Case Note & Summary
The dispute arose from cancellation of a government milk supply contract. The petitioner, C. K. Achuthan, had supplied milk to the Government Hospital at Cannanore since 1946, following his brother who held similar contracts from 1936. In 1957, a uniform procedure for fixing contracts was adopted, and conditions for acceptance of tenders were laid down, including preference for approved cooperative milk supply unions within a 5% margin. For the year 1958-1959, both the petitioner and the third respondent, the Co-operative Milk Supplies Society, Cannanore, submitted tenders. On January 20, 1958, the Superintendent scrutinised the tenders and accepted the petitioner's tender, rejecting the cooperative society's. The Superintendent communicated reasons to the Director of Public Health. Subsequently, due to government policy favouring cooperative societies in supply to medical institutions in Cannanore District, the petitioner was informed that his contract was cancelled. After further correspondence, the second respondent issued a notice under Clause 20 of the tender conditions and cancelled the contract after the notice period. The petitioner challenged the cancellation before the Kerala High Court under Article 226; his original petition was rejected by a single judge on June 6, 1958, and a Letters Patent Appeal was dismissed on July 7, 1958, on the ground that the matter was a breach of contract and remedy lay in civil suit. No special leave to appeal was sought. The petitioner then filed a petition under Article 32 of the Constitution before the Supreme Court, alleging infringement of fundamental rights under Articles 14, 16(1), 19(1)(g), and 31, claiming discrimination vis-à-vis the cooperative society and denial of equal opportunity of employment under the State. The Court rejected all contentions. It held that a contract held from Government stands on the same footing as one from a private party; the Government is free to choose the person to fulfil its contracts, and the aggrieved party cannot claim protection of Article 14. The Court further held that a contract for supply of goods is not a contract of employment, and the petitioner as a supplier of milk was not a servant of the State, so Article 16(1) did not apply. Article 19(1)(g) was not violated because breach of contract does not amount to deprivation of the right to practise a profession or carry on a trade; the remedy lies in damages or specific performance. Article 31 could not be invoked to prevent cancellation under a contractual clause. The Court concluded that no fundamental right was involved, and the Article 32 petition was wholly misconceived. The petition was dismissed with costs, leaving the petitioner to pursue a civil suit for breach of contract if so advised.
Headnote
A) Constitutional Law - Equality Before Law - Government Contract Choice - Constitution of India, Article 14 - A contract held from Government stands on no different footing from a contract held from a private party; when one person is chosen rather than another, the aggrieved party cannot claim protection of Article 14 because the choice of person to fulfil a particular contract must be left to the Government. In the present case, cancellation of the milk supply contract and its grant to a cooperative society did not amount to discrimination. Held that Article 14 was not attracted. B) Constitutional Law - Equal Opportunity in Public Employment - Contract for Supply of Goods Not Employment - Constitution of India, Article 16(1) - A contract for the supply of goods is not a contract of employment; the petitioner supplying milk to a State hospital was a contractor, not a servant, and no question of employment qua servant arose. Article 16(1) is confined to employment by the State and does not cover refusal or breach of a supply contract. Held that Article 16(1) was not attracted. C) Constitutional Law - Right to Practise Profession or Trade - Cancellation of Contract Not Deprivation - Constitution of India, Article 19(1)(g) - Breach of contract, if any, may entitle the aggrieved person to sue for damages or specific performance, but cannot be complained of as deprivation of the right to practise any profession or carry on occupation, trade or business under Article 19(1)(g). Held that Article 19(1)(g) was not violated. D) Constitutional Law - Right to Property - Contractual Termination Under Clause - Constitution of India, Article 31 - Article 31 cannot be invoked to prevent cancellation of a contract in exercise of powers conferred by one of the terms of the contract itself. Held that no fundamental right to property was involved in termination of the milk supply contract under Clause 20. E) Constitutional Law - Writ Jurisdiction - Article 32 Not Available for Breach of Contract - Constitution of India, Article 32 - A petition under Article 32 for enforcement of fundamental rights is wholly misconceived where only a breach of contract is alleged and no fundamental right is involved; the appropriate remedy is a civil suit for damages. Held that the petition failed and was dismissed with costs.
Issue of Consideration
Whether cancellation of a milk supply contract given to petitioner and award to cooperative society violated fundamental rights under Articles 14, 16(1), 19(1)(g), and 31 of Constitution; whether Article 32 petition maintainable
Final Decision
The Supreme Court dismissed the petition under Article 32 with costs, holding that no fundamental right was involved; the dispute was at best a breach of contract to be pursued in civil court.
Law Points
- Legal points not extracted
- A contract held from Government stands on same footing as private contract for Article 14
- choice of contractor left to Government
- no discrimination when one person chosen over another
- contract for supply of goods not employment under Article 16(1)
- Article 19(1)(g) not violated by breach of contract
- Article 31 cannot prevent cancellation under contract terms
- Article 32 not proper remedy for breach of contract
- remedy is civil suit
