Hon'ble Ajay Bhanot,J.
[Per Hon'ble Ajay Bhanot, J.]
1. I have the pleasure of reading the opinion rendered by my learned Brother on the Bench. I am in respectful disagreement with the same. Calling for a counter affidavit does not require elaborate reasons. But in view of the lengthy and erudite opinion of my learned Brother, I am constrained with all humility to set out some reasons why calling for counter affidavits from the respondents is necessary to subserve the ends of justice in this case.
2. Heard Shri N. C. Rajvanshi, learned Senior Counsel assisted by Shri Vishesh Rajvanshi, learned counsel for the petitioner, Shri Sanjay Goswami, learned Additional Chief Standing Counsel for the State-respondents and Shri Sumit Kakkar, learned counsel for the respondent no. 4-Stock Holding Corporation of India Limited.
3. The opinion will be structured in the following sequence:
I.
The stamp duty as a Levy and the U.P. E-Stamping Rules, 2013:
II.
Facts:
i. Agencies engaged in collection of stamp duty and their functions ii. Proposed agreement III.
Legal issues and analysis of facts in light of such legal perspectives :
i. Public functions and concept of authorities ii. Public law and contracts iii. Fundamental rights iv. Locus standi and maintainability IV.
Directions I. Stamp Duty as a Levy and the U.P. E-Stamping Rules:-
4. Stamp duty is levied on various transactions under the Indian Stamp Act, 1899 (hereinafter referred to as the "Act"). The stamp duty so levied is a compulsory exaction made from the citizens upon happening of the taxing event. The levy, measure, exaction and collection of the stamp duty like any other tax is a sovereign function of the State.
5. With the introduction of e-stamping system, the Uttar Pradesh E-Stamping Rules, 2013 (hereinafter referred to as the "Rules of 2013") were promulgated. The Rules of 2013 effectuate the purpose of the Act. Validly framed Rules are an integral part of the parent statute. The Hon'ble Supreme Court in the case of Udai Singh Dagar & Ors vs Union Of India, reported at 2007 (10) SCC 306 held:
"75.....inasmuch as a legislative Act must be read with the regulations framed. A subordinate legislation, as is well known, when validly framed, becomes a part of the Act."
6. Some of the relevant provisions of the Rules of 2013 are being extracted hereinunder for ease of reference and to facilitate the discussion.
7. Rule 2 of the Rules of 2013 is the definition clause, and provides for various definitions including agreement, appointing authority, Authorized Collection Centre, Central Record-keeping Agency :
"2. Definitions.--- (1) In these rules unless there is anything repugnant in the subject or context,--
(a) "Act" means the Indian Stamp Act, 1899 (Act No. 2 of 1899), as amended from time to time in its application to Uttar Pradesh;
(b) "Agreement" means the agreement executed between the Appointing Authority and the Central Record keeping Agency describing the terms and conditions of appointment of the Central Record- keeping Agency;
(c) "Appointing authority" means the Government or the Commissioner of Stamps, authorized by the Government in this behalf by notification in the Gazette for any specific purpose under these rules;
(d) "Approved Intermediaries" means the Central Record keeping Agency and the Authorized Collection Centers including all its offices and branches as appointed with the prior approval of the Government to act as an intermediary between the Government and the Stamp duty payer for collection of Stamp duty under these rules;
(e) "Authorized Collection Center" means an agent appointed by the Central Record keeping Agency, with the prior approval of the Government, to act as an intermediary between the Central Record-keeping Agency and the Stamp duty payer for collection of Stamp duty;
(f) "Central Record-keeping Agency" means an agency appointed by the appointing authority for computerization of Stamp duty Administration System in the State or in such places as the State Government may determine from time to time;"
8. The procedure for appointment of the Central Record-keeping Agency, is described in Part II of the Rules of 2013:
PART II APPOINTMENT OF CENTRAL RECORD KEEPING AGENCY "Rule 3: Eligibility criteria for appointment of Central Record-keeping Agency.- Any Public Financial Institution, Indian Scheduled Bank or a company engaged in providing depository services appointed by Central Government a company recognized by the Government either individually or in consortium may be eligible for appointment as Central Record-keeping Agency.
4. Appointment of Central Record-keeping Agency.-The Appointing Authority shall select and appoint by notification a suitable agency to function as Central Record-keeping Agency for the State to implement the Computerization of Stamp duty Administration System in specified places of the State as declared by him from time to time, by adopting in order of as mentioned below -
(a) on the basis of recommendations, if any, of the Central Government regarding appointment of Central Record-keeping Agency, issued from time to time;
(b) by inviting technical and commercial bids through a duly constituted expert Selection Committee.
5. Term of appointment.--The term of the Central Record-keeping Agency appointed under these rules shall be five years.
6. Central Record-keeping Agency to execute Agreement and Under- taking and Indemnity Bond.-(1) The appointment of the Central Record- keeping Agency shall be on the contract basis and the Agency shall enter into an Agreement in Form-1 with the Appointing Authority or the Government.
(2) The Central Record-keeping Agency shall alongwith the Agreement referred to in sub-rule (1) execute an Undertaking & Indemnity Bond in Form-2 appended to these rules, in favour of the Appointing Authority or in any other form as may be determined by the Government from time to time.
7. Termination of appointment of Central Record-keeping Agency.-(1) The appointment of the Central Record-keeping Agency may be terminated earlier than the agreed term of appointment, on the ground of any breach of obligation, or terms of agreement, or the provisions of these rules or the Act or, financial irregularity or for any other sufficient reason;
(2) However, the decision to terminate the appointment will be taken only--
(a) after the Central Record-keeping Agency has been given a three months show-cause notice specifying the details of grounds under sub-rule (1) and,
(b) after the Central Record-keeping Agency has been given a reasonable opportunity of being heard.
(c) after the explanation offered by the Central Record-keeping Agency has not been found to be satisfactory or,
(d) in case of breach of obligation, if the Central Record-keeping Agency fails to cure the breach within the three months period from the date of show-cause notice.
(3) lf the ground, on which the Appointing Authority has decided to terminate the appointment is such that it has also caused loss of revenue to the State, the Central Record-keeping Agency shall be bound to pay the complete amount of revenue loss, in addition to such amount of penalty as may be imposed by such authority;
(4) The amount of penalty that may be imposed under sub-rule (3) will not exceed up to an amount equal to twice the loss of revenue;
(5) On termination of appointment under this rules, the Central Record-keeping Agency shall transfer all the data generated during the period of appointment to the Government. After the termination of the appointment of the Central Record-keeping Agency, shall not use or cause to be used the data generated during the period of appointment for its business or a other purpose whatsoever.
8. Renewal of appointment of Central Record-keeping Agency.-(1) The application for renewal of appointment of the Central Record-keeping Agency will be made to the Appointing Authority at least three months before the expiry of the running term of appointment, (2) The Appointing Authority may, before taking decision on the application for renewal of the appointment of the Central Record-keeping Agency, call for any information or record from the Department or the Central Record-keeping Agency or the Authorized Collection Centers or any other person or body, (3) On being satisfied about the suitability of renewal the Appointing Authority may renew the appointment, (4) If the appointing Authority decides to renew the appointment, a fresh agreement referred in Rule 6(1) and undertaking and in Indemnity Bond referred to in Rule 6(2) will be executed with suitable amendments, if any.
(5) The Appointing Authority shall have power to refuse the renewal of the term of appointment for reasons to be recorded in writing."
9. Part III of the Rules of 2013 details the duties of the Central Record-keeping Agency.
PART-III DUTIES OF THE CENTRAL RECORD KEEPING AGENCY
9. Duties of Central Record-keeping Agency.--(1) The Central Record- keeping Agency shall be responsible for--
(a) creating need based infrastructure, hardware and software in designated places in consultation with the Appointing Authority and its connectivity with its main server;
(b) creating need based software in the offices of Registering Officers, and supervisory and controlling officers of the Department and at authorized collection centers, the point of contact for payment of Stamp duty, within the State or in such places of the State as specified from time to time by the Appointing Authority:
(c) Providing suitable and adequate training for operation and the use of the system to the personnel of the department as specified from time to time by the Appointing Authority;
(d) facilitating in selection of authorized collection centers for Collection of stamp duty and issuing e-stamp certificates;
(e) Co-ordinating between the central server of Central Record-keeping Agency Authorized collection centers (banks, etc.) and the office of the Registering Officers, and supervisory and controlling officers of the Department or any other office or, place in the state as may be specified by the Appointing Authority.
(f) collecting stamp duty and remitting it to the prescribed Head of Account of the State in accordance with these rules or else from time to time by the Government as the case may be;
(g) preparing and providing various reports as required under these rules and as required by the Commissioner of Stamps from time to time.
(2) The Central Record-keeping Agency shall-
(a) not provide, transfer or share any hardware, software, or any other technology or details in respect of the E-stamping project undertaken by it in the state to anybody without written permission of the Appointing Authority other than the duly appointed Authorized Collection Centers;
(b) deploy the E-stamping application after getting the security audit conducted by agency empanelled by the Government. The Security audit shall also be required whenever there is any change in the E-stamping application software's subsequently.
(c) maintain the logs of all the activities on the server dedicated for e-stamping and guidelines of Indian Computer Emergency Response Team "CERT.in" on regular basis.
10. Commission allowable to the Central Record-keeping Agency.- (1) The Central Record-keeping Agency shall be entitled to such agreed percentage of Commission on the amount of Stamp duty collected by Approved Intermediaries. The rate of Commission shall be notified by the Government in the Official Gazette.
(2) The Commission to the CRKA shall be subject to the condition of Rule 20 hereunder mentioned.
11. Specification of software to be used by Central Record-keeping Agency.-(1) The Central Record-keeping Agency shall have to design and use such software that the following minimum details are shown on the E-stamp certificate--
(a) distinguished Unique Identification number of the Certificate so that it is not repeated on any other certificate during the lifetime of the E-stamping system,
(b) date and time of issue,
(c) amount of stamp duty paid through the certificate in words and figures,
(d) name and address of the purchaser or authorized representative of the purchaser obtaining the E-stamp certificate,
(e) brief description of the instrument on which the stamp duty is intended to be paid,
(f) brief description of the property, if any, which is subject-matter of the instrument,
(g) code, location and district of the issuing branch of the Approved Intermediary,
(h) any other distinguishing mark of the certificate e.g. bar code etc., if any,
(i) space on the paper for signature and seal of the issuing officer/ authorized signatory of the Approved Intermediary.
(2) The software to be used by the Central Record-keeping Agency shall also provide for--
(a) facility to the Registering Officer to lock the E-stamp certificate used in an instrument which is to be presented for verification by him,
(b) facility to cancel spoiled, unused or not required for use E-stamp certificate,
(c) necessary user ID passwords and codes to be used by the designated officials of the department to search, access and view any E-stamp certificate and to access Management Information System and the Decision Support System. The Central Record- keeping Agency shall provide these passwords and codes to the concerned officials of the Department as directed by the Appointing Authority,
(d) availability of details of the issued E-stamp certificate on the E-Stamping Server maintained by the Central Record-keeping Agency,
(e) availability of the different transaction details and reports relating to E-stamping, on the website of the Central Record-keeping Agency which will be accessible to the officers mentioned in clause (c) of sub-rule (2)."
10. Part IV of the Rules of 2013 provides for appointment and duties of the Authorized Collection Centre:
PART IV AUTHORIZED COLLECTION CENTERS "Rule 12. Appointment of Authorized Collection Center.-The Central Record- keeping Agency may appoint agent(s), herein called Authorized Collection Centers, with prior approval of the Appointing Authority, to act as an intermediary between the Central Record-keeping Agency and the stamp duty payer for collection of stamp duty. The service charges or commission or Fee etc. payable to Authorized Collection Centers shall be paid by the Central Record- keeping Agency at their own level as mutually agreed between them.
13. Eligibility criteria for appointment of Authorized Collection Centre.-- Any scheduled bank, any financial institution or undertaking controlled by the Reserve Bank of India or Financial Institution or Undertaking controlled by the Government, or the Post Office will be eligible for appointment Collection Centre, subject to prior approval of the Appointing Authority under Rule 12.
14. Branches of Central Record-keeping Agency also to collect Stamp duty.--All the offices/branches of the Central Record-keeping Agency in specified places of the State, as declared by Appointing Authority from to time collect the payment of Stamp duty for which separate approval from Appointing Authority under Rule 12 will not be required.
15. Infrastructure.---All such Approved Intermediaries shall be equipped with the required computers, printers, internet connectivity and other related infrastructure which is necessary to implement the E-stamping system a specified by the Central Record-keeping Agency from time to time.
16. Cost of Infrastructure.----The cost of providing equipment and infrastructure referred to in Rule 15 will be borne by the concerned Approved Intermediaries.
17. State to provide necessary hardware and infrastructure in the offices of the Department.----The Government shall make arrangements for necessary infrastructure at the Offices of Registering Officers, and offices of their supervisory and controlling officers, which would include the Computers, printers, bar code scanners, internet connection, etc as specified by the Central Record- keeping Agency from time to time.
18. Termination of agency of Authorized Collection Centre.----The Appointing Authority may at any time, for reasons to be recorded in writing, advice the Central Record-keeping Agency to terminate the agency of any Authorized Collection Centre and the Central Record-keeping Agency shall on such advice terminate the agency of such Authorized Collection Centre.
19. Minimum Value limit of e-stamp certificate.----(i) The e-stamp certificates may be issued only for amounts exceeding Rs. 9999 (Rupees nine thousand nine hundred ninety nine) or such other minimum amount as may be specified by the Appointing Authority from time to time.
(ii) The limit referred to in sub rule (i) shall not apply to issue of e-stamp certificate for payment of additional stamp duty under Rule 28."
II. Facts:-
i. Agencies engaged in collection of stamp duty and their functions:-
11. The Rules of 2013 provide for a mechanism for collection of stamp duty, and also for appointment of agencies to accomplish the said task. Sale of e-stamps and collection of stamp duty involves the State, the Central Record-keeping Agency and Authorized Collection Centre. The aforesaid entities are interconnected with a chain of contracts which delineate the interse rights and obligations of the aforesaid parties. This is in brief the scheme of the Rules of 2013.
12. The Authorized Collection Centre is essentially a private citizen who is engaged in the business of stamp vending. The petitioner is the union of stamp vendors in the State of Uttar Pradesh. There are almost forty five thousand stamp vendors who are the members of the petitioner Union. All members of the petitioner Union are desirous of being appointed as Authorized Collection Centres under the Rules of 2013. The petitioner has approached this Court in a representative capacity, claiming to represent all stamp vendors in the State of Uttar Pradesh.
13. The Stock Holding Corporation of India Limited (hereinafter referred to as SHCIL) has been appointed as the Central Record-keeping Agency by the appointing authority under the Rules of 2013. From the record of the writ petition the attributes of SHCIL cannot be determined with certainty. The website of SHCIL informs that it is a public sector undertaking.
ii. Proposed agreement:-
14. The SHCIL/Central Record-keeping Agency has taken out a proforma of an agreement proposed between the SHCIL/ Central Record-keeping Agency and the prospective Authorized Collection Centre. The agreement is purportedly relatable to Rule 12 of the Rules of 2013. Clause 7 of the proposed agreement provides for commission to the Authorized Collection Centre is extracted hereinunder:
COMMISSION TO THE ACC:-
"i. The ACC shall be entitled to 23% of the commission earned by SHCIL from the State of UTTAR PRADESH for such e-Stamps generated by the ACC in the State of UTTAR PRADESH. The commission will be paid separately to the ACC after the end of every month by SHCIL. This amount is inclusive of any tax and other statutory levies that may be imposed at any time or from time to time for the collections through e-Stamping mechanism. Any change shall be made with mutual consent.
(ii) Service charges may be levied by the ACC and collected from the purchaser/customer as and when permitted by the State Government."
15. The commission received by the Central Record-keeping Agency/SHCIL, from the State of Uttar Pradesh is not revealed in the said proforma agreement, nor has it been otherwise disclosed to the petitioner either by the State Government or by the SHCIL. Consequently the amount of commission to which the Authorized Collection Centre is entitled under the proposed contract with SHCIL cannot be determined. This makes the proposed agreement between the Authorized Collection Centre and the Central Record-keeping Agency / SHCIL vague and uncertain.
16. The petitioner has pointed out a further anomaly resulting from the contract which goes to the root. The pleadings in the writ petition assert that as per the knowledge of the petitioner, the amount of commission to which the SHCIL/Central Record-keeping Agency is entitled from the State Government is at the rate of 0.5% on the sale of e-stamps worth Rupees one lakh. As per the proposed contract the Authorized Collection Centre is entitled to 23% of the said amount towards commission. Accordingly, the commission to which the Authorized Collection Centre will be entitled upon the sale of e-stamps worth Rs. 1 lakh is Rs. 115/-. The Authorized Collection Centre is required to predeposit an amount of Rs. 1 lakh in its bank account as advance, for purchase of e-stamps from the SHCIL / Central Record-keeping Agency of equivalent value. Upon deposit of said amount, a sum of Rs. 250/- is charged by the bank as cash handling charge. Hence the Authorized Collection Centre is sure to suffer a certain financial loss on each transaction of purchase and sale of stamps.
17. The proposed agreement thus creates an assurance of certain losses for the Authorized Collection Centre. Ordinary prudence would have it that no private entity will enter into a contract where loss is certain. (These consequences are being drawn on a plain reading of the writ petition, and without the benefit of pleadings from the respondents by counter affidavits).
III. Legal issues and analysis of facts in light of such legal perspectives:-
i. Public functions and concept of authorities:-
18. Rapid advances in science and technology in modern times, have caused far-reaching changes in administration and concepts of governance. Hitherto sovereign and public functions were the exclusive monopoly of the State and at times its instrumentalities. No private entities or parties entered into the fray. Changes wrought by the economic development and technological progress, opened up the space of public functions to private players as well. Public functions no longer remain in the exclusive domain of the State. In many instances private entities have been either exclusively performing public functions, or supporting the State in performance of such functions.
19. Private entities which discharge public functions, in pursuance of and under the framework of a statute, may be called hybrid instrumentalities. They are not State instrumentalities in the current understanding of Article 12 of the Constitution of India. Such hybrid instrumentalities are defined by the nature of functions they perform, and not by organizational attributes. These hybrid instrumentalities pose a challenge to our existing concepts of public law or administrative law. The advantage of exists good authority to guide the discussion in this regard. The courts have addressed these challenges creatively, and have not approached these issues pedantically.
20. Courts today recognize that private entities can discharge public functions. Judicial pronouncements have brought such bodies under the regime of public law. Authorities in point hold that actions of such bodies are subject to judicial review, and the public functions performed by these hybrid instrumentalities are to be tested on established principles of public law. The hybrid instrumentalities discharging public functions cannot claim immunity from judicial review, in regard to the public functions they perform.
21. The narrative shall now be fortified by cases in point.
22. The Hon'ble Supreme Court in the case of Zee Telefilms Ltd. & Anr vs Union Of India, reported at 2005 (4) SCC 649, deduced the concept of public functions from the cumulative consideration of various factors, including the nature of duties being discharged by a body and held these bodies amenable to writ jurisdiction:
"143. Governmental functions are multifacial. There cannot be a single test for defining public functions. Such functions are performed by a variety of means.
144.Furthermore, even when public duties are expressly conferred by statute, the powers and duties do not thereunder limit the ambit of a statute, as there are instances when the conferment of powers involves the imposition of duty to exercise it, or to perform some other incidental act, such as obedience to the principles of natural justice. Many public duties are implied by the courts rather than commanded by the legislature; some can even be said to be assumed voluntarily. Some statutory public duties are "prescriptive patterns of conduct" in the sense that they are treated as duties to act reasonably so that the prescription in these cases is indeed provided by the courts, not merely recognised by them.
145. A.J. Harding in his book Public Duties and Public Law summarised the said definition in the following terms:
"1. There is, for certain purposes (particularly for the remedy of mandamus or its equivalent), a distinct body of public law.
2. Certain bodies are regarded under that law as being amenable to it.
3. Certain functions of these bodies are regarded under that law as prescribing as opposed to merely permitting certain conduct.
4. These prescriptions are public duties."
146. In Donoghue [2002 QB 48 : (2001) 4 All ER 604 : (2001) 3 WLR 183 (CA)] it is stated: (All ER p. 619, para 58) "58. We agree with Mr Luba's submissions that the definition of who is a public authority, and what is a public function, for the purposes of Section 6 of the 1998 Act, should be given a generous interpretation."
147. There are, however, public duties which arise from sources other than a statute. These duties may be more important than they are often thought or perceived to be. Such public duties may arise by reason of (i) prerogative, (ii) franchise, and (iii) charter. All the duties in each of the categories are regarded as relevant in several cases. (See A.J. Harding's Public Duties and Public Law, pp. 6 to 14.)
148. The functions of the Board, thus, having regard to its nature and character of functions would be public functions.
149. All public and statutory authorities are authorities. But an authority in its etymological sense need not be a statutory or public authority. Public authorities have public duties to perform.
150. In Aston Cantlow and Wilmcote with Billesley Parochial Church Council v. Wallbank [(2004) 1 AC 546 : (2003) 3 WLR 283 : 2003 UKHL 37] albeit in the context of the (British) Human Rights Act, 1998, it was held:
"... This feature, that a core public authority is incapable of having convention rights of its own, is a matter to be borne in mind when considering whether or not a particular body is a core public authority...."
See also Hampshire County Council v. Graham Beer t/a Hammer Trout Farm [2003 EWCA Civ 1056] and Parochial Church Council of the Parish of Aston Cantlow v. Wallbank[(2004) 1 AC 546 : (2003) 3 WLR 283 : 2003 UKHL 37] , UKHL para 52. There, however, exists a distinction between a statutory authority and a public authority. A writ not only lies against a statutory authority, it will also be maintainable against any person and a body discharging public function who is performing duties under a statute. A body discharging public functions and exercising monopoly power would also be an authority and, thus, writ may also lie against it.
152. Judicial review forms the basic structure of the Constitution. It is inalienable. Public law remedy by way of judicial review is available both under Articles 32 and 226 of the Constitution. They do not operate in different fields. Article 226 operates only on a broader horizon.
153. The courts exercising the power of judicial review both under Articles 226, 32 and 136 of the Constitution act as a "sentinel on the qui vive". (See Padma v. Hiralal Motilal Desarda [(2002) 7 SCC 564] , SCC at p. 577.)
154. A writ issues against a State, a body exercising monopoly, a statutory body, a legal authority, a body discharging public utility services or discharging some public function. A writ would also issue against a private person for the enforcement of some public duty or obligation, which ordinarily will have statutory flavour.
155. Judicial review casts a long shadow and even regulating bodies that do not exercise statutory functions may be subject to it. [Constitutional and Administrative Law, by A.W. Bradley and K.D. Ewing (13th Edn.), p. 303.]
156. Having regard to the modern conditions when the Government is entering into business like the private sector and also undertaking public utility services, many of its actions may be State action even if some of them may be non-governmental in the strict sense of the general rule. Although the rule is that a writ cannot be issued against a private body but thereto the following exceptions have been introduced by judicial gloss:
(a) Where the institution is governed by a statute which imposes legal duties upon it.
(b) Where the institution is "State" within the meaning of Article 12.
(c) Where even though the institution is not "State" within the purview of Article 12, it performs some public function, whether statutory or otherwise.
157. Some of the questions involved in this matter have recently been considered in an instructive judgment by the Delhi High Court in Rahul Mehra v. Union of India [(2004) 114 DLT 323 (DB)] . Having regard to the discussions made therein, probably it was not necessary for us to consider the question in depth but its reluctance to determine as to whether the Board is a State within the meaning of Article 12 of the Constitution necessitates further and deeper probe.
158. The power of the High Court to issue a writ begins with a non obstante clause. It has jurisdiction to issue such writs to any person or authority including in appropriate cases any Government within its territorial jurisdiction, directions, orders or writs specified therein for the enforcement of any of the rights conferred by Part III and for any other purpose. Article 226 confers an extensive jurisdiction on the High Court vis-à-vis this Court under Article 32 in the sense that writs issued by it may run to any person and for purposes other than enforcement of any rights conferred by Part III; but having regard to the term "authority" which is used both under Article 226 and Article 12, we have our own doubts as to whether any distinction in relation thereto can be made. (See Rohtas Industries Ltd. v. Rohtas Industries Staff Union [(1976) 2 SCC 82 : 1976 SCC (L&S) 200 : AIR 1976 SC 425] .)"
23. Recognizing the fact that the phrase "public function" eludes precise definition, the Hon'ble Supreme Court in the case of G. Bassi Reddy Vs. International Crops Research Institute, reported at 2003 (4) SCC 225, attempted to understand it from a consideration of an aggregate of various factors. But explained it mainly in terms of the nature function discharged and duty owed to the public by a body:
"28. A writ under Article 226 can lie against a "person" if it is a statutory body or performs a public function or discharges a public or statutory duty (Praga Tools Corpn. v. C.A. Imanual [(1969) 1 SCC 585 : AIR 1969 SC 1306], Shri Anadi Mukta Sadguru Trust v. V.R. Rudani [(1989) 2 SCC 691] SCC at p. 698 and VST Industries Ltd. v. Workers' Union[(2001) 1 SCC 298 : 2001 SCC (L&S) 227] ). ICRISAT has not been set up by a statute nor are its activities statutorily controlled. Although, it is not easy to define what a public function or public duty is, it can reasonably be said that such functions are similar to or closely related to those performable by the State in its sovereign capacity.(emphasis supplied). The primary activity of ICRISAT is to conduct research and training programmes in the sphere of agriculture purely on a voluntary basis. A service voluntarily undertaken cannot be said to be a public duty. Besides ICRISAT has a role which extends beyond the territorial boundaries of India and its activities are designed to benefit people from all over the world. While the Indian public may be the beneficiary of the activities of the Institute, it certainly cannot be said that ICRISAT owes a duty to the Indian public to provide research and training facilities. In Praga Tools Corpn. v. C.V. Imanual [(1969) 1 SCC 585 : AIR 1969 SC 1306] this Court construed Article 226 to hold that the High Court could issue a writ of mandamus "to secure the performance of a public or statutory duty in the performance of which the one who applies for it has a sufficient legal interest".
24. The two entities, namely, Central Record-keeping Agency and Authorized Collection Centre are appointed by the manner prescribed in the Rules of 2013, and thus have a statutory origin. Under the Rules of 2013, these two agencies support the State Government in performance of its sovereign function, namely, the exaction/collection of the stamp duty through sale of e-stamps. The Rules of 2013 reveal that the Central Record-keeping Agency and Authorized Collection Centre, are an integral part of and play a critical role in the statutory mechanism of collection of stamp duty through sale of e-stamps. An agreement is executed between the State Government, and the Central Record-keeping Agency as provided in the Rules of 2013. Similarly, an agreement is also contemplated under Rule 12 of the Rules of 2013, between the Central Record-keeping Agency and the Authorized Collection Centre. The contract between the Central Record-keeping Agency and the Authorized Collection Centre creates the framework of interse rights and obligations between the parties. The covenants of the said agreement enable both entities to discharge their statutory functions, in furtherance of the larger sovereign function of collection of stamp duty.
25. The cumulative effect of the aforesaid facts is that the Central Record-keeping Agency and Authorized Collection Centre, discharge public functions. Consequently their actions including the proposed agreement can be judicially reviewed, and the same are accountable to public law.
ii. Public law and contracts:-
26. It is well settled that the court cannot rewrite the contract between the parties. Moreso, in this case it is not the ken of the court to determine the commission to be paid to either party. However, it is very much concern of the court to enquire whether the proposed agreement between the Central Record-keeping Agency/SHCIL and the Authorized Collection Centre is consistent with the law of the land or not.
27. The first principle of contracts is party autonomy. The parties are free to decide the terms of any mutual agreement, and give it the shape of a contract. However, the freedom to contract is restricted by law. The Indian Contract Act, 1872, contains a restriction on the terms of a contract. Section 23 of the Indian Contract Act, 1872, voids certain contracts for various reasons. A specific prohibition exists in Section 23 against contracts which are contrary to existing law. The provision is being extracted hereinunder:
" Section 23. What consideration and objects are lawful, and what not.-- The consideration or object of an agreement is lawful, unless--
it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void."
28. There are other limitations on the creation of contracts under the public law. Some salient aspects of the proposed agreement between the Central Record-keeping Agency /SHCIL, and the Authorized Collection Centre will now be considered. The proposed agreement is not a simplicitor commercial contract. Public functions will be discharged by the parties in the framework of the said contract. There is a dominant public law element in the aforesaid contract. The parties to the contract also perform statutory functions under the Rules of 2013. The said agreement fulfills a statutory purpose. A contract between the Authorized Collection Centre, and the Central Record-keeping Agency is critical to the existence of the Authorized Collection Centre, and for its efficient functioning to implement the scheme of the Act and the Rules of 2013. The proposed agreement has to be compliant with the requirements of public law.
29. It has to be seen whether on the basis of plain assertions in the writ petition, the proposed agreement between the Central Record-keeping Agency and the Authorized Collection Centre is in accord with the provisions of the Indian Contract Act, and the demands of public law. The requirements posed by the public law are infact an extension of Section 23 of the Indian Contract Act. This discussion can profit from good authority in point.
30. The scope of judicial interference in cases where public law is applicable to a contract, and conformity of such contracts to requirements of public law arose for consideration before the Hon'ble Supreme Court in Mahabir Auto Stores & Ors vs Indian Oil Corporation reported at AIR 1990 SC 1031. The Hon'ble Supreme Court while exhaustively determining the contours of public law in a contract held:
"12. It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. Reliance in this connection may be placed on the observations of this Court in Radha Krishna Agarwal v. State of Bihar [(1977) 3 SCC 457] . It appears to us, at the outset, that in the facts and circumstances of the case, the respondent company IOC is an organ of the State or an instrumentality of the State as contemplated under Article 12 of the Constitution. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercises of power. Therefore, the action of State organ under Article 14 can be checked. See Radha Krishna Agarwal v. State of Bihar[(1977) 3 SCC 457] at p. 462, but Article 14 of the Constitution cannot and has not been construed as a charter for judicial review of State action after the contract has been entered into, to call upon the State to account for its actions in its manifold activities by stating reasons for such actions. In a situation of this nature certain activities of the respondent company which constituted State under Article 12 of the Constitution may be in certain circumstances subject to Article 14 of the Constitution in entering or not entering into contracts and must be reasonable and taken only upon lawful and relevant consideration; it depends upon facts and circumstances of a particular transaction whether hearing is necessary and reasons have to be stated. In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a governmental action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. In this connection reference may be made to E.P. Royappa v. State of Tamil Nadu [(1974) 4 SCC 3 : 1974 SCC (L&S) 165], Maneka Gandhi v. Union of India [(1978) 1 SCC 248],Ajay Hasia v. Khalid Mujib Sehravardi[(1981) 1 SCC 722 : 1981 SCC (L&S) 258], R.D. Shetty v. International Airport Authority of India [(1979) 3 SCC 489] and also Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay [(1989) 3 SCC 293]. It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination in the type of the transactions and nature of the dealing as in the present case.
18. Having considered the facts and circumstances of the case and the nature of the contentions and the dealing between the parties and in view of the present state of law, we are of the opinion that decision of the State/public authority under Article 298 of the Constitution, is an administrative decision and can be impeached on the ground that the decision is arbitrary or violative of Article 14 of the Constitution of India on any of the grounds available in public law field. It appears to us that in respect of corporation like IOC when without informing the parties concerned, as in the case of the appellant-firm herein on alleged change of policy and on that basis action to seek to bring to an end to course of transaction over 18 years involving large amounts of money is not fair action, especially in view of the monopolistic nature of the power of the respondent in this field. Therefore, it is necessary to reiterate that even in the field of public law, the relevant persons concerned or to be affected, should be taken into confidence. Whether and in what circumstances that confidence should be taken into consideration cannot be laid down on any strait-jacket basis. It depends on the nature of the right involved and nature of the power sought to be exercised in a particular situation. It is true that there is discrimination between power and right but whether the State or the instrumentality of a State has the right to function in public field or private field is a matter which, in our opinion, depends upon the facts and circumstances of the situation, but such exercise of power cannot be dealt with by the State or the instrumentality of the State without informing and taking into confidence, the party whose rights and powers are affected or sought to be affected, into confidence. In such situations most often people feel aggrieved by exclusion of knowledge if not taken into confidence."
31. Certainty is both a virtue and a requirement for a valid contract in private law and public law. A contract may be voided for uncertainty. The mandate of Section 29 of the Indian Contract Act in regard to the consequences of uncertainty in an agreement, was explained by the Hon'ble Supreme Court in Delhi Development Authority, vs Joint Action Committee, Allottee reported at 2008 (2) SCC 672 in the following manner:
"80. A definite price is an essential element of binding agreement. A definite price although need not be stated in the contract but it must be worked out on some premise as was laid down in the contract. A contract cannot be uncertain. It must not be vague. Section 29 of the Contract Act reads as under:
"29. Agreements void for uncertainty.--Agreements, the meaning of which is not certain, or capable of being made certain, are void."
A contract, therefore, must be construed so as to lead to a conclusion that the parties understood the meaning thereof. The terms of agreement cannot be vague or indefinite. No mechanism has been provided for interpretation of the terms of the contract. When a contract has been worked out, a fresh liability cannot be thrust upon a contracting party.
81. It is well settled that a definite price is an essential element of a binding agreement. Although a definite price need not be stated in the contract, but assertion thereof either expressly or impliedly is imperative."
32. A contract cannot be opposed to public policy. Public policy is also a term that has eluded precise definition. However, there is good authority to enable us to distill the import of the term as applicable to the facts of the case. Suffice it to say that the concept of public policy takes its colour from the facts of the case, and draws its content from felt needs of the time. Law enacted by the legislature is most often the best guide to public policy.
33. The Hon'ble Supreme Court after setting its face against an unconscionable term in a contract and voiding a contract opposed to public policy, in the case of Central Inland Water vs Brojo Nath Ganguly, reported at AIR 1986 SC 1571, made the following exposition on public policy:
"76. Under which head would an unconscionable bargain fall? If it falls under the head of undue influence, it would be voidable but if it falls under the head of being opposed to public policy, it would be void. No case of the type before us appears to have fallen for decision under the law of contracts before any court in India nor has any case on all fours of a court in any other country been pointed out to us. The word "unconscionable" is defined in the Shorter Oxford English Dictionary, 3rd Edn., Vol. II, p. 2288, when used with reference to actions etc. as "showing no regard for conscience; irreconcilable with what is right or reasonable". An unconscionable bargain would, therefore, be one which is irreconcilable with what is right or reasonable.
77. Although certain types of contracts were illegal or void, as the case may be, at common law, for instance, those contrary to public policy or to commit a legal wrong such as a crime or a tort, the general rule was of freedom of contract. This rule was given full play in the nineteenth century on the ground that the parties were the best judges of their own interests, and if they freely and voluntarily entered into a contract, the only function of the court was to enforce it. It was considered immaterial that one party was economically in a stronger bargaining position than the other; and if such a party introduced qualifications and exceptions to his liability in clauses which are today known as "exemption clauses" and the other party accepted them, then full effect would be given to what the parties agreed. Equity, however, interfered in many cases of harsh or unconscionable bargains, such as, in the law relating to penalties, forfeitures and mortgages. It also interfered to set aside harsh or unconscionable contracts for salvage services rendered to a vessel in distress, or unconscionable contracts with expectant heirs in which a person, usually a money lender, gave ready cash to the heir in return for the property which he expects to inherit and thus to get such property at a gross undervalue. It also interfered with harsh or unconscionable contracts entered into with poor and ignorant persons who had not received independent advice (See Chitty on Contracts, 25th Edn., Vol. I, paras 4 and 516).
92. The Indian Contract Act does not define the expression "public policy" or "opposed to public policy". From the very nature of things, the expressions "public policy", "opposed to public policy", or "contrary to public policy" are incapable of precise definition. Public policy, however, is not the policy of a particular government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new concepts take the place of old, transactions which were once considered against public policy are now being upheld by the courts and similarly where there has been a well recognized head of public policy, the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from inventing a new head of public policy. There are two schools of thought-- "the narrow view" school and "the broad view" school. According to the former, courts cannot create new heads of public policy whereas the latter countenances judicial law-making in this area. The adherents of "the narrow view" school would not invalidate a contract on the ground of public policy unless that particular ground had been well-established by authorities. Hardly ever has the voice of the timorous spoken more clearly and loudly than in these words of Lord Davey in Janson v. Driefontein Consolidated Gold Mines Ltd.[(1902) AC 484, 500] : "Public policy is always an unsafe and treacherous ground for legal decision". That was in the year 1902. Seventy-eight years earlier, Burrough, J., in Richardson v. Mellish [(1824) 2 Bing 229, 252 : 130 ER 294, 303 and (1824-34) All ER 258, 266] described public policy as "a very unruly horse, and when once you get astride it you never know where it will carry you". The Master of the Rolls, Lord Denning, however, was not a man to shy away from unmanageable horses and in words which conjure up before our eyes the picture of the young Alexander the Great taming Bucephalus, he said in Enderby Town Football Club Ltd. v. Football Assn. Ltd. [(1971) Ch 591, 606] : "With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles." Had the timorous always held the field, not only the doctrine of public policy but even the common law or the principles of Equity would never have evolved. Sir William Holdsworth in his History of English Law Vol. III, p. 55, has said:
"In fact, a body of law like the common law, which has grown up gradually with the growth of the nation, necessarily acquires some fixed principles, and if it is to maintain these principles it must be able, on the ground of public policy or some other like ground, to suppress practices which, under ever new disguises, seek to weaken or negative them."
It is thus clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution.
93.The normal rule of Common Law has been that a party who seeks to enforce an agreement which is opposed to public policy will be non-suited. The case of A. Schroeder Music Publishing Co. Ltd. v. Macaulay [(1974) 1 WLR 1308] however, establishes that where a contract is vitiated as being contrary to public policy, the party adversely affected by it can sue to have it declared void. The case may be different where the purpose of the contract is illegal or immoral. In Kedar Nath Motani v. Prahlad Rai [AIR 1960 SC 213 : (1960) 1 SCR 861] reversing the High Court and restoring the decree passed by the trial court declaring the appellants' title to the lands in suit and directing the respondents who were the appellants' benamidars to restore possession, this Court, after discussing the English and Indian law on the subject, said: (at p. 873) "The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Williston and the plaintiff is not required to rest his case upon that illegality, then public policy demands that the defendant should not be allowed to take advantage of the position. A strict view, of course, must be taken of the plaintiff's conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by misstating the facts. If, however, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the court, the plea of the defendant should not prevail."
The types of contracts to which the principle formulated by us above applies are not contracts which are tainted with illegality but are contracts which contain terms which are so unfair and unreasonable that they shock the conscience of the court. They are opposed to public policy and require to be adjudged void."
34. An elucidation of the concept of public policy was also made by the Hon'ble Supreme Court in Oil & Natural Gas Corporation Ltd vs Saw Pipes Ltd reported at 2003 (5) SCC 705:
"17.....It is thus clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the fundamental rights and the directive principles enshrined in our Constitution."
35. The proposition that true and faithful implementation of the existing statutory provisions is best public policy is applicable to the instant case also.
36. The facts prised out in the earlier part of the narrative may now be considered in light of the preceding authorities.
37. From the pleadings it transpires that the exact commission payable to the SHCIL/Central Record-keeping Agency from the State Government is not known, and remains shrouded in opacity. Consequently, the exact commission to which the Authorized Collection Centre is entitled, cannot be determined. Business decisions cannot be taken in absence of material facts, which are in the knowledge of one of the parties but not disclosed to the other contracting party.
38. These features of the proposed agreement run counter to the requirement of fairness and transparency in contracts coming in the ambit of public law. Vague terms and uncertainty in the contract can exist on the pain of invalidation under Section 29 of the Indian Contract Act.
39. As seen earlier, this is not a business /commercial contract simplicitor. Hence the concept of unequal bargaining power could well apply to the facts of the case. The SHCIL is apparently exerting its superior bargaining power over the Authorized Collection Centre, to induce the latter into an unequal contract. The offending part of the proposed agreement appears to be opposed to public policy, and seems unconscionable. But the issue can be decided with finality only after exchange of pleadings.
40. There is another aspect of the matter. The Rules of 2013 contemplate three agencies, namely, the State, Central Record-keeping Agency and the Authorized Collection Centre, in the mechanism of collection of Stamp Duty. The Authorized Collection Centre has a critical role, and an important function to discharge under the statutory Rules. The Authorized Collection Centre cannot be eliminated from the said scheme of collection of stamp duty, nor can it be made redundant. The terms of the proposed agreement, has an assurance of certain losses in the functioning of the Authorized Collection Centre. The functionality of the Authorized Collection Centre would become impossible, and its existence would be untenable if the agreement proposed by the Central Record-keeping Agency/SHCIL is made operational.
41. True that Rule 12 of the Rules of 2013 empowers the Central Record-keeping Agency, and the Authorized Collection Centre to create a contract "at their own level as mutually agreed between them". However, the provision does not grant discretion to Central Record-keeping Agency to create an agreement, which will lead to the destruction of the Authorized Collection Centre, or produce a stillborn entity. The agreement under Rule 12 of the Rules of 2013, has to effectuate the purpose of the said Rules, and not frustrate it. In this manner the proposed contract appears to violate the law.
iii. Fundamental rights:-
42. Article 19(1)(g) of the Constitution of India confers a right to practise any profession or to carry on any occupation, trade or business to all citizens. Article 19(1)g of the Constitution of India is extracted hereinunder:
"19 (1) g: All citizens shall have the right to practise any profession, or to carry on any occupation, trade or business."
43. The constitutionally permissible restrictions to the fundamental right to practise any profession or carry on any occupation, trade or business are contained in Article 19(6):
"(6) Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause, and, in particular, [nothing in the said sub clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to,--
(i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or
(ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise]."
44. The phrases "practise any profession" or "carry on any occupation, trade or business" occurring in Article 19(1)(g) of the Constitution of India have a wide ambit. These compendious expressions have been interpreted liberally by the constitutional courts. Only those activities which are "res extra commercium" are excluded from the scope of Article 19(1)(g) of the Constitution of India. The validity of restrictions on the fundamental right which are imposed by law, and regulation of various trades, occupation, professions and business by statutes, have to be tested on the anvil of the permissible restrictions to the fundamental right contemplated in Article 19(6) of the Constitution of India.
45. The right to trade in e-stamps comes within the embrace of Article 19(1)(g) of the Constitution of India. This, however, does not mean that any person has a fundamental right to be appointed as an Authorized Collection Centre. The appointment of Authorized Collection Centre is strictly governed and regulated by the Rules of 2013, and has to be made according to the said Rules.
46. Thus subject to the restrictions imposed by the law, (in this case the Indian Stamp Act, 1899, read with Uttar Pradesh E-Stamping Rules, 2013), the members of the petitioner have a fundamental right to trade in e-stamps. According to the petitioner, the offending condition in the proposed contract and actions of the respondents, curtail the fundamental right of the petitioner in contravention of the permissible restrictions under Article 19(6) of the Constitution of India, and violate Article 19(1)(g) of the Constitution of India.
47. The directions issued by the Reserve Bank of India to regulate the business of finance and investments, came to be assailed before the Hon'ble Supreme Court, in Peerless General Finance and Investment Co. Ltd. vs Reserve Bank Of India, reported at 1992 (2) SCC 343, on the foot that the aforesaid regulation amounted to an unreasonable restriction on the fundamental right of the petitioner to carry on any occupation, trade or business guaranteed by Article 19(1)(g) of the Constitution of India.
48. Reiterating the role of the constitutional courts as the sentinel of fundamental rights, and their scrupulous duty to uphold fundamental rights, the Hon'ble Supreme Court in Peerless General Finance and Investment Co. Ltd. (supra), described the scope of the fundamental right under Article 19(1)(g) of the Constitution of India and nature of the enquiry by the court into an allegation of the violation of the same:
"47. The question emerges whether paragraphs (6) and (12) are ultra vires Articles 19(1)(g) and 14 of the Constitution. Article 19(1)(g) provides fundamental rights to all citizens to carry on any occupation, trade or business. Clause (6) thereof empowers the State to make any law imposing, in the interest of the general public, reasonable restrictions on the exercise of the said rights. Wherever a statute is challenged as violative of the fundamental rights, its real effect or operation on the fundamental rights is of primary importance. It is the duty of the Court to be watchful to protect the constitutional rights of a citizen as against any encroachment gradually or stealthily thereon. When a law has imposed restrictions on the fundamental rights, what the Court has to examine is the substance of the legislation without being beguiled by the mere appearance of the legislation. The legislature cannot disobey the constitutional mandate by employing an indirect method. The Court must consider not merely the purpose of the law but also the means how it is sought to be secured or how it is to be administered. The object of the legislation is not conclusive as to the validity of the legislation. This does not mean the constitutionality of the law shall be determined with reference to the manner in which it has actually been administered or operated or probably been administered or operated by those who are charged with its implementation. The Court cannot question the wisdom, the need or desirability of the regulation. The State can regulate the exercise of the fundamental right to save the public from a substantive evil. The existence of the evil as well as the means adopted to check it are the matters for the legislative judgment. But the Court is entitled to consider whether the degree and mode of the regulation is in excess of the requirement or is imposed in an arbitrary manner. The Court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether it overstepped the limits of social legislation. Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method. If it directly transgresses or substantially and inevitably affects the fundamental right, it becomes unconstitutional, but not where the impact is only remotely possible or incidental. The Court must lift the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavour should be made to have the efficacy of fundamental right maintained and the legislature is not invested with unbounded power. The Court has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right.
48. However, there is presumption of constitutionality of every statute and its validity is not to be determined by artificial standards. The Court has to examine with some strictness the substance of the legislation to find what actually and really the legislature has done. The Court would not be over persuaded by the mere presence of the legislation. In adjudging the reasonableness of the law, the Court will necessarily ask the question whether the measure or scheme is just, fair, reasonable and appropriate or is it unreasonable, unnecessary and arbitrarily interferes with the exercise of the right guaranteed in Part III of the Constitution.
49. Once it is established that the statute is prima facie unconstitutional, the State has to establish that the restrictions imposed are reasonable and the objective test which the Court is to employ is whether the restriction bears reasonable relation to the authorised purpose or is an arbitrary encroachment under the garb of any of the exceptions envisaged in Part III. The reasonableness is to the necessity to impose restriction; the means adopted to secure that end as well as the procedure to be adopted to that end.
50. The Court has to maintain delicate balance between the public interest envisaged in the impugned provision and the individual's right; taking into account, the nature of his right said to be infringed; the underlying purpose of the impugned restriction; the extent and urgency of the evil sought to be remedied thereby; the disproportion of the restriction imposed, the prevailing conditions at the time, the surrounding circumstances; the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose. All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction. The Court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction. The Court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits."
49. Final determination into the allegation of violation of fundamental rights, can be made only after exchange of pleadings. At this stage, the petitioner has made out a case to call for counter affidavits from the respondents.
iv. Locus standi and maintainability:-
50. True at this stage the contract has not been executed between the Authorized Collection Centre, and the Central Record-keeping Agency. True also that the petitioner has prima facie established, that offending part of the contract and actions of the respondents violate Article 14 and Article 19(1)(g) of the Constitution of India and the law. Members of the petitioner cannot be induced or forced into executing an illegal contract. It is idle to contend that the petitioner has a choice not to execute the contract. Execution of an illegal contract may raise other complications. The opposing party could well take this position at a later point in time. The Authorized Collection Centre having executed the contract has accepted its terms, and is estopped from resiling from its terms, and challenging the same before a court of law. This will lead to multiplicity of litigation, which should be avoided.
51. The "heads I win, tails you lose" choice, or a double whammy situation left to the petitioner, cannot be accepted in law. Shutting doors of justice in the present and for the future, leaves a party without any recourse in law. This is not conducive to the administration of justice. A party cannot be left without remedy in law when it faces threatened injury and loss is imminent, on the foot that it should approach the court after irreversible damage has been done. The petitioner is an aggrieved party, and has the locus standi to file this writ petition.
52. This proposition is fortified by the holding of a Constitutional Bench of the Hon'ble Supreme Court rendered in D. A. V. College Bathinda, Etc vs State Of Punjab reported at 1971 (2) SCC 261:
"5. A preliminary objection has been urged on behalf of the respondents that in a petition under Article 32, only where it is shown that there is a violation of fundamental right that the validity of the legislation or of the legislative competence can be raised and determined, but in these cases as there is no violation of Articles 14, 26, 29 and 30 of the Constitution the petitioners ought not be allowed to challenge the vires of the Act on the ground of the competence of the Legislature to enact the impugned law. This question has been dealt with fully in the batch of petitions in which we have just pronounced judgment, where we had also considered the contentions of the learned Advocate-General of Punjab and Shri Tarkunde, the learned Counsel for Respondent 2 in this behalf and hence we do not propose again to reiterate the reasons in support of the conclusion that a petition under Article 32 in which petitioners make out a prima facie case that their fundamental rights are either threatened or violated will be entertained by this Court and that it is not necessary for any person who considers himself to be aggrieved to wait till the actual threat has taken place. (emphasis supplied). On the other objection that the Arya Samaj is neither a linguistic or religious minority nor is it a religious denomination we held that it was unnecessary to go into the question of whether it is a separate religious denomination for the purpose of Article 26(1)(a) or a linguistic minority for the purposes of Article 30(1) because in our view it would be sufficient for the petitioners if they could establish that they had a distinct script of their own and they were a religious minority, to invoke the protection of Articles 29(1) and 30(1). We had in those writ petitions held that what constitutes a linguistic or religious minority must be judged in relation to the State inasmuch as the impugned Act is a State Act and not in relation to the whole of India. In this view we rejected the several contentions which are also urged in these petitions, namely, that Hindus being a majority in India are not a religious minority in Punjab and held that the Arya Samajis who are part of the Hindu community in Punjab are a religious minority and that they had a distinct script of their own the Devnagri which entitled them to invoke the guarantees under the aforesaid provisions of the Constitution."
53. Similarly the Constitutional Bench of the Hon'ble Supreme Court in Roop Chand vs State Of Punjab, reported at AIR 1963 SC 1503 opined:
"22....It may be that just now the right has not been affected and there is only a threat that it will be affected. But we think that the threat is sufficiently serious and the petitioner is not bound to wait till his right has actually been affected more particularly as it is not disputed that it would inevitably be affected."
IV. Directions:-
54. The respondents are granted four weeks time to file their respective counter affidavits'. While filing the counter affidavit, the respondent no. 4-SHCIL shall also state its organizational details and structure, constitution of its Board, the extent of control of the Government both administrative and financial, and any other like information.
55. The SHCIL and the State Government are directed to make the necessary disclosures regarding the actual commission being given to the Stock Holding Corporation of India Limited by the State Government, and reveal the same to the petitioner within two weeks from the date of receipt of a certified copy of this order.
56. List in the top ten cases in the additional cause list immediately after four weeks before the appropriate Bench.
Order Date :- 10.02.2021 Dhananjai Sharma