Dismissed

Harshad Gawade v. the State of Maharashtra and Ors.

Bombay HC17 Sept 2010PIL/235/2009

Case brief

AI extract

What is this about?

This PIL challenged the Maharashtra Tourism Development Corporation's decision to charter the Deccan Odyssey luxury train outside Maharashtra without tendering. The Court rejected the plea of arbitrariness, upholding the decision as a valid move to turn a loss-making venture profitable and citing national identity against parochial views, while directing future wider publicity for charter bookings

What did the court decide?

Petition dismissed. Direction issued to widely advertise train charter availability in media and trade journals in future.

Harshad Gawade Vs the State of… — Constitutional and Fundamental Rights | Bombay HC (2010)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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CIVIL APPELLATE JURISDICTION

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PUBLIC INTEREST LITIGATION NO.235 OF 2009

Harshad Gawade

..Petitioner.

Vs.

The State of Maharashtra and others

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..Respondents.

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Mr. Ashutosh Kumbhakoni, Senior Advocate with Mr. N.V. Walavalkar, Senior Advocate with Mr. Peter Lobo, Mr. Rui Rodrigues and Ms. Neha P. Bhide for the Petitioner.

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Mr. R.P. Behere, Addl. GP for Respondents 1 and 2.

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Mr. Anil V. Anturkar, Senior Advocate with Mr. Sugandh B. Deshmukh for Respondents 3 and 4.

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Mr. V.P. Chaudhary, Senior Advocate with Ms. Komal Joshi and Mr. Nitin Chaudhary i/b M/s. Khaitan & Jayakar for Respondents 5 and 7.

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Mr. R.A. Dada, Senior Advocate with Ms. M. Dada, Mr. M. Salian and Ms. I. Sen i/b Gagrats for Respondent No.6.

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CORAM : DR. D.Y.CHANDRACHUD, and SMT.R.P.SONDURBALDOTA, JJ.

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17 September 2010.

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ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :

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Rule, by consent returnable forthwith. Counsel appearing on

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behalf of the Respondents waive service. With the consent of Counsel, the Petition is taken up for hearing and final disposal.

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This Petition has been instituted in the public interest by a Petitioner who claims to be an agriculturist and a local tour operator. The Petitioner claims to institute the proceedings in order “to safeguard the livelihood of the rural population in the State of Maharashtra” associated with the tourism and hospitality industry. The subject matter of the Petition is a luxury train by the name of the Deccan Odyssey. The train came into being at a cost of approximately Rs. 32.12 Crores of which an amount of Rs.8.49 Crores was contributed by the Department of Tourism of the State Government, an amount of Rs.10.27 Crores by the State Government while the rest was brought in as a contribution by the Union Ministry of Railways by way of rolling stock, coaches and other facilities. On 28 March 2002 the Government of India in the Ministry of Tourism and Culture communicated the sanction of the President of India for incurring an expenditure not exceeding an amount of Rs.8.49 Crores as the contribution of the Department of Tourism for the fabrication of the luxury train in

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Maharashtra to run on the Mumbai – Ratnagiri – Sindhudurg – Goa – Pune – Aurangabad (Ajanta-Ellora) – Mumbai circuit. The train was to run on this sector. The train has essentially been marketed for a foreign clientele and it is common ground before the Court that the price at which tickets of the train are sold would generally subserve the requirements of foreign tourists.

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The train was operated by the Maharashtra Tourism Development Corporation (the Third Respondent) until September 2009 or thereabouts on journeys within the State of Maharashtra but extending to Goa. In addition, from the material before the Court it emerges that during the period 2006-07 to 2009-10 the train was chartered for tourist destinations in diverse areas of the country including Rajasthan, West Bengal, U.P. Even during the period when the train was predominantly operated by the Third Respondent, it was made available on charter hire for tourist destinations in other parts of the country as well.

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The grievance of the Petitioner is that since September 2009

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the train has been allowed to ply by the Third Respondent outside the State and an agreement has been entered into with the Seventh Respondent, a private tour operator, by which the train has been chartered for destinations outside the State. The relief that the Petitioner seeks in these proceedings is the setting aside of all permissions, charters, leases and agreements in respect of the train with private enterprises and an order of injunction restraining the Third Respondent from plying and operating the train to any tourist destination or tour circuit outside the States of Maharashtra and Goa.

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Essentially two issues have been raised in the course of the proceedings. The first issue is whether the policy decision of the Third Respondent to allow a change in the route of the train to places beyond the State of Maharashtra is arbitrary and violative of the fundamental rights of the Petitioner. The second is whether the action of the Third Respondent in entering into an arrangement with the Seventh Respondent without inviting tenders is arbitrary.

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On behalf of the Petitioner it has been urged by Counsel that

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the object and purpose underlying the establishment of the train was to

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show case the State of Maharashtra and its culture to tourists both within and outside the country. The submission is that it was in this background that a contribution was made on behalf of the State towards the initial cost of acquisition. However, that object is, according to the Petitioner, now defeated by allowing the train to ply outside the State. The second submission is that a private arrangement has been entered into by the Third Respondent with the Seventh Respondent without inviting tenders under which the train has been made available for the benefit of the Seventh Respondent. Counsel emphasized that any dealing with public property without inviting tenders must at least prima facie incur the vice of arbitrariness. The grievance of the Petitioner is that in the absence of an invitation to tender the Third Respondent would have no indication of what revenue can be realized by the charter hire of the train and that as a result the arrangement which is made with the Seventh Respondent must be set aside. The Seventh Respondent has in turn entered into an agreement with the Sixth Respondent, the Travel Corporation of India Limited, which is a wholly owned subsidiary of Thomas Cook India Limited,

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under which the latter was to provide marketing and branding services to the Seventh Respondent.

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The circumstances in which the Third Respondent decided to allow the use of the train outside the State of Maharashtra are adverted to in the affidavit filed on behalf of the Corporation. The attention of the Court has been drawn to the fact that the operation of the train progressively resulted in accumulated losses of Rs.2.31 Crores for the year ending 31 March 2005, Rs.3.64 Crores as of 31 March 2006 and Rs.4.08 Crores, Rs.3.94 Crores and Rs.6.97 Crores for the years ending 31 March 2007, 31 March 2008 and 31 March 2009. These losses, it has been stated were compounded by the reduction in tourist traffic consequent upon the terrorist attacks in Mumbai and elsewhere in the country and on account of the global recession in recent years. Moreover, it has been stated that haulage charges are payable to the Railways for every journey. Earlier the charges were between Rs.30 to 32 lacs for tours within Maharashtra. The Union Ministry of Railways, however, increased its charges to Rs.45.09 lacs for a composition of 16 coaches to Rs.52.43 lacs for a 21 coach rake. The Chief Minister of

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Maharashtra addressed a letter on 2 August 2008 to the Union Minister

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of Railways highlighting the financial hardship that was being faced by the State as a result of the increase in haulage charges and seeking some concessions. This was reiterated in letters dated 2 September 2008 and 6 February 2009 which highlighted the adverse impact on the tourism industry occasioned as a result of the terrorist attack in the State and the global financial crisis. However, it appears that these representations did not meet on response. Consequently a decision was taken by the Third Respondent to make available the train on charter hire to parties desirous of doing so. The fact that the train was available for charter hire was published on the website of the Third Respondent. The website of the Third Respondent specifically contains a notice that exclusive charters can be organized on the Deccan Odyssey. The Seventh Respondent submitted a proposal to the Petitioner for charter hire of the train for diverse periods and journeys. At a meeting held on 21 April 2009 it was agreed that the Seventh Respondent would (i) pay the actual haulage cost communicated by the Railway Board for the charter route; (ii) pay in addition an amount equivalent to 5% of the haulage cost as part of the revenue payment

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share to be made to the Railway Board and (iii) pay to the Third Respondent an amount of Rs.25 lacs per week for the period during which the train would be on charter hire. Counsel informed the Court during the course of hearing that for the period 2009-10 the train was made available on charter hire to the Seventh Respondent for 16 trips. For 2010-11 and 2011-12, bookings have been made for 22 trips each. The tourist season commences at the end of the September and continues until the end of March in the following year.

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The first submission which has been urged on behalf of the Petitioner is that there is an illegality in permitting the operation of the train to tourist destinations outside the State of Maharashtra. Now the

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facts before the Court would indicate that even during the period when the train was in exclusive operation of the Third Respondent, the train was allowed to be used on charter hire for destinations outside the State. As a matter of fact, a travel operator in the U.K., G.W. Travels had charter hired the train between 2006 and 2009 on routes which included several tourist destinations in the States of Rajasthan, U.P. and West Bengal. The submission of the Petitioner cannot be acceded

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to for more than one reason. Firstly, there is no legal impediment in allowing the operation of the train outside the State of Maharashtra. This Court at least cannot countenance such a parochial view. The Petitioner loses sight of our national identity – an identity which is associated with nationhood and a citizenship of the nation. Despite diversity of culture, language and geography India is one nation; a nation which values its constitutional ethos of diversity and inclusiveness. The Petitioner espouses a fragmented view of reality – one that the Court cannot accept because it is the antithesis of the constitutional vision and spirit. Secondly, the material on the record demonstrates that the Third Respondent faced a consistent pattern of accumulated losses for the year ending 31 March 2005 and thereafter as of 31 March 2009 the accumulated losses stood at Rs.6.97 Crores. The letters written by the Chief Minister of the Maharashtra to the Union Minister of Railways show that an effort was made to persuade the Ministry of Railways to reduce the haulage charges. In this background, if a policy decision was taken by the Third Respondent to convert what was essentially a loss making venture into a revenue earning facility, that cannot be faulted as being violative of Article 14.

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Even if, as the Petitioner suggests, the object of establishing the Third Respondent is not merely to make profits but to show case tourism and culture within the State, there can be no compulsion on an entity of the State to continue operations in the face of continued losses. Ultimately, it is for the entity concerned to manage its affairs efficiently and if with a view to do this, the modality of employing a public private partnership is envisaged to yield revenue, that cannot be questioned in proceedings under Article 226 of the Constitution. We therefore do not find any substance in the first submission.

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Now insofar as the second submission is concerned, the law on the point is well settled. Every dealing with public property must be guided by norms of fairness and transparency. When the State or its agency deals with public property those dealings must be guided by the requirements that Article 14 imposes of non-discrimination and equality of treatment. Ordinarily, where public property is put up for disposal, the usual process is to allow for tendering or auction so as to result in the realization of the best possible price. This however, is not an inflexible rule which must be followed irrespective of the situation

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in each case. However, where an exception to the general rule is

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made, the State must justify why the exception has been made. This principle emerges from the judgment of the Supreme Court in Netai Bag v. State of W.B.¹ where the Court held as follows :

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“There cannot be any dispute with the proposition that generally when any State land is intended to be transferred or the State largesse decided to be conferred, resort should be had to public auction or transfer by way of inviting tenders from the people. That would be a sure method of guaranteeing compliance with the mandate of Article 14 of the Constitution. Non-floating of tenders or not holding of public auction would not in all cases be deemed to be the result of the exercise of the executive power in an arbitrary manner. Making an exception to the general rule could be justified by the State executive, if challenged in appropriate proceedings. The constitutional courts cannot be expected to presume the alleged irregularities, illegalities or unconstitutionality nor the courts can substitute their opinion for the bona fide opinion of the State executive. The courts are not concerned with the ultimate decision but only with the fairness of the decision-making process.”

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The same principle was applied in a subsequent decision in Villianur

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Iyarkkai Padukappu Maiyam v. Union of India² where the

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principle was formulated as follows :

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1 (2000)8 SCC 262.

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2 (2009)7 SCC 561.

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“Though public auction or inviting of tenders is the ordinary rule in case where the State Government proposes to dispose of a property, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule, the reasons indicated in this case for the departure are shown to be rational and are not suggestive of discrimination.”

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Now in the present case the admitted features of the transaction between the Third Respondent and the Seventh Respondent must be noted. The Third Respondent, as its website shows had published an intention to make the train available on charter hire to private parties. In a situation like the present the invitation of tenders would neither be feasible nor workable. The Third Respondent does not contemplate that the train should be deployed by a private party on any one sector or for a stipulated period of time. Every tourist operator, consistent with the exigencies of business and tourist traffic would have certain projections based upon which a proposal would be made for the deployment of the train for a specified route and for a particular period. Undoubtedly when a proposal is received by the Third Respondent, it is for the Third Respondent to decide as to whether it is financially viable and whether it is such as to cover the

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operating and other costs and yield profits. The proposal under which the Seventh Respondent was allowed to operate the train in the past envisaged that the Seventh Respondent would bear the entire cost of haulage imposed by the Ministry of Railways and the revenue share portion required to be paid to that Ministry. The Third Respondent was to be paid an amount of Rs.25 lacs per week. No material has been placed before the Court by the Petitioner to enable the Court to draw even a prima facie inference that this payment was not equivalent to what would be realized on a similar facility being operated elsewhere in India. For instance, it is common ground that in the State of Karnataka a train by the name of Golden Chariot is operated while the Palace on wheels operates in the State of Rajasthan. There is no material before the Court to indicate that the price that has been realized by the Third Respondent is not reflective of a correct market assessment. The facility of charter hire is not exclusively entrusted to the Seventh Respondent. Indeed, as the announcement on the web-site of the Third Respondent shows, any prospective charterer can avail of the facility. The charter is not exclusive to the Seventh Respondent. Arrangements, however, have to be made well in advance to facilitate

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the marketing of tickets to foreign tourists – something that the Sixth Respondent has under contract with the Seventh Respondent, agreed to do. At the same time we are of the view that the Third Respondent must take all necessary measures to widely publicize the availability of the train as a facility on charter hire for tour operators. Counsel appearing on behalf of the Third Respondent has stated before the Court that the Third Respondent will advertise the availability of the train in the electronic and print media and in the trade journals and trade channels so as to provide the Third Respondent the benefit of a wide field of choice for charter hire bookings. That apart, from the schedule of the train for the period September 2010 to April 2011 which has been placed on the record of the Court it appears that the Third Respondent is also conducting tours within the State of Maharashtra. In addition, the train has been allowed to be reserved for the Seventh Respondent on charter hire on the Mumbai – Delhi sector. As a matter of fact, the train has also been charter hired by a tour operator in the U.K. on the Mumbai – Siliguri Sector. We direct that in future the Third Respondent shall take all steps necessary to disseminate the availability of the train on charter hire in all the normal

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trade channels and journals and in the print and electronic media, as stated before the Court to obviate any allegation that the Third Respondent is dealing with either one or a small group of private parties.

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Subject to the aforesaid, we do not find any reason to interfere in these proceedings under Article 226 of the Constitution. The Petition shall accordingly stand disposed of.

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There shall be no order as to costs.

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(DR. D.Y.CHANDRACHUD, J.)

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( SMT.R.P.SONDURBALDOTA, J.)

Harshad Gawade v. the State of Maharashtra and Ors.

Case brief

What is this about?

What did the court decide?

Harshad Gawade v. the State of Maharashtra and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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