Dismissed

Adityakumar Chearing Agency and Transport Leaseholder, through Prop. Shri. Bhaskar Mahadu Narwade v. Union of India, through General Manager and Ors.

Bombay HC19 Jul 2013WP/3243/2013

Case brief

AI extract

What is this about?

The petitioner appealed a decision to deny lease allocations and seek compensation, arguing the Railway's actions were illegal. The court held the dispute was contractual and dismissed the writ petition as there were no exceptional circumstances to invoke writ jurisdiction.

What did the court decide?

None. The writ petition is dismissed with no order as to costs.

Adityakumar Chearing Agency and Transport… — Contract and Commercial Disputes | Bombay HC (2013)

WP3243.13

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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CIVIL APPELLATE JURISDICTION

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WRIT PETITION NO.3243 OF 2013

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Adityakumar Clearing Agency & Transport )....Petitioner V/s. Union of India & Ors. )....Respondents

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Mr.D.H.Dhanure for the petitioner.

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Mr.A.M.Samant for the respondent nos.1 to 3.

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CORAM : V.M.KANADE & K.R.SHRIRAM,JJ DATE : 19th July, 2013.

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P.C. (Per : K.R.Shriram,J) :-

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1 The petitioner has registered with the Mumbai Division of Central Railway as category-”B” leaseholder for the purpose of operating leasing contract pertaining to Brake Vans(SLRs)/Assistant Guard Cabin. The registration is valid for five years from 20.12.2011 to 19.12.2016.

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2 Pursuant to a tender dated 7^th September 2012 (hereinafter referred to as the 2^nd tender) floated by the 2^nd respondent for leasing out four tonnes space in SLR (compartment of brake van) and 1 tonne space in Assistant Guard Cabin of

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Mail/Express/Passengers trains originating from CST for Mumbai Division for a period of 3 years, the petitioner had submitted his bid in a sealed cover. The tender was pertaining to six different trains and the petitioner stood highest and successful bidder in respect of 4 trains.

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3 Prior to the tender mentioned in para-1 above, the petitioner had also bid for another tender dated 1.12.2011 floated by the 2^nd respondent for leasing out 4 tonne space in SLRs and 1 tonne Assistant Guard compartment for 3 years to carry goods in Mail/Express & passenger trains originating from Mumbai Division. (Hereinafter referred to as the 1^st tender). This tender was for 4 trains. The petitioner stood highest and successful bidder in this 1^st tender with respect to two trains viz. 4 tonne SLRs 1 compartment for train no.12336 DN and 1 tonne (AGC) compartment for train no.12107 DN for a period of 3 years. The petitioner states that after he was allotted the trains under the 1^st tender, after about 7 months due to financial unviability, the petitioner requested the respondents for cancellation/termination of the said allotment for the two trains. The petitioner's case is that under the contract, the petitioner was entitled to terminate the agreement after serving 60 days notice to Railway Administration and admittedly the petitioner was liable to penalty if the petitioner terminates the contract within one year of the

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allotment, which in the case of 1^st tender the petitioner had. The penalty was that the respondents can forfeit the security deposit of Rs.25,005/- and the registration fees of Rs.25,000/- that was paid by the petitioner and further the petitioner could be debarred from participating in any tender for one year but he shall be allowed to operate existing tender of other train if any. The petitioner has relied on clause-18.3 of the 2^nd Tender document dated 7^th September 2012 at Exhibit-B to the petition. The petitioner states that the 1^st tender document was also identical in respect of the terms and conditions.

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4 In view of the cancellation by the petitioner, the respondent has not only forfeited the security deposit of Rs.25,005/and registration fees of Rs.25,000/- paid by the petitioner but the petitioner is also debarred from participating in any tender for the period from 4.1.2013 to 3.1.2014 which according to the petitioner was illegal and arbitrary. Due to the petitioner being so debarred the respondent no.2 is not issuing the letter of allotment in respect of the 2^nd tender to the petitioner. The 2^nd respondent has recalled the original 2^nd tender with respect to the said 4 trains and are calling for fresh bid. It is the case of the petitioner that the respondent no.2 having already alloted 4 trains under the 2^nd tender, the respondent no.2 is bound to issue the allotment letter in respect of the said 4

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trains under the 2^nd tender. According to the petitioner the respondent no.2 should issue the letter of allotment in respect of the 2^nd tender and can debar the petitioner only for any future tender. The act of respondent no.2 is contrary to clause 18.3 of the tender document.

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5 Therefore, the petitioner is seeking a writ of mandamus or any other appropriate writ, order or direction to direct the respondent no.2 to issue allotment letter to the petitioner in respect of the 4 trains under the 2^nd tender and further quash and set aside the letter dated 3.1.2013 (Exhibit-H) to the petition, by which the 2^nd respondent has forfeited the security deposit, registration fees and thereby further debarred the petitioner from participating in any tender for 1 year. The petitioner is also seeking a writ of mandamus directing the respondent to pay the petitioner a compensation of Rs.5 lakhs along with interest at the rate of 12% p.a for business loss towards damages.

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6 In reply, it is the respondents' case that : (a) It is a contractual dispute and this Court should not exercise its jurisdiction under Article 226 of the Constitution of India and (b) the petitioner having terminated the contract relating to the 1^st tender within 7 months from its commencement under clause 18.3, the respondents were entitled to forfeit the security deposit and registration fees and

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further debar the petitioner from participating in any tender for 1 year. The Counsel for the respondents further submitted that though the petitioner was a successful bidder relating to 4 trains under the 2^nd tender, the Tender Committee while finalizing the tender, observed that the petitioner was liable to be debarred in view of the petitioner terminating the 1^st contract within less than 1 year as provided under clause 18.3 and hence, forfeited the security deposit and registration fees and debarred the petitioner for 1 year for the period from 4.1.2013 to 3.1.2014.

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7 The respondents therefore, have withdrawn the 2^nd tender and are coming up with a fresh tender. We find merit in the case of the respondents.

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8 First of all, this is a contractual dispute. It is trite law that Courts should generally not exercise its jurisdiction under Article-226 of the Constitution of India in case of contractual disputes even if a “State” is involved. In the matter of National Highway Authority of India V/s. Ganga Enterprises & Anr. (2003 (7) SCC 410) the Apex Court held “It is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India.” In Kerala State Electricity Board Vs. Kurein E.Kalathil & Ors. (2000 (6) SCC 293) it is held “Every contract with a statutory authority does not

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become a statutory contract. The interpretation and implementation of a clause in a contract cannot be the subject matter of a writ petition. If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. In the case of State of U.P. & Ors. Vs. Bridge & Roof Company (India) Ltd., (1996 (6) SCC 22) it is held “No writ lies when the contract provides for a self contained remedy such as arbitration. The existence of an effective alternative remedy is a good ground for the court to decline to exercise its extraordinary jurisdiction under Article 226. The said article was not meant to supplant the existing remedies at law but only to supplement them in certain well-recognized situations.” In the case of Bareily Development Authority & Anr. Vs. Ajit Pal Singh & Ors. (1989 (2) SCC 116) it is held “Even in the case where the Respondent has the trappings of a `State', after entering into the field of ordinary contract acts purely in its executive capacity and the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter se.”.

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9 This does not mean that the High Court will never exercise discretion. There are exceptions to the general rule stated above. In the case of Harbanslal Sahnia and Anr. Vs. Indian Oil Corporation and Ors. (2003) 2 SCC 107 “Supreme Court has laid down the

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guidelines for exercising discretion. The court has held that in an appropriate case, inspite of availability of the alternative remedy, the High Court may exercise its writ jurisdiction,

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(a) When petition seeks enforcement of any of the fundamental rights or

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(b) when there is a failure of principles of natural justice or

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(d) the vires of an Act is challenged.

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10 We do not find any such exception in this case. The petitioner also has not made out a case of extraordinary nature for this Court to interfere. Moreover, the petitioner in prayer clause-(d) of the petition is seeking compensation of Rs.5 lakhs with interest @ 12% for business loss as damages. The tender in issue also provides for Arbitration. Moreover, we are satisfied that the respondent was correct in invoking clause 18.3 of the tender terms and conditions and the moment that is invoked the bar will be applicable. The first tender was terminated by the petitioner on 10.11.2012 but the 2^nd tender was in the meanwhile issued and the petitioner was successful bidder relating to 4 trains. Though on that date when the 2^nd tender was opened, the petitioner had not been debarred, the petitioner's act relating to the first tender made him

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liable to be debarred and the security deposit and registration fees forfeited. Therefore, the respondents were correct in issuing the letter dated 3.1.2013 at Exhibit-H to the petition.

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11 We do not see any reason to intervene. The petition is therefore, dismissed with no order as to costs.

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(K.R.SHRIRAM,J) (V.M.KANADE,J)

Adityakumar Chearing Agency and Transport Leaseholder, through Prop. Shri. Bhaskar Mahadu Narwade v. Union of India, through General Manager and Ors.

Case brief

What is this about?

What did the court decide?

Adityakumar Chearing Agency and Transport Leaseholder, through Prop. Shri. Bhaskar Mahadu Narwade v. Union of India, through General Manager and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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