Writ Jurisdiction and the Doctrine of Privity of Contract

The doctrine of privity of contract is a legal principle in common law, which states that only those who are parties to a contract can sue each other. This principle is foundational to contract law and all the primary basis of litigation in contract is directly in line with this principle. Now, this principle definitely holds true for the two independent parties but what if one party is the government? does "government" as per definition given in the Article 12 of the Constitution, has more obligations while executing its right to enforce a contract? The same question were raised in the case Union of India vs. IMECO Ltd. & Anr where Calcutta High Court took the constitutional position instead of the classical implementation of the legal principles of jurisprudence.

Contract of Privity

Under the common law, a third party, despite being affected by a contract cannot sue or be sued. Thus, in a contract between A and B, a third party C, even if indirectly impacted, has no enforceable rights.

Facts of the Case

In the case of Union of India vs. IMECO Ltd. & Anr (2023 SCC OnLine Cal 2126), Union of India awarded a contract to BEML Ltd., a government company, for fitting additional berths in railway coaches. BEML, in turn, subcontracted this work to IMECO Ltd. The government later cancelled the contract with BEML, despite partial completion of the work by IMECO. This left IMECO unpaid and aggrieved. With no direct privity with the Union of India, IMECO sought remedy under Article 226, praying for a writ of mandamus to compel the government to release funds to BEML so that BEML could pay IMECO.

The Legal Dilemma

Could a third party, lacking contractual privity with the government, seek a writ to enforce a payment indirectly owed to them?

The general rule of contract would deny this right. However, the Calcutta High Court saw the issue differently. It recognized that public law obligations, especially those involving fairness and non-arbitrariness by the State under Article 12, could override the strict confines of privity in certain contexts.

Locus Standi

The Court held that even though IMECO lacked direct privity with the Union of India, it had sufficient interest or locus standi to maintain the writ. The Hon'ble Court observed that -

1. When a public body contracts with another (here, BEML), and the work is lawfully subcontracted, there exists a derivative obligation towards the subcontractor, especially where the government acknowledges the subcontracting through conduct.

2. That despite a clause prohibiting subcontracts, the government had accepted IMECO's role by conduct and was estopped from denying the subcontract’s validity later.

3. The government’s delay and internal contradictions in decision making, some officials recommending payment, others denying it were deemed unfair. This justified judicial intervention under Article 226.

4. Court observed that directing IMECO to civil litigation would be futile, especially when BEML admitted its liability but was constrained by non-payment from the Union. Thus, writ jurisdiction provided a speedy and meaningful remedy.

The Judgement

The Calcutta High Court observed that as per the doctrine, there is no doubt that IMECO is barred from raising a dispute with the Union of India but the government undertakings are bound by principles of natural justice such as equality and fairness. Arbitrarily cancelling the contract is not only against the principles of fairness and equality but also causes unnecessary delay and damage to the petitioner.

Justice Biswaroop Chowdhury observed:

“When due to non-release of statutory fund or payment of contractual debt, by Government Authority to any Government undertaking the said undertaking is unable to pay...the parties who do not receive the payment and suffer hardship may...move the High Court under Article 226... Such a direction would be just and reasonable and mitigate hardships...”

Conclusion

The core of the legal system of a state can be described using the legal maxim "interest reipublicae ut sit finis litium" which means that "It is in the interest of the State to end all litigation". All the principles evolved are in the interest of justice and hence the court shall in interest of justice set aside even the core principles of common law to end the litigation. Especially when the party the Government, it has additional responsibility to uphold the principles of natural justice which includes principles of equality and fairness. 

Evil Practices Act in India

India being a diverse country, have numerous tribes and ethnic groups. All of these "groups" have different kinds of practices and customs and no matter how absurd it looks to anyone, they have a right to practice. But where do we draw a line and say till here and no further. I think this line is when neo cults sprout out of nowhere, amass a huge following and make weird occultic practices. These neo cults not only cause a mayhem in society but also pose danger to national security.  

If we look into the history, every decade we have a self style godman who makes a cult out of himself and then they are caught doing weird practises which forces law enforcement to take action and purge these people. Few years down the line we have a repeat of these same events and nothing changes.

The only exception in this case in the State of Maharashtra which has its own law to deal with this problem. Since policing is a state subject, it is better that states make their own laws regarding the same. State of Maharashtra was also the first to bring in The Maharashtra Control of Organised Crime Act, 1999 which was used to bring down mafia and organised crime in Mumbai back in the day.

Look at the example of Prophet Bajinder Singh, a self styled prophet who claimed to cure the diseased, give vision to the blind and make a leper walk. Essentially, Prophet Bajinder Singh had all the powers as biblical Jesus. All these videos of "miracles" are shared widely, some make fun of this while others actually believe it.  A bare look at his videos or "commotion" we may say, makes it clear that it is stupid but even then nothing happens to them. Where does it end? Prophet Bajinder Singh getting convicted for numerous rapes. 

Why do we have to wait for such things to happen when it is clear from the start where this will end. If situation really worsens, then Central government may make a Central Act and then practices of various other "groups" will be suppressed. 

 The Maharashtra Prevention and Eradication of Human Sacrifice other Inhuman and Aghori Practices and Black Magic Act, 2013 is an effective legislation to look for stopping such stupid practices. The Act simultaneously bans superstitious practice and also allows customary practices to continue.

India is a welfare state no doubt about that but the state should also be willing to regulate omens in society. Of course all the practices of these godmen can be covered under Bhartiya Nyaya Sanhita but since the problem is bigger, it requires a separate law to deal with more effectively. 

A separate legislation will not only ensure that these practices of inhumanity are prohibited but also aligns with the Directive Principle of State Policy in the Constitution of India, namely Article 51 A (h). I am quoting the same here:

(h) to develop the scientific temper, humanism and the spirit of inquiry and reform