Disposed

M/s Sparkles Laundry Services, v. The Union of India

Andhra Pradesh HC20 Jul 2023WP/10400/2021

Case brief

AI extract

What is this about?

This writ petition challenged a SARFAESI notice alleging discriminatory denial of assured off-take payments via a non-existent Force Majeure clause. The Court held authorities could not invoke a clause absent from the agreement and remanded the matter for reasoned consideration.

What did the court decide?

The impugned notices by Respondents 6 to 8 were set aside. The matter was remanded to consider the petitioner's representation and decide afresh with a reasoned order within four weeks.

M/s Sparkles Laundry Services, Vs… — Contract and Commercial Disputes | Andhra Pradesh HC (2023)

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RC,J W.P. NO. 10400 of 2021

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HON’BLE SRI JUSTICE RAVI CHEEMALAPATI

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WRIT PETITION No. 10400 of 2021

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ORDER:

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This Writ Petition is filed under Article 226 of the Constitution of

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India for the following relief:

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“……..issue an appropriate Writ, order or direction more particularly one in the nature of writ of Mandamus, declaring the following actions:

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A. The action of the respondent No.10 in issuing the notice dated 17.04.2021 under Section 13(2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) to the petitioner without proceedings against the respondent Nos. 7 & 8 who had given irrevocable undertaking of making payments to ESCROW Account.

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B. The action of the respondent Nos. 3 to 9 in not paying agreed rates to the petitioner for assured offtake quantities as set out in Notice inviting Tenders and Contract Agreements No.M.13/C&W/Mech/ Laundry/286/BOOT/GTL-2, dt. 30.12.2006, and Contract Agreement No.M.13/C&W/Mech.Laundry/286/BOOT/COA dated 30.12.2016 from 23.03.2020 onwards to present, which includes the amounts of Rs.95,76,437.50 and Rs.1,40,27,445.59 claimed under Bills along with interest for delayed payment, under assured offtake quantities during the period 23.03.2020 to 31.03.2021 by considering the representations dated 16.11.2020 of the petitioner

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C. the further action of the Respondents 6 to 8 in issuing Letters No.M.313/286/ Tenders/Correspondence/Vol-IV dated 02.04.2020 and Letter No.M/13/C&W/Mech Laundry/286/BOOT/TPTY/Agrt. Dt. 01.04.2020 and Letter No. B/MS.142/1/BOOT.Laundry/COA/2017 dated 03.04.2020 respectively, invoking the Force Majeure Clause under the aforesaid Contract Agreements dated 24.09.2014 & 16.03.2015 to evade their liability under Clause 5.2.II said Contract Agreements,

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As illegal, arbitrary, discriminative, unjust, unreasonable, without jurisdiction, contrary to law and violative of fundamental rights under

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RC,J W.P. NO. 10400 of 2021

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Articles 14 of the Constitution of India and also against the principles of natural justice and to set aside the notice dated 17.04.2021 issued by the respondent No.10 to the petitioner under Section 13(2) of SARFAESI Act and consequent direct the respondent Nos. 7 & 8 for forthwith pay the amounts …..”

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The short grievance of the petitioner is, issuance of notice under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act by the 10^th respondent without proceeding against the respondent Nos.7&8, who had given irrevocable undertaking of making payments, and also the non-payment of 75% of the average daily requirement known as assured off-take from the laundry, guaranteed under BOOT Laundry Contract, by invoking a non-existent Force Majeure Clause, despite the fact that the similar situated contractors including the petitioner of other Railway Divisions were paid amount towards assured off-take.

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Heard Sri Devalaraju Anil Kumar, learned counsel for the petitioner and Sri Y.V.Anil Kumar, learned Central Government counsel for respondents.

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When the matter is taken up for consideration, the learned counsel for the petitioner submitted that the relief sought in this Writ Petition is restricted to the extent of non-payment of 75% of the average

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RC,J W.P. NO. 10400 of 2021

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daily requirement known as assured off-take from the laundry, guaranteed under BOOT Laundry Contract.

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Sri Devalaraju Anil Kumar, learned counsel, would submit that, as per Para-1 of Standard Guidelines and Special Conditions, payment of 75% of the minimum workload is guaranteed to the contractor towards assured off take, however, the authorities by invoking Force Majeure clause, which is not at all a part of the contract, have rejected the claim made by the petitioner for payment of assured off take. The learned counsel for the petitioner would submit that, in the event of contradictions, special conditions of the contract prevail over the general conditions. The other divisions of Railway such as South East Central Railway and East Coast Railway have made payments to the contractors including the petitioner under Assured off take clause, however the respondent authorities have denied the payment to the petitioner, who is similarly situated, thus the petitioner was discriminated, which is impermissible under Constitution. The learned counsel for the petitioner would further submit that while answering the question raised in Lok Sabha regarding Mechanized Boot Laundries, it has been answered that bills were processed as per Minimum assured clause. Despite bringing all the facts to the notice of the authorities and also that Force Majeure Clause is alien to laundry contracts,

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RC,J W.P. NO. 10400 of 2021

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they rejected the petitioner’s claim contrary to the special conditions of the contract and that too without considering the grounds urged in the representation. Hence prayed to allow the writ petition.

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Sri Y.V.Anil Kumar, learned Central Government Counsel, on counter vehemently opposed the claim made by the petitioner and also the maintainability of the writ petition on the ground that this Court while exercising jurisdiction under Article 226 of the Constitution of India cannot adjudicate the disputes arising out of contractual obligations. Further, the agreement contains an arbitration clause. The petitioner, without invoking arbitration clause, has filed this writ petition. The learned counsel would further submit that the authorities have rightly invoked Force Majeure clause in view of the unforeseen circumstances that had erupted on account of Covid-19 pandemic since there was complete cessation of laundry operations during the relevant period. There are no valid and justifiable grounds raised in this writ petition warranting interference with the proceedings impugned in this writ petition.

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Perused the material available on record. In the representation submitted by the petitioner there is a categorical mention about the payment made to another similarly situated Laundry Services in relation to the contract of similar nature but relates to other Divisions of Railway, by

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RC,J W.P. NO. 10400 of 2021

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invoking assured off-take clause contained in the Boot Laundry agreement. Invocation Force Majeure clause, in case it is non-existent in the agreement, is impermissible under law. Further, the Ministry of Railways, Railway Board, by issuing circular dated 03.07.2020 had clarified that where assured off-take is provided in Boot laundry contract; the same can be followed/continued in short to medium run.

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The impugned order does not contain any explanation as to the

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reason why the petitioner is not entitled for payment of assured off take, which allowance was extended to the similarly situated persons by the other Divisions of the same department. The only reason offered for nonpayment is invocation of Force Majeure clause. As already stated supra, the authorities cannot invoke the said clause, if it is not found in the agreement.

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However, as the authorities have not answered all the grounds

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raised by the petitioner in the representation, instead of going into the merits of the matter, this Court feels it appropriate to remand the matter to the original authority for better adjudication of the matter by considering and answering all the issues raised by the petitioner, keeping in view the extension of benefit to the similarly situated contracts of other Divisions.

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RC,J W.P. NO. 10400 of 2021

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Accordingly, the Writ Petition is disposed of. The proceedings Letters No.M.313/286/ Tenders/Correspondence/Vol-IV dated 02.04.2020 and Letter No.M/13/C&W/Mech Laundry/286/BOOT/TPTY/Agrt. Dt. 01.04.2020 and Letter No.B/MS.142/1/BOOT.Laundry/COA/2017 dated 03.04.2020 respectively issued by respondent Nos. 6 to 8 are set aside and the matter is remanded directing the respondent Nos. 6 to 8 to consider and answer all the grounds raised by the petitioner in his representation and decide the matter afresh by passing a reasoned order and communicate the same to the petitioner within a period of four (04) weeks from the date of receipt of copy of the order. There shall be no order as to costs.

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As sequel thereto, miscellaneous petition, if any, pending shall stand closed. Interim orders, if any, shall stand vacated.

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_________________________ JUSTICE RAVI CHEEMALAPATI

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21^st July, 2023 RR

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RC,J W.P. NO. 10400 of 2021

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HON’BLE SRI JUSTICE RAVI CHEEMALAPATI

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WRIT PETITION No.4008 of 2022

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21^st July, 2023

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M/s Sparkles Laundry Services, v. The Union of India

Case brief

What is this about?

What did the court decide?

M/s Sparkles Laundry Services, v. The Union of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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