Gopi Chand And Anr. vs D.S.C. Finance Dev. Corpn. Ltd.
2003 Latest Caselaw 224 Del

JUDGMENT

A.K. Sikri, J.

1. All these writ petitions are preferred in common factual background and the legal issues raised are also, therefore, common. Therefore these were heard together and are being disposed of by this common order.

2. All the petitioners belong to SC/ST/Weaker section of the society. There is a scheme for financing the vehicles which may be purchased by them. Under this scheme, the petitioners purchased, except in CWP Nos. 5065, 5088 and 5105/2002, tempo travelers on hypothecation basis for which finance was provided by the respondent. As far as petitioners in CWP Nos. 5065, 5088 & 5105/2002 are concerned, they purchased diesel buses. Loan agreements were entered into between these petitioners and respondent as per which finance vehicles were hypothecated in favor of the respondent and loans were to be repaid in monthly Installments stipulated therein. To ensure timely repayment of the Installment, the petitioners handed over post-dated cheques to the respondent.

3. It is a matter of record that one Mr. M.C. Mehta filed CWP No. 13029/85 in the Supreme Court of India raising various environmental and other public interest issues. In this writ petition issue relating to diesel buses and vehicles plying in Delhi and creating pollution was also taken up. Various orders were passed from time-to-time. On 5th April, 2002, a detailed order was passed on this issue whereby all diesel buses/tempo travelers plying on diesel in National Capital Territory of Delhi were banned unless they are converted into CNG mode by specified dates.

4. In view of the aforesaid orders, petitioners could not ply their vehicles, namely, tempo travelers or diesel buses in Delhi. According to the petitioners, this resulted in complete stoppage of their business activities because of which they could not pay monthly Installments. Post-dated cheques which were given by the petitioners to the respondent started bouncing on presentation. As a result respondent initiated proceedings against the petitioners under Sections 138-142 of the Negotiable Instruments Act by filing complaints before the concerned MM, Delhi/New Delhi which complaints are still pending adjudication.

5. At this stage, these writ petitions were filed, inter alia, on the ground that the agreements between the petitioners and respondent entered into stood frustrated because of aforesaid order passed by the Supreme Court and therefore it has become impossible for the petitioners to perform the same and these be declared void under the provisions of Section 56 of the Contract Act. On the basis of this plea, prayer made in these writ petitions is that balance/outstanding amount of loan be waived off on the condition that the petitioners are ready to give back the possession of the hypothecated tempo travelers/diesel buses and same be auctioned by the respondent and whatever amount is received may be adjusted and further that petitioners and their guarantors be discharged from all liabilities and accountabilities and no objection certificates be given to them. Prayer is also made that proceedings initiated against the petitioners under Section 138 of the Negotiable Instruments Act be dropped.

6. It may be mentioned at this stage that while passing the order dated 5th April, 2002, the Supreme Court was also conscious of the fact this order may act to the prejudice of these diesel bus/vehicle owners and they would be needing money/finance for conversion of their vehicles to CNG fuel mode. The Supreme Court was also particularly concerned about the owners of vehicles, such like the petitioners; who belong to SC/ST category as well as weaker section of society. The Court noted that Government of NCT of Delhi had announced a scheme financing CNG vans to be run as taxis for SC/ST. The Court gave further directions to the effect that a similar financing scheme be framed by the Union of India jointly with Government of NCT of Delhi whereby those owners whose permits of diesel buses are cancelled due to non-conversion of CNG be given the finance in the first instance to SC/ST and other weaker sections of society. These directions read as under:

"The NCT of Delhi had announced a scheme financing a CNG van to be run

as taxi for SC/ST. We direct a similar financing scheme be framed by the Union of India jointly with the NCT of Delhi whereby those of the permits of owners of diesel buses are cancelled due to non-conversion to CNG the same should, in the first instance, be allotted to SC/ST and to the other weaker sections of the society. Such a scheme should be prepared and implemented and a compliance report be filed within four weeks. The costs deposited under direction (4) above can be utilised in implementing the proposed scheme."

7. Thereafter, the matter came up for hearing on 15th July, 2002. The Court expressed its anguish at the apathy of Government of NCT of Delhi in not preparing the scheme pursuant to its order dated 5th April, 2002 in the following words:

"Pursuant to this Court's order dated 5th April, 2002, it is stated by Mr. S.W.A. Qadari, learned Counsel appearing for the NCT of Delhi, that a scheme in respect of providing finance to SC/ST for purchase of buses has been made. Neither any such scheme has been placed on record nor is there any compliance report in respect thereto. On a query being made, Mr. Qadari submits that till today under the scheme stated to have been formulated no vehicle has yet been made available or permit granted to SC/ST, so much for the concern of the Government for the betterment of SC/ST. We direct the NCT of Delhi to file a compliance report within two weeks. They will indicate as to what is the scheme and they will also give an explanation as to why the scheme, if any, has not been implemented so far. This aspect of the case to come up on 29th July, 2002.

On the next date of hearing, the Union of India will also indicate as to why the orders have not been passed requiring the vehicles to conform to Category-II/Bharat-II emission norms in the cities other than Delhi which are suffering air pollution.

8. I am informed that the matter has come up for hearing thereafter from time-to-time. But till date, no concrete steps are taken by the Government of NCT of Delhi in preparing the scheme as directed by the Supreme Court vide its order dated 5th April, 2002.

9. Reverting back to the present writ petitions, as already noted above, the petitioners have prayed for waiver of the balance loans. During arguments, however, learned Counsel for the petitioners submitted that most of these vehicles have been phased out with the passage of time. Respondent should therefore either waive of the balance loans or give requisite finance to convert these vehicles to CNG fuel mode wherever possible or in the alternative provide finance to the petitioners to buy new vehicles. It is submitted that respondent is even today giving such loans on case to case basis but has not considered the matter by taking into consideration the problem of all such similarly situated persons. In support of this proposition, he relied upon Clause 16 of the Loan Agreement which reads as under:

"16. That should you fail any circumstances to avail the loan proposed to be advanced to you then in such event all expenses incurred by the Corporation shall be recoverable from you, whether or not due. In case of any circumstances beyond your control the performance of the above term and conditions become frustrated. The more fact that some other authorities have refused to grant to you certain concession or right or other entitlement will not be taken into consideration while recovering the dues."

10. Learned Counsel for the respondent, on the other hand, submitted that it is the petitioners who are to blame themselves for the present state of affairs. Even if there was ban in plying these vehicles in Delhi, some of these petitioners were having All India permits and therefore they could ply these vehicles outside Delhi after getting All India permits. Learned Counsel further pointed out that Government of NCT of Delhi has already formulated a scheme for giving financial assistance for purchase of a CNG bus (New Scheme). A copy of this scheme was handed over in the Court. It was sought to argue, relying upon and/or referring to the scheme, that under this scheme the petitioners were duly covered and could apply for the finance but they chose no to do so. It is further stated that paras 8 and 9 of this scheme lay down requisite procedure and modalities under which finance could be availed of and it was for the petitioners to invoke this machinery. He also argued that provisions of Section 56 of the Contract Act would not be applicable in a situation like this as contract was complete in the sense that respondent had already discharged its obligation in the contract by making available the requisite finance to the petitioners and petitioners had, after availing this loan, purchased the vehicles. Now the stage was only for repayment of the loan amounts and if because of any such reason, like the order of the Supreme Court in these cases, the petitioners are not in a position to ply the buses/tempo travelers in Delhi, that would not be a ground to allege that contract between the parties had frustrated. At the most, according to learned Counsel for respondent, such an order had created some difficulties for the petitioners and it was not a circumstance which could render the performance of the contract as impossible. His further submission was that petitioners had entered into loan agreements with the respondent and it being a contractual matter, petitioners were bound by the terms and conditions of this contract and could not seek waiver of loans that too by filing present writ petitions. In support, learned Counsel relied upon the judgment of the Supreme Court in the case of Orissa State Financial Corporation v. Narsingh Ch. Nayak and Ors., reported in 2002 (7) Supreme 535, and laid emphasis on the following observations made in the aforesaid judgment:

"6. The said order is under challenge in this appeal. On a plain reading of the impugned order it is manifest that the High Court, while considering the writ petition filed by the owner of the vehicle for quashing of the notice of auction sale and for other consequential reliefs, has passed order drawing up a fresh contract between the parties and has issued certain further directions in the matter, the corporation has been directed to advance a fresh loan to the writ petitioner to enable him to purchase a new truck; to enter into agreement for realization of the balance loan amount in accordance with law; to write off the remaining amount of Rs. 16,500/- and to order waiving of the interest till date, etc. The order to say the least, was beyond the scope of the writ petition which was being considered by the High Court and beyond the jurisdiction of the Court in a contractual matter. No doubt, while exercising its extraordinary jurisdiction under Article 226 of the Constitution, the High Court has wide power to pass appropriate order and issue proper direction as necessary in the facts and circumstances of the case and in the interest of justice. But that is not to say that the High Court can ignore the scope of the writ petition and nature of the dispute and enter the field pertaining to contractual obligations between the parties and issue such directions annulling the existing contract and introducing a fresh contract in its place."

11. The argument of learned Counsel for the petitioners on the basis of provisions of Section 56 of the Contract Act would not be of any help to them. The petitioners had taken loan from the respondents and got the buses financed. Insofar as the respondents are concerned, they had already completed their part of the contract by making available the required funds which they had agreed to finance. Now the stage is for repayment of these loans. Such a liability cannot be avoided on the ground that the petitioners cannot ply their buses for which the loan was taken because of some judicial orders. Section 56 of the Contract Act, therefore, shall have no application in a case like this.

12. It cannot be denied that the matter is in the realm of contract and normally parties would be bound by the terms and conditions of the agreements. However, the peculiar developments which have taken place in this case, namely, order of the Supreme Court in M.C. Mehta's case (supra), which has resulted in debarring the petitioners to ply these vehicles in Delhi cannot be lose sight of. No doubt in Orissa State Financial Corporation(supra), the Supreme Court observed that while exercising its extraordinary jurisdiction under Article 226 of the Constitution the High Court cannot ignore the scope of the writ petition and nature of dispute and enter the field pertaining to contractual obligations between the parties and issue such directions annulling the existing contract and introducing a fresh contract in its place. In the same paragraph of the aforesaid judgment, the Supreme Court has observed that the High Court has wide powers to pass appropriate orders and issue proper directions as necessary in the facts and circumstances of the case and in the interest of justice.

13. The present case may fall in this category. In any case it is clarified at this stage itself that this Court is not proposing to pass any direction which shall have the effect of annulling the existing contract or introducing a fresh contract in its place. Taking into consideration the scheme which has been formulated by the Government pursuant to the orders dated 5th April, 2002 passed by the Supreme Court and going by the spirit of various orders passed by the Supreme Court in M.C. Mehta's case (supra), I propose to issue some directions.

14. Learned Counsel for respondent has produced a letter dated 26th April, 2002 issued by the Transport Department of Government of NCT of Delhi to the Secretary (SC/ST), Government of NCT of Delhi in respect of financial scheme for SC/ST and weaker sections to own CNG buses. It refers to the Supreme Court directions dated 5th April, 2002 and states that pursuant to these directions, scheme for financing CNG buses has been formulated which has following three aspects:

 (i)     Financing of CNG buses with the amount collected as fine from diesel bus operators.  
 

 (ii)   Selection of beneficiaries from SC/ST weaker sections.  
 

 (iii) Grant of permits cancelled under direction 93 of the above order to the identified SC/ST/Weaker section beneficiaries.    
 

 15. It is further stated that for the implementation of this scheme, necessary steps may be taken. At this stage, one may reproduce the relevant paras of this scheme also. These are:  
   

 "Para 5. For financing of the proposed purchase of CNG buses, there can be two alternatives- 
   

 (I)    The first opinion is utilising the funds collected by the Transport Department as costs / fine from the diesel bus operators as per directions of the Apex Court.  
 

(II) The second option is that financing of these buses may be done by the Deptt. For the Welfare of Sch. Castes/Tribes and other Backward classes through Delhi Sch. Castes. Fin. and Dev. Corpn. (DSFDC) in collaboration with National Sch. Castes Fin. and Dev. Corpn. (NSFDC)/ National Backward Classes Fin. and Dev. Corpn. (NBCFDC) as per their existing pattern of financing i.e. 65% of the project cost as loan for NSFDC/NBCFDC to DSFDC for disbursal to beneficiary by adding 25% as its own share as margin money and the balance 10% (-) subsidy of Rs. 6,000/- by the beneficiary himself or through any other source like DFC, Nationalised Banks, etc.

6. The criteria in the second option is no doubt not very relevant to this new scheme but in view of orders of the Apex Court, the responsibility for implementation of this scheme, may be assigned to the Department for the Welfare.

8. The identification of the beneficiaries and grant of permit in both the cases will be done by Transport Department and their names will be sponsored for financing to the financing agency.

9. For availing of benefit of this scheme, the applicant should fulfill the following conditions-

1. Should be a permanent resident of Delhi.

2. In case he/she belongs to SC/ST/OBC, he/she should produce the Caste Certificate in support thereof, issued by the Competent Authority of Government of NCT of Delhi.

3. Should have a valid permit issued by STA in his/her name.

4. Age-limit should be 18 to 45 years.

5. He/she should not have any other permit issued by Transport Department.

Besides above, he/she will have to fulfill the conditions laid down by the financing institutions for grant of loan.

The pattern of financing in this scheme may be as under:

 1.Financing         =    75%
  Institutions share
2.Beneficiary share =    25% (-) Rs. 10,000/-
                             as subsidy to SC/
                             ST and OBC
                             beneficiaries only."  
 

16. It may be mentioned that it is categorically provided in para 7 that scheme is for those persons who belong to either SC or ST or OBC or minority or even general category persons and clarifies that those covered by this scheme, i.e., belonging to SC category would also be covered.

17. Keeping in view the aforesaid scheme formulated by Government of NCT of Delhi pursuant to directions of the Supreme Court, as noted above, these writ petitions are disposed of with the following directions:

(I) The petitioners shall be permitted to apply for finance /loans under the aforesaid scheme either for conversion of their existing vehicles into CNG fuel mode wherever possible or for purchase of new vehicles.

(II) On petitioners' preferring loan applications which should be within a period of two weeks from the date of receipt of copy of this order, the respondent and/or Government of NCT of Delhi, NSFDC, NBCFDC or Transport Department shall consider these applications and take decision thereon within two months thereafter. I am conscious of the fact that the Government of NCT of Delhi or Transport Department or National Commission for Scheduled Caste are not parties in these petitions. However, keeping in view the fact that the scheme promulgated by the Government of NCT of Delhi itself entitles such persons like the petitioners to approach the aforesaid authorities under the scheme and if these persons make applications for this purpose, it is the obligation of these authorities to consider such request in accordance with the scheme, these directions are issued.

(III) While taking such decision, the respondents shall be free to consider each case on its own merits and examine as to whether particular applicant/petitioner is entitled to benefit of the scheme or not.

(IV) Till such decision is taken by the authorities as directed above, the respondents shall not pursue the complaints filed by the petitioners herein under Section 138 of the Negotiable Instruments Act.

18. It is, however, made clear that the liability of the petitioners to make payment to the respondents does not get absolved and further course of action to be adopted by the respondents shall depend upon the outcome of the applications preferred with the authorities mentioned in direction No. (II) above.

19. No costs.

20. On making application for certified copy and paying requisite fees, it may immediately be supplied to Counsel for petitioners.