Delhi High Court

Bikanervala Foods Pvt. Ltd. vs Ministry Of Textiles & Anr. on 27 April, 2011

Author: S. Muralidhar

*         IN THE HIGH COURT OF DELHI AT NEW DELHI
20
+         W.P. (C) 5860/2010 & CM APPL 11535/2010 (for stay)

 BIKANERVALA FOODS PVT LTD                                      ..... Petitioner
             Through Mr. Rajiv Bansal with
             Mr. Abhir Datt, Advocates.

                     versus

 MINISTRY OF TEXTILES & ANR                  ..... Respondents
               Through Ms. Saroj Bidawat, Advocate

  CORAM: JUSTICE S. MURALIDHAR

 1. Whether Reporters of local papers may be
      allowed to see the order?                                        No
 2. To be referred to the Reporter or not?                             No
 3. Whether the order should be reported in Digest?                  No

                                   ORDER

27.04.2011

1. The Petitioner is aggrieved by an order dated 27th August 2010 passed by

the Deputy Director (Handicrafts), office of the Development

Commissioner (Handicrafts), Ministry of Textiles, Government of India

rejecting the licence agreement dated 5th July 2010 and calling upon the

Petitioner to surrender the premises given on licence on the next date, i.e.,

28th August 2010.

2. While directing notice to issue in this petition on 30th August 2010 this

Court directed status quo to be maintained.

3. Pursuant to the tender process, the Petitioner allotted space of 5800 sq.ft.

at the Rajiv Gandhi Handicrafts Bhawan for running a multi-cuisine food

court. An agreement was entered into on 28th August 2007 whereby the

Petitioner was granted a licence for use of the premises for a period of three

years. Clause 13.2 of the said agreement reads as under:

"13.2 On the licensee making a request at least three months before the expiry of the agreed term of three years for extension of the license, subject to the satisfactory performance by the Licensee, as evaluated by the Licensor or its nominated representative, of all the terms and conditions, rules and regulations and guidelines prescribed therefore during his poor occupation of the licensed premises and the Licensee being not in arrear of any licence fee or other dues under this Agreement, the Licensor will renew the license for similar period on such terms and conditions as may be mutually agreed upon and for such monthly license fee as the parties may mutually agree upon provided that the increase in license fee shall not be less than 15%. This shall not amount to any Licensee to get renewal, and the Licensor in its discretion may not license or to grant it to somebody else."

4. The Petitioner states that much before the date of expiry of the licence

period the Petitioner applied to the Respondent for renewal of the licence.

By a letter dated 12th May 2010 the Respondent acknowledged the letter

dated nil April 2010 of the Petitioner seeking renewal of the licence

agreement and stated that the following conditions ought to be accepted by

the Petitioner:-

"In this regard it is intimated that before request for further renewal of licence agreement is considered by the competent authority, the following terms and conditions needs to be either accepted or otherwise:

1) The ambience of food court should have the elements of Handicrafts.

2) The increase in monthly license fee shall not be less than 25%.

It is, therefore, requested that necessary comments and offer of acceptance or otherwise may be furnished to this office for taking further course of action in the matter at an early date."

5. Thereafter, another agreement for licence dated 5th July 2010 was

entered into whereby the premises in question was given on licence basis to

the Petitioner for a period of three years with effect from 29th August 2010.

The Petitioner states that all of a sudden on 27th August 2010 Respondent

informed the Petitioner by the impugned letter that the said agreement

dated 5th July 2010 stood revoked on the ground that it had not been

entered into after following the "due and transparent procedure". The

Petitioner was informed that it would be free to participate in the fresh bid

for allotment of the premises on licence basis.

6. In reply, an objection has been raised by the Respondent to the

maintainability of the writ petition on the ground that Clause 22 of the

licence agreement contains an arbitration clause which ought to have been

invoked by the Petitioner for settling the dispute. Secondly, it is submitted

that the agreement dated 5th July 2010 was in fact not a renewal of the

earlier agreement dated 28th August 2007. It is contended that the Petitioner

had not availed of its right of renewal in terms of the Clause 13.2 of the

earlier agreement. It is further contended that the Respondent is not under

any obligation to renew the licence agreement and that in any event the

second agreement was revoked prior to the date of its coming into effect,

i.e., 29th August 2010.

7. Ms. Saroj Bidawat, learned counsel appearing for the Respondent

submitted that under the prevalent Government Rules the premises had to

be even given on licence basis pursuant to a bidding process and since that

procedure was not followed, the second agreement dated 5th July 2010 was

revoked.

8. On the other hand, it is pointed out by Mr. Rajiv Bansal, learned counsel

appearing for the Petitioner that by a letter dated nil April 2010, receipt of

which was acknowledged by the Respondent by a letter dated 12 th May

2010, the Petitioner exercised the option of renewal of the licence. There

was no question of the Respondent inviting fresh bids when the licence

agreement dated 28th August 2007 itself gave an option for renewal of its

licence. He submitted that the very fact that the impugned order unilaterally

revoked the licence and required the Petitioner to surrender the premises

within 24 hours demonstrated its arbitrary nature.

9. As regards the preliminary objection as to the maintainability of the writ

petition, it is settled law that the mere existence of an alternative remedy is

not a bar to the High Court entertaining a writ petition under Article 226 of

the Constitution particularly where the allegation is that the action of the

government or its entity is arbitrary and violative of Article 14 of the

Constitution (see Harbanslal Sahnia v. Indian Oil Corporation Limited

(2003) 2 SCC 107 and ABL International Ltd. v. Export Credit Guarantee

Corporation of India (2004) 3 SCC 553]. In a recent decision of the

Supreme Court in Union of India v. Tantia Construction Private Limited

2011 (4) SCALE 745, it was explained as under: (@ p. 753)

"27. Apart from the above, even on the question of maintainability of the writ petition on account of the Arbitration Clause included in the agreement between the parties, it is now well-established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition should not be maintainable. The various decisions cited by Mr. Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the

Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, when and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution. We endorse the view of the High Court that notwithstanding the provisions relating to the Arbitration Clause contained in the agreement, the High Court was fully within its competence to entertain and dispose of the writ petition filed on behalf of the Respondent Company."

10. The facts in the present case are not in dispute. The ground on which

the impugned decision is challenged is that it is arbitrary and violative of

the principles of natural justice. Consequently, this Court rejects the

preliminary objection raised by the Respondent as to the maintainability of

the writ petition.

11. The letter dated 12th May 2010 written by the Respondent to the

Petitioner is in reply to the letter dated nil April 2010 of the Petitioner

exercising the option of renewal of the licence agreement dated 28th August

2007. The Respondent by the said letter accepted the Petitioner's request

for renewal of the licence. Thereafter the subsequent agreement dated 5th

July 2010 was entered into, which again contained a renewal clause. In the

circumstances, there was no question of Respondent thereafter deciding to