THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
AND
THE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY
W.A.No.554 of 2022
JUDGMENT: (Per the Hon'ble the Chief Justice Ujjal Bhuyan)
Heard Mr. E.Madan Mohan Rao, learned Senior Counsel for
the appellant and Mr. B.S.Prasad, learned Advocate General for
the State of Telangana appearing for the respondents.
2. This intra-court appeal has been filed by the appellant assailing the common order dated 01.08.2022 dismissing W.P.No.20391 of 2022 filed by the appellant along with nine other writ petitions.
3. The related writ petition was filed assailing the memo dated 04.04.2022 issued by respondent No.1; circular dated 07.04.2022 issued by respondent No.2; and the consequential notice dated 12.04.2022 issued by respondent No.4. Appellant further challenged the tender notice dated 16.04.2022 issued by respondent No.3 and the related notice terminating the contract of the appellant.
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4. Appellant was the existing contractor supplying diet to respondent No.4- Gandhi Hospital, Secunderabad. Tender notice dated 23.09.2021 was floated by respondents No.3 and 4 for supply of diet to respondent No.4, in which appellant participated. Following the tender process, appellant was awarded the contract on 20.01.2022; the contract period being three years from the date of commencement. Following the award of contract, a contract agreement was entered into between the appellant and respondent No.3 on 21.01.2022 whereafter, appellant submitted the caution deposit money.
5. Respondent No.1 issued G.O.Ms.No.34 dated 21.03.2022 for streamlining the delivery of nutritious food to in-patients of Government hospitals and health centers leading to increase in the diet charges on the basis of new diet schedule. Following the above, respondent No.1 issued memo dated 04.04.2022, according permission to respondent No.2 for cancelling the existing diet contracts by giving one month's notice.
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6. According to the appellant, respondent No.1 had issued G.O.Ms.No.34 dated 21.03.2022 streamlining delivery of nutritious food to in-patients of Government hospitals; it did not call for cancellation of existing diet contracts. Therefore, it was contended that memo dated 04.04.2022 was contrary to G.O.Ms.No.34 dated 21.03.2022.
7. Be that as it may, circular dated 07.04.2022 was issued to opt for fresh tenders for diet contract by terminating the existing contracts after one month's notice. Following the same, respondent No.4 issued advance notice dated 12.04.2022 to the appellant for termination of diet contract.
8. Learned Single Judge, after due consideration, took the view that the writ court under Article 226 of the Constitution of India cannot enforce contractual obligation. As per the termination clause, three months' notice was required to be given, which was not challenged by any of the contractors. On the plea of the appellant that only one month's notice was given as opposed to three months, learned Single Judge was of the view that though the ::4::
same may result in some hardship to the appellant, larger public interest would be sub-served by providing nutritious diet to the in- patients of Government hospitals and that individual interest would have to yield to public interest. As the Government had taken a conscious decision not to continue the petitioner at enhanced rates and invoked the termination clause, the writ court would not be inclined to interfere with the decision of the Government. Finally, learned Single Judge noted that the impugned decision of the State could not be termed as arbitrary or mala fide as it is the policy decision of the Government to introduce new diet. While dismissing the writ petition, learned Single Judge observed that though one month's termination notice was given to the appellant, in the writ proceedings, appellant had obtained stay for more than two months. If the two periods are considered together, appellant had more than three months' time.
9. In the hearing today, learned Senior Counsel for the appellant submits that appellant had not questioned the policy decision of the State. All that the appellant has questioned is the ::5::
manner of termination of the contract. Given an opportunity, appellant is ready to supply the new diet schedule at the rates fixed by the State. Summary termination of the contract was not at all justified.
10. In his submissions, learned Advocate General has stated that the above decision of the State has been applied across the board to 192 hospitals of the State. Justifying the order of the learned Single Judge, he submits that there is neither any arbitrariness nor mala fides in the decision making process, which would warrant interference with the cancellation of contract and issuance of new contract. He further submits that following the fresh tender process, one M/s. Shivenary Canteen Services has been awarded the contract for supply of diet to respondent No.4. In this connection, letter of award of contract was issued to the new contractor on 27.08.2022.
11. However, learned Senior Counsel for the appellant submits that as on today, appellant is still continuing to supply diet to respondent No.4.
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12. After hearing learned counsel for the parties and on due consideration, we are of the view that there should be an inbuilt provision for redressal of grievance arising out of a contract. On perusal of the contract agreement dated 21.01.2022 entered into between the Hyderabad District Diet Managing Committee and the Diet Managing Committee of respondent No.4 on the one hand and appellant on the other hand, we find that as per Article 11(b), there is a provision for dispute resolution, which reads as follows:
"Dispute Resolution All disputes arising out of the Agreement may be got resolved through best efforts by mutual discussions amicably. In the event of the Parties not finding any acceptable solution to the disputes within 30 days the same shall be appealed to the State Level Committee as hereinbefore said, whose decision shall be final and binding on both the parties."
13. From the above, it is evident that in case any dispute arises out of the agreement, the same may be resolved through the best efforts by mutual discussions amicably. If such resolution of dispute is not acceptable to either of the parties, it may appeal to ::7::
the State Level Committee, whose decision shall be final. At the first instance, the dispute is to be resolved within thirty days.
14. Having regard to the above, we relegate the parties to dispute resolution to be carried out in terms of Article 11(b) of the Contract Agreement dated 21.01.2022, which shall be carried out between respondent No.3 and the appellant and concluded within a period of thirty days from the date of receipt of a copy of this order. Till the period of thirty days, status quo as on today as regards supply of diet to respondent No.4 shall be continued.
15. Order dated 01.08.2022 passed by the learned Single Judge in W.P.No.20391 of 2022 stands modified accordingly.
16. This disposes of the writ appeal. No costs.
As a sequel, miscellaneous petitions, pending if any, stand closed.
__________________ UJJAL BHUYAN, CJ _______________________ C.V.BHASKAR REDDY, J Date: 29.08.2022 LUR