Competent Service vs Lala Ram Sarup Institute Of Tb And ...
2011 Latest Caselaw 4349 Del

            *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                       Date of decision: 6th September, 2011
+                                  W.P.(C) 6519/2011

         COMPETENT SERVICE                                ..... Petitioner
                     Through:             Mr. M.I. Chaudhary & Mr. Bharat
                                          Sharma, Advs.

                                     Versus

         LALA RAM SARUP INSTITUTE OF TB
         AND RESPIRATORY DISEASES                           ..... Respondent
                     Through: None.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.       Whether reporters of Local papers may             Not necessary
         be allowed to see the judgment?

2.       To be referred to the reporter or not?            Not necessary

3.       Whether the judgment should be reported           Not necessary
         in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The petitioner, in December, 2010 had entered into an Agreement

with the respondent, stated to be an autonomous institute under the

Ministry of Health & Family Welfare of the Government of India, for

providing manpower services. The term of the said Agreement was for one

year from 27.12.2010 to 26.12.2011. This writ petition has been filed

impugning the letter dated 18.08.2011 of the respondent terminating the

Agreement with the petitioner in exercise of powers under Clause 17 of the

Contract.

2. It is not in dispute that Clause 17 of the Agreement / Contract

authorizes the respondent to terminate the Contract with one month's

notice in writing and the petitioner upon receipt of such notice is obliged to

discontinue the work accordingly.

3. The counsel for the petitioner has contended that the respondent has

not given any reason whatsoever for termination. Reliance in this regard is

placed on Clause 7 of the letter dated 27.11.2010 of the respondent to the

petitioner offering the Contract to the petitioner upon the bid of the

petitioner being found L1 in the tender process and as per which Clause,

the Contract is terminable if the services were not found satisfactory. It is

contended that there is no allegations of unsatisfactory services against the

petitioner and thus the termination without reason is interferable by this

Court in writ jurisdiction.

4. Though Clause 7 aforesaid entitles the respondent to terminate the

Contract upon services rendered being unsatisfactory but without assigning

any reason. Moreover, the letter dated 27.11.2010 containing the said

Clause stood superseded by the Agreement aforesaid of a subsequent date

and as per Clause 17 of which the respondent is entitled to terminate the

Contract in its sole discretion and even without assigning any reason.

Moreover, the nature of the Contract is not such which can be specifically

enforceable. If the petitioner has any grievance, the remedy of the

petitioner is to claim damages from the respondent.

5. The interference in writ jurisdiction in contractual matters is even

otherwise very limited and can only be when a public law element is

entailed as reiterated by the Apex Court in Kisan Sahkari Chini Mills Ltd.

Vs. Vardan Linkers AIR 2008 SC 2160.

6. The counsel for the petitioner has sought to argue that an element of

public law is entailed since no reason for termination has been given.

However, the obligation to give reasons has to be seen contextually and

without their being any requirement in the Contract to give reasons, merely

because the respondent has in the letter of termination not given any reason

would not entitle this Court to interfere. The Supreme Court in

Maharashtra State Board of Secondary & Higher Secondary Education

v. K.S. Gandhi (1991) 2 SCC 716 held that omission to record reasons is

not necessarily illegal or violative of natural justice and depends upon the

nature of enquiry and the effect of the decision on the rights of the person

and attendant circumstances. As has often been said, the principles of

natural justice cannot be applied in a vacuum without reference to the

relevant facts and circumstances. In fact doubts have been expressed

whether duty to give reasons is a part of the principles of natural justice.

7. The counsel for the petitioner has lastly argued that only two months

of the Contract remain and notice of the writ petition be issued to find out

the reasons which prevailed with the respondent to terminate the Contract.

It is further stated that in another tender floated by the respondent, though

the petitioner was again L1, the Contract was not awarded and a writ

petition in that regard has been entertained by this Court.

8. However, the occasion for issuing notice of the petition would arise

only when the petitioner makes out a prima facie case. The petitioner has

also not pleaded mala fides of any officer of the respondent in the matter of

termination. The only case is of principles of natural justice having not

been complied with but as aforesaid, there was no such requirement in the

Agreement. In the present case, the petitioner having failed to make out a

prima facie case and the other factors aforesaid being irrelevant, no case of

entertaining the petition is made out.

9. The counsel for the petitioner at this stage relies upon paras 5&6 in

Tulsipur Sugar Co. Ltd. Vs. The Notified Area Committee, Tulsipur

(1980) 2 SCC 295. However, the observation therein were in the context of

Section 3 of the U.P. Town Areas Act, 1914 whereunder the decision was

of a judicial / quasi judicial nature and the Court recorded that there was,

under the said provision, an express obligation to give reasons. There is no

obligation in the present case which is of a Contract and when the Clause

in the Contract under which the respondent has acted expressly stated that

no reasons needs to be given. A power to deal with a contractual matter

and a power of the statutory authority to exercise its statutory power in

determining the rights and liabilities of the parties are distinct and

different. Whereas reasons are required to be assigned in a case where civil

or evil consequences may ensue, the same may not be necessary where it is

contractual in nature (see Ramchandra Murarilal Bhattad v. State of

Maharashtra (2007) 2 SCC 588). The Courts in contractual matters have

insisted on giving of reasons only where the action impugned is apparently

contrary to logic i.e. say where the highest bid is not accepted.

10. There is thus no merit in the petition. The same is dismissed.

No order as to costs.

Dasti.

RAJIV SAHAI ENDLAW (JUDGE) SEPTEMBER 06, 2011 'gsr'