Sabyasachi Bhattacharyya, J. - (1.) The petitioner no. 1-company and the petitioner no. 2, its director/shareholder, have moved the instant writ petition against a notice of termination of contract to supply various food products under the name of the respondent no. 2 to financially underprivileged sections of the society, entered into between the parties on February 17, 2017. The notice was dated November 5, 2020 and set out alleged violation of Clauses 6, 7, 8, 22 and 23 of the said contract as grounds for cancellation of the same. The distribution of food items pertain to a government scheme named "21se Annapurna".
(2.) Learned counsel for the petitioner argues that the respondents violated Article 14 of the Constitution of India by arbitrarily terminating the contract. As such, irrespective of the existence of a contractual relation between the parties, this court can interfere with such termination under Article 226 of the Constitution of India.
(3.) In support of such contention, learned counsel cites a judgement reported at ( Mahabir Auto Stores and Ors. vs. Indian Oil Corporation and Ors, 1990 AIR(SC) 1031.) for the proposition that every action of the State or an instrumentality of the State, in exercise of its executive power, must be informed by reason. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution shall be applicable to such exercise of power. The Supreme Court held that having regard to the nature of the transaction it would be appropriate to state that in cases where the instrumentality of the state enters the contractual field, it should be governed by the incidence of the contract; it may not be necessary to give reasons but, in the field of this nature fairness must be there to the parties concerned. Having regard to the large number or the long period and the nature the dealings between the parties the appellant, it was held, should have been taken into confidence. Equality and fairness at least demands this much from an instrumentality of the State dealing with a right of the State not to treat the contract as subsisting. However, the Supreme Court proceeded to evolve a process which would work.;