Dismissed

M/S. Sumitra Kanwar v. State of Rajasthan and Ors.

Rajasthan HC27 Nov 2018SAW/658/2018

Case brief

AI extract

What is this about?

This multi-party writ appeal challenged the discontinuation of a Public Private Partnership scheme and refusal to pay Viability Gap Fund by Rajasthan State Road Transport Corporation. The High Court held that the agreement was not statutory, the relief sought was for specific performance inapplicable in writ jurisdiction, and dismissed the appeals to avail of arbitration or civil remedies.

What did the court decide?

The appeals were dismissed, concluding that the disputes fall under civil jurisdiction or arbitration, not writ jurisdiction, and no direction to continue payments was granted.

M/S. Sumitra Kanwar Vs State of Rajasthan and Ors. — Company and Corporate | Rajasthan HC (2018)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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1. D.B. Spl. Appl. Writ No. 37/2018

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M/s Gurjeet Singh S/o Shri Gurdev Singh, R/o 7/25, New Housing Board, Hanumangarh Junction. Raj.

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----Petitioner

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Versus

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The State Of Rajasthan Through The Secretary, Department Of Finance Expenditure-2, Secretariat, Rajasthan, Jaipur.

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Rajasthan State Road Transport Corporation, Through Its Managing Director, Parivahan Marg, Jaipur.

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Chief Manager, Rsrtc, Hanumangarh Depot, Hanumangarh.

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----Respondents

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2. D.B. Spl. Appl. Writ No. 530/2018

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M/s Bhagirath Dudhwal S/o Shri Ramchandra, R/o Ward No. 16, Ambekdar Colony Street No. 1 Hanumangarh Town Raj..

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----Petitioner

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Versus

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The State Of Rajasthan Through The Secretary, Department Of Finance Expenditure-2, Secretariat, Rajasthan, Jodhpur.

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Rajasthan State Road Transport Corporation, Through Its Managing Director, Parivahan Marg, Jaipur.

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Chief Manager, Rsrtc, Hanumangarh Depot, Hanumangarh.

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----Respondents

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3. D.B. Spl. Appl. Writ No. 531/2018

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M/s Sita Ram S/o Shri Pratap Singh, R/o Bambalawas Tehsil Bhadra Hanumangarh Raj.

(2 of 13)

[SAW-37/2018]

----Petitioner

Versus

The State Of Rajasthan Through The Secretary, Department Of Finance Expenditure-2, Secretariat, Rajasthan, Jodhpur.

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Rajasthan State Road Transport Corporation, Through Its Managing Director, Parivahan Marg, Jaipur.

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Chief Manager, Rsrtc, Hanumangarh Depot, Hanumangarh.

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----Respondents

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4. D.B. Spl. Appl. Writ No. 606/2018

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M/s Shankar Irrigation Thorugh Proprietor-Veer Singh Sela S/o Shri Hem Singh, R/o Vpo Hemavas, Tehsil Siwana, District Barmer Raj..

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----Petitioner

¶31

Versus

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The State Of Rajasthan Through The Secretary, Department Of Finance Expenditure-2, Secretariat, Rajasthan, Jaipur.

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The Rajasthan State Road Transport Corporation, Parivahan Marg, Jaipur Through Its Managing Director.

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The Chief Manager, Rsrtc, Barmer Depot, Barmer.

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----Respondents

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5. D.B. Spl. Appl. Writ No. 658/2018

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M/s Sumitra Kanwar Wife Of Sharwan Singh, Resident Of 176, Rajputon Ka Was, Sendri, Balotra, Tehsil- Ahore, District- Jalore.

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----Petitioner

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Versus

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The State Of Rajasthan Through The Secretary, Department Of Finance Expenditure-2, Secretariat, Rajasthan, Jaipur.

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The Rajasthan State Road Transport Corporation,

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(3 of 13)

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[SAW-37/2018]

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Parivahan Marg, Jaipur, Through Its Managing Director 3. The Chief Manager, Rsrtc, Jalore Depot, Jalore

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----Respondents

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6. D.B. Spl. Appl. Writ No. 659/2018

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M/s Ikbal Khan Kaji Son Of Shri Salim Mohmmad, Resident Of Upar Kota Saidon Ka Vas, Jalore Raj

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----Petitioner

¶49

Versus

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The State Of Rajasthan Through The Secretary, Department Of Finance Expenditure-2, Secretariat, Rajasthan, Jaipur.

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The Rajasthan State Road Transport Corporation, Parivahan Marg, Jaipur, Through Its Managing Director

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The Chief Manager, Rsrtc Jalore Depot, Jalore

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----Respondents

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7. D.B. Spl. Appl. Writ No. 660/2018

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M/s Sumitra Kanwar Wife Of Sharwan Singh, Resident Of 176, Rajputon Ka Was, Sendri, Balotra, Tehsil- Ahore, District- Jalore.

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----Petitioner

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Versus

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The State Of Rajasthan Through The Secretary, Department Of Finance Expenditure-2, Secretariat, Rajasthan, Jaipur.

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The Rajasthan State Road Transport Corporation, Parivahan Marg, Jaipur, Through Its Managing Director

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The Chief Manager, Rsrtc, Jalore Depot, Jalore

¶61

----Respondents

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For Petitioner(s) : Mr. HS Sidhu For Respondent(s) : Mr. Rajesh Panwar, AAG Mr. Harish Purohit

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(4 of 13)

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[SAW-37/2018]

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HON'BLE MR. JUSTICE SANGEET LODHA HON'BLE MR. JUSTICE DINESH MEHTA

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Judgment

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BY THE COURT (PER DINESH MEHTA, J) :

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27/11/2018

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The present bunch of appeals arise out of common judgment and order dated 23.11.2017, passed by the learned Single Judge in a group of writ petitions led by SB Civil Writ Petition No.6160/2017 (Sita Ram Vs. State of Raj. & Ors.). As all the appeals involve identical facts and common question of law, they are being decided by this common order, but for the purpose of convenience, the facts of DB Civil Special Appeal (Writ) No.37/2018 (arising out of SB Civil Writ Petition No.6254/2017) to the extent they are relevant, are being taken into consideration as a lead case.

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The Rajasthan State Road Transport Corporation (hereinafter referred to as “RSRTC”) promulgated a pilot scheme with a view to provide safe, secure and affordable operation of buses in rural areas of Rajasthan for operation of State Carriage Service on financing, procurement, own, operation and management of buses on specified cluster in rural areas of the State on PPP (Public Private Partnership) mode. The salient features of the scheme had been that a cluster would comprise of group of selected routes, requiring the operator to deploy about 6 to 9 buses. The bus operator was given freedom to operate beyond the minimum prescribed schedule on the routes indicated in the cluster. According to the said scheme, the operator was entitled to a sort of subsidy called VGF (Viability Gap Fund). The said VGF amount

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(5 of 13)

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[SAW-37/2018]

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was paid by the Rajasthan State Road Transport Corporation (hereinafter referred to as “the Corporation”), but the Corporation was entitled for its reimbursement from the State Government.

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As per the scheme e-tenders were invited, the appellant having offered his bid was declared a successful bidder qua Cluster No.3 of Hanumangarh district. His financial proposal for viability gap of Rs.6.88/- per kilometer, being the minimum was accepted and a letter of intent dated 6.8.2013 came to be issued to the appellant. In furtherance of the letter of intent, an operation agreement dated 26.8.2013 came to be executed between the respondent Corporation and the appellant. According to the terms of the said agreement, the appellant was permitted/ authorized to operate buses on rural Cluster No.3, in and around Pilibanga area of Hanumangarh Depot, which otherwise was reserved for the Corporation.

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Having entered into the agreement aforesaid, the appellant has been operating on the said route till the State Government decided to discontinue the VGF scheme w.e.f. 31.03.2017. A communication dated 03.04.2017 issued by the Special Secretary, Finance (Expenditure-II) to the Managing Director of the RSRTC has been placed on record, inter alia informing that the State Government had discontinued the VGF scheme w.e.f. 01.04.2017 and hence, no reimbursement of the VGF amount would be made after 31.03.2017. Consequent to the said communication, the Managing Director of the Corporation in turn wrote to the Chief Manager of the Hanumangarh Depot to inform the operator working on PPP mode in each Cluster to stop the operations on the corresponding Cluster routes. It was further cautioned that if the

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(6 of 13)

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[SAW-37/2018]

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operator continues to operate on such route, no payment of VGF shall be made.

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The respondent No.3, Chief Manager, Hanumangarh Depot of the Corporation thus sent a communication dated 25.04.2017 to the appellant, informing him about the decisions of the State Government as well as of the Corporation to the effect that the rural bus service scheme has been withdrawn and hence the VGF amount shall not be paid after 31.03.2017. It was also made clear that if the operator still choses to operate the buses on the Cluster route, payment of the VGF amount shall not be made by the Corporation.

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Faced with such situation, the appellant filed a writ petition in this Court, praying that the order dated 03.04.2017 and consequential orders dated 20.04.2017 and 25.04.2017 be quashed. In addition thereto, a direction to the respondents to pay the VGF amount till the expiry of the period of six years mentioned in the agreement, was also sought.

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Learned Single Judge however declined to exercise her writ jurisdiction in wake of the arbitration clause, contained in the said operation agreement dated 26.8.2013. While relegating the petitioner to avail alternative remedy, including the arbitration, learned Single Judge has held that the writ petition seeks enforcement/ specific performance of an obligation, flowing from an agreement which can be done only by way of civil suit for damages or otherwise.

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Feeling aggrieved with the said judgment of learned Single Judge, the appellants have preferred the present intra-court appeals.

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(7 of 13)

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[SAW-37/2018]

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Mr. HS Sidhu, learned counsel for the appellants firstly contended that the agreement dated 26.08.2013 is a statutory agreement and hence for breach of such agreement or for its enforcement, writ jurisdiction can be invoked in light of various decisions of Hon’ble the Supreme Court. He also submitted that the scheme floated by the State Government as well as the agreement executed between the parties unequivocally enjoined the agreement to continue for a period of six years, hence, the respondents could not have brought the agreement to an abrupt end, more particularly without a notice to the appellants.

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In a bid to establish that the contentious agreement was statutory in nature, he read Clause B and D of the agreement and argued that the appellants were justified in invoking the writ jurisdiction of this Court as the respondents have declined to adhere to the terms of the statutory agreement.

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Pointing out the appellants’ predicament, learned counsel urged that the appellants had deployed a number of buses by taking a loan/finance from the financial institutions/banks in an anticipation that the respondents would re-compense the deficit in the cost of operations in the form of VGF amount; but the untimely termination of the Scheme and discontinuance of reimbursement of the VGF amount has given a big blow to his financial position. Mr. Sidhu contended that the respondent Corporation, despite being the instrumentality of the State has proceeded arbitrarily and terminated the agreement unilaterally. The impugned conduct of the respondent Corporation being violative of Article 14 of the Constitution, is subject to judicial review in the writ jurisdiction of this Court and the appellants are

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(8 of 13)

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[SAW-37/2018]

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entitled to a direction to the respondent Corporation to continue to pay the VGF amount as promised and agreed by it.

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Learned counsel for the appellants further urged that learned Single Judge has seriously erred in non-suiting the appellants and dismissing their writ petition simply because of existence of an arbitration clause. He added that in the facts of the present case, learned Single Judge ought to have exercised the jurisdiction under Article 226 of the Constitution vested in her.

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Mr. Rajesh Panwar, learned Additional Advocate General on the other end appearing for the respondents, strongly supported the impugned judgment dated 23.11.2017 and urged that the learned Single Judge was perfectly justified in refusing to exercise her jurisdiction under Article 226 of the Constitution of India; the prayers made in the writ petition and the relief sought were in the nature of a suit for specific performance; no mandamus can be sought to continue to pay the VGF amount as the same was payable under a scheme of the State Government; after the decision of the State Government to discontinue the scheme, the Corporation cannot be thrusted with the obligation to continue with the agreement; and that the agreement dated 26.08.2013 is not a statutory agreement as the expression used in Clause D of the agreement, “in consonance with Section 103(1)(1A) of the Motor Vehicles Act, 1988”, does not convert a simple commercial agreement into a statutory contract.

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We have heard learned counsel for the parties and given our thoughtful consideration over the matter.

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The agreement dated 26.8.2013 came to be executed between the appellant(s) and the respondents in terms of the scheme floated by the RSRTC. The agreement was ordained to

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(9 of 13)

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[SAW-37/2018]

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continue for a period of six years, during which, the appellant was authorised to operate his buses in Cluster No.3, Pilibanga of Hanumangarh Depot, with an understanding that the respondents would pay a sum of Rs.6.88/- per kilometer as viability gap. The State Government for some reasons has later decided to discontinue such scheme on account of administrative exigencies or financial constraints or other reasons cataloged in the reply.

¶98

Be that as it may, we are not inclined to embark upon the propriety, legitimacy or morality of such decision of the respondents nor do we propose to examine as to whether the agreement in question could be aborted prior to its completion.

¶99

A combined reading of the communication dated 03.04.2017 written by the Special Secretary Finance and letter dated 25.04.2017 written by respondent No.3 makes it crystal clear that the respondent Corporation had informed the appellants about the discontinuation of the scheme by the State Government and has unequivocally warned him that the respondents would not pay the VGF amount after 31.03.2017, irrespective of the fact whether or not the appellants operate their buses on the routes covered by the Cluster.

¶100

We are of the considered opinion that neither the appellants’ prayer for direction to the respondents to continue to pay VGF amount for the entire period of six years can be granted, nor can the respondents be directed to continue the agreement for the remaining period, simply because the same was entered into for a period of six years. Issuance of such direction or granting this relief would be like decreeing a suit for specific performance. The prayer made by the appellants in the writ petitions can in an appropriate case be granted by the competent Civil Court alone,

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(10 of 13)

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[SAW-37/2018]

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that too after leading of evidence and determination of scores of factual coordinates.

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The contention of the appellants that the contentious agreement dated 26.08.2013 is a statutory agreement is wholly misconceived. Mere use of words “Section 103(1)(1A) of the Motor Vehicles Act, 1988” does not render the agreement statutory contract, particularly when Section 103(1)(1A) of the Act of 1988 does not contemplate grant of such contracts on the routes reserved for the State Transport Corporation.

¶105

It is pertinent that there is no amendment in Section 103 of the Motor Vehicles Act, 1988 brought in by the State of Rajasthan, hence use of expression “Section 103(1)(1A) of the Act of 1988” itself is out of sync. Be that as it may, the Motor Vehicles Act, 1988 does not envisage rather permit grant of such contract enabling the operators to ply buses on the routes reserved for the State Transport Corporations.

¶106

Without dilating upon this issue, as it is not a question involved in the present writ petition, we hold that in absence of the statutory provision for grant of contract for operating the buses on rural routes, earmarked for the respondent Corporation, the subject agreement cannot be termed or held as a statutory contract. Hence, the writ jurisdiction under Article 226 of the Constitution of India cannot be invoked as a matter of right or course, more particularly for the reliefs prayed by the appellants.

¶107

Withdrawal of the scheme for financial or other constraints is within the discretion or domain of the respondents. No writ can be issued requiring the respondents to continue with the agreement. The appellants can at the best claim damages, which too can be granted by a competent civil Court or by invoking the

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(11 of 13)

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[SAW-37/2018]

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arbitration clause. As the grant of such relief will require not only a fact finding exercise, but also the contextual interpretation of the terms of the contract, the writ Court is not a court competent. Whether the appellants were allowed or permitted to continue on the routes covered by the agreement and/or they have factually operated the buses on such routes, is a complex question of fact, which can be gone into by this Court.

¶111

Learned counsel for the appellants has relied upon the judgment of Supreme Court reported in (2004)3SCC553 (ABL International Ltd. & Anr. Vs. Export Credit Guarantee Corporation of India Ltd. & Ors.) to buttress his arguments that a writ petition can be maintained in an appropriate case and there is no absolute bar in maintainability of a writ petition.

¶112

The above proposition of law can never be disputed, but then, each case has to be examined on its own facts. As already noticed, the decision of the writ petition will be dependent upon hordes of contentious questions. In absence of a thorough probe into the oral and ocular evidence, the relief as prayed by the appellants cannot be granted. Needless to say that the High Court in exercise of its extra ordinary writ jurisdiction would not do the same.

¶113

In rejoinder, Mr. Sandhu vehementally argued that the arbitration clause 12.3.2 is applicable only if the parties fail to arrive at amicable settlement as envisaged under Clause 12.3.1 of the agreement. Elaborating his arguments, learned counsel submitted that it was required of the Corporation to have issued a notice proposing to terminate the agreement so as to enable him to first try to get it resolved through negotiation or settlement and in failure of such settlement, to take recourse to the arbitration

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(12 of 13)

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[SAW-37/2018]

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clause. Stand of the appellants has been that as the respondents have abruptly brought the mutual agreement to an end, while also deciding not to pay the VGF amount, hence the appellants were rendered remediless. He further submitted that as the decision to discontinue the scheme has been taken by the State Government, the invocation of arbitration clause, for resolving the dispute by the Managing Director of the Corporation would be illusory. He submitted that even otherwise in light of the amendment brought in the Arbitration Act, 1996, the Managing Director of the Corporation cannot act as an arbitrator and hence Clause 12.3.2 of the agreement in relation to the arbitration has lost its existence or practicability.

¶117

True it is that after the amendment in Arbitration Act, 1996, the Managing Director of the Corporation cannot arbitrate in the matter, but then it is for the appellants to take appropriate steps for securing appointment of arbitrator, including taking resort to Section 11(6) of the Arbitration Act, 1996, if so advised. It will be wrong to contend that the arbitration clause has become redundant or has obliterated as a result of the said amendment, which postulates that the officer and employee of the contracting party cannot act as an arbitrator. In this regard, we can gainfully refer to the judgment of Hon’ble Supreme Court reported in AIR2017(SC)4450 (Aravali Power Company Pvt. Ltd. Vs. M/s. Era Infra Engineering Ltd.), wherein Hon’ble the Supreme Court has held as under :-

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“B. In cases governed by 1996 Act after the Amendment Act has come into force :-

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If the arbitration clause finds foul with the amended provisions, the appointment of the Arbitrator even if

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(13 of 13)

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[SAW-37/2018]

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apparently in conformity with the arbitration clause in the agreement, would be illegal and thus the Court would be within its powers to appoint such arbitrator(s) as may be permissible.”

¶123

As an upshot of the discussions aforesaid, we do not find any flaw in the decision of learned Single Judge in refusing to exercise the discretionary jurisdiction.

¶124

As above captioned appeals are identical; they are dismissed by this common order.

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(DINESH MEHTA),J

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(SANGEET LODHA),J

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Arun/PS

M/S. Sumitra Kanwar v. State of Rajasthan and Ors.

Case brief

What is this about?

What did the court decide?

M/S. Sumitra Kanwar v. State of Rajasthan and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

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