R.A. Sharma, J.
1. The appellant filed a writ application seeking appropriate writ directing the respondents, namely, the Government of Bihar and its officials, to make payment of the dues for the work done by it under the contract. The appellant's case is that it has entered into a contract with the-respondents on 26-2-1987 for construction of a canal in Chakulia Division and although it has completed 90% work awarded to it under the said contract, but the respondents are not making the payment for the work done by it in spite of request made to that effect and the recommendation made by the Executive Engineer. The writ application having been dismissed by the learned single Judge, the appellant has filed this appeal.
2. The contract between the Government and the appellant is a non-statutory contract, It is well settled that non-statutory contract can neither be enforced nor can any direction be issued to remedy its breach under Article 226 of the Constitution. In this connection in Bareilly Development Authority v. Ajay Pal Singh, AIR 1989 SC 1076, the Supreme Court has laid down as under (at page 1083) :--
'There is a line of decisions where the contract entered into between the State and the persons aggrieved is non-statutory and purely contractual and the rights are governed only by the terms of the contracl, no writ or order can be issued under Article 226 of the Constitution of
India so as to compel the authorities to remedy a breach of contract pure and simple : Radhakrishna Agarwal v. Stale of Bihar, (1977) 3 SCR 249 : (AIR 1977 SC 1496), Premji Bhai Parmar v. Delhi Development Authority, (1980) 2 SCR 704 : ATR 1980 SC 738 and D.F.O. v. Biswanath Tea Company Ltd. (1981) 3 SCR 662 : AIR 1981 SC 1368.'
In State of U. P. v. Bridge & Roof Company (India) Ltd. (1996) 6 SCC-22 : (AIR 1996 SC 3515), the relevant extract of which is reproduced below, the Supreme Court has reiterated the same view declaring that this Court under Article 226 of the Constitution can neither enforce (he non-statutory contract nor can issue any direction in connection therewith (at pages 3519-3520) :
'Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, may be, also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as . provided by the contract or for the civil Court, as the case may be. Whether any amount is due to the respondent from the appellant-Government under the Contract and. if so, how much and the further question whether retention of refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition. The prayer in the writ petition,viz., to restrain the Government from deducting a particular amount from the writ, petitioner's bill(s) was not a prayer which could be granted by the High Court under Article 226. Indeed, the High Court has not granted (he said prayer.
Secondly, whether there has been a reduction in the statutory liability on account of a change in law within the meaning of Sub-clause (4) of Clause 70 of the Contract is again not a matter to be agitated in the writ petition. That is again a matter relating to interpretation of a term of the contract and should be agitated before the arbitrator or the civil Court, as the case may be. If any amount is wrongly withheld by the Government, the remedy of the respondent is to raise a dispute as provided by the contract or to approach the civil Court, as the case may be, according to law. Similarly if the Government says that any overpayment has been made to the respondent, its remedy also is the same.'
In Assistant Excise Commissioner v. Issac Peter, (1994) 4 SCC 104: (1994 AIR SCW 2616) the Supreme Court has declared that doctrine of fairness and reasonableness cannot be read into contracts to which State is a party. The relevant extract from Paragraph No. 26 of the said decision of the Supreme Court is as under :--
'.....'. Doctrine of fairness or the duty to act fairly and reasonably is a doctrine developed in the administrative law field to ensure the rule of law and to prevent failure of justice where the action is administrative in nature. Just as principles of natural justice ensure fair decision where the function is quasi-judicial, the doctrine of fairness is evolved to ensure fair action where the function is administrative. But it can certainly not be invoked to amend, alter or vary the express terms of the contract between the parties. This is so, even if the contract is governed by statutory provisions, i.e., where it is statutory contract --or rather more so. It is one thing to say that a contract -- every contract -- must be con(sic) reasonably having regard to its language. But this is not what the licensees say. They seek to create an obligation on the other party to the contract, just because it happens to be the State........................ The decisions cited by the learned counsel for the licensees do not support their proposition. In DwarkadasMarfatia v. Board of Trustees of the Port of Bombay it was held that where a public authority is exempted from the operation of a statute like Rent Control Act, it must be presumed that such exemption from the statute is coupled with the duty to act fairly and reasonably. The decision does not say that the terms and conditions of contract can be varied, added or altered by importing the said doctrine. It may be noted that though the said principle was affirmed, no relief was given to the appellant in that case. Srilekha Vidyarthi v. State of U. P. was a case of mass termination of District Government Counsel in the State of U. P. It was a case of termination from a post involving public element. It was a case of non-government servant holding a public office, on account of which it was held to be a matter within the public law field. This decision too does not affirm the principle now canvassed by the learned counsel. We are, therefore, of the opinion that in case of contracts, freely entered into with the State, like the present ones, there is no room for invoking the doctrine of fairness and reasonableness against one party to the contract (State), for the purpose of altering or adding to the terms and conditions of the contract, merely because it happens to be the State. In such cases, the mutual rights and liabilities of the parties are governed by the terms of the contracts (which may be statutory in some cases) and the laws relating to contracts. It must be remembered that these contracts are entered into pursuant to public auction, floating of tenders or by negotiation. There is no compulsion on anyone to enter into these contracts. It is voluntary on both sides. There can be no question of the State power being involved in such contracts...
Recently in Nath and Company v. The State of Bihar, C.WJ.C. No. 401 of 1998, decided on 24-3-1998, (Reported in 1998 (2) Pat LJR 363) a Division Bench, presided over by the Hon' ble the Chief Justice, has laid down that this Court cannot issue direction to the Government to make payment of money arising under a contract which appertains to the realm of private contract.
3. The learned counsel for the appellant has, however, submitted that there are many cases decided by the apex Court and this Court, wherein non-statutory contracts have been enforced in writ jurisdiction and directions have been issued to the Government to make payment of the dues arising under such contract. In this connection reliance has been placed by the learned counsel on Hindustan Sugar Mills v. The State of Rajasthan, AIR 1981 SC 1681 : (1981 Tax LR 1125), Kumari Shrilekha Vidyarthi v. State of U. P., (1991) 1 SCC 212: (AIR 1991 SC 537), Hyderabad Commercials v. Indian Bank, AIR 1991 SC 247 : (1990 All U 872), Union of India v. Graphic Industries Co., (1994) 5 SCC 398 : (1994 AIR SCW 4617) and Pancham Singh v. The State of Bihar, 1991 (1) PUR 352 : (AIR 1991 Patna 168) (FB). It is not possible to agree with the learned counsel. The cases cited by him have not laid down any such law as is canvassed by him.
4. Hindustan Sugar Mills v. The State of Rajasthan, AIR 1981 SC T681 : (1981 Tax LR
1125) (supra) was a case in which the apex Court was dealing with the review application against its judgment in an appeal wherein the question involved was 'whether in sales of cement effected by the appellant under the Cement Control Order, 1967, the amount of freight formed part of the sale price so as to he exigible to sales tax under the Central Sales Tax Act. 1956 and the Rajasthan Sales Tax Act, 1954'. The apex Court although held that the amount of freight formed part of the sale price and was liable to be included in the turnover for the purpose of taxability under the Sales Tax Act, but made observations on the basis of some statement made before it that the same cannot be recovered from the Central Government. The application for review was, accordingly, made, which was allowed holding that there is specific clause in the Rate Contract, according to which the sales tax legally leviable from the appellant is to be reimbursed by the Central Govt. While concluding, after holding as above, the apex Court made the following observations (at page 1683 of AIR) :--
'..... Where there is such a clause, the Centra! Government is bound to pay the amount of sale tax on the freight component of the price and we hope and trust that the Central Government will honour its legal obligation and not drive the appellant to file a suit for recovery of the amount of such sales tax. We hopefully expect that the Central Government will not try to shirk its legal technicalities, for we maintain that in a democratic society governed by the rule of law, it is the duty of the State to do what is fair and just to the citizen, and the State should not seek to defeat the legitimate claim of the citizen by adopting a legalistic attitude but should do what fairness and justice demand.'
On the basis of the above passage, the learned counsel wants this Court to hold that a non-statutory contract can be enforced under Article 226 of the Constitution. No such rule has been laid down by the Supreme Court in that case. Those observations were made in connection with a Rate Contract under which the liability to reimburse the sale tax paid by the appellant therein was undertaken by the Government. This case is not an authority for holding that a non-statutory contract can be enforced under Article 226 of the Constitution.
5. In Shrilekha Vidyarthi v. Slate of U. P., (1991) 1 SCC 212 : (AIR 1991 SC 537) (supra) was involved the question about the validity of the order by which the mass termination of the service of District Government Counsel in the State of U. P. was ordered. This case was also not dealing with the question which is involved in the present case. In fact the Supreme Court itself in its later decision in Assistant Excise Commissioner v. Issac Peter, (1994) 4 SCC 104 : (1994 AIR SCW 2616) (supra) has made the following observations about the case of ShrilekhaVidyarthi v. State of U. P. (supra):--
'..... Shrilekha Vidyarthi v. State of U.P. was a case of mass termination of District Government Counsel in the State of U. P. It was a case of termination from a post involving public element. It was a case of non-Government servant holding a public office, on account of which it was held to be a matter within the public law field. This decision too does not affirm the principle now canvassed by the learned counsel.'
6. In Hyderabad Commercials v. Indian Bank, AIR 1991 SC 247 : (1990 All LJ 872) (supra) also the controversy was different. In that case in spite of the fact that the Bank admitted that the transfer of the disputed amount from one account to another has been made in an unauthorised manner and further admitted its liability to pay back said amount to the customer from whose account it was unauthorisedly transferred, it declined to honour its commitment. The Bank accounts are maintained under a well known system regulated by law and are not matters of contract pure and simple. The public element is also involved therein. Any undertaking given by the Bank in such matter has to be honoured by it. Deviation from well known banking norms will affect the very cause for which the Banks have been established adversely affecting the economy of the nation and the public interest. It is for these reasons that the Supreme Court condemned the Bank's failure to honour its commitment in the following words :--
'..... The Bank's conduct is reprehensible. We are constrained to observe that such functioning of a Nationalised Bank is detrimental to public interest and if it follows the practice of transferring money of its customers to some other persons account on oral authority, people will loose faith in the credibility of Bank.'
In this case also the question, as to whether non
statutory contract can be enforced under Article 226 of the Constitution, was neither raised nor decided.
7. In Union of India v. Graphic Industries Co., (1994) 5 SCC 398 : (1994 AIR SCW 4617) (supra) also no such controversy as is being raised in this case was decided. In Paragraph No. 11 of its judgment the Supreme Court has expressly observed as under (at page 4620 of AIR SCW) :--
'Having come to the conclusion that the materials which the Division Bench noted do not make out a case of unfairness, it is not necessary to examine the question as to whether in the field covered by contractual rights and obligations it would always be permissible to invoke the extraordinary jurisdiction of the High Court under Article 226 of the Constitution. It would be enough to say that this remedy being discretionary, it would be open to the High Court to take a view on the fact situation before it that invocation of power under Article 226 would not be proper exercise of discretion, leaving the aggrieved person to seek remedy in some other forum, or to take recourse to arbitration if that be visualised by the agreement between die parties.'
8. In Pancham Singh v. The State of Bihar, 1991 (l)PLJR 352: (AIR 1991 Patna 168) (FB), the Full Bench of this Court has held that if a non-statutory contract is cancelled on a ground, dehors any of the terms of the contract, and which is per se violative of Article 14 of the Constitution, a writ under Article 226 of the Constitution can be maintained. Such a contingency arises when the rights and obligations under the contract are interfered with on the basis of some executive/administrative orders dehors the contract passed by the Government. The position is well settled that a writ petition under Article 226 of the Constitution against an executive/administrative order is maintainable. But if the Government does not perform its obligations, which it has undertaken under the non-statutory contract, writ cannot be issued directing it to discharge those obligations. In the instant case, there is no executive/administrative order dehors the contract issued by the Government on the basis of which payment to the petitioner has been denied. No such case has been pleaded and proved by the petitioner-appellant.
9. Learned counsel for the appellant wants to
build up a case for enforcement of non-statutory contract by this Court under Article 226 of the Constitution on the basis of some observations of the Supreme Court from the above mentioned cases without having regard to the context in which they were made. It is a ratio of decision which matters and not every observations made therein. The Supreme Court in State of Orissa v. Sudhansu Sekhar Misra, AIR 1968 SC 647, has laid down in this regard as follows (at page 651):--
'..... A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury LC said in Quinn v. Leathern, 1901 AC 495.
'Now before discussing the case of Allen v. Flood (1898) AC 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical Code, whereas every lawyer must acknowledge that the law is not always logical at all. It is not a profitable task to extract a sentence here and there from a judgment and to build upon it. ..... .'
10. In the end the learned counsel for the appellant has submitted that as the Government has not filed any counter-affidavit in reply to the writ application filed by the appellant, it shall be deemed to have admitted the amount due to the petitioner and therefore, appropriate writ can be issued to it to make the payment of the admitted dues. This submission is also devoid of merit and
cannot be accepted. Merely because counter affidavit has not been filed, it does not mean that the Government has admitted its liability to make the payment. The Division Bench of this Court in Nath and Company v. The State of Bihar (supra) has dealt with this question in detail and has declared that merely because a counter-affidavit/written statement have not been filed by the State, it cannot be said that it has admitted the. dues/liability and, therefore, it is not proper and safe to pass an order against the Govt. merely on the ground of non-filing of the counter-affidavit. In this connection the Division Bench has overruled the learned single Judge's decisions of this Court wherein it was laid down that in such cases direction can be issued to the Government to make payment of the admitted dues. That apart, even if the liability is admitted by the Government, this Court cannot issue direction under Article 226 of the Constitution to'compel it to make the payment of such dues. If a party to non-statutory contract does not discharge its admitted liability, the only remedy open to the person aggrieved is either to approach the civil Court for necessary relief or get the matter referred to the Arbitrator if there is such a clause under the contract. Writ is not a remedy in such cases. In this connection it is appropriate to requote the following observations of the Supreme Court in State of U. P. v. Bridge & Roof Company (India) Ltd., (1996) 6 SCC 22 : AIR 1996 SC 3515 (at page 3519):--
'..... If any amount is wrongly withheld by the Government, the remedy of the respondent is to raise a dispute as provided by the Contract or to approach the civil Court, as the case may be, according to law. Similarly if the Government says that any overpayment has been made to the respondent, its remedy also is the same.'
11. The writ petition filed by the appellant was not maintainable and was rightly dismissed by the learned single Judge. This appeal is, accordingly, dismissed.
A.K. Prasad, J.
12. I agree.