M/S.Airwide Express Cargo vs Union Of India
2010 Latest Caselaw 247 Bom

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            IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                             O. O. C. J.




                                                                                        
                    WRIT PETITION (L) NO.2604  OF 2010




                                                                
    M/s.Airwide Express Cargo.                      ..Petitioner
              versus




                                                               
    Union of India, through General 
    Manager, Western Railway & Anr.                 ..Respondents.
                                    .....
    Ms.Neeta Masurkar i/b. Arun Kumar Roy  for the Petitioner.




                                                   
    Mr.Suresh Kumar  for the Respondents.
                                 .....
                                  
                             CORAM :  DR.D.Y.CHANDRACHUD &
                                      ANOOP V. MOHTA , JJ.

3 December 2010.

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

The General Manager of the Western Railway invited

tenders for leasing of parcel space in brake vans/parcel

vans/Assistant Guard's Cabin of twenty five tonnes in the Firozpur

Janata Express (Train No.9023/24) on a round trip basis between

Mumbai Central and Firozpur. Bids were invited for all running

days in a year on a long term basis. Tenders were opened 4

September 2006. A letter of acceptance was issued to the

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Petitioner on 20 November 2006. The rate offered by the

Petitioner was Rs.1,01,000/- for each round trip. The contract was

to be valid until 6 December 2009. The contention of the

Petitioner is that his performance was satisfactory and both a

certificate of satisfactory performance and a no dues certificate was

issued by the Divisional Commercial Manager. Clause 20 of the

agreement contains a provision for extension of the contract which

was as follows:

"20.0 Extension to lease contract:

20.1 Extension of lease is permissible only in case of long term lease of 3 years wherein the same can be extended only once, by 2 more years at a lease rate of

25% more than the lumpsum-leased freight rate subject to satisfactory performance by the leaseholder, without

any penalty for overloading or violation of any provision of the contract."

2. The Petitioner sought an extension in terms of clause 20

for a period of two years on 2 November 2009. At the relevant

time, the policy of the Ministry of Railways was governed by Freight

Marketing Circular 12 of 2006 issued by the Railway Board on 28

March 2006. The relevant clause (Clause (E)) in relation to

extension of leases was as follows:

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               "(E) Extension of Lease :




                                                                                    

1. Extension of lease is permissible only in case of long term lease of 3 years.

2. In case of Long Term Lease, on expiry of the

contract period, the same can be extended only once, by 2 more years at a lease rate of 25% more than the lump-sum leased freight rate.

3. Such extension will be subject to satisfactory

performance by the lease holder, without any penalty for overloading or violation of any provision of the contract.

4. In case of expiry of contract period and non- finalization of new contract due to administrative delays, temporary extension can be permitted by

the CCM only once, for a period of 3 months."

This policy lays down the guidelines for leasing out parcel space in

brake vans (SLR) on passenger trains and leasing of parcel vans on

a round trip basis. An arbitration agreement was contained in the

agreement entered into between the Petitioner and the Western

Railway (clause 20). The Petitioner instituted a suit before the City

Civil Court on 6 December 2009 and on 7 December 2009 an order

of status quo was passed by that Court. This order was continued

until eventually on 18 November 2010, the City Civil Court

returned the plaint for presentation before the Competent Court.

These Proceedings have now been instituted before this Court on

22 November 2010 and the relief that is sought in the proceedings

is a direction to the General Manager of the Western Railway to

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extend the contract of the Petitioner for a period of two years in

terms of clause 20.1 of the agreement dated 20 November 2006.

3. In the meantime, the Petitioner has been informed by a

letter dated 25 November 2010, that the Competent Authority has

decided to discontinue the lease contract of the Petitioner in the

absence of any interim order of a Court. Accordingly, the

Petitioner has sought an amendment of the Plaint in terms of the

draft which is tendered before the Court. Amendment in terms of

the draft is allowed, since the Petition has been pending

admission, and is allowed to be carried out forthwith.

4. The earlier policy of the Railway Board was governed by

Circular No.12 of 2006 dated 28 March 2006 to which a reference

has been made already. Subsequently, a new policy was

formulated on 9 February 2010 in terms of Freight Marketing

Circular No.3 of 2010. By the new policy, the clause relating to

extension that was contained in the earlier policy has been deleted.

Nonetheless, by a subsequent Circular dated 18 March 2010 of the

Railway Board, it has been clarified as follows :

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"2.1 In case of existing contracts which are in operation and agreement/contract signed before issue of Freight

Marketing Circular No.03 of 2010 i.e. prior to 09.02.2010, shall be governed by the policy guidelines

applicable before issue of Freight Marketing Circular No. 03 of 2010."

Hence, according to the Petitioner though the clause for extension

as stipulated in the Policy Circular 12 of 2006 is deleted by Policy

Circular 6 of 2010, in the case of all existing contracts which are in

operation, the earlier policy guidelines will continue to apply.

5. A Division Bench of this Court dealt with a Petition

where there was a similar contract embodying clause (20)

providing for conditions for extension. The Division Bench in its

order dated 13 April 2010 noted the statement of the Respondent

that a decision has been taken to grant extension to contractors like

the Petitioners in terms of clauses (20) and (20.1) of the lease

contract agreement and to continue their contracts for a further

period till a new contract was finalised. The Division Bench

recorded that this decision would be applicable to all such

contractors whose contract period has come to an end and in

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accordance with the policy decision, new tenders were being

invited. In these circumstances, the Division Bench disposed of the

Petition by directing that the Petitioners would be entitled to

continue their contract till a new contract was finalized upon

inviting of tenders. The earlier judgment of the Court was in

Economic Commercial Service vs. Union of India and Ors. (Writ

Petition (L) 247 of 2010). The direction of this Court in the earlier

order dated 13 April 2010, was also extended in the case of a

similarly placed Petitioner, by a Division Bench while disposing of

Writ Petition (L) 2418 of 2010 (M/s.Kishan Freight Forwarder

Vs. Union of India) on 28 October 2010. The Petitioner seeks the

same benefit.

6. Counsel appearing on behalf of the Respondent has

submitted that (i) There was no vested right to an extension of

lease under clause (20) of the agreement and all that the

agreement contemplated was that an extension is permissible only

in the case of a long term lease of three years subject to the terms

and conditions as spelt out therein; (ii) In the present case, the

Western Railway invited bids for the allotment of an additional

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parcel space on the Firozpur Janata Express in respect of which a

contract had been awarded to the Petitioner. After tenders were

invited, a letter of acceptance was issued on 23 September 2010

where the rate which is quoted is Rs.2,32,560/- for each round

trip. Hence, it has been submitted that now that tenders have

been invited and a new contract has been awarded, the Petitioner

has no vested right to continue.

7. In our view, the earlier orders passed by the Division

Bench of this Court on 13 April 2010 and 28 October 2010, both

clarify that the Petitioners there who had existing contracts, would

be allowed to continue only until a new lease contract was

awarded. In the present case, the attention of the Court has been

drawn to the fact that tenders were invited by the Western Railway

albeit for the additional parcel space. The Petitioner could have

submitted a bid for the allotment of a tender, but the Court has

been informed by Counsel appearing on behalf of the Petitioner,

the Petitioner did not do so. Counsel appearing on behalf of the

Respondent states that one of the bidders, Shri Prajapati Gunwant

Keshavlal submitted a bid on behalf of the Petitioner, but

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according to Counsel for the Petitioner, he is a brother of one of

the partners of the Petitioner who bid independently. As a matter

of fact that bidder is also present before the Court.

8. Be that as it may, it is now clear that the condition

subject to which the earlier orders were passed by Division

Benches of this Court on 13 April 2010 and 28 October 2010 is

fulfilled and a fresh contract has been awarded for a parcel van

on the same train, namely, Firozpur Janata Express. The rate

which has been accepted by the Western Railway of Rs.2,32,560/-

per round trip is almost double the rate which was quoted by the

Petitioner and accepted for the contract which was entered into in

2006. The Petitioner has had the benefit of not only the period of

the original contract of 2006-09 but as a result of the interim order

of status quo that was passed by the City Civil Court, the Petitioner

continued thereafter, at the same rate until 25 November 2010.

There is no vested right to extension or renewal of the contract.

Having regard to all these circumstances, we do not consider that it

would be either appropriate or proper for this Court in the exercise

of the writ jurisdiction to direct that the contract of the Petitioner

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should be continued on the same terms and conditions. Whether

the existing parcel van which was allotted to the Petitioner should

be continued or discontinued and if it is continued whether it

should be at existing rates, is a matter which is not within the

jurisdiction of this Court under Article 226 of the Constitution.

9. Counsel appearing on behalf of the Respondent has

stated before the Court that a final operational decision has still not

been taken on whether the existing parcel van which was allotted

to the Petitioner would be discontinued or whether a fresh tender

would be invited in respect of that parcel van. In the event that the

Respondents are inviting fresh tenders in respect of the parcel van

which was allotted to the Petitioner and the Petitioner is ready and

willing to match the rate of Rs.2,32,560/- received by the Western

Railway in the contract which has been awarded on 23 September

2010, it would be open to the Petitioner to make a representation

to the General Manager seeking a continuation of the existing

contract until a fresh contract is finalized upon inviting tenders.

The First Respondent will consider and decide upon the

representation. Save and except for the directions issued earlier,

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we decline to accede to the prayers of the Petitioner. The Writ

Petition is accordingly disposed of. No costs.

( Dr.D.Y.Chandrachud, J.)

( Anoop V. Mohta, J.)