Supreme Court in Mahabir Auto Stores and others Vs. Indian Oil Corporation and others held that the State or its instrumentality, when engaged in commercial transactions, must act reasonably, and should inform and take into confidence the adverse party against whom adverse action is contemplated. Any contractual dealings between the State and a citizen can never attract jural investigation under Article 226 of the Constitution. If there is a breach of contract, the same should be determined by the civil court and where a breach of contract is complained of, a party complaining of such breach may sue for specific performance of the contract, if the contract is capable of being specifically performed, or may sue for damages.
In Gujarat State Financial Corporation Vs. Lotus Hotels Pvt. Ltd. it was held that the State cannot commit breach of a solemn undertaking on which the other side has acted and then contend that the party suffering by a breach of contract may sue for damages but cannot compel specific performance of the contract. In Smt. Nilabati Behera alieas Lalita Behera Vs. State of Orissa and others, the Supreme Court held that it is not always enough to relegate a party to the ordinary remedy of a civil suit to claim damages for the tortuous act of the State as that remedy in private law is available to the aggrieved party. The Supreme Court held that the citizen complaining of the infringement of the indefeasible right under Article 21 of the Constitution cannot be told that for the established violation of the fundamental right of life, he cannot get any relief under the public law by the courts exercising writ jurisdiction.
Prerogative writs, therefore, have to evolve new tools to give relief in public law by moulding it according to the situation which it demands with a view to preserve and protect the rule of law.
(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.
(b) Merely because some disputed questions of facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of monetary claim is also maintainable.
