Chattisgarh High Court
M/S Moon Caterers vs State Of Chhattisgarh on 3 November, 2022
1
AFR
HIGH COURT OF CHHATTISGARH, BILASPUR
WPC No. 3326 of 2022
• M/s Moon Caterers Through Its Proprietor Mohammad Shoaib, S/o Shri
Rafik Mohammad, Aged About -35 Years, R/o 8/8, Bristol Chowk,
Chotapara, District Raipur Chhattisgarh.
---- Petitioner
Versus
1. State Of Chhattisgarh Through Secretary, Department Of Urban
Development, Mahanadi Bhawan, Naya Raipur, District Raipur
Chhattisgarh.
2. Raipur Smart City Limited, Through Its The Managing Director,
Chhatrapati Shivajee Maharaj Outdoor Standium, Near Vivekanand
Sarovar, Raipur, District Raipur Chhattisgarh.
3. Collector, Raipur District Raipur Chhattisgarh.
---- Respondent
(Cause-title taken from Case Information System)
For Petitioner : Shri Vinay Pandey, Advocate.
For Respondents 1 & 3 : Shri Trivikram Nayak, Panel Lawyer.
For Respondent No.2 : Shri Sumesh Bajaj, Advocate.
Date of Hearing : 01/09/2022, 06/09/2022, 14/09/2022, 20/09/2022
Date of Judgment : 03/11/2022
Hon'ble Shri Arup Kumar Goswami, CJ &
Hon'ble Shri Deepak Kumar Tiwari, J
C A V ORDER
Per Deepak Kumar Tiwari, J.
By this Writ Petition filed under Article 226 of the Constitution of India
the petitioner has questioned the propriety and correctness of the impugned
letter dated 15.7.2022 issued by respondent No.2 whereby the respondent
authority has terminated the Licence Agreement executed on 6 th July, 2021
between the petitioner and Raipur Smart City Limited (for short 'RSCL') and
forfeited the performance bank guarantee amounting to Rs.7,56,000/- and the
petitioner was directed to pay the balance license fee of Rs.2,97,345/-.
2. Facts of the case are that respondent No.2 invited proposals by its
request dated 17.12.2020 for selection of bidders to design, development,
implementation, operation and maintenance of Smart Parking Management at
Multi Level Car Parking (MLCP) located at EAC Colony in Raipur on annual
liense fee basis. The petitioner is having vast experience in the field of
Car/Motor Cycle Parking Management in Chhattisgarh. The petitioner is
successfully operating many other parking spots at different area of Raipur.
The petitioner has participated in the process and on the basis of documents
submitted by the petitioner as also looking to his experience, the petitioner
was declared L-1 and subsequently, the petitioner was declared as successful
bidder for the said project.
3. An agreement was executed between the parties on 6.7.2021. The
period of said license was Five Years, as agreed by the parties, which was to
be extendable for another term of 5 years at the sole discretion of the
competent authority. The annual license fee fixed by the respondent authority
is Rs.15,11,926/-. The said License fee was to be paid in two installments i.e.
the first installment to be paid within 30 days of issuance of LoA and before
the agreement is signed and the second installment to be paid before
completion of 15 days of three months from the effective date. The petitioner
has duly submitted TDR dated 21.5.2021 for a value equivalent to six months
of quoted annual license fee of the highest bidder i.e. Rs.7,56,000/- towards
performance security. On fulfilling the conditions enumerated in the
agreement and after payment of first installment, the work order was issued to
the petitioner on 13.9.2021 to operate maintenance of Smart Parking
Management at Multi Level Car Parking.
4. It is stated that the Collector has failed to pay the parking fee to the
petitioner for the vehicles parked under the passes issued by him to the
employees of Collectorate, Police, Zila Panchayat and the employees of other
departments. Since the Collector has issued 800 such passes for the
employees, he is under an obligation to pay parking fee on their behalf,
however, he failed to pay the fee. So, the petitioner moved a representation to
the Collector on 25.11.2021, which has not been decided so far. It is also
stated that respondent No.2 has not paid the Electricity Bill, which was due
with the CSPDCL of the period when the Multi Level Parking was under
construction. The petitioner has duly apprised the respondent No.2 about
payment of electricity bill of Rs.5,01,686/-, failing which the electricity
connection would be disconnected, however, till date the respondent authority
has not paid the electricity bill. It is further stated that the petitioner has been
regularly submitting demand draft for payment of installment and the GST,
which has not been presented by them in the Bank, which has resulted in
expiry of the period. The petitioner moved a representation informing the
authorities about the delay, however, the respondent authorities have failed to
take note of it and maligned the image of the petitioner as defaulter.
5. It is further stated that in spite of above difficulties being faced by the
petitioner, all of a sudden, the respondent No.2 issued the impugned letter
whereby the respondent authority has terminated the License Agreement
executed on 6th July, 2021 between the petitioner and the Raipur Smart City
Limited on the ground of inappropriate use of parking premises as also the
fact that the Istgasa No.190/193/22 was registered on 10.7.2022 in pursuance
of the complaint made regarding causing of nuisance in the public area within
the premises of MLCP located at EAC colony in Raipur.
6. Learned counsel for the petitioner would submit that the respondent
authorities have violated the principle of natural justice and no opportunity of
hearing was accorded to the petitioner before issuance of the impugned
termination letter. The conduct of the respondent authority is arbitrary,
irrational and unjust. The Istgasa No.190/193/22 registered on 10.7.2022
mentioned in the impugned letter is only for maintenance of peace and the
same is under investigation. It is stated that the reasons assigned and the
clauses invoked in the impugned order for terminating the License Agreement
are contrary to each other. Hence the petitioner prays to quash the impugned
letter dated 15.7.2022, and also seeks a direction to the respondent authorities
to permit him to complete the work order for the term specified in the
agreement, as also for refund of an amount of Rs.7,56,000/- (Performance
Bank Guarantee), which was forfeited by the respondent authority by the
impugned letter.
7. The respondent No.2 in his reply has submitted that the agreement itself
contains Article-6 which relates to Dispute Resolution and which disentitles
the petitioner to raise the instant dispute directly before the High Court. Thus
the instant petition deserves to be dismissed summarily on this count alone. As
regards the contention of the petitioner that one incident of goat slaughter had
taken place outside the premises, it was submitted that the petitioner is trying
to impress that only the constructed area is covered under the license
agreement and, therefore, the alleged activity was outside the leased premises.
The stand taken by the petitioner is incorrect inasmuch as the area leased out
to the petitioner under the agreement is the constructed area, which is a multi
level parking as well as the surrounding open areas which are meant for
parking of two wheeler and also comprises of surrounding roads. A Pen Drive
and photograph have been filed to demonstrate that a goat was not only being
slaughtered in the open parking area but also a goat was tied inside the
constructed multi level parking area. The illegal activity of the petitioner
triggered a law and order situation and the local police also took cognizance of
the matter. Two Istgasas were registered on 10.7.2022 and 11.7.2022. In
furtherance of these Istgasas, a letter was also addressed by the local police on
12.7.2022 informing the entire incident and that the petitioner and two other
persons have been lodged in jail. After the action of police authorities, the
District Administration and the authorities of Municipal Corporation also
swung into action and a team of six Senior Officers visited the place of
occurrence and prepared the joint report on 10.7.2022 itself. It is pleaded that
the slaughter was done well within the premises under the control of the
petitioner.
8. The stand taken by the petitioner that the persons involved were not
related to him has been denied by the respondent No.2 on submission that
firstly the petitioner himself was engaged in the alleged act and secondly two
other persons were also the associates of the petitioner. The attendance
register and the documents of the staff/associates of the petitioner was to be
maintained by the petitioner, which was not produced by him. The petitioner
is solely responsible for the illegal activities carried out in the premises, for
which impugned action has been taken. The act done by the petitioner is
against the terms and conditions stipulated in the agreement and the same
would amount to an offence under Section 257 of the CG Municipal
Corporation Act, 1956, as well as Section 269 of the IPC. The impugned
letter terminating the agreement and forfeiting the performance bank
guarantee has been issued in a just and legal manner, strictly adhering to
various clauses mentioned in the agreement. The amount sought from the
petitioner in the impugned letter has also been duly calculated and demanded,
as the petitioner had failed to pay the amount even after 30 days from the due
date of last payment due and this action is fortified by the terms of agreement.
The petitioner is in the habit of not maintaining the premises in a proper
condition and also used to collect extra amount from the general public. The
issue raised by the petitioner qua the electricity bill was settled much earlier
and the issue concerning GST was also duly resolved much earlier. In view of
the above submissions, the present Writ Petition deserves to be dismissed.
9. Rejoinder has also been filed on behalf of the petitioner denying the
allegations levelled by respondent No.2 in his reply. As regards Article-6,
which provides for resolution of dispute, it is stated that jurisdiction under
Article 226 is a valuable constitutional safeguard against an arbitrary exercise
of power by the State or a misuse of authority. It is well settled that
jurisdiction under Article 226 cannot be ousted only on the basis that the
dispute pertains to a contract matter. As per the petitioner, none of the clauses
mentioned in the agreement has been violated, therefore, the License
Agreement could not have been terminated. The map prepared by respondent
No.2 is an afterthought and the same was not a part of the agreement. The
petitioner was not allotted the area where the goat slaughter took place. The
activity of slaughter was not carried out within the area specified for parking,
rather it was in an open area and the same is not under the control of the
petitioner. Though the map indicates that particular area has been allotted for
two wheeler parking, however, when the petitioner was handed over the
premises by respondent No.2, no map was supplied to him and hence, the
petitioner is not using the area shown for two wheeler parking. In Istgasa also,
incident is said to have taken place in an area adjacent to the MLCP in an open
area. The submission that the goat was slaughtered in the specified area for
parking which has been handed over to the petitioner by way of agreement has
been denied. Respondent No.2 has placed photographs and Pen Drive on
record in support of his contention, however, the source of the photograph and
Video is not disclosed. Respondent No.2 has no evidence to show that it was
the area which was given for two wheeler parking. The petitioner submits
that the area was an open area, adjacent to the area meant for multi level
parking. Two persons against whom the allegation has been made that they
have used the premises for slaughter of goat have been restrained to work
within the limit of MLCP. The petitioner was not involved in slaughter of
goat or any other activity which may cause nuisance. The other allegations
levelled by respondent No.2 have been denied by the petitioner. It is further
averred that in the agreement, clause 3.16 provides for penalty for violation,
which also provides for an amount of penalty to be imposed per instance for
use of parking space as also for other than parking purposes. So, the arbitrary
action of termination of license agreement is not just and proper.
10. In the additional reply by respondent No.2, it is submitted that penalty
clause is contained under clause-3.16 and the termination clause is contained
under clause 5.1. Both the clauses are separate and distinct and can be
exercised independently. It is further averred that inflicting penalty is
independent from the act of termination and in fact, can be done additionally
and "Termination" is contemplated in clause-3.16 at S.No. 12 in the Table
mentioned below and the same is optional.
Variations Amount of penalty to be imposed
per instance
xxxx xxxx
xxxx Xxxx
Xxxx Xxxx
12. Use of parking space for other e) First instance of complaint for any
than parking purposes variation during the License Period -
2% of the Annual License Fee
f) Second instance of complaint for
any variation during the License
Period 4% of the Annual License
Fee
a) Third instance of complaint for any
variation during the License Period
10% of the Annual License Fee
and/or Termination of Agreement
without any notice.
The map of the location was part of the request for proposal and the entire
area of 5264 square meter comprising in the MLCP was handed over to the
petitioner.
11. We have heard learned counsel for the parties at length and perused the
record with utmost circumspection.
12. Shri Sumesh Bajaj, learned counsel for respondent No.2 has raised the
issue that the instant dispute is purely a commercial transaction under a non-
statutory contract. So, the public law remedy would not be available to the
petitioner. He has relied on the judgment in the matter of Pimpri Chinchwad
Municipal Corpn. v. Gayatri Construction Co.,{(2008) 8 SCC 172} in which
difference between statutory contracts and non-statutory contracts has been
dealt with. In the said matter, para 11 of the judgment in the matter of Kerala
SEB v. Kurien E. Kalathil [(2000) 6 SCC 293] has been referred which reads
thus :
"11. A statute may expressly or impliedly confer
power on a statutory body to enter into contracts in
order to enable it to discharge its functions.
Dispute arising out of the terms of such contracts
or alleged breaches have to be settled by the
ordinary principles of law of contract. The fact
that one of the parties to the agreement is a
statutory or public body will not by itself affect the
principles to be applied. The disputes about the
meaning of a covenant in a contract or its
enforceability have to be determined according to
the usual principles of the Contract Act. Every act
of a statutory body need not necessarily involve an
exercise of statutory power. Statutory bodies, like
private parties, have power to contract or deal with
property. Such activities may not raise any issue of
public law. In the present case, it has not been
shown how the contract is statutory. The contract
between the parties is in the realm of private law.
It is not a statutory contract. The disputes relating
to interpretation of the terms and conditions of
such a contract could not have been agitated in a
petition under Article 226 of the Constitution of
India. That is a matter for adjudication by a civil
court or in arbitration if provided for in the
contract. Whether any amount is due and if so,
how much and refusal of the appellant to pay it is
justified or not, are not the matters which could
have been agitated and decided in a writ petition.
The contractor should have relegated to other
remedies."
13. In Radhakrishna Agarwal v. State of Bihar, {(1977) 3 SCC 457}, it
was held in para 11 that if facts are disputed and require assessment of
evidence, it is not a fit case for invoking writ jurisdiction. The said para reads
thus :
"11. In the cases before us the contracts do not
contain any statutory terms or obligations and no
statutory power or obligation which could attract
the application of Article 14 of the Constitution is
involved here. Even in cases where the question is
of choice or consideration of competing claims
before an entry into the field of contract facts have
to be invesitgated and found before the question of
a violation of Article 14 could arise. If those facts
are disputed and require assessment of evidence
the correctness of which can only be tested
satisfactorily by talking detailed evidence,
involving examination and cross-examination of
witnesses, the case could not be conveniently or
satisfactorily decided in proceedings under Article
226 of the Constitution. Such proceedings are
summary proceedings reserved for extraordinary
cases where the exceptional and what are
described as, perhaps not quite accurately,
"prerogative" powers of the Court are invoked.
We are certain that the cases before us are not
such in which powers under Article 226 of the
Constitution could be invoked."
14. He would further place reliance on a judgment in the matter of M/s.
Utkal Highways & Ors. Vs State of Chhattisgarh & Anr. {AIR 2006 Chh
29} in which in para 17 the following was observed :
"17. In view of the above decisions of the Hon'ble
Apex Court, it is settled law that writ petition
under Article 226 of the Constitution of India is
not maintainable in cases of non-statutory, purely
contractual matters and where rights and liabilities
of the parties are governed by the terms of the
contract, and the party complains about breach of
such contract by the State. The contract between
the parties is a contract in the realm of private law
and not a statutory contract. The writ petition lies
only where the State or its instrument alities act in
exercise of a statutory power under certain Act or
Rules framed there under."
15. In the matter of National Highways Authority of India v. Ganga
Enterprises, {(2003) 7 SCC 410}, while allowing the appeal, the Hon'ble
Supreme Court has observed that the bank guarantee was enforced because the
bid was withdrawn within 120 days. Therefore, it could not be said that the
invocation of the bank guarantee was against the terms of the bank guarantee.
If it was in terms of the bank guarantee, one fails to understand as to how the
High Court could say that the guarantee could not have been invoked. If the
guarantee was rightly invoked, there was no question of directing refund as
has been done by the High Court.
16. In Food Corporation of India v. Jagannath Dutta, {1993 Supp (3) SCC
635}, a policy decision was taken at the level of the Zonal Manager to abolish
the storage agencies and the said decision was approved by the Head Office of
the FCI. So, the Hon'ble Supreme Court held that the view taken by the High
Court was not justified in reaching the conclusion that there was no policy
decision by the FCI.
17. In State of Bihar v. Jain Plastics and Chemicals Ltd., {(2002) 1 SCC
216}, it was observed that writ is not the remedy for enforcing contractual
obligations. It is to be reiterated that writ petition under Article 226 is not the
proper proceedings for adjudicating such disputes. Under the law, it was open
to the respondent to approach the court of competent jurisdiction for
appropriate relief for breach of contract. It is settled law that when an
alternative and equally efficacious remedy is open to the litigant, he should
pursue that remedy and should not invoke the writ jurisdiction of the High
Court. Equally, the existence of alternative remedy does not affect the
jurisdiction of the Court to issue writ, but ordinarily that would be a good
ground in refusing to exercise the discretion under Article 226.
18. Lastly, Shri Bajaj, learned counsel for respondent No.2 would submit
that the contract in question was signed after the approval of Cabinet was
obtained. Therefore, element of public law was not involved. In this respect,
the Hon'ble Supreme Court in the matter of Joshi Technologies
International Inc. Vs. Union of India & Others {AIR 2015 SC (Supp)
1889} has observed thus in para-71:-
"71. As pointed out earlier as well, the contract in
question was signed after the approval of Cabinet was
obtained. In the said contract, there was no clause
pertaining to Section 42 of the Act. The appellant is
presumed to have knowledge of the legal provision,
namely, in the absence of such a clause, special
allowances under Section 42 would (be) impermissible.
Still it signed the contract without such a clause, with
open eyes. No doubt, the appellant claimed these
deductions in its income tax returns and it was even
allowed these deductions by the Income Tax
Authorities. Further, no doubt, on this premise, it
shared the profits with the Government as well.
However, this conduct of the appellant or even the
respondents, was outside the scope of the contract and
that by itself may not give any right to the appellant to
claim a relief in the nature of Mandamus to direct the
Government to incorporate such a clause in the
contract, in the face of the specific provisions in the
contract to the contrary as noted above, particularly,
Article 32 thereof. It was purely a contractual matter
with no element of public law involved thereunder."
19. Shri Vinay Pandey, learned counsel for the Petitioner submitted that it
is well settled that if the state instrumentality violates its constitutional
mandate under Article 14 to act fairly and reasonably, writ by invoking the
powers under Article 226 of the Constitution would lie. He would place
reliance on paras 38 to 41 of the judgment delivered by the Hon'ble Supreme
Court in the case of Unitech Limited and Others v/s Telangana State
Industrial Infrastructure Corporation (TSIIC) and Others {2021 SCC
OnLine SC 99}, which are referred as under :
"38. Much of the ground which was sought to be
canvassed in the course of the pleadings is now
subsumed in the submissions which have been urged
before this Court on behalf of the State of Telangana
and TSIIC. As we have noted earlier, during the course
of the hearing, learned Senior Counsel appearing on
behalf of the State of Telangana and TSIIC informed
the Court that the entitlement of Unitech to seek a
refund is not questioned nor is the availability of the
land for carrying out the project being placed in issue.
Learned Senior Counsel also did not agitate the ground
that a remedy for the recovery of moneys arising out a
contractual matter cannot be availed of under Article
226 of the Constitution. However, to clear the ground,
it is necessary to postulate that recourse to the
jurisdiction under Article 226 of the Constitution is not
excluded altogether in a contractual matter. A public
law remedy is available for enforcing legal rights
subject to well-settled parameters.
39. A two judge Bench of this Court in ABL
International Ltd. v. Export Credit Guarantee
Corporation of India7 [ABL International] analyzed a
long line of precedent of this Court to conclude that
writs under Article 226 are maintainable for asserting
contractual rights against the state, or its
instrumentalities, as defined under Article 12 of the
Indian Constitution. Speaking through Justice N
Santosh Hegde, the Court held:
"27. ...the following legal principles emerge as to the
maintainability of a writ petition:
(a) In an appropriate case, a writ petition as against a
State or an instrumentality of a State arising out of a
contractual obligation is maintainable.
(b) Merely because some disputed questions of fact
arise for consideration, same cannot be a ground to
refuse to entertain a writ petition in all cases as a matter
of rule.
(c) A writ petition involving a consequential relief of
monetary claim is also maintainable."
40. This exposition has been followed by this Court,
and has been adopted by three-judge Bench decisions
of this Court in State of UP v. Sudhir
Kumar and Popatrao Vynkatrao Patil v. State of
Maharashtra. The decision in ABL International,
cautions that the plenary power under Article 226 must
be used with circumspection when other remedies have
been provided by the contract. But as a statement of
principle, the jurisdiction under Article 226 is not
excluded in contractual matters. Article 23.1 of the
Development Agreement in the present case mandates
the parties to resolve their disputes through an
arbitration. However, the presence of an arbitration
clause within a contract between a state instrumentality
and a private party has not acted as an absolute bar to
availing remedies under Article 226.11 If the state
instrumentality violates its constitutional mandate
under Article 14 to act fairly and reasonably, relief
under the plenary powers of the Article 226 of the
Constitution would lie. This principle was recognized
in ABL International:
"28. However, while entertaining an objection as to the
maintainability of a writ petition under Article 226 of
the Constitution of India, the court should bear in mind
the fact that the power to issue prerogative writs under
Article 226 of the Constitution is plenary in nature and
is not limited by any other provisions of the
Constitution. The High Court having regard to the facts
of the case, has a discretion to entertain or not to
entertain a writ petition. The Court has imposed upon
itself certain restrictions in the exercise of this power.
(See Whirlpool Corpn. v. Registrar of Trade
Marks [(1998) 8 SCC 1].) And this plenary right of
the High Court to issue a prerogative writ will not
normally be exercised by the Court to the exclusion
of other available remedies unless such action of the
State or its instrumentality is arbitrary and
unreasonable so as to violate the constitutional
mandate of Article 14 or for other valid and
legitimate reasons, for which the Court thinks it
necessary to exercise the said jurisdiction."
(Emphasis supplied)
41. Therefore, while exercising its jurisdiction under
Article 226, the Court is entitled to enquire into
whether the action of the State or its instrumentalities is
arbitrary or unfair and in consequence, in violation of
Article 14. The jurisdiction under Article 226 is a
valuable constitutional safeguard against an arbitrary
exercise of state power or a misuse of authority. In
determining as to whether the jurisdiction should be
exercised in a contractual dispute, the Court must,
undoubtedly eschew, disputed questions of fact which
would depend upon an evidentiary determination
requiring a trial. But equally, it is well-settled that the
jurisdiction under Article 226 cannot be ousted only on
the basis that the dispute pertains to the contractual
arena. This is for the simple reason that the State and its
instrumentalities are not exempt from the duty to act
fairly merely because in their business dealings they
have entered into the realm of contract. Similarly, the
presence of an arbitration clause does oust the
jurisdiction under Article 226 in all cases though, it still
needs to be decided from case to case as to whether
recourse to a public law remedy can justifiably be
invoked. The jurisdiction under Article 226 was rightly
invoked by the Single Judge and the Division Bench of
the Andhra Pradesh in this case, when the foundational
representation of the contract has failed. TSIIC, a state
instrumentality, has not just reneged on its contractual
obligation, but hoarded the refund of the principal and
interest on the consideration that was paid by Unitech
over a decade ago. It does not dispute the entitlement of
Unitech to the refund of its principal."
20. In Tata Cellular v. Union of India, {(1994) 6 SCC 651}, it was held
that the principles of judicial review would apply to the exercise of contractual
powers by Government bodies in order to prevent arbitrariness or favouritism.
In para 77, the following was observed :
"77. The duty of the court is to confine itself to the
question of legality. Its concern should be:
1. Whether a decision-making authority exceeded its
powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal
would have reached or,
5. abused its powers.
Therefore, it is not for the court to determine whether a
particular policy or particular decision taken in the
fulfilment of that policy is fair. It is only concerned
with the manner in which those decisions have been
taken. The extent of the duty to act fairly will vary from
case to case. Shortly put, the grounds upon which an
administrative action is subject to control by judicial
review can be classified as under:
(i) Illegality : This means the decision-maker must
understand correctly the law that regulates his decision-
making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury
unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not
rule out addition of further grounds in course of time.
As a matter of fact, in R. v. Secretary of State for the
Home Department, ex Brind [(1991) 1 AC 696] , Lord
Diplock refers specifically to one development, namely,
the possible recognition of the principle of
proportionality. In all these cases the test to be adopted
is that the court should, "consider whether something
has gone wrong of a nature and degree which requires
its intervention"."
21. In the light of principles laid down in the aforesaid decisions, if we
examine the factual matrix of the present case, we find that in the licence
agreement dated 06.07.2021, in Clause 3.16, Penalty for violations is
stipulated, according to which, the License shall be liable to pay such penalty
as authority may inflict for complaints against the licensee which in the
opinion of the authority are bonafide and substantiated. Without prejudice to
the other remedial, which may be available under the agreement, the licensee
shall be liable to pay at the sole discretion of the authority a suitable penalty to
be decided depending on the discrepancy noticed and as described in the
agreement for any action in contravention of any of the clause of this
agreement. The relevant variations 12 and 13 read as under :
Variations Amount of penalty to be imposed
per instance
xxxx xxxx
xxxx Xxxx
Xxxx Xxxx
12. Use of parking space for other e) First instance of complaint for any
than parking purposes variation during the License Period -
2% of the Annual License Fee
13. Criminal activity in parking area
f) Second instance of complaint for
any variation during the License
Period 4% of the Annual License
Fee
a) Third instance of complaint for any
variation during the License Period
10% of the Annual License Fee
and/or Termination of Agreement
without any notice.
22. The competent authority by invoking Clause Nos.5.1.1 (h), (i), and 5.1.3
terminated the license agreement w.e.f. 14.08.2022 by impugned letter dated
15.07.2022. The said Clauses read as under :
"5.1 Termination
5.1.1 xxx xxx
xxx xxx xxx
xxx xxx xxx
(h) If the Licensee fails to pay any of the instalment of
the Annual License Fee for a period of maximum up to
30 days.
(i) The Licensee using or permitting or causing the use
of the project for purposes other than for the as
prescribed in the RFP and this Agreement.
5.1.3 In case of breach of any of the conditions
mentioned herein the contract shall be liable to be
terminated summarily without assigning any reasons
and the decision of the Authority in this regard will be
final and binding on the Licensee. In that event, the
performance License Agreement for Selection of
Agency for "Design, Development, Implementation,
Operation and Maintenance of Smart Parking
Management" at MLCP located at EAC Colony in
Raipur, on Annual License fee basis guarantee of the
Licensee shall be forfeited. No abatement in license
fee will be given to the Licensee."
23. In the light of arguments advanced by learned counsel for the parties, if
we examine the facts of the case, it is apparent that respondent No.2 has issued
the "Work Order" on 13.09.2021 in favour of the Petitioner being successful
bidder in pursuance of Tender No.70115, dated 17.12.2020 and by the
impugned letter dated 15.07.2022 highlighting inappropriate use of parking
premises and Termination of the Licence Agreement for the "Design,
Development, Implementation, Operation, and Maintenance of Smart Parking
Management" at MLCP located at EAC Colony in Raipur, on Annual Licence
fee basis, terminated the License Agreement. The competent authority has
mentioned the grounds in the impugned letter that one Istghasha (complaint)
No.190/193/22 was registered at Police Station Civil Line, Raipur, against
Deepak Gandhi and Chhotu Jagat, stating that on 10.07.2022 at 14.10 hours
they were not only slaughtering a goat in the Public premises of MLCP, but
also causing nuisance to the general public. So, as a preventive measure, the
said persons were arrested under Section 107, 116(3) and Section 151 of the
Code of Criminal Procedure. The Petitioner has annexed another Istghasha
(complaint) No.191/194/2022 with the petition, which was registered against
him on 11.07.2022, for an incident which took place on 11.07.2022 when the
general public made a protest against the incident which took place on
10.7.2022. As the petitioner was raising dispute and disturbing the general
public at the place adjacent to MLCP on10.7.2022, peace in the locality could
be affected, so preventive measure was taken under Section 107, 116(3) and
Section 151 of the Code of Criminal Procedure. The Petitioner has also drawn
attention of the Court to the fact that in the 2 nd Istghasha dated 11.07.22, the
place has been mentioned as area adjacent to MLCP, which is an open area.
The petitioner has made a submission that he was not involved in slaughter of
goat and the two persons against whom the allegation has been leveled were
restrained to work within the limits of the MLCP. The Petitioner, in his reply
filed before the Executive Magistrate in the Istghasha case, has taken a
specific defence that on the date of incident he was celebrating the 'Bakrid
Festival' and was not involved in any such criminal activity.
24. In the terms of agreement dated 06.07.2021, the penalties for violations
(Clause 3.16) and Termination (Clause 5) are given separately, and the act of
termination can be done additionally. In the present matter, though by the
impugned letter, Clause No. 5.1.1 (h) has also been invoked, but the petitioner
has filed copy of the demand draft specifically asserting that he has regularly
paid 3 instalments as per the schedule prescribed and the respondent authority
has illegally invoked the clause no. 5.1.1 (h) of the agreement. Taking into
consideration the entire agreement and the alleged incident for which the
competent authority has terminated the licence agreement, though for any
criminal activity in the parking area, or use of parking space for other than
parking purposes, it can be held that the authority is competent to inflict
penalty. Though the authority may also take extreme step of termination, but
action of the competent authority would always be subjected to judicial
review, and wherever the action of the State or its instrumentality is found to
be arbitrary and unreasonable as also against the constitutional mandate of
Article 14 or for other valid and legitimate reasons, this Court may exercise
the Writ jurisdiction.
25. In K. Sreedhara Reddy v. Conservator of Forests, {(1976) 1 SCC 107},
their Lordships of the Supreme Court have held that where the contravention
and breach of the terms of the condition is serious or grave, the action of
termination can be ordered but if the breach is inconsequential, the contract
may continue and a lighter penalty may be imposed and observed in para 8 &
10 , which read as under :
"8. There are two types of penalties which we may
conveniently designate as "major" and "minor", in the
contemplation of the Forest Rules. Rule 29 deals with
the major penalties while Rule 31 relates to minor
penalties. Where the breach of the conditions of the
contract committed by the forest contractor is serious,
the contract itself is to be terminated and a substantial
penalty is to be imposed which "shall not exceed one-
quarter of the total consideration paid by the
contractor". If the breach is of lesser significance, then
the authority may not propose to terminate the contract
on account thereof but may recover a portion of the
"whole penalty provided for in Rule 29" not exceeding
Rs 100. In short, if the contravention is grave, the
contract is cancelled and a heavy penalty imposed but
if the breach is inconsequential the contract continues
but a lighter penalty is imposed. ......................."
10. We think that the true meaning of Rules 29 and 30,
read together, is that the forest authorities must move
from stage to stage in the following manner. Once they
detect a breach, they must investigate to understand
and estimate the nature and degree of damage caused
by the breach. If it is serious, they must proceed to
ascertain the sum to be fixed as penalty. In doing this, a
reasonable opportunity must be given to the affected
party. After that the penalty shall be quantified and the
contract shall be terminated, in the event of the
authorities coming to the decision that the breach is
grave enough for that drastic step. Once the contract is
terminated, the last procedure is realisation which can
in no case be before the termination of the contract.
The realisation of the penalty may be in one or other of
the ways set out for recovery under Rule 30. Of course,
if the breach is of a venial nature. Rule 31 is attracted,
the contract is continued and only a small portion of
the penalty envisaged in Rule 29 is collected."
(Emphasis supplied)
26. In view of the aforesaid discussion and considering all the attending
facts and circumstances of the case and the allegations, the exercise of power
to terminate the license agreement and the reasons assigned in the impugned
letter, we are of the opinion that the exercise was not done in a rational and
equitable manner. The action of termination is too harsh and disproportionate
to the allegations levelled against the petitioner. So, Respondent No.2 was not
justified in terminating the license agreement on the grounds and the reasons
mentioned in the impugned letter.
27. For the foregoing, the impugned letter dated 15.07.2022, whereby the
Respondent No2 has terminated the license agreement for the "Design,
Development, Implementation, Operation, and Maintenance of Smart Parking
Management" at MLCP located at EAC Colony in Raipur, on Annual Licence
fee basis, is hereby quashed.
28. Resultantly, the Writ Petition is allowed. No costs.
Sd/- Sd/-
(Arup Kumar Goswami) (Deepak Kumar Tiwari)
Chief Justice Judge
Barve
