Concept of Unconscionability:

The court introduced the concept of unconscionable contracts, where one party to a contract is in a position of undue influence, power, or inequality over the other, making the terms grossly unfair to the weaker party.

In this case, the employees were in a weaker bargaining position compared to the government-owned corporation. The employees were required to accept the terms of employment, including the unfair termination clause, without any real choice.

The court held that such contracts are contrary to public policy and should not be enforced.

Public Policy:

The court recognized that contracts should not contain provisions that allow arbitrary, unreasonable, or unfair actions, especially in employment situations where employees are at a disadvantage.

The contract was deemed to violate public policy by allowing the employer to terminate employees without any reason, thus depriving them of their right to natural justice and fair treatment.

Article 14 of the Indian Constitution:

The court also considered the case in the light of Article 14 of the Indian Constitution, which guarantees equality before the law. It held that the termination clause, being arbitrary and unfair, violated the principle of equality.

The termination clause was struck down as it failed to meet the standards of reasonableness and fairness, which are essential under Article 14.

Case summary:

The case involved four petitions challenging the validity of cesses levied on coal, tea estates, brick-earth, and minor minerals. The Supreme Court ruled on the validity of the cesses in light of the legislative competence of the state governments.

Judgment:

The Supreme Court ruled that royalty is not a tax, but rather an income paid to the owner of the land. The court also ruled that a cess may be a tax or fee, and is generally used for special administrative expenses.

Significance:

The case also involved a clerical error in the text of India Cements, where the court mistakenly wrote that "royalty is a tax" instead of "cess on royalty is a tax".

Background:

Skipper Construction Co. entered into a contract with the DDA to develop land. However, the company violated the terms of the agreement, engaging in fraudulent activities, such as misrepresentation and unauthorized sale of property units.

Fraudulent Behavior:

The court found that Skipper Construction Co. acted in bad faith by violating the terms of the contract and defrauding the public by selling units illegally. The company had sold the same properties to multiple buyers without authorization.

Judgment:

The Supreme Court held that Skipper Construction Co. breached its duty of good faith and engaged in fraudulent and illegal practices, which were detrimental not only to the DDA but also to the public.

The court emphasized the importance of good faith in contractual dealings, particularly when contracts involve public authorities. In cases where a party violates the duty of good faith and misuses the trust placed in it, the consequences can be severe, as seen in this case.

Restitution and Accountability:

The court ordered restitution, requiring Skipper Construction to compensate the affected parties, and the DDA's rights to the land were restored. The court also emphasized that private entities entering contracts with public bodies have an enhanced duty of care and integrity.