Govindbhai J. Rokkadkar vs State of Gujarat and Others

P.R. Gokulakrishnan, C.J.—This Letters Patent Appeal is against the order passed by the learned single Judge in Special Civil Application No. 2499 of 1988. The matter is in respect of authorisation given to the appellant herein by way of an agreement to run the fair price shop. The relationship between the appellant on the one hand and the State Government on the other hand, is purely contractual. Even reading the agreement under which the authorisation was granted, it is clear that the appellant was approved as an authorised fair price shop dealer for the purpose of purchase, distribution and sale of foodgrains, which the Government of Gujarat intends to supply to the public at a fair and reasonable price. The agreement also provides for its termination as well as for forfeiture of the deposit. There is an arbitration clause and the Award of the Arbitrator is made final and binding on the parties.

The question of issue of licence or its cancellation is not in issue, but the conditions specified in the authorisation granted to the appellant was in issue and after looking into the violation of such conditions, the contract was terminated. Thus, the facts of the present case are purely in the realm of contractual obligation and this Court, while dealing with Letters Patent Appeal No. 194 of 1988, came to the conclusion that in respect of such authorisation, no writ will lie. This Court has also stated that the appellant, if at all, wants to agitate, he can do so in a Civil Court by filing appropriate suit for damages. While disposing of the Letters Patent Appeal No. 194 of 1988, this Court also followed the order passed in Special Civil Application Nos. 2979 of 1980, 3008 of 1980 and 3365 of 1980, dated 1st December, 1980. All these cases pertain to cancellation of the authorisation granted. Mr. Shah, the learned Counsel appearing for the appellant, brings to our notice, the decision in the case of Rashmikant Babubhai Patel and Another Vs. Gujarat Electricity Board, Baroda and Another, , wherein a Bench of our High Court had occasion to consider the termination of a contract for supply of transformers. Dealing with the facts of that case, where contractual obligation arises under the statute, the Bench observed (at page 1069 of GLR):

In view of this settled position, we must hold that the respondent-Board entered into the present contract with the appellants in exercise of its statutory power for the fulfilment of its statutory obligation, viz. of supply of electricity to the consumers and the distributing licensees in the State; and, therefore, it cannot be said that the matter was lying purely in the contractual sphere.

In those circumstances, the Bench held that in such type of cases, the arbitrary action of the authority concerned can be questioned. No doubt, it is an accepted principle that the State has to act reasonably, justly and fairly in respect of its statutory obligation, though it may fall in the realm of contractual obligations by virtue of such a statute. There is absolutely no conflict between this decision cited by Mr. Shah and the one rendered by this Bench in Letters Patent Appeal No. 194 of 1988 dated 26-7-1988.

For all these reasons and following the reasoning in the order in Letters Patent Appeal No. 194 of 1988 on the legal aspect as well as on the facts and circumstances of this case, this Letters Patent Appeal is dismissed.

At this stage, Mr. R.N. Shah, the learned Counsel appearing for the appellant, requires the stay of the order of cancellation of the authorisation for a period of six weeks. We do not think that it is advisable and possible to grant this prayer when especially the authorisation has been cancelled for valid reasons. Hence, the prayer to stay the order of cancellation of the authorisation is refused.