JUDGMENT judgment of court was delivered by A. K. Sikri J.-Present appeal impugnes judgment and order dated May 28, 2012, passed by High Court of Delhi, thereby dismissing writ petition which was filed by appellant. It so happened that appellant had entered into two contracts dated February 20, 1995, with Union of India, through Ministry of Petroleum and Natural Gas Joshi Technologies International Inc. v. Union of India [2013] 353 ITR 86 (Delhi). (MoPNG) in year 1992 relating to exploration of certain oil fields which Union of India had selected in Gujarat and other States. These contracts were on production sharing basis for Dholka and Wavel Oil Fields respectively. It started production after entering into contract and filed its income-tax return on income generated from aforesaid production. In returns, appellant claimed benefit of section 42 of Income-tax Act, 1961 (hereinafter referred to as "the Act"). Section 42 is special provision for deductions in case of business for prospecting, etc., for mineral oil. It provides for certain additional allowances as are specified in agreement, details thereof would be taken note of hereinafter. We may, however, point out here itself that such allowances, as stipulated in section, are to be specifically mentioned in agreement as well, which is entered into with Central Government and it is also necessary that such agreement has been laid on Table of each House of Parliament. income-tax authorities extended benefit of granting deductions under aforesaid provisions from year 2001-02 (assessment years onwards) when appellant commenced commercial production in aforesaid two oil fields. However, while making assessment for assessment year 2005-06, Assessing Officer observed that there were no such provisions made in agreements which were signed between Central Government and appellant and in absence of such stipulation in agreement, appellant was not entitled to benefit of deductions under section 42 of Act. Realising that agreements did not contain such provision, appellant wrote to Ministry of Petroleum and Natural Gas stating that though there was such arrangement agreed to as per understanding between two parties, non-inclusion thereof was inadvertent omission in contracts that were signed. Ministry of Petroleum and Natural Gas wrote to Ministry of Finance (MoF) accepting aforesaid omissions and requested Ministry of Finance to give clarification in this behalf. As no clarification came from Ministry of Finance, Assessing Officer disallowed claim for deduction under section 42(1)(b) and section 42(1)(c) of Act. At this stage, appellant preferred writ petition under article 226 of Constitution of India in High Court of Delhi with following prayers. "Therefore it is most respectfully prayed that this hon'ble court may be pleased to issue: (i) writ, direction or order declaring that petitioner is entitled, in respect of two production sharing contracts dated February 20, 1995, executed with petitioner for Dholka and Wavel Oil Fields in Gujarat, to benefit of said deductions (set forth in article 16 of MPSC and reproduced in annexure P1) under section 42 of Income-tax Act, 1961, from date of these production sharing contracts, as has been stated and declared by respondent No. 1 (i.e., Ministry of Petroleum and Natural Gas) in several of its communications; and that petitioner is entitled to said deductions on same footing as all other contractors who have executed production sharing contracts with Union of India; (ii) writ, order or direction in nature of certiorari quashing impugned order dated December 31, 2007, issued by respondent No. 1; notice dated March 28, 2008, for reopening of petitioner's income-tax assessments for assessment years 2001-02, 2002-03 and 2003-04 and notice dated May 1, 2008, for reopening assessment for assessment year 2004-05; and (iii) Such other writ order or direction as this hon'ble court may deem just and proper in circumstances of case and in interest of justice be passed in favour of petitioner." This writ petition which has been dismissed by High Court, vide impugned judgment dated May 28, 2012, holding that appellant is not entitled to any deductions under section 42 of Act in absence of stipulations to this effect in contracts signed between parties. This decision is subject matter of challenge before us in present appeal. Now, facts in detail: Union of India ("the UOI"), through Ministry of Petroleum and Natural Gas, issued notice inviting tenders in August, 1992 ("1992 NIT"), along with model production sharing contract ("MPSC"), for "development of oil and gas fields" from various companies in relation to some selected oil fields in Gujarat and other States. Article 16 of abovementioned model production sharing contract contained specific provision, which provided certain financial benefits and deductions in relation to taxes, etc., that would be allowed to contractors/developers, as per requirements of section 42 of Act. Ministry of Finance by its office memorandum dated June 18, 1992, raised issue that section 293A of Act would not apply to contracts of nature mentioned above and that benefits under special provisions of section 42 of Act would not be available to foreign companies such as appellant, which enter into such contracts with Central Government. Ministry of Petroleum and Natural Gas by its office memorandum dated June 22, 1992 ("OM") referred issue to Ministry of Law, Justice and Company Affairs specifically seeking its opinion on applicability of section 42 and section 293A of Act to 1992 NIT and model production sharing contract. Ministry of Law gave its opinion dated July 21, 1992, to effect that benefit of both section 293A and section 42 should be extended to foreign companies in order to make their participation in these oil fields viable. appellant (along with its erstwhile joint venture partner Larsen and Toubro Ltd., whose stake was also subsequently acquired by appellant) submitted its bid dated March 29, 1993, in response to 1992 NIT. appellant was allotted Dholka and Wavel Oil Fields in Gujarat near Ahmedabad, by Ministry of Petroleum and Natural Gas. Two production sharing contracts, each dated February 20, 1995, were executed by appellant with Ministry of Petroleum and Natural Gas for Dholka and Wavel Oil Fields, respectively (the "Two PSCs"). According to appellant, since no amendments to article 16 of model production sharing contract had been suggested nor contemplated by Union of India, it was (and is) belief and legitimate expectation of appellant that all benefits, financial or otherwise, offered in article 16 of model production sharing contract to prospective bidders were duly included in above two production sharing contracts. From 2001, appellant commenced commercial production from Dholka and Wavel Oil Fields (delayed on account of Union of India's delay in handing over fields) and availed of benefits of section 42 deductions provided in article 16 of model production sharing contract, which were duly allowed by concerned Income-tax Officer at Ahmedabad. Union of India's share of petroleum profit was also determined in accordance with assumption that, and on consideration that appellant was entitled to benefit of section 42 deductions and Union of India consequently also enjoyed larger quantum as petroleum profits that it otherwise would have. accounts and calculations of appellant claiming section 42 deductions and passing on benefit to Union of India in form of increased quantum of petroleum profit in terms of two production sharing contracts were duly audited and approved by Ministry of Petroleum and Natural Gas's Government auditors. While things proceeded in aforesaid manner, it so happened in case of some other production sharing contracts, which did not specifically contain fiscal benefits and deduction envisaged by article 16 of model production sharing contract, income-tax authorities questioned basis on which such assessees had claimed deduction/ allowances under section 42. This move of income-tax authorities prompted Ministry of Petroleum and Natural Gas to write office memorandum dated June 17, 2005, to Ministry of Finance, Department of Revenue to clarify to relevant income-tax authorities that provisions of section 42 of Income-tax Act would be applicable to all production sharing contracts, including those thirteen (13) production sharing contracts executed by Union of India, which did not expressly contain these contracts executed by Union of India, which did not expressly contain these provisions, for purpose of computing profits and gains, after allowing section 42 deductions. appellant's two production sharing contracts are among these thirteen (13) production sharing contracts referred to by Ministry of Petroleum and Natural Gas in this office memorandum. office memorandum noted that it would not be equitable and fair if section 42 deductions were denied in respect of these 13 production sharing contracts. Since entire dispute pertains to deductions under section 42 of Act, at this stage we reproduce said provisions hereunder: "42. Special provision for deductions in case of business for prospecting, etc., for mineral oil.-(1) For purpose of computing profits or gains of any business consisting of prospecting for or extraction or production of mineral oils in relation to which Central Government has entered into agreement with any person for association or participation of Central Government or any person authorised by it in such business (which agreement has been laid on Table of each House of Parliament), there shall be made in lieu of, or in addition to, allowances admissible under this Act, such allowances as are specified in agreement in relation- (a) to expenditure by way of infructuous or abortive exploration expenses in respect of any area surrendered prior to beginning of commercial production by assessee; (b) after beginning of commercial production, to expenditure incurred by assessee, whether before or after such commercial production, in respect of drilling or exploration activities or services or in respect of physical assets used in that connection, except assets on which allowance for depreciation is admissible under section 32: Provided that in relation to any agreement entered into after 31st day of March, 1981, this clause shall have effect subject to modification that words and figures'except assets on which allowance for depreciation is admissible under section 32' had been omitted; and (c) to depletion of mineral oil in mining area in respect of assessment year relevant to previous year in which commercial production is begun and for such succeeding year or years as may be specified in agreement; and such allowances shall be computed and made in manner specified in agreement, other provisions of this Act being deemed for this purpose to have been modified to extent necessary to give effect to terms of agreement. (2) Where business of assessee consisting of prospecting for or extraction or production of petroleum and natural gas is transferred wholly or partly or any interest in such business is transferred in accordance with agreement referred to in sub-section (1), subject to provisions of said agreement and where proceeds of transfer (so far as they consist of capital sums)- (a) are less than expenditure incurred remaining unallowed, deduction equal to such expenditure remaining unallowed, as reduced by proceeds of transfer, shall be allowed in respect of previous year in which such business or interest, as case may be, is transferred; (b) exceed amount of expenditure incurred remaining unallowed, so much of excess as does not exceed difference between expenditure incurred in connection with business or to obtain interest therein and amount of such expenditure remaining unallowed, shall be chargeable to income-tax as profits and gains of business in previous year in which business or interest therein, whether wholly or partly, had been transferred: Provided that in case where provisions of this clause do not apply, deduction to be allowed for expenditure incurred remaining unallowed shall be arrived at by subtracting proceeds of transfer (so far as they consist of capital sums) from expenditure remaining unallowed. Explanation.-Where business or interest in such business is transferred in previous year in which such business carried on by assessee is no longer in existence, provisions of this clause shall apply as if business is in existence in that previous year; (c) are not less than amount of expenditure incurred remaining unallowed, no deduction for such expenditure shall be allowed in respect of previous year in which business or interest in such business is transferred or in respect of any subsequent year or years: Provided that where in scheme of amalgamation or demerger, amalgamating or demerged company sells or otherwise transfers business to amalgamated or resulting company (being Indian company), provisions of this sub-section- (i) shall not apply in case of amalgamating or demerged company; and (ii) shall, as far as may be, apply to amalgamated or resulting company as they would have applied to amalgamating or demerged company if latter had not transferred business or interest in business. Explanation.-For purposes of this section,'mineral oil' includes petroleum and natural gas." Meanwhile, Income-tax Officer, Ward I(3) (hereinafter referred to as "ITO Wd I(3)") issued notice dated June 9, 2006, under section 143(2) of Income-tax Act to appellant for assessment year 2005-06 and asked appellant to justify its claim for section 42 deductions. Income-tax Officer, Wd I(3) also issued another notice to appellant under section 142(1) of Income-tax Act seeking various details and data relevant to said assessment year. case was later transferred to Assistant Director of Income-tax (International Taxation), Ahmedabad ("ADIT"). Assistant Director of Income-tax (International Taxation) also raised question of applicability of section 42 deductions to two production sharing contracts executed by appellant for reason that such clause was not specifically included in these two production sharing contracts. joint secretary of Ministry of Petroleum and Natural Gas, vide his communication dated April 11, 2007, wrote to Ministry of Finance specifically admitting that in 11 production sharing contracts, reference to section 42 deductions had been omitted by oversight. It was also stated that contracts signed in respect of other fields at same time contained provision for section 42 deductions. It was specifically stated that "petroleum operations are high risk business and it may not be equitable and fair if companies are not allowed to claim allowances for their expenditure. Besides it would be difficult to justify different standards for different production sharing contracts signed under one regime." (emphasis supplied). clarification was also sought from Ministry of Finance to Revenue authorities that section 42 deductions should be uniformly granted irrespective of whether production sharing contracts contained relevant clause or not. It is pertinent to note that in this letter, appellant was listed by Ministry of Petroleum and Natural Gas as having provision for section 42 deductions in its two production sharing contracts, which though factually incorrect, again underscores bona fide belief of Union of India through Ministry of Petroleum and Natural Gas that appellant had been granted section 42 deductions in respect of its two production sharing contracts. However, Ministry of Finance did not issue any such clarification. In absence of such clarification from Ministry of Finance, Assistant Director of Income-tax (International Taxation) disallowed appellant's claim for deduction under section 42(1)(b) and section 42(1)(c) of Income-tax Act made in appellant's income-tax return for assessment year 2005-06 on ground that specific reference to section 42 deduction has not been made expressly in two production sharing contracts (hereinafter "ADIT's order"). As result, Assistant Director of Income-tax (International Taxation) issued demand notice under section 156 of Income-tax Act to appellant demanding payment of Rs. 1,24,45,509.00 (rupees one crore twenty-four lakhs forty-five thousand five hundred and nine only) by way of additional tax, interest and penalty. appellant preferred appeal against Assistant Director of Income-tax (International Taxation)'s order before relevant Commissioner of Income-tax (Appeals) in Ahmedabad and deposited sum of Rs. 40,00,000 (rupees forty lakhs only), as required by Assistant Director of Income-tax (International Taxation), while himself staying demand raised by assessment order. This appeal has been dismissed by Commissioner of Income-tax (Appeals) and further appeal is now pending before Income-tax Appellate Tribunal. In meanwhile, on December 24, 2007, appellant required Union of India, through Ministry of Petroleum and Natural Gas and Ministry of Finance, to issue appropriate clarification/amendment with respect to two production sharing contracts executed with appellant, taking stance that it was always intention of Union of India, at all stages, to give benefits of section 42 deductions of Income-tax Act read with article 16 of model production sharing contract to all entities who had entered into production sharing contracts with it, including appellant with plea that non-inclusion of this provision in two production sharing contracts signed with appellant was clerical error/oversight. This was followed by reminder dated March 19, 2008, again requesting Union of India, through Ministry of Petroleum and Natural Gas and Ministry of Finance, to issue appropriate clarification/amendment with respect of two production sharing contracts executed with appellant. No such clarification came forward. On other hand, Assistant Director of Income-tax (International Taxation) issued notice dated March 28, 2008, to appellant under section 148 of Income-tax Act for reopening appellant's income-tax returns for assessment years 2001-02, 2002-03, 2003-04 and 2004-05. At this juncture, secretary, Ministry of Petroleum and Natural Gas, wrote communication dated April 28, 2008, to Ministry of Finance pointing about said accidental omissions again in contract. Ministry of Finance was, accordingly, requested to extend benefits of section 42 deductions to 13 production sharing contracts (including appellant's two production sharing contracts) in line with all other signed production sharing contracts. As, in meantime, Assistant Director of Income-tax (International Taxation) was going ahead with proceedings pursuant to notice under section 148 of Act deciding to reopen assessment of appellant in respect of assessment years 2001-02 to 2004-05, appellant sent one more representation dated June 23, 2008, on same lines on which it had been making similar representations earlier. No positive response was, however, received. Exasperated, appellant approached High Court by way of writ petition under article 226 of Constitution. Counter-affidavits to writ petition was filed by respondent-authorities taking preliminary objection pertaining to territorial jurisdiction of High Court of Delhi and also raising ground of alternate remedies available in law in form of appeal before Income-tax Appellate Tribunal which had already been preferred by appellant. Rejoinder thereto was filed by appellant. Thereafter, another counter-affidavit on merits was filed by respondent No. 1. In this counter- affidavit, stand was taken by respondents that model production sharing contract would not apply to appellant's two production sharing contracts. appellant filed rejoinder to this counter-affidavit controverting stand which was taken by respondent. Thereafter, respondent filed another supplementary affidavit stating that Ministry of Finance had not concurred with proposal to extend benefit of deductions under section 42 of Act, vide Ministry of Finance Office Memorandum dated November 11, 2009. Short affidavits were also filed by Ministry of Finance as well as Assistant Director of Income-tax (International Taxation) taking position that appellant was not entitled to benefit of section 42 of Act. Rejoinder to these short affidavits was filed by appellant. Rejoinder was also filed to supplementary affidavit which has been filed by respondent No. 1. appellant also filed additional affidavit dated February 28, 2012, giving details of other small sized discovered oil fields production sharing contracts, who were awarded contracts under 1992 NIT, submitting that they were identical to appellant and in their case clause was inserted giving benefit under section 42 of Act. It was pleaded that since they were identically situated as appellant herein, denying such benefit to appellant amounted to hostile discrimination. By another affidavit filed by appellant, it also tried to demonstrate that respondent No. 1 had accepted calculation of petroleum profits on assumption that deduction under section 42 was available to appellant; otherwise appellant would have enjoyed increased profits. It was, thus, sought to be demonstrated that even while profit sharing, shares were calculated keeping in view deductions under section 42 of Act thereby giving better and increased profit sharing to Government as well. matter was ultimately heard by High Court which has dismissed writ petition by passing detailed judgment on May 28, 2012. Before we come to arguments of appellant challenging correctness of this judgment, it may be appropriate to take note of reasons which have been given by High Court in support of view it has taken. Impugned judgment High Court took note of basic and primary contention of appellant which was that there was clear understanding between Ministry of Petroleum and Natural Gas and appellant that in contract to be signed between parties benefits under section 42 of Act would be admissible. NIT issued by Government was based on this basic understanding but due to inadvertent oversight and error on part of Ministry of Petroleum and Natural Gas contract, which was ultimately signed, omitted to include such clause. Therefore, on account of mistake of Ministry, which even it admitted in its communications when dispute regarding admissibility of deduction under section 42 of Act arose, appellant should not be allowed to suffer. More so, when it was not responsible for said error. It may be pertinent to point out that High Court did not accept preliminary objections raised by respondent and after repelling same, it adverted to subject matter of writ petitions. On merits of issue involved, High Court formulated two questions. These are : "(1) Whether benefit under section 42 of Act was envisaged in 1992 NIT and in production sharing contracts, but due to oversight or mistake, same was not included and mentioned in written contract, and if so, effect thereof? (2) If question is decided in favour of appellant, second aspect is whether direction can be issued for grant of benefit under section 42 of Act to appellant, with further direction that contract should be laid before Parliament after incorporating said clause?" Dealing with first question, High Court rejected plea of appellant that 1992 NIT included and referred to model production sharing contract as incorrect. It is pointed out that 1992 NIT did not refer to model production sharing contract and did not stipulate that model production sharing contract shall form part of tender documents. It is further stated by High Court that in 1992 NIT, there was no reference to model production sharing contract or that terms and conditions of model production sharing contract shall be included in, or be part of, production sharing contracts. It is also observed that there is no document or clause in bid given by appellant under 1992 NIT to effect that model production sharing contract or clause 16.2 of same would be applicable and should be part of production sharing contracts. In tender submitted by appellant there was no specific stipulation to include any clause with regard to benefit under section 42 of Act. High Court has further observed that written contracts were signed between appellant and Ministry of Petroleum and Natural Gas in name of President on February 20, 1995. Clause 15 of these contracts which pertain to "taxes, royalties, rentals, customs duties, etc." though mentions about applicability of fiscal, there is no reference to section 42 of Act in this clause. High Court further pointed out that there was no letter or correspondence written by appellant from 1995 onwards stating that noninclusion of section 42 benefit was due to oversight. In so far as three letters written by Ministry of Petroleum and Natural Gas, namely, letters dated June 17, 2005, April 11, 2007, and April 28, 2008, are concerned wherein this Ministry admitted that there was unintentional lapse and omission in not incorporating provision of admissible deduction under section 42 of Act High Court has brushed aside these communications as inter-ministerial correspondence. These letters were apparently written on request of appellant or NIKO Resources Ltd. It is further mentioned that these are not contemporaneous letters written at time when production sharing contracts were signed. High Court has also commented that though in these letters it is mentioned that section 42 deductions were omitted by "oversight" in fact there was no such oversight inasmuch as Ministry of Petroleum and Natural Gas itself in its counter-affidavit has specifically stated that no such benefit was envisaged, considered or granted at time when production sharing contracts were negotiated and awarded. Averments made in this behalf in counter-affidavit filed by Ministry of Petroleum and Natural Gas are extensively quoted. To verify this position, High Court also examined and went through original files relating to preparation and finalisation of tender documents and made following remarks in this behalf: "In order to verify and examine correct factual position, we had asked respondent-Ministry of Petroleum and Natural Gas to produce original files relating to preparation and finalisation of tender documents. They were produced before us on February 21, 2012. We examined original records and found that under terms and conditions, as well as in notes, no benefit under section 42 of Act was envisaged or was required to be granted. We also recorded statement of learned Additional Solicitor General that three letters mentioned above were factually incorrect and, therefore, no legal right on basis of letters accrues/arises. Thus, no statement or promise, that advantage under section 42 would be available to successful bidder, was promised or made." In so far as plea of discrimination between 13 production sharing contracts (which included appellant), who are not given benefit of section 42 of Act vis-a-vis other production sharing contracts where such benefit has been extended, High Court has accepted explanation put forth by respondents to effect that these 13 production sharing contracts formed different class inasmuch as their contract was in respect of small oil fields which had already been discovered and, therefore, risk factor was less. On other hand, other production sharing contracts were in respect of undiscovered oil fields and for this reason benefit under section 42 had been granted to them. On aforesaid reasoning, High Court concluded that appellant was fully aware of clause 16.2 of model production sharing contract which specifically makes reference to benefit under section 42 of Act but did not advert to and refer to same in their tender bid and did not ask for this benefit. Therefore, it was not possible to accept contention of appellant that benefit under section 42 of Act was Page 99 of 353 ITR. inadvertently missed out or due to act of oversight, not included in contract. On this finding, High Court chose not to examine second issue. Post by it in paragraph 9 of impugned judgment and noted by us above. We would also like to mention that in penultimate paragraph, High Court has expressed its displeasure and anguish over averments made by respondent No. 1 in additional affidavit dated March 23, 2012, where respondent No. 1 even denied fact that petroleum profits were not shared between Government and appellant after making calculations with reference to benefit under section 42 of Act. In letter dated November 11, 2009, written by Ministry of Finance, Department of Revenue, this fact is specifically admitted and, therefore, respondent No. 1 should have been careful in making such averments in said additional affidavit which were contrary to record, even if it was uncomfortable to respondent No. 1. Mr. Ganesh, learned senior counsel appearing for appellant, submitted that High Court had failed to appreciate and cognise basic issue which had arisen in instant case about admissibility of benefit of section 42 of Act in respect of two production sharing contracts (PSCs) between appellant and Government. He submitted that claim for benefit of aforesaid provision was predicated on following grounds: "(a) Ministry of Petroleum and Natural Gas (MoPNG) had invited bids for said oilfields on basis of model production sharing contract (MPSC) which specifically and unequivocally provided that benefit of section 42 would be granted. (b) appellant's bids for said two oilfields were clearly and indisputably submitted on footing that model production sharing contract would govern contract between parties. In fact, in its bid, appellant only referred to those clauses of MPSC which appellant wanted to be slightly modified, to which Government had no objection. Thus, appellant's bids were on basis of MPSC which provided benefit of section 42. (c) Respondent No. 1 itself admitted that contract was entered into, keeping in view stipulations/terms contained in model production sharing contract and, therefore, model production sharing contract had to be read into contract. It was also argued that these facts were specifically confirmed by respondent No. 1 itself in its three letters dated June 17, 2005, April 11, 2007, and April 28, 2008. (d) It was, thus, argued that as held in case of Godhra Electricity Co. Ltd. v. State of Gujarat, it is mutual understanding of parties to contract which determines construction that court will place on it and this principle squarely applied in present case. (e) accounts of venture were drawn up on footing that deductions under section 42 were available and that, accordingly, income-tax liability would stand reduced. On this footing, significantly higher amount was computed as profit share payable to Government of India under production sharing contract, which was received by Government year after year. (f) reference made by Ministry of Petroleum and Natural Gas to Ministry of Law in June/July, 1992, and written opinion given by Ministry of Law also by themselves clearly established that intention of Government from very beginning was to grant benefit of section 42. (g) Income-tax Department itself granted deductions under section 42 for several years right up to assessment year 2004-05 and then suddenly and unaccountably changed its mind and turned somersault. (h) benefit of section 42 was, in fact, granted to several other small- sized discovered oilfields. appellant had filed additional affidavit dated February 28, 2012, giving particulars of at least 11 other small-sized discovered oilfields to which benefit of section 42 was given. Even though contents of affidavit remained untraversed, same has been completely disregarded by High Court." Relying on aforesaid material on which Mr. Ganesh laid great emphasis, his plea was that High Court did not consider aforesaid aspects in its right perspective and arrived at wrong finding that appellant did not ask for benefit of section 42 of Act. He further submitted that strong reliance was placed by High Court on contents of file which was produced by respondent No. 1 relating to preparation of tender documents. However, this file was not shown to appellant or its counsel and appellant was, thus, denied any opportunity of dealing with same. He pointed out that appellant had specifically filed application dated February 28, 2012, praying that court should not consider contents of said file or alternatively [1975] 1 SCC 199. copies of documents in file be supplied to counsel of appellant. On this application, court had made observation on March 12, 2012, to effect that it was not going to place any reliance on contents of file and with these observations application was dismissed. However, in impugned judgment, High Court has rested its conclusion on basis of some contents in file. He further submitted that court should not have disregarded letters of respondent No. 1 on ground that they were not contemporaneous letters. His submission was that right up to year 2005, benefit of section 42 was extended to appellant and, therefore, there was no occasion for appellant to approach respondent No. 1 to ask for such clarification. He further submitted that reliance placed by High Court on certain paragraphs of counter-affidavit of respondent No. 1 was totally erroneous as such stand taken in counter-affidavit was contrary to letters which were addressed by respondent No. 1 itself to Ministry of Finance but, according to him, manner in which plea of discrimination was dealt with by High Court was also erroneous ignoring specific plea taken by appellant in its additional affidavit dated February 28, 2012, giving particulars of number of small-sized oilfields to which section 42 benefit was given and Government had not controverted those averments. He submitted that apart from plea, 13 oilfields (which included appellant) all other oilfields, whether large, medium or small sized, and whether discovered or exploratory, were given benefit of section 42 of Act. Therefore, respondents had acted in grossly arbitrary and discriminatory manner. last submission of Mr. Ganesh was that issue regarding mandamus to be issued to respondents for amending contract and including clause for granting benefit of section 42 of Act was not even gone into, though it was specifically argued. He further submitted that when other contracting parties, namely, Ministry of Petroleum and Natural Gas specifically admitted that this provision was left our inadvertently, court should have given direction for amendment of contract. In order to support his submission that such direction can be issued by High Court in exercise of its powers under article 226 of Constitution, he referred to following judgments: (i) K. N. Guruswamy v. State of Mysore (ii) Gujarat State Financial Corporation v. Lotus Hotels Ltd. (iii) Kumari Shrilekha Vidyarthi v. State of U. P. and; [1955] 1 SCR 305. [1983] 3 SCC 379. [1991] 1 SCC 212. (iv) ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd.. Mr. Arijit Prasad, advocate, who appeared for all respondents countered aforesaid submissions emphatically and passionately. He argued that in so far as Income-tax Department is concerned it could extend benefit of deductions admissible under section 42 of Act only when assessee, namely, appellant in instant case, fulfilled conditions for such deductions stipulated in that section. For this purpose, income-tax authorities were supposed to look into production sharing contracts only and as far as contracts between Government and appellant are concerned, admittedly there was no such stipulation therein. Nor these contracts were placed before both Houses of Parliament. Therefore, order of assessing authorities in tune with legal provisions. He further submitted that in any case appeal of appellant was pending before Income-tax Appellate Tribunal and it was for Income-tax Appellate Tribunal to go into submissions made by appellants on admissibility of deduction under section 42 of Act. In respect of three letters which were written by respondent No. 1, his submission was that no reliance could have been placed on those letters and matter had to be examined on basis of record. High Court had, for this purpose, examined original files on basis of which it was clearly found that averments made in three letters were not borne out of records. He also made detailed submissions to support findings of High Court that there was no inadvertent omission in failing to make any stipulation with regard to extending benefits of section 42 of Act and on contrary in so far as appellant and 12 other similar parties are concerned, there was deliberate decision not to extend such benefit. He also argued that in any case plea of discrimination could not be taken in matters of contract in private law field. Reacting to relief of mandamus sought by appellant seeking directions against respondent No. 1 to amend contract, his plea was that such prayer, in realm of contractual relationship between parties, was inadmissible. He pleaded that production sharing contracts are in nature of contract agreed to be between two independent contracting parties and each of production sharing contracts are distinct from other and is not copy of model production sharing contract. He also pointed out that before signing production sharing contract, approval of Cabinet is obtained, which reflects that production [2004] 3 SCC 553; [2004] 118 Comp Case 213 (SC). sharing contracts as submitted to Cabinet, has approval of one of contracting parties, i.e. Government of India. Therefore, appellant could not claim to be oblivious of provisions of law or contents of contract at time of signing and was precluded from seeking retrospective amendment as matter of right when no such right is conferred under contract. In support of his submission that doctrine of fairness and reasonableness applies only in exercise of statutory or administrative actions of State and not in exercise of contractual obligation and that issues arising out of contractual matters will have to be decided on basis of law of contract and not on basis of administrative law, he referred to and relied upon judgments in Pradeep Kumar Sharma v. U. P. Finance Corporation and ABL International Ltd. (supra). From reading of writ petition filed in High Court, impugned judgment rendered by High Court thereupon and also having regard to arguments advanced before us which have already been taken note of, it is apparent that fulcrum of issue, which has to be focused and to be answered, pertains to benefit of deductions permissible under section 42 of Act. In fact, as is clear from prayers made by appellant in writ petition, very first direction which appellant sought was to declare that appellant is entitled to such deductions in terms of two production sharing contracts dated February 20, 1995. Incidental issues, while deciding aforesaid primary issue, which arises relate to construction of terms of said production sharing contracts and also nature of contracts which parties intended to. Another issue relates to jurisdiction of High Court under article 226 of Constitution to pass mandamus for amending production sharing contracts. All these issues are formulated in precise form hereunder: (i) Whether in terms of provisions contained in two production sharing contracts (PSCs) dated February 20, 1995, executed between appellant and Central Government, appellant is entitled to special allowances stipulated under section 42 of Act? (ii) Whether model production sharing contract (MPSC) can be read as part of and incorporated in production sharing contracts? (iii) Whether there was any intention between contracting parties, namely, Ministry of Petroleum and Natural Gas and appellant for giving benefit of deductions under section 42 of Act? [2012] 10 SCC 424. (iv) If so, whether non-inclusion of such provision in contract can be treated as accidental and unintentional omission? (v) If answer to question No. (iv) is in affirmative, whether mandamus can be issued by court to parties to amend contract and incorporate provisions to this effect? We would now proceed to answer these questions seriatim. Answer to question No. (i)-The first and foremost aspect which has to be kept in mind while answering this issue is that income-tax authorities while making assessment of income of any assessee have to apply provisions of Income-tax Act and make assessment accordingly. Translating this as general proposition contextually, what we intend to convey is that Assessing Officer is supposed to focus on section 42 of Act on basis of which he is to decide as to whether deductions mentioned in said provision are admissible to assessee who is claiming those deductions. In other words, Assessing Officer is supposed to find out as to whether assessee fulfils eligibility conditions in said provision to be entitled to such deductions. We have already reproduced language of section 42, which deals with special provisions of deductions in case of business for prospecting, etc., for mineral oil. Since, appellant herein, in its income-tax return for assessment year in question, i.e., assessment year 2005-06, had claimed deductions mentioned in section 42(1)(b) and (c) of Act, we should take note of nature of these deductions. Section 42(1)(b) provides for deductions of expenditure incurred in respect of drilling or exploration activities or services or in respect of physical assets used in that connection, except for those assets on which allowance for depreciation is admissible under section 32. Section 42(1)(c) speaks of allowances pertaining to depletion of mineral oil in mining area. In order to be eligible to deductions, certain conditions are stipulated in this very section which have to be satisfied by assessees. As is clear from reading of this section, these conditions are as under: (a) it grants such special allowances to those assessees who carry on business in association with Central Government or with any person authorised by it; (b) business should relate to prospecting for, extracting or producing mineral oils, petroleum or natural gas; (c) there has to be agreement in writing between Central Government and assessees in this behalf; (d) it is also requirement that such agreement has been laid on Table of each House of Parliament; (e) allowances which are claimed are to be necessarily specified in agreement entered into between two contracting parties; and (f) allowances are to be computed and made in manner specified in agreement. From nature of allowances specified in this provision, it is clear that such allowances are otherwise inadmissible on general principles, for e.g. allowances relating to diminution or exhaustion of wasting capital assets or allowances in respect of expenditure which would be regarded as on capital account on ground that it brings asset of enduring benefit into existence or constitutes initial expenditure incurred in setting up profit earning machinery in motion. It is for this reason this section itself clarifies that provisions of this Act would be deemed to have been modified to extent necessary to give effect to terms of agreement, as otherwise, other provisions of Act specifically deny such deductions. fortiori, production sharing contract entered into between parties becomes independent accounting regime and its provisions prevail over generally accepted principles of accounting that are used for ascertaining taxable income (see CIT v. Enron Oil and Gas India Ltd.). Thus, by virtue of this section, it is production sharing contract which governs field as without it, such deductions are not permissible under Act. If production sharing contract also does not contain any stipulation providing for such allowances, Assessing Officer would be unable to give benefit of these deductions to assessee. We would also like to point out, at this juncture itself, that this court held in CIT v. Enron Expat Services Inc. that mere fact that assessee had offered to pay tax under section 44BB of Act in some of earlier years will not operate as estoppel to claim benefit of Double Taxation Avoidance Agreement (DTAA), where assessee operates under same production sharing contract which was before court. While holding so, court had followed its earlier judgment in case of Enron Oil and Gas India Ltd. (supra). In present case, it is admitted fact that conditions mentioned in section 42 of Act are not fulfilled. In two production sharing contracts, no provision is made for making admissible aforesaid allowances to assessee. It is obvious that Assessing Officer could not have [2008] 15 SCC 33; [2008] 305 ITR 75 (SC). [2010] 327 ITR 626 (Uttarakhand). granted these allowances/deductions to assessee in absence of such stipulations, mandatory requirement, in production sharing contracts. appellant is conscious of this position. It is for this reason attempt of appellant was to read provisions of model production sharing contract into agreement. That bring us to second issue. Answer to question No. (ii)-Endeavour of Mr. Ganesh, on this aspect, was to show that bids were invited on basis of terms stated in model production sharing contract which specifically mentioned about deductions under section 42 of Act. He also endeavored to demonstrate that appellant had submitted its bid keeping in view such categorical stipulation in model production sharing contract. He also pointed out that on model production sharing contract, opinion of Law Ministry was solicited, vide memo dated June 22, 1992, and that Ministry of Law gave its opinion dated July 21, 1997, opining that benefit of both sections 293A and section 42 of Act should be extended to foreign companies in order to make their participation in these oilfields viable. As per appellant, it was also made abundantly clear by Ministry of Law that it was in relation to "foreign companies to be engaged in exploration, development and production of oil ion small sized oil and gas fields under proposed production sharing contract", thus, drawing no distinction between fields to be explored and those already discovered and also making specific reference to model production sharing contract. Taking sustenance from aforesaid material, passionate plea was made by Mr. Ganesh to read provisions of section 42 contained in model production sharing contract, as opined by Ministry of Law, into production sharing contracts which were ultimately signed between parties. In order to appreciate this argument, we shall have to traverse through production sharing contracts dated February 20, 1995, which were ultimately signed between Government and appellant. We would like to mention here that when this argument was being advanced by learned senior counsel for appellant court asked him to produce copy of production sharing contracts, which were otherwise not brought on record as court wanted to find out as to whether there was any such intention expressed in agreement, namely, to incorporate provisions of model production sharing contract or correspondence exchanged between parties earlier to signing of this agreement. On our asking, appellant has placed on record copy of these production sharing contracts. On going through same, we find that intention expressed is just to contrary. It is rather made crystal clear in agreement that this agreement is sole repository of terms on which it is signed and nothing else would be looked into for this purpose. It is so reflected in following clauses in agreement: "(5) Government has agreed to enter into this contract with companies with respect to area referred to in appendices and B of this contract on terms and conditions herein set forth. Article 1-In this contract, unless context requires otherwise, following terms shall have meaning ascribed to then hereunder:... Article 1.18'Contract' means this agreement and appendices mentioned herein and attached hereto and made integral part hereof and any amendments made thereto pursuant to terms hereof. Article 32-Entire agreement, amendments, waiver and miscellaneous 32.1 This contract supersedes and replaces any previous agreement of understanding between parties, whether oral or written, on subject matter hereof, prior to effective date of this contract. 32.2 This contract shall not be amended, modified, varied or supplemented in any respect except by instrument in writing signed by all parties, which shall state date upon which amendment or modification shall become effective. 32.3 No waiver by any party of any one or more obligations or defaults by 32.3 No waiver by any party of any one or more obligations or defaults by any other party in performance of this contract shall operate or be construed as waiver of any other obligations or defaults whether of like or of different character. 32.4 provisions of this contract shall inure to benefit of and be binding upon parties and their permitted assigns and successors in interest. 32.5 In event of any conflict between any provisions in main body of this contract and any provision in appendices, provision in main body shall prevail. 32.6 headings of this contract are for convenience of reference only and shall not be taken into account in interpreting terms of this contract." intention behind aforesaid clauses is more than apparent, namely, not to look into any other document or correspondence which took place between parties prior to signing of this agreement. Not only this, even so-called "understanding" between parties is to be ignored as well. It is, therefore, impermissible for appellant to take aid of model production sharing contract or clauses contained therein while construing terms of production sharing contracts. Therefore, it was not even open to income- tax authorities to go beyond stipulations contained in production sharing contracts while making assessment and had to exclusively remain within provisions of agreement. On that touchstone, Assessing Officer had no option but to deny benefit of deductions/allowances claimed by appellant in its income-tax returns filed for assessment year 2005-06. This bring us to next question. Answer to question No. (iii)-We have already noted that article 32.2 categorically provides that this contract shall not be amended, modified, varied or supplemented in any respect except by instrument in writing signed by all parties, which shall state date upon which amendment or modification shall become effective. In continuation to what has been observed by us while answering point No. (ii) above, it becomes apparent that question of any intention to contrary between parties does not arise. It is because of reason that article 32 of agreement specifically supersedes any understanding between parties prior to effective date of this contract. matter is, however, compounded by certain acts of respondent No. 1 and made complex to some extent by income-tax authorities in giving benefit of these allowances/deductions under section 42 of Act to appellant under these very production sharing contracts in respect of earlier assessment years. Further, this very state of affairs continued for few years in so far as giving such benefit by income-tax authorities is concerned it may not pose serious problem. We have already held above that on proper construction of provisions of section 42 of Act and application of these provisions to instant case, appellant was not entitled to any such deductions under production sharing contracts. Thus, when in law no such deduction was permissible as per production sharing contracts in present form, even if such deduction was given wrongly in earlier years that would not amount to wrong act on part of income-tax authorities and, therefore, would not enure to benefit of appellant in assessment year in question as well. appellant cannot say that merely because this benefit is extended in previous years; albeit wrongly, this wrong act should continue to perpetuate. There is no estoppel against law. We have taken note of judgment of court in Enron Expat Services Inc. (supra) where assessee had offered to pay tax under section 44BB of Act in earlier years wrongly and court held that it would not operate as estoppel to claim benefit of DTAA for assessment year in question when it was found that assessee was otherwise entitled to it. same principle applies though it is converse situation where assessee has not offered to pay tax wrongly (which was situation in Enron Expat Services Inc. (supra)) and instead tax authorities have extended benefit wrongly to assessee. With this, we come to more crucial aspect, namely, three letters written by Ministry of Petroleum and Natural Gas in response to appellant's communications seeking its clarification. Undoubtedly, in these three letters Ministry of Petroleum and Natural Gas has accepted that intention between parties was to give benefit of allowances under section 42 of Act to appellant herein. So much so, Ministry of Petroleum and Natural Gas even requested Ministry of Finance to give its nod for amending contract by incorporating such provision which was allegedly left out inadvertently. Our first remark is that approach of High Court in dealing with this aspect may not be entirely correct. In first instance, it has embarked upon issue as to whether such omission was by way of "oversight" or it was unintentional. While undertaking this enquiry, it has side tracked language of three letters and instead gone by stand taken in counter-affidavit filed by respondent No. 1 where, in paragraph 4 of counter-affidavit, respondent No. 1 pleaded to contrary. Clearly, said stand taken in counter- affidavit filed in High Court was contrary to contents of three letters dated June 17, 2005, April 11, 2007, and April 28, 2008. Significantly, respondent No. 1 neither disowned those letters nor tried to explain away those letters. No plea was raised to effect that person who wrote those letters was not authorised to do so or he had taken said stand in letters which was contrary to records. No doubt, High Court has observed that it had looked into original record in order to verify and examine correct factual position. However, as demonstrated by Mr. Ganesh, on application made by appellant in High Court for giving copies of such records, High Court had observed that those records would not be seen but ultimately relied upon these records. We do not know whether High Court is correct in its conclusion as to whether contents of three letters are contrary to records and averments made in paragraph 4 of counter-affidavit are in conformity with records, inasmuch as these records have not been produced for our perusal. However, on going through terms of production sharing contracts it becomes apparent that such exercise is not even required. It is stated at cost of repetition that article 32 of contract supersedes any understanding between parties. Thus, even if it is presumed that there was understanding between parties before entering into agreement to effect that benefit of section 42 deduction shall be extended to appellant, that understanding vanished into thin air with execution of two production sharing contracts. Now, for all intent and purpose, it is only production sharing contracts signed between parties, which can be looked into. We answer this question accordingly. into. We answer this question accordingly. Undoubtedly, appellant is also conscious of such limitation and is aware of fact that unless there is clear stipulation in production sharing contracts for grant of benefit of special allowances under section 42 of Act it would be difficult, nay impossible, for appellant to sail through. It is for this reason Mr. Ganesh, learned senior counsel for appellant, made fervent plea that respondents be directed to carry out amendment in contract to include stipulation with regard to section 42 as well. That bring us to next question about permissibility of such prayer. Answer to question Nos. (iv) and (v)-These issues have three facets, namely:- (i) Whether there is prayer to this effect in writ petition? (ii) If it was intended to give such benefit before entering into agreement, whether this intention gives any right to appellant to seek amendment? (iii) Whether court has power to issue mandamus or direction to Government? We have reproduced prayers made in writ petition. Obviously, no prayer for issuance of writ of mandamus or direction of this nature is specifically made. Prayer clause shows that there are two prayers made in writ petition. first relates to directing authorities to grant benefit under section 42 of Act in terms of production sharing contracts dated February 22, 1995, i.e., it is confined within scope of said contracts. Though appellant wants that while construing these contracts model production sharing contracts and other several communications between parties should be looked into and given effect to. We have already held that all such communications would be extraneous and it is only terms of production sharing contracts dated February 20, 1995, which can be looked into. second prayer aims at seeking quashing of orders dated December 31, 2007, and notices dated March 28, 2008, and May 1, 2008, vide which income-tax assessments for assessment years 2001-02, 2002-03, 2003-04 and 2004-05, respectively, are sought to be reopened. Mr. Ganesh, however, submitted that such prayer should be culled out from prayer No. (iii) which is residual in nature. Ordinarily, it would be difficult to read into this prayer clause relief of substantive nature of issuing writ of mandamus. However, we find that there are specific averments to this effect in body of writ petition as well as in grounds. More pertinently this relief was specifically pressed and argued in High Court which was even entertained by High Court without any objections from respondent to contrary. Therefore, we are inclined to examine plea on merits though reluctantly. Let us presume that there was such intention. In fact, it is so stated in three letters dated June 17, 2005, April 11, 2007, and April 28, 2008, which are written by Ministry of Petroleum and Natural Gas and not disowned by it. Still such intention would not make any difference and for this purpose we again revert back to article 32 which has already been reproduced above. Not only prior understanding between parties stood superseded as mentioned in article 32.1, article 32.2 which is crucial to answer this question, bars any amendment, modification, etc., to said contract except by instrument in writing signed by all parties. Thus, unless respondents agree to amend, modify or varied/supplemented terms of contract, no right accrues to appellant in this behalf. We have to keep in mind that contract in question is governed by provisions of article 299 of Constitution. These are formal contracts made in exercise of executive power of Union (or of State, as case may be) and are made on behalf of President (or by Governor, as case may be). Further, these contracts are to be made by such persons and in such manner as President or Governor may direct or authorise. Thus, when particular contract is entered into, its novation has to be on fulfilment of all procedural requirements. No doubt, there is exception to this principle, viz., even in absence of contract, according to requirements of article 299 of Constitution, doctrine of promissory estoppel can still be invoked against Government. However, no such case is pleaded by appellant. To dilate upon aforesaid proposition further, we take along third facet of this issue as, to some extent, they are overlapping. fact remains that even when Ministry of Petroleum and Natural Gas requested Ministry of Finance for giving consent to amend contract, no such authorisation came from Ministry of Finance. Whether, in such case, can court issue mandamus? As noted above, contention of respondent is that production sharing contracts are in nature of contract agreed to between two independent contracting parties. It is also mentioned that before signing of production sharing contracts, approval of Cabinet is obtained which reflects that production sharing contract as submitted to Cabinet has approval of one of contracting parties, namely, Government of India in this case. When it is signed by other party it means that it has approval of both parties. Therefore, contracting party cannot claim to be oblivious of provisions of law or contents of contract at time of signing and, therefore, later on cannot seek retrospective amendment as matter of right when no such right is conferred under contract. Even doctrine of fairness and reasonableness applies only in exercise of statutory or administrative actions of State and not in exercise of contractual obligation and issues arising out of contractual matters are to be decided on basis of law of contract and not on basis of administrative law. No doubt under certain situations, even in respect of contract with State relief can be granted under article 226. We would, thus, be dealing with this aspect in some detail. Law in this aspect has developed through catena of judgments of this court and from reading of these judgments it would follow that in pure contractual matters extraordinary remedy of writ under article 226 or article 32 of Constitution cannot be invoked. However, in limited sphere such remedies are available only when non-Government contracting party is able to demonstrate that its public law remedy which such party seeks to invoke, in contradistinction to private law remedy simpliciter under contract. Some of case law to bring home this cardinal principle is taken note of hereinafter. Significantly, in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V. R. Rudani as well, this court made it clear that if rights are purely of private character, no mandamus can be issued. Thus, even if respondent is "State", other condition which has to be satisfied for issuance of writ of mandamus is public duty. In matter of private character or purely contractual field, no such public duty element is involved and, thus, mandamus will not lie. first case which needs to be referred is Bareilly Development Authority v. Ajay Pal Singh. That was case where appellate [1989] 2 SCC 691. [1989] 1 SCR 743. authority had undertaken construction of dwelling units for people belonging to different income groups and cost at which such flats were to be allotted to allottees. However, it was mentioned that cost stated was only estimated cost and subject to increase or decrease according to rise or fall in price at time of completion of property. authority increased cost and monthly instalment rates which it demanded from allottees were almost doubled and cost and rates of instalments initially stated in brochure. respondents/allottees filed writ petition challenging same and in this context question of maintainability of writ petition arose. High Court, relying upon judgment of Supreme Court in case of Ramana Dayaram Shetty v. International Airport Authority of India allowed writ petition by observing as under : "It has not been disputed that contesting opposite party is included within term'other authority' mentioned under article 12 of Constitution. Therefore, contesting opposite parties cannot be permitted to act arbitrarily with principle which meets test of reason and relevance. Where authority appears acting unreasonably, this court is not powerless and writ of mandamus can be issued for performing its duty free from arbitrariness or unreasonableness." In appeal filed by Authority, this court, on facts, noted that respondents had applied for registration only by acceptance of terms and conditions contained in brochure. Moreover, subsequently letter was written by Authority about enhancement of cost of houses/ flats as well as increase in monthly instalments. Rate of yearly interest requesting allottees to give their written acceptance and respondents except respondent No. 4 had sent their written acceptance and it was on basis of written acceptance that name of first respondent was included in draw and he was successful in getting allotment of particular house. court observed that respondents were under no obligation to seek allotment of house/flats even if they had registered themselves. Notwithstanding, voluntarily registered themselves as applicants only after fully understanding terms and conditions of brochure including relating to variance in prices. On basis of these facts, this court observed that aforesaid observations of High Court relying upon Ramana Dayaram Shetty's case were not correct. Thus, observed court, speaking through Ratnavel Pandian J.: [1979] 2 LLJ 217 SC. "The finding, in our view, is not correct in light of facts and circumstances of this case because in Ramana Daya Shetty's case, there was no concluded contract as in this case. Even conceding that BDA has trappings of state or would be comprehended in 'other authority' for purpose of article 12 of constitution, while determining price of houses/flats constructed by it and rate of monthly instalments to be paid, the'Authority' or its agent after entering into field of ordinary contract acts purely in its executive capacity. Thereafter, relations are no longer governed by constitutional provisions but by legally valid contract which determines rights and obligations of parties inter se. In this sphere they can only claim rights conferred upon them by contract in absence of any statutory obligations on part of authority (i.e. BDA in this case) in said contractual field. There is line of decisions where contract entered into between state and persons aggrieved is non-statutory and purely contractual and rights are governed only by terms of contract, no writ or order can be issued under article 226 of Constitution of India so as to compel authorities to remedy breach of contract pure and simple: Radhakrishna Agarwal v. State of Bihar, AIR 1977 SC 1496, Premji Bhai Parmar v. Delhi Development Authority, AIR 1980 SC 738 and Divisional Forest Officer v. Bishwanath Tea Co. Ltd., AIR 1981 SC 1368" Bishwanath Tea Co. Ltd., AIR 1981 SC 1368" next case of relevance is Divisional Forest Officer v. Bishwanath Tea Co. Ltd. In that case, respondents took on lease certain land from Government. Initially, period of lease was 15 years. lease was to be extended for cultivation and raising tea garden and was subject to condition set out in lease agreement and generally to Assam Land and Revenue Regulation and Rules made thereunder. respondentcompany approached appellant seeking permission to cut 7,000 cub. ft. of timber. appellant took stand that as timber was required for particular use which was not within grant, full royalty will be payable on timber so cut and removed. respondent company paid amount of royalty under protest and filed writ petition under article 226 of Constitution in High Court alleging that upon true construction of relevant clauses of grant as also proviso to rule 37 of Settlement Rules, it was entitled to cut and remove timber without payment of royalty and, therefore, recovery of royalty being unsupported by law, appellant was liable to refund same. preliminary objection was taken [1981] 3 SCR 662; [1981] 3 SCC 238. by appellant to maintainability of writ petition on ground that claim of respondent flows from terms of lease and such contractual rights and obligations can only be enforced in civil court. This preliminary objection was overruled by High Court which proceeded to hear matter and allowed writ petition of respondent company. In appeal by appellant to this court, decision of High Court was reversed holding that writ as not maintainable. following observations may usefully be quoted: "8. It is undoubtedly true that High Court can entertain in its extraordinary jurisdiction petition to issue any of prerogative writs for any other purpose. But such writ can be issued where there is executive action unsupported by law or even in respect of corporation there is denial of equality before law or equal protection of law. Corporation can also file writ petition for enforcement of right under statute. As pointed out earlier, respondent (company) was merely trying to enforce contractual obligation. To clear ground let it be stated that obligation to pay royalty for timber cut and felled and removed is prescribed by relevant regulations, validity of regulations is not challenged. Therefore, demand for royalty is unsupported by law. What respondent claims is exception that in view of certain term in indenture of lease, to wit, clause 2, appellant is not entitled to demand and collect royalty from respondent. This is nothing but enforcement of term of contract of lease. Hence, question whether such contractual obligation can be enforced by High Court in its writ jurisdiction. 9. Ordinarily, where breach of contract is complained of, party complaining of such breach may sue for specific performance of contract, if contract is capable of being specifically performed, or party may sue for damages. Such suit would ordinarily be cognizable by Civil Court. High Court in its extraordinary jurisdiction would entertain petition either for specific performance of contract or for recovering damages. right to relief flowing from contract has to be claimed in Civil Court where suit for specific performance of contract or for damages could be filed." question came up for consideration again in case of Kumari Shrilekha Vidyarthi v. State of U. P.. In that case, State of U. P. had issued Government order dated February 6, 1990, whereby appointments of all Government counsels (civil, criminal, revenue) in all Districts of State of U. P. were terminated with effect from February 28, [1991] AIR 1991 SC 537; [1991] 1 SCC 212. 1990, irrespective of fact whether term of incumbents had expired or was subsisting. validity of this G. D. was challenged by many of these Government Counsels whose appointments were terminated and one of issues to be determined by court was as to whether writ petition was maintainable challenging this G. D., as, according to respondent State, appointment of these Government counsel was purely contractual and writ petition to enforce contract was not maintainable. After noticing this argument of respondents, Supreme Court formulated question to be decided in said case, in following words: "The learned Additional Advocate General did not dispute that if article 14 of Constitution of India is attracted to this case like all State actions, impugned circular would be liable to be quashed if it suffers from vice of arbitrariness. However, his argument is that there is no such vice. In ultimate analysis, it is challenge of arbitrariness which circular must withstand in order to survive. This really is main point involved for decision by us in present case." court then examined nature of appointment of Government counsel in districts with reference to various legal provisions including legal Remembrance Manual and section 24, Code of Criminal Procedure as well as decision of Supreme Court in which character of engagement of Government counsel was considered. After analysing these provisions and case law, Supreme Court concluded in following manner, describing nature of appointment of District Government counsel: "17. We are, therefore, unable to accept argument of learned Additional Advocate General that appointment of District Government counsel by State Government is only professional engagement like that between private client and his lawyer, or that it is purely contractual with no public element attaching to it, which may be terminated at any time at sweet will of Government excluding judicial review. We have already indicated presence of public element attached to the'office' or post of District Government counsel of every category covered by impugned circular. This is sufficient to attract article 14 of Constitution and bring question of validity of impugned circular within scope of judicial review. 18. scope of judicial review permissible in present case, does not require any elaborate consideration since even minimum permitted scope of judicial review on ground of arbitrariness or unreasonableness or irrationality, once article 14 is attracted, is sufficient to invalidate impugned circular as indicated later. We need not, therefore, deal at length with scope of judicial review permissible in such cases since several nuances of that ticklish question do not arise for consideration in present case. 19. Even otherwise and sans public element so obvious in these appointments, appointment and its concomitants viewed as purely contractual matters after appointment is made, also attract article 14 and exclude arbitrariness permitting judicial review of impugned state action. This aspect is dealt with hereafter. 20. Even apart from premises that'office' or'post' of D. G. Cs. has public element which alone is sufficient to attract power of judicial review for testing validity of impugned circular on anvil of article 14, we are also clearly of view that this power is available even without that element on premise that after initial appointment, matter is purely contractual. Applicability of article 14 to all executive actions of State being settled and for same reason its applicability at threshold to making of contract in exercise of executive power being beyond dispute, can it be said that State can thereafter cast off its personality and exercise unbridled power unfettered by requirements of article 14 in sphere of contractual matters and claim to be governed therein only by private law, principles applicable to private individuals whose rights flow only from terms of contract without anything more? We have no hesitation in saying that personality of State, requiring regulation of its conduct in all spheres by requirements of article 14, does not undergo such radical change after making of contract merely, because some contractual rights accrue to other party in addition. It is not as if requirements of article 14 and contractual obligations are alien concepts, which cannot co-exist. 21. preamble of Constitution of India resolves to secure to all its citizens Justice, social economic and political; and Equality of status and opportunity. Every State action must be aimed at achieving this goal. Part IV of Constitution contains'Directive principles of State Policy' which are fundamental in governance of country and are aimed at securing social and economic freedoms by appropriate State action which is complementary to individual fundamental rights guaranteed in Part III for protection against excesses of State action, to realise vision in preamble. This being philosophy of constitution, can it be said that it contemplates exclusion of article 14-non-arbitrariness which is basic to rule of law-from State actions is contractual field when all actions of State are meant for public good and contractual field when all actions of State are meant for public good and expected to be fair and just? we have no doubt that Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to professed ideals in preamble. In our opinion, it would be alien to Constitutional scheme to accept argument of exclusion of article 14 in contractual matters. scope and permissible grounds of judicial review in such matters and relief which may be available are different matters but that does not justify view of its total exclusion. This is more so when modern trend is also to examine unreasonableness of term in such contracts where bargaining power is unequal so that these are not negotiated contracts but standard from contracts between unequal. 22. There is obvious difference in contracts between private parties and contracts to which State is party. Private parties are concerned only with their personal interest whereas State while exercising its powers and discharging its functions, acts indubitably, as is expected of it for public good and in public interest. impact of every State action is also on public interest. This factor alone is sufficient to import at least minimum requirements of public law obligations and impress with this character contracts made by State or its instrumentality. It is different mater that scope of judicial review in respect of disputes falling within domain of contractual obligations may be more limited and in doubtful cases parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to extent, challenge is made on ground of violation of article 14 by alleging that impugned act is arbitrary, unfair or unreasonable, fact that dispute also falls within domain of contractual obligations would not relieve State of its obligation to comply with basic requirements of article 14. To this extent, obligation is of public character invariably in every case irrespective of there being any other right or obligation in addition thereto. additional contractual obligation cannot divest claimant of guarantee under article 14 of non-arbitrariness at hands of State in any of its actions... 34. In our opinion, wide sweep of article 14 undoubtedly takes within its fold impugned circular issued by State of U. P. in exercise of its executive power, irrespective of precise nature of appointment of Government counsel in districts and other rights, contractual or statutory, which appointees may have. It is for this reason that we base our decision on ground that independent of any statutory right, available to appointees, and assuming for purpose of this case that rights flow only from contract of appointment, impugned circular, issued in exercise of executive power of State, must satisfy article 14 of Constitution and if it is shown to be arbitrary, it must be struck down. However, we have referred to certain provisions relating to initial appointment, termination or renewal of tenure to indicate that action is controlled at least by settled guidelines, followed by State of U.P., for long time. This too is relevant for deciding question of arbitrariness alleged in present case." Similarly, in State of Gujarat v. Meghji Pethraj Shah Charitable Trust, this court reiterated principles that if matter is governed by contract, writ petition is not maintainable since it is public law remedy and is not available in private law field, for example, where matter is governed by non-statutory contract. At this stage, we would like to discuss at length judgment of this court in ABL International Ltd. (supra), on which strong reliance is placed upon by counsel for both parties. In that case, various earlier judgments right from year 1954 were taken note of. One such judgment which Department in support of their case had referred to was decision of apex court in case LIC of India v. Escorts Ltd. wherein court had held that ordinarily in matter relating to contractual obligations, court would not examine it unless action has some public law character attached to it. following passage from said judgment was relied upon by respondents: "If action of State is related to contractual obligations or obligations arising out of tort, court may not ordinarily examine it unless action has some public law character attached to it. Broadly speaking, court will examine actions of State if they pertain to public law domain and refrain from examining them if they pertain to private law field. difficulty will lie in demarcating frontier between public law domain and private law field. It is impossible to draw line with precision and we do not want to attempt it. [1994] 3 SCC 552. [1986] 1 SCC 264; [1986] 59 Comp Cas 548 (SC). Page 637 of 59 Comp Cas. question must be decided in each case with reference to particular action, activity in which State or instrumentality of State is engaged when performing action, public law or private law character of action and host of other relevant circumstances. When State or instrumentality of State ventures into corporate world and purchases shares of company, it assumes to itself ordinary role of shareholder, and dons robes of shareholder, with all rights available to such shareholder. There is no reason why State as shareholder should be expected to state its reasons when it seeks to change management, by resolution of company, like any other shareholder." This court dealt with this judgment in following manner: "We do not think court in above case has, in any manner, departed from view expressed in earlier judgments in case cited hereinabove. This court in case of Life Insurance Corporation of India (supra) proceeded on facts of that case and held that relief by way of writ petition may not ordinarily be appropriate remedy. This judgment does not lay down that as rule in matters of contract court's jurisdiction under article 226 of Constitution is ousted. On contrary, use of words'court may not ordinarily examine it unless action has some public law character attached to it' itself indicates that in given case, on existence of required factual matrix remedy under article 226 of Constitution will be available." In so far as argument of respondents in said case that writ petition on contractual matter was not maintainable unless it is shown that authority performs public function or discharges public duty, is concerned, it was answered in following manner: "22. We do not think above judgment in VST Industries Ltd. v. VST Industries Workers Union supports argument of learned counsel on question of maintainability of present writ petition. It is to be noted that VST Industries Ltd. against whom writ petition was filed was not State or instrumentality of State as contemplated under article 12 of Constitution, hence, in normal course, no writ could have been issued against said industry. But it was contention of writ petitioner in that case that said Page 222 of 118 Comp Cas. Page 226 of 118 Comp Cas. [2001] 1 SCC 298; [2001] 98 FJR 72 (SC). industry was obligated under concerned statute to perform certain public functions, failure to do so would give rise to complaint under article 226 against private body. While considering such argument, this court held that when authority has to perform public function or public duty if there is failure writ petition under article 226 of Constitution is maintainable. In instant case, as to fact that respondent is instrumentality of State, there is no dispute but question is: was first respondent discharging public duty or public function while repudiating claim of appellants arising out of contract? Answer to this question, in our opinion, is found in judgment of this court in case of Kumari Shrilekha Vidyarthi v. State of U. P. [1991] 1 SCC 212; [1991] AIR 1991 SC 537 wherein this court held: 'The impact of every State action is also on public interest. It is really nature of its personality as State which is significant and must characterise all its actions, in whatever field, and not nature of function, contractual or otherwise which is decisive of nature of scrutiny permitted for examining validity of its act. requirement of article 14 being duty to act fairly, justly and reasonably, there is nothing which militates against concept of requiring State always to so act, even in contractual matters.' 23. It is clear from above observations of this court, once State or instrumentality of State is party to contract, it has obligation in law to act fairly, justly and reasonably which is requirement of article 14 of Constitution of India. Therefore, if by impugned repudiation of claim of appellants first respondent as instrumentality of State has acted in contravention of above said requirement of article 14 then we have no hesitation that writ court can issue suitable directions to set right arbitrary actions of first respondent." court thereafter summarised legal position in following manner: "27. From above discussion of ours, following legal principles emerge as to maintainability of writ petition: (a) In appropriate case, writ petition as against State or instrumentality of State arising out of contractual obligation is maintainable. Page 229 of 118 Comp Cas. (b) Merely because some disputed questions of facts arise for consideration, same cannot be ground to refuse to entertain writ petition in all cases as matter of rule. (c) writ petition involving consequential relief of monetary claim is also maintainable. 28. However, while entertaining objection as to maintainability of writ petition under article 226 of Constitution of India, court should bear in mind fact that power to issue prerogative writs under article 226 of Constitution is plenary in nature and is not limited by any other provisions of Constitution. High Court having regard to facts of case, has discretion to entertain or not to entertain writ petition. court has imposed upon itself certain restrictions in exercise of this power (see: Whirlpool Corporation v. Registrar of Trade Marks [1998] 8 SCC 1). and this plenary right of High Court to issue prerogative writ will not normally be exercised by court to exclusion of other available remedies unless such action of State or its instrumentality is arbitrary and unreasonable so as to violate constitutional mandate of article 14 or for other valid and legitimate reasons, for which court thinks it necessary to exercise said jurisdiction." position thus summarised in aforesaid principles has to be understood in context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to maintainability of writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At same time, discretion lies with High Court which under certain circumstances, can refuse to exercise. It also follows that under following circumstances,'normally', court would not exercise such discretion: (a) court may not examine issue unless action has some public law character attached to it. (b) Whenever particular mode of settlement of dispute is provided in contract, High Court would refuse to exercise its discretion under article 226 of Constitution and relegate party to said mode of settlement, particularly when settlement of disputes is to be resorted to through means of arbitration. (c) If there are very serious disputed questions of fact which are of complex nature and require oral evidence for their determination. (d) Money claims per se particularly arising out of contractual obligations are normally not to be entertained except in exceptional circumstances. Further, legal position which emerges from various judgments of this court dealing with different situations/aspects relating to contracts entered into by State/public authority with private parties, can be summarised as under: (i) At stage of entering into contract, State acts purely in its executive capacity and is bound by obligations of fairness. (ii) State in its executive capacity, even in contractual field, is under obligation to act fairly and cannot practice some discriminations. (iii) Even in cases where question is of choice or consideration of competing claims before entering into field of contract, facts have to be investigated and found before question of violation of article 14 could arise. If those facts are disputed and require assessment of evidence correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, case could not be conveniently or satisfactorily decided in proceedings under article 226 of Constitution. In such cases court can direct aggrieved party to resort to alternate remedy of civil suit, etc. (iv) writ jurisdiction of High Court under article 226 was not intended to facilitate avoidance of obligation voluntarily incurred. (v) writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of conditions agreed to in contract can provide no justification in not complying with terms of contract which parties had accepted with open eyes. It cannot ever be that licensee can work out licence if he finds it profitable to do so: and he can challenge conditions under which he agreed to take licence, if he finds it commercially inexpedient to conduct his business. (vi) Ordinarily, where breach of contract is complained of, party complaining of such breach may sue for specific performance of contract, if contract is capable of being specifically performed. Otherwise, party may sue for damages. (vii) writ can be issued where there is executive action unsupported by law or even in respect of corporation there is denial of equality before law or equal protection of law or if can be shown that action of public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice. (viii) If contract between private party and State/instrumentality and/or agency of State is under realm of private law and there is no element of public law, normal course for aggrieved party, is to invoke remedies provided under ordinary civil law rather than approaching High Court under article 226 of Constitution of India and invoking its extraordinary jurisdiction. (ix) distinction between public law and private law element in contract with State is getting blurred. However, it has not been totally obliterated and where matter falls purely in private field of contract. This court has maintained position that writ petition is not maintainable. Dichotomy between public law and private law, rights and remedies would depend on factual matrix of each case and distinction between public law remedies and private law, field cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether contractual relations between parties bear insignia of public element. Once on facts of particular case it is found that nature of activity or controversy involves public law element, then matter can be examined by High Court in writ petitions under article 226 of Constitution of India to see whether action of State and/ or instrumentality or agency of State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into decision-making process or that decision is not arbitrary. (x) Mere reasonable or legitimate expectation of citizen, in such situation, may not by itself be distinct enforceable right but failure to consider and give due weight to it may render decision arbitrary, and this is how requirements of due consideration of legitimate expectation forms part of principle of non-arbitrariness. (xi) scope of judicial review in respect of disputes falling within domain of contractual obligations may be more limited and in doubtful cases parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. Keeping in mind aforesaid principles and after considering arguments of respective parties, we are of view that on facts of present case, it is not fit case where High Court should have exercised discretionary jurisdiction under article 226 of Constitution. First, matter is in realm of pure contract. It is not case where any statutory contract is awarded. As pointed out earlier as well, contract in question was signed after approval of Cabinet was obtained. In said contract, there was no clause pertaining to section 42 of Act. appellant is presumed to have knowledge of legal provision, namely, in absence of such clause, special allowances under section 42 would impermissible. Still it signed contract without such clause, with open eyes. No doubt, appellant claimed these deductions in its income-tax returns and it was even allowed these deductions by income-tax authorities. Further, no doubt, on this premise, it shared profits with Government as well. However, this conduct of appellant or even respondents was outside scope of contract and that by itself may not give any right to appellant to claim relief in nature of mandamus to direct Government to incorporate such clause in contract, in face of specific provisions in contract to contrary as noted above, particularly, article 32 thereof. It was purely contractual matter with no element of public law involved thereunder. Having considered matter in aforesaid prospective, we come to irresistible conclusion that appellant is not entitled to relief claimed. Though it may be somewhat harsh on appellant when it availed of benefit of section 42 for few years and acted on understanding that such benefit would be given to it but we have no option but to hold that production sharing contracts did not provide for this benefit to be given to appellant and contract can be amended only if both parties agree to do so and not otherwise. Therefore, we are constrained to dismiss appeal for reasons given above. There shall, however, be no orders as to costs. *** Joshi Technologies International Inc. v. Union of India