settlement,

particularly when settlement of disputes is to be resorted to

through the means of arbitration.

(c) If there are very serious disputed questions of fact which are

of complex nature and require oral evidence for their

determination.

10

(2015) 7 SCC 728

(d) Money claims per se particularly arising out of contractual

obligations are normally not to be entertained except in

exceptional circumstances.

69. Further legal position which emerges from various

judgments of this Court dealing with different

situations/aspects relating to the contracts entered into by

the State/public Authority with private parties, can be

summarized as under:

(i) At the stage of entering into a contract, the State acts purely

in its executive capacity and is bound by the obligations of

fairness.

(ii) State in its executive capacity, even in the contractual field,

is under obligation to act fairly and cannot practice some

discriminations.

(iii) Even in cases where question is of choice or consideration of

competing claims before entering into the field of contract,

facts have to be investigated and found before the question

of a violation of Article 14 could arise. If those facts are

disputed and require assessment of evidence the

correctness of which can only be tested satisfactorily by

taking detailed evidence, Involving examination and cross-

examination of witnesses, the case could not be

conveniently or satisfactorily decided in proceedings under

Article 226 of the Constitution. In such cases court can

direct the aggrieved party to resort to alternate remedy of

civil suit etc.

(iv) Writ jurisdiction of High Court under Article 226 was not

intended to facilitate avoidance of obligation voluntarily

incurred.

(v) Writ petition was not maintainable to avoid contractual

obligation. Occurrence of commercial difficulty,

inconvenience or hardship in performance of the conditions

agreed to in the contract can provide no justification in not

complying with the terms of contract which the parties had

accepted with open eyes. It cannot ever be that a licensee

can work out the license if he finds it profitable to do so : and

he can challenge the conditions under which he agreed to

take the license, if he finds it commercially inexpedient to

conduct his business.

(vi) Ordinarily, where a breach of contract is complained of, the

party complaining of such breach may sue for specific

performance of the contract, if contract is capable of being

specifically performed. Otherwise, the party may sue for

damages.

(vii) Writ can be issued where there is executive action

unsupported by law or even in respect of a corporation there

is denial of equality before law or equal protection of law or

if can be shown that action of the public authorities was

without giving any hearing and violation of principles of

natural justice after holding that action could not have been

taken without observing principles of natural justice.

(viii) If the contract between private party and the

State/instrumentality and/or agency of State is under the

realm of a private law and there is no element of public law,

the normal course for the aggrieved party, is to invoke the

remedies provided under ordinary civil law rather than

approaching the High Court under Article 226 of the

Constitutional of India and invoking its extraordinary

jurisdiction.

(ix) The distinction between public law and private law element

in the contract with State is getting blurred. However, it has

not been totally obliterated and where the matter falls

purely in private field of contract. This Court has

maintained the position that writ petition is not

maintainable. Dichotomy between public law and private

law, rights and remedies would depend on the factual

matrix of each case and the distinction between public law

remedies and private law, field cannot be demarcated with

precision. In fact, each case has to be examined, on its facts

whether the contractual relations between the parties bear

insignia of public element. Once on the facts of a particular

case it is found that nature of the activity or controversy

involves public law element, then the matter can be

examined by the High Court in writ petitions under Article

226 of the Constitution of India to see whether action of the

State and/or instrumentality or agency of the State is fair,

just and equitable or that relevant factors are taken into

consideration and irrelevant factors have not gone into the

decision making process or that the decision is not

arbitrary.

(x) Mere reasonable or legitimate expectation of a citizen, in

such a situation, may not by itself be a distinct enforceable

right, but failure to consider and give due weight to it may

render the decision arbitrary, and this is how the

requirements of due consideration of a legitimate

expectation forms part of the principle of non-arbitrariness.

(xi) 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.”

19. In K.K. Saksena v. International Commission on

Irrigation & Drainage

11, the Court held that even when a body

was performing a public duty and was amenable to writ

jurisdiction, its decisions would not be subject to judicial

review except those which had a public law element therein.

11

(2015) 4 SCC 670

While elucidating as to what constituted a public function

amenable to judicial review, reliance was placed upon R.

(Hopley) v. Liverpool Health Authority

12 and held:

“50. ...In R. (Hopley) v. Liverpool Health

Authority [2002 EWHC 1723 (Admin) : 2002 Lloyd's Med

Rep 494] (unreported)(30 -7-2002), Justice Pitchford

helpfully set out three things that had to be identified when

considering whether a public body with statutory powers

was exercising a public function amenable to judicial review

or a private function. They are : (i) whether the defendant

was a public body exercising statutory powers; (ii) whether

the function being performed in the exercise of those powers

was a public or a private one; and (iii) whether the

defendant was performing a public duty owed to the

claimant in the particular circu mstances under

consideration.”

20. In a recent judgment, the Apex Court in M.P. Power

Management Company Limited, Jabalpur v. Sky Power Southeast

Solar India Private Limited and Others

13 on a conspectus of the law

as it developed starting from the case of Radhakrishna

Agarwal (supra) held that the principle of law laid down in

Radhakrishna Agarwal (supra) would not hold good in view of the

law laid down in ABL International Limited v. Export Credit

Guarantee Corporation of India Limited

14 and further held that

even if a contract was non-statutory in character, it would not

12

[2002 EWHC 1723 (Admin) : 2002 Lloyd's Med Rep 494] (unreported)(30-7-2002)

13

(2023) 2 SCC 703

14

(2004) 3 SCC 553

entitle the State to ward off scrutiny of its action or inaction under

the contract if it was established that such action or inaction, per

se, was arbitrary and further held that Article 14 enabled the writ

Court to deal with arbitrary action even after contract was entered

into by the State.

The Supreme Court in the aforementioned judgment while

holding that existence of an arbitration provision would be viewed

as a near bar to the entertainment of a writ petition and existence

of an alternate remedy was to be borne in mind in declining relief

in a writ petition in a contractual matter, yet there was no

prohibition in the writ Court in deciding even disputed questions of

fact particularly when the dispute pertained only to demystifying

of documents. It was further held as under:

“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 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 Shrilekha Vidyarthi v. State

of U.P. [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC

212 : 1991 SCC (L&S) 742] ). 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 mala fide, 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.”

21. Reference to the aforementioned judgments would thus make

it clear that even in non-statutory contracts wherever there is

arbitrariness by the State, being one of the contracting parties,

judicial review is permissible under Article 226 of the Constitution

of India. In that view of the matter, the objection in regard to

maintainability of the petition in regard to a non -statutory

concluded contract is unsustainable. However, a connected

question that requires to be dealt with is whether this is a fit case

where the petitioner ought to have been relegated to the remedy of

a civil suit as has been ordered by the learned single Judge in the

judgment and order impugned. In our opinion, the issue raised by

the petitioner in the writ petition was not such as would consume

much time in demystifying the issues and the documents relied

upon by the petitioner with a view to support and buttress its claim

regarding the price adjustment in reference to the agreement

executed between the Government and the petitioner and

therefore, we now proceed to deal with the issue with regard to the

respective stands of the parties.

22. Admittedly, as per the agreement executed between the

petitioner and the respondents, it was agreed that price adjustment

would be both for increase and decrease in the prices for the works

completed. G.O.23, dated 11.02.2014, although issued by the

Panchayat Raj Department of the Government of Andhra Pradesh

did envisage such a similar price adjustment which was applicable

both for increase and decrease in the prices for the works

completed. In any case, G.O.No.67 was issued by the Transport,

Roads and Buildings Department of the Government of Andhra

Pradesh, which envisaged a similar provision as was contained in

the agreement with regard to price adjustment. Notwithstanding

the agreed terms and conditions with regard to price adjustment in

the agreement, dated 23.11.2012, so executed between the parties

and notwithstanding the G.O.67, dated 27.11.2015, it is not denied

that the petitioner did execute a supplemental agreement with the

Government and agreed to accept the amounts, which were based

upon calculations giving effect to the price adjustment clause to the

extent of 5% only in the case of increase of rates and not in a case

where the rates stood decreased from the agreed rates. Therefore,

the petitioner even when had a right to claim in terms of the

agreement executed between the parties had a right to enforce the

price adjustment clause, the condition as regards price adjustment

as it appears in Clause 46 of the agreement and reiterated in

G.O.Nos.23 of 2014 and 67 of 2015, yet must be deemed to have

waived his right to the limited extent of the supplemental

agreement.

23. It is not the case of the petitioner that the supplemental

agreement was executed under any undue coercion or duress as the

communications on record do not suggest so. It needs to be noted

that the petitioner in the writ petition has not made any murmur

about the supplemental agreement having been executed under any

fraud, coercion or undue influence.

24. On the other hand, the averment made in the writ petition by

the petitioner is that supplemental agreement was executed by the

petitioner due to financial problems and due to urgency in settling

payments to the workers and suppliers.

25. It is not out of place to mention that two communications,

both dated 20.07.2016 and 17.08.2016, addressed by the

petitioner to the Superintending Engineer and the Engineer -in-

Chief of R & B Circle only prayed for the price adjustment beyond

5% of the decrease in the rates and did not in the least mention that

the supplemental agreement was executed under any fraud,

coercion or undue influence by the respondents. In the absence of

such an averment and in the absence of such material on record,

the official respondents based upon the supplemental agreement

were justified in refusing any differential payment as claimed by

the petitioner and to that extent, in our opinion, it cannot be said

that there has been any arbitrariness on the part of the official

respondents in that regard, which would justify the exercise of

extraordinary jurisdiction of this Court under Article 226 to issue a

mandamus to make such a payment.

26. In R.N.Gosain Vs. YashpalDhir

15, the Court held:

“Law does not permit a person to both approbate and

reprobate. This principle is based on the doctrine of election which

postulates that no party can accept and reject the same instrument

and that “a person cannot say at one time that a transaction is valid

and thereby obtain some advantage, to which he could only be

entitled on the footing that it is valid, and then turn around and say

it is void for purposes of securing some other advantage.”

27. The petitioner having entered into supplemental agreement

and having agreed to receive a particular amount based upon the

calculation reflected in the supplemental agreement cannot be

15

(1992) 4 SCC 683

permitted to take a somersault and claim an amount which was

otherwise not reflected in the supplemental agreement as payable

to the petitioner. Unless and until the petitioner succeeded in

establishing that the supplemental agreement was executed under

fraud, coercion or undue influence, which in the present case the

petitioner has failed to establish, it will not help the petitioner to

succeed in the present case on the ground that the supplemental

agreement was executed on account of financial compulsion,

commercial pressure or economic duress. Reference in this regard

can also be made to the Apex Court judgment in the case of National

Insurance Company Limited Vs. M/s. Boghara Polyfab Pvt. Ltd.

16,

which held as follows:

“52 (v). A claimant makes a claim for a huge sum,

by way of damages. The respondent disputes the claim.

The claimant who is keen to have a settlement and avoid

litigation, voluntarily reduces the claim and requests for

settlement. The respondent agrees and settles the claim

and obtains a full and final discharge voucher. Here even

if the claimant might have agreed for settlement due to

financial compulsions and commercial pressure or

economic duress, the decision was his free choice. There

was no threat, coercion or compulsion by the

respondent. Therefore, the accord and satisfaction is

16

(2009) 1 SCC 267

binding and valid and there cannot be any subsequent

claim or reference to arbitration.”

28. It is settled law in the case of Bishundeo Narain and Another

Vs. Seogeni Rai and Jagernath

17 that general allegations of fraud,

coercion or undue influence, in howsoever strong language they

may couch in are insufficient without a party putting forth full

particulars in that regard before the Court. Not only should there be

a specific averment in the pleadings but there must also be

sufficient material to buttress the allegations in that regard.

29. Be that as it may, we find no merit in the present appeal which

is accordingly dismissed. No costs.

Consequently, connected miscellaneous petitions, if any, shall

stand closed.

DHIRAJ SINGH THAKUR, CJ

R RAGHUNANDAN RAO, J

kbs/akn

17

AIR 1951 SC 280

_____

HON’BLE MR. JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE

&

HON’BLE MR. JUSTICE R.RAGHUNANDAN RAO

W.A. No.1060 of 2023

(per Dhiraj Singh Thakur, CJ)

Dt: 04.04.2024

kbs/akn