When a public authority has entered into a contract with an individual and a problem crops up thereto, whether or not the aggrieved party can resort to Article 226 of the Constitution of India often arises. The law in this regard is well settled and is as follows;
(i) When public authority has already entered into a contract the relations are no longer governed by Constitutional provisions but by contract.
(ii) Within the field of contract violation of a Constitutional provision including Article 14 thereof cannot arise and all that a party can claim are only rights under a contract and such rights can be enforced only through Civil Proceedings and not through Writ Proceedings, which are inapt for deciding disputed questions of fact.
(iii) The State or its agency or instrumentality, and the private party stand on the same footing in the Law of Contract. State does not enjoy any special Governmental or statutory power,
(iv) Nor will principles of natural justice essential to State action in other contexts have any relevance or application when the impugned action is in pursuance of a contract.
The only exceptions being:
(i) When the contract is in exercise of a statutory power;
(ii) Where State is liable pursuant to promissory estoppel;
(iii) Where State is at ‘threshold’ of entering into contract in choosing the other party with which it wishes to deal.
KARNATAKA HIGH COURT -CHAMUNDI ROLLER FLOUR MILLS LTD.Vs. SENIOR REGIONAL MANAGER, FCI [(1992) ILR(Karnataka) 2160 : (1992) 1 KantLJ 579]
