- (1.) How a public sector corporation set up to give impetus to industrial development of the country, a promise of planned economy aimed at job expansion to liquidate the course of unemployment, and larger production helping price stabilisation acts in a manner contrary to its raison d'etre and becomes counter-productive is aptly illustrated by the facts of this case. The G. S. F. C. sanctioned loan to the respondent, a private limited company on the term inter alia that the rate of interest would be 12 per cent per annum if refinance was available from the Industrial Deve-lopment Bank of India at 9 per cent per annum, otherwise it would be 13 per cent per annum. After refusal of 1. D. B. 1. to refinance, the Corporation also refused to disburse the loan to the respondent. The instrumentality of the State which would be 'other authority' under Article 12 cannot commit breach of a solemn undertaking to the prejudice of the other party which acted on that undertaking or promise and put itself in a disadvantageous position. The G. S. F. C. created under the State Financial Corporations Act, falls within the expression of 'other authority' in Article 12, and if it bac,ks out from such a promise' it cannot be said that the only remedy for the aggrieved party would be suing for damages for breach and that it could not compel the Corporation for specific performance of the contract under Article 226. Such a corporation dealing with the public whether by way of giving jobs or entering into contracts or otherwise cannot act arbitrarily and its action must be in conformity with some principle which meets the test of reason and relevance. If the appellant entered into a solemn contract in discharge and performance of its statutory duty and the respondent acted upon it, the statutory corporation cannot be allowed to act arbitrarily so as to cause harm and injury, flowing from its unreasonable conduct to the respondent. In such a situation, the court is not powerless from holding the appellant to its promise and it can be enforced by a writ of mandamus directing it to perform its statutory duty. The petition under Article 226 will certainly he to direct performance of a statutory duty by 'other authority' as envisaged by Article 12. Appeal dismissed.;