Bombay High Court
M/S S K Translines Pvt Ltd Thru ... vs The State Of Maharashtra And ... on 16 January, 2018
Bench: S.V. Gangapurwala
1 W.P.No.14847/17
IN THE HIGH COURT OF JUDICATURE
AT BOMBAY
BENCH AT AURANGABAD.
WRIT PETITION NO.14847 OF 2017
WITH
CIVIL APPLICATION NO.447 OF 2018.
IN
WRIT PETITION NO.14847 OF 2017
M/s S.K.Translines Pvt. Ltd.
17/19, 1st floor,
Suresh Dada Jain Complex,
Ajintha Road, Jalgaon,
through its Authorised
Representative
Prakash Dnyaneshwar Baviskar,
Age 30 years, Occ.Service,
R/o Jalgaon. ... Petitioner.
Versus
1. The State of Maharashtra,
through Secretary,
Transport Department,
Mantralaya, Mumbai-32.
2. Maharashtra State Road
Transport Corporation
Central Office - Mharashtra
Vahatuk Bhavan,
Dr.Anandrao Nair Marg,
Mumbai-400 008
through its Chairman,
3. Maharashtra State Road
Transport Corporation
Central Office - Maharashtra
Vahatuk Bhawan,
Dr.Anandrao Nair Marg,
Mumbai-400 008,
through its Vice Chairman-
Managing Director,
::: Uploaded on - 18/01/2018 ::: Downloaded on - 20/01/2018 02:15:00 :::
2 W.P.No.14847/17
4. General Manager,
(Planning & Marketing),
Maharashtra State Road
Transport Corporation,
Maharashtra Vahatuk Bhawan,
Dr.Anandrao Nair Marg,
Mumbai-400 008.
5. General Manager(Traffif),
Maharashtra State Road
Transport Corproation,
Maharashtra Vahatuk Bhawan,
Dr.Anandrao Nair Marg,
Mumbai-400 008. ... Respondents.
...
Mr.P.M.Shah, Senior advocate holding for
Mr.A.N.Sikchi, advocate for the petitioner.
Mrs.Vaishali Patil Jadhav, A.G.P. for the State.
Mr.V.J.Dixit, Senior advocate holding for
Mr.D.S.Bagul, advocate for Respondent Nos.2 to 5.
Mr.S.U.Chaudhari, advocate for Applicant-
Intervener.
...
CORAM : S.V.GANGAPURWALA AND
ARUN M. DHAVALE,JJ.
Date : 16.01.2018.
ORAL JUDGMENT (Per S.V.Gangapurwala,J.)
1. The substratum of the matter is based
on following grounds :
(i) The jurisdiction of this Court under
Article 226 of the Constitution of India to
entertain the petition in contractual matter.
(ii) Whether by an agreement the
jurisdiction of the Court under Article 226 of
the Constitution of India can be restricted.
2. Pursuant to the tender process, the
petitioner was the successful bidder and was
awarded work order by Respondent No.5 for
carrying out the business of transportation of
parcel, specific allied services and couriers by
the State Transport Buses of Respondent
Corporation for the period 1.11.2015 to
31.10.2018 on the terms and conditions
subscribed to in the licence deed and the tender
document.
3. Under order dated 16.12.2017,
communicated to the petitioner on 17.12.2017, the
Respondent No.4 terminated licence granted to the
petitioner for transportation of parcels,
couriers and allied services with effect from
18.12.2017. Respondent No.4 in said order
forfeited security deposit and Bank guarantee,
and also imposed penalty. The petitioner has
assailed aforesaid order in present Petition.
4. Mr.P.M.Shah, learned Senior advocate
for the petitioner in his usual erudite
disposition, put forth following submissions :
(a) The order terminating the licence
granted to the petitioner by Respondent No.4 for
transportation of parcels, couriers and allied
services is without notice to the petitioner and
without following the principles of natural
justice. Clause 41 of the Licence deed requires
the Respondents to give 30 days notice, if they
want to prematurely terminate the contract.
According to learned Senior advocate, principles
of natural justice are required to be followed in
such matters. The learned Senior advocate relies
on judgment of the Apex Court in the case of
"Hindustan Petroleum Corpn. Ltd. and others Vs.
Super Highway Services and another" reported in
(2010) 3 SCC 347. The learned Senior advocate
also relies on judgment of a Division Bench of
this Court in the case of "Rajesh Sadanand Patil
Vs. The Additional Collector and others" reported
in AIR 2003 Bombay 304.
(b) The learned Senior advocate further
submits that in contractual matters involving
the State and instrumentality of the State,
powers of this Court of judicial review subsist.
To buttress his submission, he relies on
judgment of the Apex Court in the case of "Noble
Resources Ltd. Vs. State of Orissa and another"
reported in (2006) 10 Supreme Court Cases 236.
(c) It is further contended that when the
effect of the termination of the contract entails
civil consequences then opportunity of hearing is
must. He relies on the judgment of the Apex
Court in a case of "Kulja Industries Limited Vs.
Chief General Manager, Western Telecom Project
Bharat Sanchar Nigam Limited and others" reported
in (2014) 14 Supreme Court Cases 731.
(d) The availability of alternate remedy
would be no bar to invoke the jurisdiction of
this Court. In present case even Arbitration
clause does not exist. The learned Senior
advocate further submits that by an agreement
jurisdiction of this Court under Article 226 of
the Constitution of India, can not be restricted.
He relies on judgment of the Apex Court in the
case of "P.R.Transport Agency Vs. Union of India
(UOI) and others" reported in AIR 2006 Allahabad
23 and judgment of learned Single Judge of the
Madras High Court in the case of "Sun TV Network
Ltd. and others Vs. Union of India and others"
reported in (2016) 5 Mh.L.J. 198.
e) The action is arbitrary and malafide.
It is submitted by learned Senior advocate that
reasons referred to in the order for termination
are in fact non-existent. The alleged breaches
were trivial and were in respect of earlier
period. The grievance of the Respondent with
regard to registration under GST, the petitioner
had provided screen-shot to the Respondents
showing that it is registered under GST. The
petitioner had not received the certificate in
physical form. While the same was received on
18.12.2017, it was immediately submitted to the
Respondents. Even opinion of the Chartered
Accountant of the Respondents is that GST would
not apply.
5. Mr.Dixit, learned Senior advocate for
the Respondents in a lucid manner canvassed
following propositions :
(a) That the parties under clause 53 had
agreed that if any dispute arises between them
then the Court located at Mumbai alone shall have
jurisdiction to try and decide the dispute
between the parties. The learned Senior Advocate
submits that if two or more Courts have
jurisdiction, the parties by an agreement can
restrict the jurisdiction to any one Court. The
learned Senior advocate relies on judgment of
the Apex Court in the case of "Shriram City Union
Finance Corporation Limited Vs. Rama Mishra"
reported in 2002 (9) SCC 613, so also on case of
"Swastik Gases P. Ltd. Vs. Indian Oil Corp.Ltd."
reported in 2013 (9) SCC 32.
(b) Learned Senior advocate further submits
that in contractual matters,this Court would not
exercise its jurisdiction of its judicial review.
The matter between the parties arises out of the
terms and conditions of contract. This Court
would not entertain a Writ Petition against
termination of contract in its writ jurisdiction.
The learned Senior advocate relies on judgment
of the Apex Court in the case of "Pimpri
Chinchwad Municipal Corporation Vs. Gayatri
Construction Company" reported in LEX(SC) 2008
822, so also on the case of "Empire Jute Co. Ltd
Vs. Jute Corporation of India Ltd." reported in
LEX(SC) 2007 1061. Learned Senior advocate also
places reliance on the case of "State of Uttar
Pradesh Vs. Bridge and Roof Company India
Limited" reported in LEX(SC) 1996 845.
(c) Learned Senior advocate further submits
that considering breaches committed by the
petitioner from time to time, notices were issued
to the petitioner. The petitioner went on
committing breaches of the terms of the license
deed. It is not that the petitioner was not made
aware of the lapses on its part. The lapses on
the part of the petitioner as enumerated in the
order of termination were communicated to the
petitioner on each and every occasion and lastly,
the petitioner was also directed to provide the
details of GST registration. The petitioner
failed to provide the same. The petitioner was
required to get itself registered under GST.
Failure on the part of the petitioner to get
itself registered under GST is fatal. The
Respondents had rightly exercised its right and
terminated the contract to avoid further
defaults.
(d) The learned Senior advocate further
submits that for forfeiture of security deposit,
bank guarantee, the license deed does not provide
for issuance of notice and the right has been
given to the Respondent-Corporation to forfeit
the security deposit, bank guarantee as contained
in clause 6 of the Licence Deed. According to
learned Senior advocate the right has been
exercised by the Respondents, on account of
breach committed by the petitioner. Action has
been taken bonafide and can not be termed as
arbitrary or malafide and prays for dismissal of
the Writ Petition.
6. We have considered submissions of the
respective learned Senior counsel for the
parties.
7. Before proceeding further it would be
necessary to reproduce the clause relied by the
parties. Clause 41 reads as under :
"41. Notice of termination
of License Deed
If during the period of deed
remains in force,the General Manager
(Traffic) has reason to be
dissatisfied with the service or the
manner of the implementation of the
contract and/or the representatives
of the Licencee, the Licensor may by
notice in writing call upon the
Licencee to remove the cause of such
dissatisfaction in the way to be
indicated in the notice and if the
Licencee fails for a period of 30
days after the receipt of such notice
to remedy such causes of
dissatisfaction to the satisfaction
of the General Manager (Traffic) then
notwithstanding anything contained in
the agreement to the contrary the
General Manager (Traffic) shall be at
liberty to any time thereafter to
terminate this deed by giving the
Licencee 15 days notice in writing
and the deed, shall, on expiry of the
notice period, stand cancelled and
the Licencee shall be liable to pay
the guaranteed revenue of balance
period of deed and also security
deposit liable to be forfeited.
Clause 53. Jurisdiction of Court at
Mumbai only
The Court located at Mumbai
shall only have jurisdiction to try
and decide any matter/dispute between
the parties."
8. The contract between the Respondents
and petitioner is for a period of three years
starting from 1.11.2015 and ending on 31.10.2018.
The Respondents claim to have issued letters on
15.7.2017 and 11.9.2017 to the petitioner for
starting parcel office/Booking at Bus stand as
per clause 36 of the Licence deed and that
petitioner did not comply. According to
Respondents, the petitioner violated clauses
16,17.3 and 19 of the Licence deed and notice
dated 7.10.2017 was issued. The breaches alleged
by the Respondents are disputed by the
petitioner. The grievance of the Respondents is
also about non-registration under GST by the
petitioner. The petitioner claims to have
provided with the screen shot of its registration
from the web-site. The Respondents were not
convinced and the Respondents issued letter dated
16.12.2017, terminating the contract w.e.f.
18.12.2017 and said letter is received by the
petitioner on 17.12.2017 in the evening at about
8.21 p.m.
9. The terms of the Licence deed are
binding on both the parties.
10. Clause 41 of the Licence deed mandates
that if the Respondent is dissatisfied with the
service or the manner of the implementation of
the contract by licensee or its representative
then the Licensor/Respondent is required to
indicate in writing to the licencee to remove the
causes of dissatisfaction and if the licencee
fails within 30 days after the receipt of notice
to remedy the causes of dissatisfaction then the
Respondent is required to give 15 days notice in
writing to terminate the licence.
11. This Court would be loath to exercise
its jurisdiction to judicial review decision
taken by a party under the contract may be
largely a position, yet due adherence to the
decision making process can be a concern for this
Court.
12. We have to make it clear that we are
not examining the decision of the Respondents on
merits and are confining ourselves to the
decision making process.
13. In the case of "Pimpri Chinchwad
Municipal Corporation Vs. Gayatri Construction
Company" (supra) the Apex Court observed that
Interpretation and implementation of clauses in
contract can not be the subject matter of the
Writ Petition. In the case of "State of Uttar
Pradesh Vs. Bridge and Roof Company India
Limited" (supra) it is held that Writ Petition
for restraining Government from deducting or
withholding particular sum payable to Respondent
company under contract is wholly misconceived and
not maintainable. In the case of "Empire Jute
Co.Ltd. Vs. Jute Corporation of India Ltd."
(supra) the Apex Court observed that when there
is agreement between parties containing
Arbitration Clause the power of judicial review
should not be exercised.
14. The Apex Court in a case of "Hindustan
Petroleum Corpn. Ltd. and others Vs. Super
Highway Services and Another" (supra) has
observed as under :
"17. The cancellation of
dealership agreement of a party is a
serious business and cannot be taken
lightly. In order to justify the
action taken to terminate such an
agreement, the concerned authority
has to act fairly and in complete
adherence to the rules/guidelines
framed for the said purpose. The
non-service of notice to the
aggrieved person before termination
of his dealership agreement also
offends the well-established
principle that no person should be
condemned unheard. It was the duty
of the petitioner to ensure that the
Respondent No.1 was given a hearing
or at least serious attempts were
made to serve him with notice of the
proceedings before terminating his
agreement."
A Division Bench of this Court in the case of
"Rajesh Sadanand Patil Vs. Dadasaheb Kisan
Suryawanshi" (supra) has observed that
requirements of Article 14 and contractual
obligations are not alien concepts which can not
co-exist. It is difficult and unrealistic to
exclude the State actions in contractual matters,
after contract has been made from the purview of
judicial review to test its validity on the anvil
of Article 14 of the Constitution of India.
15. The Apex Court in a case of "Noble
Resources Ltd. Vs. State of Orissa and another"
(supra) has observed that contractual matters of
the State are not totally beyond the scope of
judicial review albeit its ambit is limited.
Each case has to be decided on its own facts.
Where State violates Article 14 or malafides or
ulterior motives are attributed, judicial review
would be permissible. Even existence of a
disputed question of fact or availability of an
alternate remedy are not ipso facto a bar to the
exercise of High Court's writ jurisdiction.
16. The Respondent has failed to abide by
clause 41. The Respondent in its letter of
termination of contract dt.16.12.2017 has
referred to the breach committed by the
petitioner on 13.3.2016, for which petitioner was
imposed fine of Rs.1000/- (Rupees one thousand).
The other lapse is of twice allowing parcel
weighing more than 500 Kg. for which petitioner
was imposed fine of Rs.15,000/- (Rupees fifteen
thousand) by the Respondent on 21.6.2016, the
petitioner had allowed parcel containing acid
and the petitioner was imposed fine of
Rs.1,000/- (Rupees one thousand). The other cause
of dissatisfaction is non-registration under GST.
The Chartered Accountant of the petitioner had
opined that the transportation of parcel under
the Licence deed would not deduct GST provided
petitioner is registered under The Maharashtra
Goods and Services Tax Act, 2017. The petitioner
had provided the screen shot from the web-site to
show that it is registered under GST. The
petitioner till then had not received the
certificate in the physical form. It is only on
18.12.2017, the petitioner could receive the
certificate in physical form and on 18.12.2017,
gave the copy in physical form, it being
registered under GST Act.
17. The Respondent at no point of time ever
issued notice in writing to the petitioner that
the cause of dissatisfaction has not been removed
and straightway issued notice of termination of
contract and forfeited security deposit, bank
guarantee and levied penalty.
18. The Respondent miserably failed to
abide imperative stipulation of giving 15 days
notice terminating contract, according to clause
41 of the Licence deed. The Respondent did not
even give an opportunity to the petitioner to
blink and straightaway resorted to the drastic
step of terminating the contract, so also
forfeiting security deposit, bank guarantee and
levying penalty of almost Rupees twelve crore
and further on 19th December 2017 floated fresh
tender inviting offer for said work. The action
of the Respondent recks arbitrariness.
19. The termination of contract entailed
civil consequences. The security deposit is
forfeited and also the Bank guarantee. The
penalty is levied. The forfeiture of security,
Bank guarantee and levy of penalty has the effect
of disqualifying the petitioner from
participating in any other tender process in a
way Blacklisting the petitioner. Even on this
count prior notice was necessary in due
observance of principles of natural justice.
20. The Respondent-Maharashtra State Road
Transport Corporation is an instrumentality of
the State. An instrumentality of the State is
expected to act as a model litigant. Fair play
is expected on the part of the Corporation. Any
action that is arbitrary is unsustainable.
Arbitrariness has no role in the society governed
by the Rule of law. Arbitrariness is antithesis
to the Rule of law, fair play justice, equity and
good conscious.
21. In the present case it is undisputed
that Arbitration clause does not exist. Clause
50 of the Licence deed specifically negates
arbitration. It states that in event of any
dispute and/or interpretation of terms and
conditions arises the same shall be referred to
the Vice Chairman & Managing Director,
Maharashtra State Road Transport Corporation and
decision of the Vice Chairman and Managing
Director shall be final and binding on both the
parties. However, this shall not be treated as
arbitration under the provisions of Arbitration
and Conciliation Act,1996.
22. The Respondent has instantly terminated
the contract and on the very next day issued
fresh tender for the same work. We have
initially made it clear that we are entertaining
the Petition only to the extent of due adherence
to the decision making process.
23. The contract has been terminated
without adhering to clause 41 of the License
deed, so also transgressing the principles of
natural justice. The decision making process is
flouted. The writ jurisdiction of this Court can
be exercised.
24. Much emphasis was laid by the
Respondents on clause 53 of the License deed to
submit that if any dispute arises between the
parties then the jurisdiction is restricted to
the Court at Mumbai. Reliance was placed on the
judgments of Apex Court in the case of "Shriram
City Union Finance Corporation Limited Vs. Rama
Mishra" reported in 2002 (9) SCC 613, so also on
case of "Swastik Gases P. Ltd. Vs. Indian Oil
Corp. Ltd." reported in 2013 (9) SCC 32 (supra).
In said cases the Apex Court was considering the
agreement restricting the jurisdiction of civil
Court.
25. The Constitution of India is Suprema
Lex. The jurisdiction of this Court under
Article 226 of the Constitution of India is
sacrosanct. It is an extra-ordinary jurisdiction.
The jurisdiction under Article 226 of the
Constitution of India can not be circumvented and
circumscribed by an agreement.
26. If two or more Courts have concurrent
jurisdiction by virtue of Section 28 of Contract
Act, the jurisdiction can be restricted to one
Court. The said Section would apply to ordinary
Tribunals exercising jurisdiction provided by the
statute. Section 28 would not extend to the
constitutional remedy. Even statute can not
abrogate the jurisdiction of this Court under
Article 226 of the Constitution of India, much
less an agreement by the parties. Similar view
has been taken by Allahabad High Court in the
case of "P.R.Transport Agency Vs. Union of India
(UOI) and others" reported in AIR 2006 Allahabad
23 and the Madras High Court in the case of "Sun
TV Network Ltd. and others Vs. Union of India and
others" reported in (2016) 5 Mh.L.J.198 (supra).
27. In view of the aforesaid, we pass the
following order :
a) The order/communication dated
16.12.2017 is set aside.
b) The contents of communication
dated 16.12.2017 with regard to the breaches
shall be considered as a notice to the
petitioner. The petitioner shall file its reply
with the Respondents within a period of ten (10)
days about remedying the dissatisfaction of the
Respondents.
c) On receipt of reply, the
Respondents shall take appropriate decision upon
it, on its own merits.
d) Till the decision is taken by
Respondents, pursuant to the reply filed by the
petitioner, the further tender process shall be
kept in abeyance and shall not be proceeded with.
e) The Writ Petition is disposed of
with aforesaid observations and directions with
no order as to costs.
f) In view of disposal of Writ
Petition, the Civil Application also stands
disposed of.
28. At this stage, Mr.Bagul, learned
advocate for the Respondent Nos.2 to 5 requests
for keeping the present judgment in abeyance for
a period of four (4) weeks. Mr. Sikchi, the
learned advocate for the petitioner opposes the
said request.
29. With a view to give opportunity to
Respondents to avail further remedy, the effect
of this judgment is kept in abeyance for a period
of four (4) weeks, however, the Respondents shall
not proceed with the tender process initiated as
directed above.
Sd/- Sd/-
(ARUN M.DHAVALE,J.) (S.V.GANGAPURWALA,J.)
asp/office/wp14847.17
