Step 1: Understanding the Concept:
The question quotes a famous passage from a Supreme Court judgment that introduced a new and dynamic interpretation of the Right to Equality under Article 14 of the Constitution. This new interpretation holds that any state action which is arbitrary is, by its very nature, a denial of equality.
Step 2: Detailed Explanation:
This revolutionary jurisprudential shift was articulated by Justice P.N. Bhagwati in the landmark case of E. P. Royappa v. State of Tamil Nadu. Prior to this case, Article 14 was primarily tested on the doctrine of "reasonable classification." The Royappa case introduced the "new doctrine" or the "anti-arbitrariness" test. The Court held that equality is a dynamic concept and cannot be confined to the traditional test. It established that Article 14 strikes at arbitrariness in state action because an arbitrary action is inherently unequal. The famous quote, "equality and arbitrariness are sworn enemies," is the essence of this new doctrine, which was further developed in \textit{Maneka Gandhi v. Union of India}.
Step 3: Final Answer:
This was stated in the case of E. P. Royappa v. State of T.N.