Case: Noble Resources Ltd Vs. State Of Orissa

3. Admittedly, the parties entered into a contract in terms whereof the Respondent No.2 herein was to supply 1,20,000 MT + / -10% each of Grade A, Grade B and Grade C iron ore fines by September 2003. On or about 28.02.2003, the parties also agreed that the supply of full tender quantity would be made in the sequence of C, B and A Grades iron ore fines at the prices offered by the Appellant. Indisputably, the Appellant disclosed the names of the parties with which it had entered into agreements to supply iron ore fines procured from the said Respondent. There is no dispute that supply of C-Grade iron ore fines had been made by the Respondent No.2. Indisputably, again supply of 64,236 MT of Grade-B iron ore fines had also been made. It is furthermore not in dispute that the Respondent No.2 offered 25,000 MT of Grade-A iron ore fines to the Appellant herein which was not accepted4. It appears that in regard to the supplies made from March, 2003 to September, 2003 there had been no complaint on the part of the Appellant about any breach of contract on the part of the Respondent No.2 On 05.09.2003, a fax was sent by the Appellant requesting the laycan in the following terms :"After the successful completion of mv Susan S, we now look forward to receiving the laycan for the next shipment of Grade-B Iron Ore Fines in the month of SeptemberWe look forward to receiving your confirmation at the earliest please, to enable us to nominate a suitable vessel."5. Yet again by a fax dated 09.09.2003, its request was reiterated stating that it had signed the sale contracts with some of its long term buyers and was looking forward for completing the balance shipments and honouring its commitment to both Respondent No. 2 and its buyers. A request was made by the Appellant seeking for personal intervention of the matter by the Chairman and Managing Director of Respondent No.26. The Board Sub-Committee On Sales Policy of Respondent No.2, however, by a resolution dated 22.09.2003 resolved :"Out of the total quantity of A, B & C grade Iron Ore fines, two C-grade and one B-grade material has been shipped by M/s Noble Resources Ltd., Hong Kong and another B-grade material is due to be loaded during the current month. It was informed that there is a stock of 60,000 MT A-grade material, 1 lakh MT B-grade material and 2.40 lakh MT C-grade material at Daitari. After receipt of information from L.C. and confirmed by Company Secretary, it was decided that 60,000 MT, A-grade material is to be shipped to M/s Noble resources, Hong Kong even after 30.08.03 and the party should be pursued not to insist for the balance quantity of A-grade as it is physically not available with OMCV and hence cannot supply the 2nd shipment of A-grade.""Further as NINL has agreed that they will be lifting Iron Ore Fines from October, 03 onwards, the requirement is to be reviewed and for the time being export sale of C-grade fines may be postponed. Therefore, the tender auction taken by OMC Ltd. should be cancelled invited in the News Paper and Website of OMC Ltd. for information of all concerned. On the basis of the above decision the tender for export sale of 1,80,000 MT of C-grade Iron Ore fines was cancelled."7. The said resolution was evidently taken in view of the increase of the rates of iron ore fines in the international market, which has gone up manifold. Yet again the Board Committee On Sales Policy of the Respondent No.2 decided as follows :"i) The validity of the tender will not be extended beyond 30.09.2003 and therefore no further quantity shall be supplied to M/s Noble Resources Ltdii) Fresh tender may be invited for B-Grade Iron Ore fines for one shipment and one shipment of C- Grade. However, while doing so it must be ensured that the quantity is available for export after meeting the requirement of NINL."8. However, despite a reminder, no action had been taken and in the meantime another invitation of tender was published. It is not in dispute that the Appellant also participated in the subsequent tender9. A writ petition was filed by the Appellant in the Orissa High Court. In its first counter affidavit the Respondent No.2, inter alia, stated :"That the Board Sub-Committee on Sales Policy held on 8.5.2993 of OMC Ltd., decided to review the export of Iron Ore fines on the basis of tender finalized in January-February, 2003. Basing on the above direction the Board of Directors in their 339th meeting held on 26.08.03 took the following decisions :"Regarding export of A-grade Iron ore fines, it was decided to examine if there is a penal provision in the agreement/tender for non- fulfillment of obligation on the part of OMC Ltd. It should also examine whether any legal complicacy arises if the A variety ore will be kept reserved for NINL. For the C-grade, Board approved for inviting fresh Tender"Accordingly, tender was floated for a quantity of 1,80,000/- MT +/- 10% of C-grade Iron Ore fines in all editions of ECONOMIC TIMES on 4.9.2003. The Board Sub-Committee on sale held on 22.09.2003 observed as follows :i) "Out of the total quantity of A B & C grade Iron Ore fines, two C-grade and one B-grade material has been shipped by M/s Noble Resources Ltd., Hong Kong and another B-grade materials is due to be loaded during the current month. It was informed that there is a stock of 60,000 MT A-grade materials, 1 lakh MT B-grade material and 2.40 lakh MT C-grade material at Daitori. After receipt of information from L.C. and confirmed by Company Secretary, it was decided that 60,000 MT, A-grade material is to be shipped to M/s Noble Resources, Hong Kong even after 30.08.2003 and the party should be perused not to insist for the balance quantity of A-grade as it is physically not available with OMC and hence cannot supply the 2nd shipment of A-grade"ii) "Further as NINL has agreed that they will be lifting Iron Ore fines from October 03 onwards, the requirement is to be reviewed and for the time being export sale of C-grade fines may be postponed. Therefore, the tender auction taken by OMC Ltd., should be cancelled invited in the News Paper and Website of OMC Ltd. for information of all concerned. On the basis of the above decision the tender for export sale of 1,80,000 MT of C-grade Iron Ore fines was cancelled11. That this matter was further referred to Board Committee on sales Policy held on 24.10.2003. The Committee decided as follows :i) The validity of the tender will not be extended beyond 30.09.2003 and therefore no further quantity shall be supplied to M/s Noble Resources Ltdii) Fresh tender may be invited for B-grade Iron Ore fines for one shipment and one shipment of C-grade. However, while doing so it must be ensured that the quantity is available for export after meeting the requirement of NINL."10. However, somehow a different stand was taken by the Respondent No.2 in its additional counter affidavit as it assigned the following reasons for its ability to supply iron ore fines, stating :"A) The primary crusher at Daitari which was an old plant got break down during the contractual period and the spares were not available in India for immediate repair. As a result production of "A" & "B" grade iron ore got affectedB) The working permission issued by the Government of India, Ministry of Environment and Forest expired on 13.03.2003 and the same was issued afresh by Government of India only on 9.4.2003, during which period there could not be any productionC) Production of "A" grade Ore was to be made by Selective Mining which could not be possible due to restrictions imposed by the Director General Mines, Safety, Government of IndiaD) Railway Rakes were not available for transportation of Iron Ore Fines from Daitari to Paradip, despite persuasion of OMC with the Railway AuthoritiesFurther, during the said contractual period OMC has not sold iron ore of any grade to any party other than to M/s. Neelachal Ispat Nigam Ltd., which is wholly Government owned undertaking with which Government of Orissa and OMC has a long term understanding for supply of iron Ore to sustain the steel plant of NINL."11. By reason of the impugned judgment, a Division Bench of the Orissa High Court dismissed the writ petition, inter alia, opining that it involved enforcement of a contract qua contract and thus not maintainable.

Court's reasoning:
15. It is trite that if an action on the part of the State is violative the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the courts scrutiny would be more intrusive, in the latter the court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on its part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matterIt may, however, be true that where serious disputed questions of fact are raised requiring appreciation of evidence, and, thus, for determination thereof, examination of witnesses would be necessary; it may not be convenient to decide the dispute in a proceeding under Article 226 of the Constitution of India45. Ordinarily, a specific performance of contract would not be enforced by issuing a writ of or in the nature of mandamus, particularly when keeping in view the provisions of the Specific Relief Act, 1963 damages may be an adequate remedy for breach of contract46. The questions as to whether OMC had the available stock of iron ore fines or the only ground to refuse supply thereof was the rise in international prices, are matters which could not have been fully and effectively adjudicated in the writ proceedings. It was difficult for the High to go into the other questions which have been raised before us by the Appellant, namely, the effect of the purported decision of OMC to offer to the Appellant 60,000 MT of A Grade iron ore fines provided the Appellant gave up all other contractual rights which stating the bad faith on the part of OMC. We may, however, notice that although a decision had allegedly been taken by OMC not to supply iron ore fines prior to the expiry of the contractual period, but the same had not been communicated. Its effect has to be determined keeping in view the fact as to whether the Appellant suffered any loss thereby. The reasons for non-supply, we may reiterate, may constitute a breach of contract but having regard to the conduct of the parties, it cannot be said that the same was so arbitrary so as to attract the wrath of Article 14 of the Constitution of India. Before us also what has been emphasized is the purported breaches of contract by the Respondent. A contention has also been raised by Mr. Desai that keeping in view the facts and circumstances of this case, this Court should mould the relief. We do not intend to do so and leave the parties to raise all contentions before an appropriate forum47. For the reasons aforementioned, we are of the opinion that although the approach of the High Court was not entirely correct, its ultimate decision to refuse to exercise its discretionary jurisdiction cannot be faulted with