Delhi High Court
Green Delhi Bqs Ltd. vs Municipal Corporation Of Delhi & ... on 23 February, 2011
Author: S. Muralidhar
IN THE HIGH COURT OF DELHI AT NEW DELHI
W.P.(C) 4951/2010 & CM No. 9800/2010
Reserved on: 10th February 2011
Decision on: 23rd February 2011
GREEN DELHI BQS LTD. ..... Petitioner
Through: Dr. Abhishek Manu Singhvi, Senior
Advocate with Mr. Abhimanyu Bhandari,
Mr. Anubhav Singhvi, Ms. Aakanksha Munjhal
and Mr. Jaiveer Shergill, Advocates.
versus
MUNICIPAL CORPORATION OF DELHI & ANR. .... Respondents
Through: Ms. Mini Pushkarna, Standing Counsel
for MCD.
Mrs. Avnish Ahlawat with
Mr. Nitesh Kumar Singh, Advocate for DTC.
AND
W.P.(C) 5428/2010 & CM No. 10682/2010
GREEN DELHI BQS LTD. ..... Petitioner
Through: Dr. Abhishek Manu Singhvi, Senior
Advocate with Mr. Abhimanyu Bhandari,
Mr. Anubhav Singhvi, Ms. Aakanksha Munjhal
and Mr. Jaiveer Shergill, Advocates.
versus
DELHI TRANSPORT CORPORATION
..... Respondent
Through: Ms. Mini Pushkarna, Standing Counsel
for MCD.
Mr. Parag Tripathi, Senior Advocate with
Mrs. Avnish Ahlawat, Ms. Simran and
Mr. Nitesh Kumar Singh, Advocates for DTC.
W.P.(C) Nos. 4951 & 5428 of 2010 Page 1 of 20
CORAM: JUSTICE S. MURALIDHAR
1. Whether reporters of the local newspapers
be allowed to see the judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
JUDGMENT
23.02.2011
Background facts
1. There are two writ petitions under Article 226 of the Constitution by
Green Delhi BQS Ltd. (hereinafter „Green Delhi‟). They arise in the context
of a contract titled as a Concession Agreement (CA) entered into on 26 th July
2007 between Green Delhi and the Delhi Transport Corporation (DTC) for
the construction, operation and maintenance on Build Operate and Transfer
basis of 225 Bus Queue Shelters (BQSs) under DOT-I (enhanced 248 BQSs)
for a period of ten years. The broad features of the CA were that Green Delhi
would erect the BQSs in accordance with pre-determined specifications at
earmarked locations. Green Delhi was to pay DTC Rs. 93,800 per BQS as
"concession fee". Green Delhi would generate revenue through display of
advertisements on the BQSs. The CA had clauses for dispute resolution first
by a reference to the Chairman DTC, failing which by arbitration. The land
on which the BQS was erected belonged to the MCD for which there was a
revenue sharing arrangement between the DTC and the MCD.
2. On 31st March 2009 DTC wrote to Green Delhi listing out the defaults
committed by Green Delhi in fulfilling its obligations under the CA. This
was followed by a notice dated 1st May 2009 issued by the DTC for
encashment of the performance security in terms of Article 16.2(a) of the
CA. Green Delhi then filed Civil Suit (OS) No. 790 of 2009 in this Court
seeking inter alia the following reliefs: (a) a mandatory injunction to the
DTC to hand over 17 BQS sites to Green Delhi (b) a permanent injunction
restraining DTC from claiming concession fees @ Rs. 93,800/- per BQS and
to allow Green Delhi to deposit concessional fees @ Rs. 32,880/- per BQS
and (c) to restrain the DTC from invoking the bank guarantees dated 22nd
May 2008 for Rs. 4,22,10,000/- and 29th September 2008 for Rs.
2,11,05,000/-.
3. By an interim order dated 1st May 2009 a learned Single Judge of this
Court restrained DTC from taking coercive steps against Green Delhi subject
to Green Delhi depositing concession fees @Rs.32,880 per BQS. By a
further interim order dated 5th May 2009, the encashment of bank guarantees
furnished by Green Delhi to DTC in terms of the CA was stayed. On 5th
April 2010 the learned Single Judge of this Court vacated the said interim
orders, dismissed the interlocutory application for stay of invocation of the
bank guarantees and reduction of the concession fees. Consequently, the
learned Single Judge ordered that Green Delhi would pay the DTC within
eight weeks "the amount constituting the difference between the amounts
paid in terms of the interim order of this Court and what is payable to the
DTC under the contract." DTC invoked the bank guarantees on 6th April
2010.
4. Green Delhi‟s appeal against the said order dated 5th April 2010 was
disposed of by a Division Bench on 15th April 2010 granting liberty to Green
Delhi to approach the learned Single Judge again to challenge the invocation
of the bank guarantees by the DTC on 6th April 2010. The application filed
by Green Delhi challenging the invocation of the bank guarantee of 6 th April
2010 was dismissed by the learned Single Judge on 19th April 2010.
However, the encashment of the bank guarantees was kept in abeyance till
20th April 2010 in terms of the order dated 15 th April 2010 of the Division
Bench of this Court. Green Delhi‟s appeal against the said order dated 19th
April 2010 was dismissed by the Division Bench.
5. Consequent upon the above developments, the DTC by its letter dated 23 rd
April 2010 called upon Green Delhi to undertake the following steps:
"In view of the above, you are requested to take following
actions under the contract immediately:
i) Performance security for the remaining operation period
for an amount equivalent to 3 months concession fee for 248
BQSs under contract be deposited either through FDR in the
name of DTC or Bank Guarantee from a Nationalized Bank in
favour of DTC.
ii) To pay the difference of original concession fee and
reduced fee paid on account of the order dated 01/05/2010 of
Single Bench of Hon‟ble Delhi High Court along with interest.
The High Court has vide its order dt. 5.4.10 directed payment of
full license fee as per agreement.
iii) To pay the concession fee of the completed 48 BQSs
w.e.f. 01.12.2008 to 30/04/2010 (bill enclosed).
iv) To pay the concession fee in respect of 248 BQSs in advance
on quarterly basis as per Article No. 11.
v) To pay the license fee in respect of 200 BQS for the month of
April, 2010 for which bill has been already submitted.
vi) To open the ESCROW Account as per Article No. 21."
6. By letters dated 2nd June and 25th June 2010 respectively DTC reminded
Green Delhi to cure the default and comply with the letter dated 23rd April
2010. By a letter dated 2nd July 2010 the DTC called upon Green Delhi to
pay the differential amount of concession fees in terms of order dated 5 th
April 2010, to pay the concession fees in respect of 48 BQS from 1 st
February 2008 onwards, to pay the concession fees in respect of 248 BQS in
advance on quarterly basis in terms of Article 11.1 of the CA along with
concession fees for the months April, May and June 2010, to open an escrow
account as per Article 21.1 of the CA and ensure the upkeep of the BQSs in
terms of the maintenance manual.
7. By letter dated 13th July 2010 the Advertisement Department of the MCD
asked Green Delhi to remove all advertisements on the 225 Bus Queue
Shelters („BQSs‟) in terms of the contract awarded to it by DTC and deposit
damage charges of Rs. 2,11,05,000/-. By another letter dated 19th July 2010
the MCD required Green Delhi to remove its display at the BQS near
Maharani Bagh, Ring Road within two days and also deposit damage charges
of Rs. 93,800/-.
The Writ Petitions
8. It is in the above background that the present petitions were filed by Green
Delhi. Writ Petition (C) No. 4951 of 2010 was filed by Green Delhi seeking
the quashing of the letters dated 13th and 19th July 2010 of the MCD. In the
said writ petition, this Court had on 27th July 2010 passed an interim order
restraining the MCD from taking any coercive steps against the Petitioner
and its advertisers. Later, by a detailed order dated 17 th January 2011, the
interim order was vacated and the application for interim stay was dismissed.
However, on the statement of learned Senior counsel for Green Delhi that
Green Delhi would pay MCD Rs. 5 crores by 21st January 2011, the vacation
of the interim order was kept in abeyance till 25 th January 2011.
Subsequently on 21st January 2011 on an application made by Green Delhi, it
was directed to make payment of Rs. 5 crores on that date itself to the MCD.
The said amount of Rs. 5 crores has since been paid by Green Delhi to the
MCD.
9. Writ Petition (C) No. 5428 of 2010 was filed by Green Delhi seeking the
quashing of the letters dated 23rd April, 2nd June, 25th June and 7th July 2010
from DTC to Green Delhi. When this petition was first listed before this
Court on 11th August 2010, Mr. Parag P. Tripathi, learned Additional
Solicitor General („ASG‟) appearing for the DTC objected to its
maintainability by pointing out that the Petitioner‟s suit being CS(OS) No.
790 of 2009 was pending in this Court. On the next date, i.e., 13th August
2010 Dr. A.M. Singhvi, learned Senior Counsel appearing for the Petitioner
stated that they would take steps to withdraw the said suit.
Order dismissing the Civil Suit as withdrawn
10. It appears that thereafter on 25th August 2010, the Petitioner filed an
application being IA No. 11220 of 2010 under Order 23 Rule 1 CPC in CS
(OS) No. 790 of 2009 praying that Green Delhi "be allowed to withdraw the
above suit with liberty to pursue the proceedings in respect of the subject
matter of the suit, if any, afresh." In the said application a reference was
made to the filing of W.P. (C) No. 5428 of 2010 by Green Delhi.
11. It requires to be noticed that in the meanwhile the DTC had filed IA No.
9422 of 2010 in the said suit stating that Green Delhi had wilfully disobeyed
the order dated 5th April 2010 passed by the learned Single Judge whereby it
had been directed to pay DTC, within eight weeks, the differential amount of
the concession fees.
12. Both the applications in CS (OS) No. 790 of 2009 came up for hearing
before the learned Single Judge on 26th August 2010. The following order
was passed by the learned Single Judge:
"I. A. No. 11220/2010 (Under Order 23 Rule 1)
Learned counsel submits that the suit may be permitted to be
withdrawn with liberty to urge the pleas, if required, in some
other proceedings. This is objected to by the defendant, who
submits that the liberty as sought cannot be granted but that it is
open to the plaintiff to pursue any other claim independent of the
subject matter of the present suit.
In view of the above, the suit is permitted to be withdrawn. The
plaintiffs right to pursue remedies in respect of causes of action
which were not covered in the present suit (i.e. not covered by
para 55 of the suit which the relief clause is indicated in paras
58(i) to (viii) of the suit) are, however, reserved. I.A. No.
11220/2010 is allowed in the above terms.
I.A. No. 9422/2010
The office is directed to register the application as a contempt
petition. Issue notice. Sh. Gopal Jain, Advocate accepts notice
in the contempt proceedings on behalf of plaintiff. Ms. Manjira
Dasgupta, Advocate accepts notice on behalf of the Defendant
No. 2 Sh. Milanka Chaudhary, Advocate accepts notice on
behalf of the Defendant No. 3.
The reply to the proceeding shall be filed within four weeks.
CS(OS) 790/2009
The suit is dismissed as withdrawn, in terms of the order made in
the I.A. No. 11220/2010.
Order dasti."
13. Thereafter when the writ petition was listed before this Court on 31 st
August 2010 learned Senior counsel appearing for the Petitioner stated that
DTC would be furnished with the calculations as per the principal amount
and interest due to the DTC. It was further stated that in order to demonstrate
its bonafides in seeking the activation of the mechanism as envisaged in
clauses 19.1 and 19.2 of the CA "the Petitioner will pay to the DTC the
balance of the principal amount as indicated in its calculations." Thereafter,
the parties exchanged their calculations. However, there was a huge gap
between the figures and there appeared to be no possibility of the Petitioner
Green Delhi being prepared to pay even the principal amount which the DTC
claimed is due to it. Consequently, the parties have been heard at length.
Submissions on behalf of Green Delhi
14. Dr. A.M. Singhvi, learned Senior counsel appearing for Green Delhi
submitted that:
(i) The suit CS(OS) No. 790 of 2009 filed by Green Delhi prayed for a very
different sets of reliefs. The present petition arose out of a fresh cause of
action which was not the subject matter of the suit. Therefore, the principles
of res judicata would not apply.
(ii) The order dated 26th August 2010 passed by the learned Single Judge
permitted Green Delhi to pursue remedies in respect of "causes of action"
not covered in the present suit. Therefore, the present writ petition, which did
not cover the cause of action in the suit was maintainable.
(iii) The principles of res judicata would not apply where the initial
proceeding was a civil suit and the subsequent proceeding was a writ
petition. What is barred is only a subsequent suit on the same cause of action.
(iv) DTC has already recovered Rs. 6.31 crores by way of encashment of
bank guarantees. Rs. 5 crores was paid to the MCD and a sum of Rs. 6 crores
thereafter to the DTC. In terms of the impugned order in W. P. (C) No. 4951
of 2010 another sum of Rs. 5 crores was paid to the MCD. The directions of
the learned Single Judge in the order dated 5th April 2010 were fully
complied with and, therefore, Green Delhi was not in contempt of the said
order.
(v) There was an inter se dispute between the MCD and the DTC with the
latter not sharing the revenue generated by it out of the CA with the MCD.
The Petitioner Green Delhi should not be made to suffer on that count.
(vi) The clauses of the contract were inherently unjust and arbitrary and in
similar circumstances the Supreme Court in Union Territory of Pondicherry
v. P.V. Suresh (1994) 2 SCC 70 held that it was possible for the Court to
issue directions rendering the contract workable. This did not amount to
rewriting the contract itself. Green Delhi was the largest contributor of
revenue to the DTC. Moreover, the DTC had not yet terminated the CA.
(vii) Green Delhi should be permitted to make a representation to the
Chairman, DTC. Alternatively, the parties should be referred to arbitration
by a retired Judge of this Court to be nominated by the Court. It is not
possible for Green Delhi to agree to either of the mechanisms set out in
Articles 19.1 and 19.2 of the CA as they were also inherently unfair and
unjust.
Submission on behalf of DTC and MCD
15. Appearing for the Respondent DTC Mr. Parag Tripathi, learned ASG
refers to the interim order dated 1st and 5th May 2009 in terms of which
Green Delhi was permitted to pay the concessional fees of Rs. 32,800/- per
BQS rather than the contracted amount of Rs. 93,800/-. That interim order
continued till 5th April 2010 when it was vacated by the learned Single Judge
with a direction to Green Delhi to pay the differential amount for the entire
period to the DTC within eight weeks. That amount according to Mr.
Tripathi has not been paid till date. Faced with a situation where it was
unable to comply with the said direction, and further with the appeal against
the said order having been dismissed as withdrawn, Green Delhi decided to
file the present writ petition. When it appeared that this Court would not
entertain the writ petition as long as the suit was pending, Green Delhi
decided to withdraw the suit. Drawing a comparison between the prayers in
the writ petition with the prayers in the suit, which was dismissed as
withdrawn, Mr. Tripathi submitted that the same issues were being agitated
again in the writ petition for which no liberty had been granted by the
learned Single Judge.
16. Distinguishing the judgment in P.V. Suresh, Mr. Tripathi submitted that
the said case concerned a statutory contract under the local excise law, for
running a liquor vend and no comparison could be drawn between the said
contract and the CA which formed the subject matter of the present writ
petition. He further submitted that in fact the Petitioner was seeking a
rewriting of the contract. Even the decision in ABL International Ltd. v.
Export Credit Guarantee Corporation of India Ltd. 2004 3 SCC 553 did not
permit such a course to be adopted by a High Court exercising jurisdiction
under Article 226 of the Constitution.
17. Mr. Tripathi submitted that the Petitioner has benefitted from the interim
order of the Court for almost one year and, thereafter, chose not to comply
with the directions of this Court issued to it while vacating the interim order.
Therefore, it ought not to be heard in the subsequent proceedings. In other
words, the conduct of the Petitioner disentitled it to any relief, much less an
equitable relief.
18. Ms. Mini Pushkarna, learned counsel appearing for the MCD submitted
that the Petitioner was bound to ensure that the display of advertisements on
the 248 BQS was consistent with the policy of the MCD. This was an
implied clause of the CA entered into by Green Delhi with the DTC. She
referred to Article 4.2 of the CA read with the definition of the „applicable
laws‟ under Article 1.1 thereof. She submitted that there was no case made
out for interference with the impugned letters written by the MCD to Green
Delhi.
Maintainability of the writ petitions
19. The first point to be considered is the maintainability of the writ
petitions. In exercise of its powers under Article 226 of the Constitution, the
High Court will generally refrain from examining disputed questions of facts
particularly when they arise in the realm of contracts. Since extensive
reliance in this regard has been placed on the decision in ABL International
Ltd., the facts in the said case require to be discussed. The case arose out of
the repudiation by the insurance company of a claim made by the insured for
losses suffered in a contract of export. From para 53 of the said judgment, it
is apparent that the Supreme Court was of the view that there was no
disputed question and that as regards interpretation of the contract it did not
require "any external aid much less any oral evidence." Further, in para 55 it
was held on facts that "the terms of the policy does not give room to any
ambiguity as to the risk covered by the first respondent." Further, it was
nobody‟s case that the "contracts in question were obtained either by fraud or
by misrepresentation." The observation that even in a contractual dispute,
where a challenge is made on ground of violation of Article 14, the writ
court could interfere, has to be understood in the above factual background.
20. In the instant case, Green Delhi contends that two critical terms of the
contract - the concession fee and the clause concerning dispute resolution -
are inherently unjust. As regards the pre-determined concession fee of Rs.
93,800/- per BQS in terms of the CA, the contention is that it is exorbitant
and that DTC ought not to charge more than Rs. 32,880/- per BQS. In other
words Green Delhi does not want to adhere to the clause in the CA
concerning the concession fee. It wants it to be re-written. In ABL
International Ltd. the fact situation was entirely different. The parties there
were not questioning the very terms of the contract. In fact the Petitioner
there was seeking enforcement of the contract.
21. Turning to the decision in P.V. Suresh it is seen that the Supreme Court
there was concerned with certain clauses in a statutory contract in the form
of a licence issued for a liquor vend under the local excise law. In para 9 of
the said decision the factual context is explained. It was noticed that the
Petitioners in the said case had, under the interim order of the High Court,
continued their business through the entire excise year. Therefore, what
remained at the stage when the matter was heard in the Supreme Court was
to "devise a formula appropriate to the circumstances." The Supreme Court
added: "The situation herein is undoubtedly exceptional and unusual which
in turn calls for an unusual solution." In this background, in para 11 it was
observed as under:
"11. In the circumstances of this case, our enquiry is limited to
the question whether the contract was so constructed that loss was
inherent and implicit in it; if so, it ought to be modified.
Otherwise, the Court has no jurisdiction to alter the terms or
rewrite the contract between the parties." (emphasis supplied)
22. Thereafter in para 12, directions were given to the State Government to
revise the „kist‟ amount to such a figure as would in all circumstances ensure
a margin of 15% of the annual bid which would in turn take care of the
establishment expenses and also include profit.
23. In the considered view of this Court, no comparison can be drawn
between the facts in P.V. Suresh and the present case. The CA in the instant
case was arrived at after negotiations between the parties. It was entered into
by Green Delhi voluntarily. This was a business decision taken by it. The
clause fixing the concession fee as Rs. 93,800/- per BQS cannot per se be
held to be arbitrary and on that basis reduced to a figure that Green Delhi
considers „reasonable‟. This is outside the scope of the powers of this Court
under Article 226. In Assistant Excise Commissioner v. Issac Peter (1994) 4
SCC 104 a three-Judge Bench of the Supreme Court rejected a similar plea
in relation to statutory contracts and observed (SCC, p.124):
"Doctrine of fairness of the duty to act fairly and reasonably is a
doctrine developed in the administrative law field to ensure the
Rule of Law and to prevent failure of justice where the action is
administrative in nature. Just as principles of natural justice
ensure fair decision where the function is quasi-judicial, the
doctrine of fairness is evolved to ensure fair action where the
function is administrative. But it can certainly not be invoked
to amend, alter or vary the express terms of the contract
between the parties." (emphasis supplied)
24. In Isaac Peter, the Supreme Court proceeded to observe (SCC, p.125):
"We are, therefore, of the opinion that in case of contracts freely
entered into with the State, like the present ones, there is no room
for invoking the doctrine of fairness and reasonableness
against one party to the contract (State), for the purpose of
altering or adding to the terms conditions of the contract,
merely because it happens to be the State. In such cases, the
mutual rights and liabilities of the parties are governed by the
terms of the contracts (which may be statutory in some cases)
and the laws relating to contracts. It must be remembered
that these contracts are entered into pursuant to public
auction, floating of tenders or by negotiation. There is no
compulsion on anyone to enter into these contracts. It is
voluntary on both sides. There can be no question of the State
power being involved in such contracts. It bears repetition to
say that the State does no guarantee profit to the licencees in
such contracts. There is no warranty against incurring losses.
It is a business for the licencees. Whether they make profit or
incur loss is no concern of the State. In law, it is entitled to its
money under the Contract. It is not as if the licencees are going to
pay more to the State in case they make substantial profits."
(emphasis supplied)
25. As regards the actions of DTC and MCD which Green Delhi is aggrieved
by, it is not as if it has no efficacious remedy other than approaching this
Court in a writ petition under Article 226. As already noticed, Green Delhi
did file a suit in this Court in the first instance in which an interim order was
passed in its favour permitting it to pay Rs. 32,880/- per BQS as an interim
measure. The Court had, while vacating the said interim order on 5 th April
2001, issued directions to Green Delhi to pay the differential amount to the
DTC within eight weeks. However, Green Delhi was unable to comply with
the terms of the said order dated 5th April 2010. This led to the filing of an
application by the DTC which has been directed by the learned Single Judge
to be treated as a contempt petition and is pending consideration.
26. In the above background, it is not possible to accept the contention of Dr.
Singhvi that the subject matter of the present petition is entirely different
from the subject matter of the suit. The letters of the DTC, which are under
challenge in the writ petition, emphasise that Green Delhi should adhere to
the terms of the CA and pay the amounts due to DTC in terms thereof.
Green Delhi questions the fairness and reasonableness of the terms of the CA
by invoking Article 14. It was the alleged unreasonableness of the terms of
the CA that led to Green Delhi filing the suit. The prayers in the suit in effect
were to restrain the DTC from enforcing the terms of the CA concerning the
concession fee. The hairsplitting done of the expression "causes of action" in
this Court‟s order dated 26th August 2010 and the interesting questions on the
applicability of the principles of res judicata do not take away the justified
criticism of the conduct of Green Delhi in abandoning the suit and filing the
present writ petitions when the conditions for pursuing the suit became
difficult for it to comply with. The jurisdiction under Article 226 being
discretionary, the conduct of the Petitioner seeking relief thereunder is
relevant.
27. A further reason why this Court is not inclined to entertain these writ
petitions is that the CA provides for dispute resolution in Articles 19.1 and
19.2 thereof. Again it is not for this Court to re-write these clauses or hold
them to be arbitrary or unreasonable. They form the part of the CA which is
not yet terminated by either DTC or Green Delhi. In exercise of its powers
under Article 226 of the Constitution this Court cannot direct that the
mechanism envisaged in the CA for resolving the disputes of the parties
thereto should be abandoned and a new arrangement put in place. If Green
Delhi is aggrieved by any of the action of the DTC it is for Green Delhi to
invoke first Article 19.1 and failing that the mechanism under Article 19.2 of
the CA.
28. As regards the demand raised by the MCD, Article 4.2 of the CA
requires Green Delhi to "familiarize itself with and be solely responsible for
compliance with all Applicable Laws including specifically in respect of
display of advertisements." Under Article 1.1, Applicable Laws are defined
as under:
"Applicable Laws means all laws, promulgated or brought into
force and effect and all Rules and Regulations made and all
Notifications and Guidelines issued there under by the
Government of India, Government of National Capital Territory
of Delhi, MCD, DTC, Statutory Authorities and other local
bodies including all judgments, decrees, injunctions, writs and
orders of any court of record, as may be in force and effect
during the subsistence of this Agreement."
29. Green Delhi, therefore, cannot plead that it was not aware of its
obligation to comply with the rules and regulations of the MCD. This was an
express term of the CA. The subject matter of the letters impugned in the
writ petition against MCD involves disputed questions of fact which this
Court cannot examine in a petition under Article 226 of the Constitution.
30. For all the above reasons, this Court declines to entertain these writ
petitions. The writ petitions are accordingly dismissed. The interim order
stands vacated. The pending applications are dismissed. It is however
clarified that this order will not preclude the parties from seeking redress
through other appropriate remedies they may have in law, uninfluenced by
any observation on merits made in this order.
S. MURALIDHAR, J.
FEBRUARY 23, 2011
ak
