M-S. KARNATAKA STATE FOREST INDUSTRIES CORPORATION v. M-S. INDIAN ROCKS

Citation: [2008] 15 S.C.R. 96

Court: Supreme Court of India

Bench: S.B. SINHA, CYRIAC JOSEPH

Case summary

M-S. KARNATAKA STATE FOREST INDUSTRIES CORPORATION v. M-S. INDIAN ROCKS.pdf

Judgment text

[2008] 15 S. C. R. 96 MIS. KARNATAKA STATE FOREST INDUSTRIES CORPORATION V. MIS. ! NDIAN ROCKS (Civil Appeal No. 6274 of 2008 etc. ) OCTOBER 24, 2008 :-- [S. B. - SINHA AND CYRIAC JOSEPH, JJ.

] Contract - Contract of sale of granite blocks - Between the Corporation as an agent of State and Companies - State was required to give permit for transportation of the blocks - Agency of the Corporation terminated in view of a scam in respect of the granite blocks and Corporation was asked to refund the amount to the Companies - Corporation showing its inability to refund - Corporation insisting on the companies { to perform the remaining part of the Contract - Contracting Companies asking for issuance of the permits - Permits not issued by the Corporation - Dispute between the contracting parties - Litigation resulting in direction to Corporation to refund the amount - Counsel for Corporation also conceding before High Court showing its readyness to refund - On appeal, held: Corporation had no authority to ask the Companies to perform their part of contract as the agency under which the~ Corporation entered into the contract had ~ been terminated - Also because it failed to issue the permits · to the Companies - Corporation as well as State were guilty ofsuppressing before the Court its position when its authority was questioned - The Counsel for the Corporation having conceded to refund, was bound to give effect to the same - Constitution of India, 1950 - Article 162 - Karnataka Minor Mineral Concession Rules, 1994 - r.

42. ;.. _ Constitution of India, 1950 - Article 226 - Writ Jurisdiction - scope of - In respect of contract - Held: Ordinarily superior courts not required to enforce the terms CORPORATION v. INDIAN ROCKS "" ofa contract qua contract- Writ to be issued only where exists a legal right and a corresponding duty on the pa1t of the State - But if the action of the State is unfair, arbitrary or discriminatory, such writ is maintainable. State appointed the appellant-Corporation as its agent for issuing tender for sale of confiscated granite blocks. Pursuant to tender, contract was entered into with the respondent-Companies. Part of contract was performed. In the meantime agency of the Corporation was terminated by the State, vide its letter dated 16. 1. 1996 ·C pursuant to a report of a Committee appointed for looking into the scam in respect of the granite blocks. State asked the Corporation to refund the amount to the Companies.

But the Corporation showed its inability to refund the amount. Dispute arose between the Companies and the Corporation. The Counsel for the Corporation in one writ petition conceded before High Court that it was ready to refund the amount. However in subsequent writ petition it denied. The litigation resulted in direction to the Corporation to refund the amount to the Companies. Hence the present appeals. Dismissing the appeals, he Court ,. HELD: 1. 1. The confiscated granite blocks belonged to the State. They did not belong to the appellant- Corporation. Appellant was merely appointed as an agent of the State. It is only in that c~pacity, the tender was issued by it. Although in terms of the said tender, the concerned respondents and others were bound to deposit the price of the granite blocks as also the amount of tax payable thereunder ; one of the essential .. J, conditions therefor, was issuance of permits to transport the same. [Para 29] [116-C-D] Bharat Sanchar Nigam Ltd.

and Anr. v. BPL Mobile Cellular Ltd. and Ors. , (2008) 8 SCALE 106 and Mis. New Bihar Biri Leaves Co. and Ors. v. State of Bihar and Ors. , [1981] 1 sec 537, distinguished. 1. 2. The letter dated 16th January, 1996 is to be treated as a communication from a Principal to an Agent. As an agent of the State Government, the appellant, which, itself is a 'State' within the meaning of Article 12. of the Constitution of India, was bound to act thereupon. It is true that it had responded to the aforesaid communication of the State dated 16th January, 1996 stating its own reasons therefor. But there is nothing to show that the State Government acted upon the request of the corporation to issue permits for transportation of granite blocks or withdrawn its direction contained in its letter dated 16th January, 1996. [Para 36) [118-F-G; 119- H; 120-A] 1. 3.

The plea of the Corporation of owing its inability to refund was not a legal plea but a plea for show of compassion expressing its inability to refund the amount because of financial constraints. Its response to the State was not based on legal premise but it was based on its own difficulty. If the agency had been terminated and had not been restored, the appellant had no authority to ask the respondents to perform their part of contract. (Para 37) (120-8] 1. 4. There is nothing on the record to show that the State and particularly the Joint Committee of the Legislative Assembly of the State directed grant of transit permits for transportation of granite blocks.

If such permits had been granted, it might have been obligatory on its part while issuing the notice upon the concerned respondents to direct lifting of the remaining blocks of granites enclosing therewith copies of the said permits, but in absence thereof, it is idle to contefld, on the one hand that the respondents were bound to perform their part of the contract and on the other that although they have asked for supply of permits, as per rules, they did .... CORPORATION v. INDIAN ROCKS not obtain the same. [Para 38] [120-D-E] 2. Appellant is also guilty of suppressio veri and suggestio falsi. Its action in the entire matter appears to be wholly unfair. It was in a dominant position in terms of the provisions of the contract but then in a case of this nature when its authority to continue to deal with the granite blocks came to be questioned, it was obligatory on its part to clear its position in this behalf. State also did not take a positive stand.

As a principal, the State was also obligated to disclose the entire facts before the High Court. [Para 39] [120-F-G] 3. 1. Although ordinarily a superior court in exercise of its writ jurisdiction would not enforce the terms of contract qua contract, it is trite that when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable. [Para 40] [120-H; 121-A] ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. ,· [2004] 3 sec 553, relied on. 3. 2. A writ of mandamus can be issued only when there exists a legal right in the Writ Petition and a corresponding legal duty on the part of the State, but then if any action on the part of the State is wholly unfair or arbitrary, the superior courts are not powerless. [Para 41] [121-8-C] G. J. Fernandez v. State of Mysore and Ors. , [1967] 3 SCR 636, relied on. 4.

A specific concession was made by the counsel for appellants in the earlier round of litigation. It may be ,;. that no specific direction was issued by the High Court therein, but the stand taken by it was clear and unequivocal. If such a stand was taken in the earlier round of litigation there is no reason as to why the concession made by it should not be given effect to. If right has accrued to the respondents for maintaining a writ so as to compel the State to give effect to an earlier order passed by the Court, the same should not be denied to the respondent. (Paras 42 and 44] (121-F, H; 122-A, BJ Case Law Reference : (2008) 8 SCALE 106 Distinguished Para 32 [19811 1 sec 537 Distinguished Para 33 [20041 3 sec 553 relied on Para 40 · (1967] . 3 SCR 636 relied on Para 41 r20011 7 sec 689 relied on Para 44 CIVIL APPELLATE JURISDICTION : Civil Appeal No.. 6274 of 2008. From the final Judgment and Order dated 26. 3. 2004 of the High Court of Karnataka at Bangalore in W. A. No.

3407 of 2001. WITH C. A. No. 6275 of 2008. Shyam Divan, R. S. Suri and Asha Gopalan Nair for the Appellant. · P. Vishwanatha Shetty, E. C. Vidya Sagar, Vikas Rojipoura, Sangeeta Singh, Sharan Thakur, Shashi Kiran Shetty, Pradeep Kumar Bakshi, Amit Kumar Chawla, Vikrant Yadav, A. Rohan Singh and Sanjay R. Hegde for the Respondent. The Judgment of the Court was delivered by S. B. SINHA, J. 1. Leave granted. 2. These two appeals involving similar questions of law and fact were taken up for hearing together and are being disposed ~, of by this common judgment. We may, however notice the fact of the matters involving in both the appeals separately. Civil Appeal arising out of SLP (c) No. 24242 of 2005 3. Appellant is a Government of Karnataka Undertaking 8 engaged in sale of granite of seized and confiscated granite blocks to persons who intend to purchase in the Tender-cum- Allotment sale on °as is where is basis". The relevant terms of the said tender were: "6.

The tender/bidder should make arrangements to obtain transit permit at his own cost from Forest Department/KSFIC. 9. The successful Tenderer/Bidder should pay 1/10th amount of the sale value plus taxes as follows:- } (a) Un-polished Granite Blocks 10% S. T. (b) Sur-charge on S. T. 15% (c) Forest Development Tax 5% (d) Income Tax 15% (e) Surcharge on I. Tax 5% ,.. On the same day, the balance amount will be payable as follows: (a) 50% within 15 days of the intimation of confirmation of tender. (b) the remaining amount shall be paid by the end of the June, 1995 or before 'the stones are lifted ,, whichever is earlier. The period of the contract shall be upto April, 30th 1995. 11. In case of breach of any of the conditions mentioned above, the Managing Director, KSFIC ,>- Ltd. , is at liberty to cancel the Tender/Bid amount and make materials at the risk and· cost of the original Tenderer/Bidder and the EMO/Security Deposit furnished by the Tenderer/Bidder be forfeited. If the K. S. F. l.

C. incurs: any extra expenditure in this regard the same will be recoverable from the original Tenderer/Bidder. .. ,__ 18. The successful Tenderer/Bidder shall make their own arrangements for inspection of seized and confiscated Granite blocks at their own cost located . at different places in the Ranges as the offer for sale is on. AS IS WHERE IS BASIS. Rejection due to colour, cracks etc. will not be entertained once the offer is submitted. ,. 19. Sale of granite blocks is agreed upon in good faith { and K. S. F. l. C. Ltd. shall not be liable for any damages or otherwise for failure to carryout the - obligation which may be occasioned by Act of God, War, Civil Disturbance disorders, strike etc. , or regulation of Government authorities or agencies or similar circumstances beyond its control. 20. Breach of any of the conditions specified supra, by the purchaser will entail forfeiture to K. S. F. l. C. of all deposits paid by him.

Further, the Granite Blocks _already paid for and lying in the field will also be . liable to be attached towards the balance due. The Granite Blocks purchased, whether paid or not will also be resold at the risk and cost of the original Tenderer/Bidder who will be liable to make good to Government any loss arising out of such resale but :.. shall not be entitled to profits. 34. No material shall be removed from the contract area unless it is covered by transit pass in accordance with the rules under Section 50 of the -- Karnataka Forest Act, 1963. If any problems arise while lifting the blocks from site, necessary assistance will be provided if need be under special circumstances. " 4. Respondent participated in the tender process. It was successful in purchase of: (i) one lot containing 25 blocks (Mulegundi Area), (ii) one lot containing 37 blocks (Mulegundi Area) and (iii) one lot containing 43 blocks (Nehrudoddi Area). 5.

The total sale value of the granite sold to the respondent herein was Rs. 21,24,574. 85. Out of the aforementioned sum, admittedly, the respondent on or about 11. 07. 1995 had deposited a sum of Rs. 11,84,447. 90. The balance amount due to the appellant from the respondent was Rs. 9,40,126. 55. In terms of the said tender, the respondent was required to pay not only 10% of the value of the goods but also taxes and other statutory dues paid by the appellant herein. Appellant has paid an amount of Rs. 6,85,642/- being the royalty amount, Forest Development Tax, Karnataka Sales Tax and Surcharge on Karnataka Sales Tax etc. .. t- 6. Respondent allegedly refused to pay the amount to which it was said to be otherwise liable in terms of Clause 8 of the terms and conditions of the tender. 7.

There appears to be a dispute as regards the amount ( payable by the respondent on the aforementioned account insofar as whereas according to the appellant the amount of granite including tax and other statutory liabilities in respect of ,.. 10 blocks of granite which had been received by the respondent and transported by it is Rs. 3,25,193. 90; according to the respondent, the total amount of goods received was Rs. 2,39,969. 35. Appellant contended that the contract was not concluded within the stipulated period of time as the entire payment was not made by June, 1995 or before lifting of the stones whichever is earlier, as envisaged under Clause 9(b) of the terms and conditions of the tender. 8. Concededly the Government of Karnataka was approached. A question was also raised in the Legislative Assembly. The Principal Secretary, Forest, Ecology and . Environment Department, Government of Karanataka issued a letter on or about 16. 01.

1996, which reads as under: "Sub: Permission to Karnataka State Forest Industries Corporation Ltd. , for the sale of Confiscated Granite Blo~k through Tender. With reference to the above subject, a copy of the Letter dated 14. 12. 1995 received from the Chairman & Managing Director, KSFIC Ltd. , is here with enclosed. The KSFIC Ltd. , has sold the Granite Blocks which were seized by the Forest Department, through public auction during the month of March 1995. Since the Granite scandal is under enquiry of Legislative Committee, it was decided not to confirm the said sale proceedings. In the meanwhile the Chairman & Managing Director of the Corporation reported to the Government that the purchasers are pressurizing for issue of transit permit to lift the Granite Blocks or refund their amount. They also requested the Government to bring these facts to the notice of the Legislative Committee.

Since the Joint Legislative Committee has objected for issue of transit permit by the Forest Department and also KSFIC Ltd. , to granite blocks as there was no provision for the same in the KMMC Rules, 1994, the Government has suggested to the KSFIC Ltd. , to take • action with regard to transfer the Granite blocks to the Department of Mines and Geology and for refund of amount to the bidders (copy enclosed). But, directed to keep the Granite blocks in safe custody till the decision of ~ balance amount, stating: \ "You are requested to remit the balance amount of the total · purchase value of the Granite Blocks purchased by you in the auction sale conducted by the KSFIC Ltd. during the Month of March - 1995. " 8 11. However, the said request was not acceded to. Appellant allegedly issued various other letters to the same ""' effect on 29. 01. 1997, 25. 04. 1997 and 30. 06. 1997. Ultimately by its letter dated 5. 06.

1999, the appellant informed the respondent to immediately remit the amount and lift the granite blocks by 30. 06. 1999 failing which, it was threatened, the amount deposited shall be forfeited, stating: "We therefore request you to kindly make immediate arrangements for remitting balance amount and lift the \. granite blocks purchased by you in Tender-cum-Auction- Sale . held during the month of March-1995 within 30th June 1999 without any further delay. If we do not hear anything from your side within the time stipulated, action will be initiated to forfeit all deposit amount paid by you as per clause (11), (16) and (20) of the Tender Conditions, which may please be noted. " 12. Respondent filed a writ petition, which was marked as Writ Petition No. 27456 of 1999. It is not in dispute that those -\ permits were not granted in favour of the respondents. Respondents in their writ petition while contending that the agency of the appellant was terminated, stated :- "8.

It is humbly submitted that the petitioner. has paid sum . of Rs. 11,84,447. 90 towards the cost of granite blocks. The petitioner after paying the huge amount of Rs. 11,84,447. 90 ·~ requested the Respondent to obtain the mineral dispatch permit from the Department of Mines and Geology for transporting the granite blocks. After receipt of the money the Respondent did not pursue the matter in obtaining the CORPORATION v. INDIAN ROCKS [S. 8. SINHA, J. ] ·~ mineral dispatch permits from the department of transport ... the granite blocks. The effort of the petitioner to convince · the Respondent to obtain the mineral dispatch permit did not yield and result and the Respondent failed to obtain the mineral dispatch permits in terms of Rule 42 of the Rules. 9. It is humbly submitted that the Respondent Corporation appointed the Jadhav, Range Forest Officer to issue the permits. The said Range Forest Officer has issued permits which are termed as fake permits.

Several persons appear to have transported the granite blocks on those fake permits. Under those circumstances the Karnataka Legislative Assembly constituted Committee of legislators to go into the question of fake permits issued by the said Jadhav. It may also be relevant to mention that the criminal case was filed against various persons and the matter was . J handed over to the COD of Police for investigation. It is also relevant to mention that both the houses of the "' legislature was rocked by the fake permits scandal. 10. It is humbly submitted that the Legislative Committee which was appointed for the purpose of looking into the fake permits has took (sic) a decision that the entrustment of selling of the seized and confiscated granite blocks in favour of the Respondent Corporation should be dispensed - ... forthwith thereby terminating the agency given to the Respondent.

The Government on the instructions of the Legislators Committee cancelled the agency that was given to the Respondent and instructed the forest ~. corporation to return the granite blocks to the department of Mines and Geology (sic) is the owner of those Granite blocks. Only for the purpose of selling those granite blocks ~ ,. it was entrusted to the Respondent Corporation. The Corporation ceased to have its power or jurisdiction to continue to sell the granite blocks with effect from 16. 01. 1996. The true copy of the Government Notification .. ,,,r- ·~ dated 16. 01. 1996 is produced herewith as ANNEXURE- C. " In the aforementioned premise, it was inter alia prayed:- (b) ISSUE an order, direction or writ in the nature of Mandamus, directing the Respondents to fmplement the Government Order Annexure-C dated 16. 01. 1996. ..... (c) ISSUE an order, direction or in the nature of mandamus, directing the Respondents to refund sum of Rs. 9,44,478.

55 together with interest calculated at 18% in ... ··. c. terms of the Government order dated 16. 01. 1996 Annexure-C. " 13. Appellant filed its counter-affidavit in the said writ petition. \. 14: ltalso filed an additional affidavit, stating: . . . "1 o. It is relevant to submit here that the petitioner should have completed the entire tender cum auction transaction by the end of 15th July 1995 by making payment of taking deiivery of the entire granite blocks purchased as per Respondent letter dated 26. 06. 1995 at ANNEXURE R14. However, the petitioner delayed the same. In fact, the ... petitioner should have completed all these transactions "" . ;. before the issue of Government letter dated 16. 01. 1996 .. at Annexure-C. The Respondent cannot be blamed for ::" ->. :; t failure and delay of the petitioner in not completing the transaction before the Government letter dated .. , 16. 01. 1996. In fact, the petitioner in letter dated 19. 04.

1997 expressed willingn~ss to take the granite as per ANNEXURE-R15. Then Respondent sent a letter dated 28. 4. 1997 as per ANNEXURE-R16 to the Deputy Conseryator of Forest. lnspite of remind~r dated 30. 06. 1997 as per ANNEXURE-R17 the petitioner has . not complied with the directions in payment of the balance amount This Respondent is entitled to forfeit the entire ~",..... amount as per clause .... illegible ..... the tender for failure of the petitioner in not p_aying amount and taking delivery of the goods within the stipulated time. Therefore, the petitioner. cannot blame this Respondent. 11. lnspite of all this, and without prejudice to the various contentions, the Respondent humbly submits that, if the petitioner pays the balance amount of Rs. 9,40,426. 55 and penalty immediately as per conditions of sale, this Respondent is ready and willing to- -! qua contract, particularly when the same involved disputed questions of fact.

(iv) Respondents, being bound by the terms and conditions of tender, could not have been given any relief in derogation thereof. 28. Mr. Vikas Rojipura, learned counsel appearing in Civil Appeal arising out of SLP (C) No. 24242 of 2005 and Mr. P. ~- Vishwanatha Shetty, learned senior counsel appearing in Civil Appeal arising out of SLP (C) No. 23148 of 2005 on the other hand,:- (i) No disputed question of fact being involved in the Writ Petitions, the High Court could exercise its discretionary jurisdiction even in a matter governed by contract qua contract. ~ (ii) The action of the State in all situations including contractual matters must be fair and keeping in view the fact that the appellant had taken a wholly 116 SUPREME· COURT REP. ORTS [2008) 15 S. C. R. unfair stand, this court should not interfere with the impugned judgment. (iii) In any event, as in the appeal arising out of SLP (c) No. 23148 of 2005 the appellant itself agreed to refund a sum of Rs. 1,51,554.

05 it cannot be permitted to go back on its promise and refuse to enforce the same particularly. when the other . ·· ~· . ; . respondents 'against whoni. directions had been · issuec( fr1cluding . the state of Karnataka and ·.. ·. , income tax authorities have accepted theji. Jdgment. ; . 29. Indisputably the confiscated granite blocks belonged to the State of Karnataka. They did not belong to the appellant- Corporation. Appellant was merely appointed as an agent of the State. It is only in that capacity the tender was issued by it. w_e may notice that although in terms of the said tender, the concerned respondents and others were bound to deposit the price of the granite blocks as also the amount of tax payable · · thereunder. ; one of the essential conditions ·therefor,·as quoted above, was issuance of permits to transport the same. · 30. Indisputably a part of the contractwas completed.

It is furthermore not in dispute that some granite blocks were transported by using forged transit permits. A huge scam was unearthed. Questions were raised in the Assembly. A Committee was appointed. It is pursuant to the report of the Committee that was appointed by the Karnataka Legislative Assembly that the policy of the State changed. It terminated the agency of the appellant. It was only while doing so, the directions contained in the said letter dated 16th January, 1996 were issued. 31. We agree with the contention of Mr. Divan that such a direction which does not have any statutory force is not binding upon the appellant but herein strictly we are not concerned with such an issue. ..... 32. Mr. Diwan relied on Bharat Sanchar Nigam Ltd. And Anr. v. BPL Mobile Cellular Ltd. and Ors. , (2008) 8 SCALE 106 wherein it has inter alia been held:- "They might have been published by some publisher but indisputably they are not statutory in nature.

They have not been framed under any statute. The Indian Telegraph Act or the Rules framed thereunder do not provide for issuance · of such circulars. The circular letters collected at one place are loosely called rules. They, as noticed hereinbefore, are meant for office use only. The directions contained in the said circular letters are relevant for the officers who are authorized not only to grant licences but also enter into contracts and prepare bills. The circular letters having no statutory force undoubtedly would not govern the contract. If some authorities have violated the terms of the said circulars, they might have committed misconduct, but when ~ a contract is entered into, the parties shall be bound thereby. " It was furthermore observed :- "25. In view of the aforementioned law laid down by this Court, there cannot be any doubt whatsoever that the circular letters cannot ipso facto be given effect to unless 4 they become part of the contract.

We will assume that some ~ of the respondents knew thereabout. We will assume that in one of the meetings, they referred to the said circulars. But, that would not mean that they are bound thereby. Apart from the fact that a finding of fact has been arrived at by the TDSAT that the said circular letters were not within the knowledge of the respondents herein, even assuming that they were so, they would not prevail over the public documents which are the brochures, commercial information and the tariffs. " 33. To the same effect are the observations made by this - Court in Mis. New Bihar Biri Leaves Co. and Ors. v. State of "'f Bihar and Ors. , (1981) 1 SCC 537, stating :- "46. At the time of inviting Tenders in the prescribed Form or inviting purchasers to bid at the publication, all tenderers or bidders are treated equally in the sense that they can offer their rates or bids subject to the statutory conditions including the impugned provisions.

While accepting the highest Tender of rates per standard bag or the highest + bid, it is not possible to classify the purchasers whose offers/bids have been accepted into 'honest' purchasers and 'dishonest' purchasers. Everybody whose offer or bid is accepted, is assumed to be honest. " 34. We are, however, concerned herein with a different situation. Transport of granite blocks was subject to issuance of transit permits. Such transit permits are granted in terms of the provisions of Rule 42 of the Karnataka Minor Mineral ' , • Concession Rules, 1994. 35. The question that arises for consideration is as to whether the State in exercise of its power under Article 162 of the Constitution of India could issue a binding direction so as to confer a legal right on a third party having regard to cancellation of contract of agency by the State in favour of the appellant ? . ... ~, -;> 36. The letter dated 16th January, 1996 is to be treated as a communication from a Principal to an Agent.

As an agent of the Government of Karnataka, the appellant, which, itself is 'State' within the meaning of Article 12 of the Constitution of ~ India, was bound to act thereupon. It is true that it had responded to the aforesaid communication of the State dated 16th January, 1996 stating its own reasons therefor. In its letter dated 29th January, 1966 addressed to the Secretary, Forest Ecology and Environment, it was stated :- "The KSFIC Ltd. is facing financial crunch and incurring heavy loss since 2-3 years due to decline of day to day .... activities. It is very painful to say that even there is no fund for payment of the employees salary for the month of January 1996. The Units of the KSFIC Ltd. at Mysore, Shimoga and Dandeli are also facing same problems and even they have not paid the salary of their employees since last 2-3 months due to non availability of funds. The subject was also discussed in the recently-held Board meeting of + KSFJC on 19. 12.

1995 and the financial position was made known to the Board Members. The decision to take up granite trade by KSFIC was taken only after thorough discussion in the Board for nearly half a dozen times. The seized granite blocks were auctioned by the Corporation with the full knowledge of Government of Karnataka to the Hon'ble Minister of Forests and the Forest Development. In fact Forest Department gave the full support for this activity. Moreover the Mines and Minerals Department can ;.! dispose in the public auction only those minerals which are seized under sub-section (4) of 21 of the Act and subrule (6) of 43 and minor Minerals left at the quarry after expiry of termination of lease or licences. In this instant case granite blocks are seized under provision of Section 62 of Karnataka Forest Act and this can be disposed off only under Chapter 12 of Karnataka Forest Rules, 1963.

Hence, we request you to kindly prevail upon the Joint Legislative Committee an·d Mines and Geology Department to issue necessary permits for the remaining Blocks to KSFIC Ltd. as per the rules in force. There is no alternative left for the KSFIC Ltd. to make arrangement for issue of transit permits through Mines and Geology Department to the purchasers for lifting the remaining . blocks purchased by them in Tender cum auction sale as the KSFIC Ltd. Is totally unable to refund the deposit amount to the purchasers in the circumstances explained _ above. " But there is nothing to show that the Government of .. . _,. Kamataka acted thereupon or withdrawn its direction contained in its letter dated 16th January, 1996. 37. The plea which was raised, therefore, was not a legal plea but a plea for show of compassion expressing its inability to refund the amount because of financial constraints. Its response to the State was not based on legal premise but it was based on its own difficulty.

If the agency had been terminated. ~nd had not been restored, we would not know under what authority the appellant had been asking respondents to perform their part ofcontract. . 38. In any view of the matter there is nothing on the records to show that the State of Kamataka and particularly the Joint Committee of the Kamataka Legislative Assembly directed grant of transit permits for transportation of granite blocks. If such permits had been granted, it might have been obligatory ~ on its part while issuing the notice upon the concerned respondents to direct lifting of the remaining blocks of granites enclosing therewith copies of the said permits, but in absence thereof, it is idle to contend, on the one hand that the respondents were bound to perform their part of the contract and on the other that although they have asked for supply of permits, as per rules, they did not obtain the same. 39. Appellant. is also. guilty of suppressio veri and . ,. suggestio fa/si.

Its action in the entire matter appears to be wholly unfair. It was in a dominant position in terms of the provisions of the contract but then in a case of this nature when its authority to continue to deal with the granite blocks came to be questioned, it was obligatory on its part to clear its position in this behalf. We have no words to express our displeasure also in regard to the conduct of the State. It did not take a positive stand. As a principal, the State of Karnataka was also obligated to disclose the entire facts before the High Court. 40. Although ordinarily a superior court in exercise of its writ jurisdiction would not enforce the terms of a contract qua ~contract, it is trite that when an action of the State is arbitrary or. discriminatory and, thus, vioiative of Article· 14 of the· Constitution of India, a writ petition'would be maintainable. (See ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. , [2004] 3 sec 553. 41.

There cannot be any doubt whatsoever that a writ of mandamus can be issued only when there exists a legal right in the Writ Petition and a corresponding legal duty on the part of the State, but then if any action on the part of the State is wholly unfair or arbitrary, the superior courts are not powerless. Reliance placed by Mr. Divan on G. J. Fernandez v. State of Mysore and Ors, [1967] 3 SCR 636 is not apposite. In th::>t case itself it was held :- "Thus under Art. 162 the State Government can take executive action in all matters in which the legislature of }I the State can pass laws. But Art. 162 itself does not confer any rule making power on the State Government in the • behalf. " G. J. Fernandez (supra) was considered in ABL International Ltd. (supra) 42. Furthermore the concession made by the counsel for appellants in the earlier round of litigation also cannot be lost sight of. A specific concession was made. It may be that no .

specific direction was issued by the High Court therein, but the stand taken by it was clear and unequivocal. 43. Mr. Shyam Divan, when questioned, had very fairly submitted that the conduct of the counsel who had appeared on behalf of the appellant in the earlier round of litigation is not in question and it cannot be said that he acted beyond his authority. 44. If such a stand had taken in the earlier round of litigation we fail to see any reason as to why the concession made by it H· should not be given effect to. If a right has accrued to the A respondents for maintaining a writ so as to compel the State to give effect to an earlier order passed by the Court as has been held by this Court in the case of Commissioner, Kamataka Housing Board v. C. Muddaiah, [2007] 7 SCC 689, the same should not be denied to respondent 1""--~~rein. 8 45.

Keeping in view the facts and circumstances of the case in its entirety and having regard to the legal propositions as noticed hereinbefore, we are of the opinion that these ·are not the cases in which this Court should exercise its C discretionary jurisdiction under Article 136 of the Constitution of India. The appeals are dismissed with costs. Counsel's fee assessed at Rs. 50,000/- in each case. K. K. T Appeals dismissed.