Delhi High Court
Himalayan Flora And Aromas Pvt Ltd vs Municipal Corporation Of Delhi on 26 May, 2025
Author: Tushar Rao Gedela
Bench: Tushar Rao Gedela
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 26.05.2025
% LPA 351/2025
HIMALAYAN FLORA AND AROMAS PVT LTD.....Appellant
Through: Mr. Anand Mishra, Ms. Vandita Nain,
Ms. Ayushi Rajput and Mr. Devansh
Pundir, Advs.
Versus
MUNICIPAL CORPORATION OF DELHI .....Respondent
Through: Mr. Tushar Sannu, SC, MCD with
Mr. Priyankar Tiwari, Mr. Shivam
Singh and Ms. Aqsa, Advs.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE TUSHAR RAO GEDELA
DEVENDRA KUMAR UPADHYAYA, CJ. (ORAL)
CM APPL. 32828/2025 (exemption)
1. Exemption allowed, subject to all just exceptions.
2. The application stands disposed of.
LPA 351/2025 & CM APPL. 32827/2025 (interim directions)
3. This Letters Patent Appeal seeks to take exception to common
judgment and order dated 19.05.2025 passed by the learned Single Judge
whereby the writ petition bearing W.P. (C) No. 5350/2025 preferred by the
4. The appellant by instituting the proceedings of the writ petition before
the learned Single Judge had challenged an order dated 21.04.2025 issued by
the respondent/ Municipal Corporation of Delhi (hereinafter referred to as
„MCD‟) rejecting the prayer for extension of the contract/allotment of the
appellant for display of advertisements through unipoles, for a further period
of two years.
5. The learned Single Judge after noticing the facts of the case as also
the Clauses 7 and 15 of the earlier contract dated 01.12.2021 entered into
between the appellant and the MCD came to the conclusion that in terms of
the said clause, the appellant does not have an absolute right to seek
extension of the term of the earlier contract and further that it is the
discretion of the authority concerned of the respondent Corporation to grant
or not to grant extension.
6. Noticing several judgments of Hon‟ble Supreme Court laying down
the scope of interference in such matters in a petition under Article 226 of
the Constitution of India, it has been held that considering the scope of
judicial scrutiny in such matters any interference in the petition would not be
possible.
7. Learned counsel for the appellant has drawn our attention to Clause 7
and 15 of the earlier contract pursuant to which the appellant has executed
the work, term of which is coming to an end on 10.06.2025. Clauses 7 and
15 of the earlier contract dated 01.12.2021 are extracted hereinbelow:
7. Period of Concession The contract period shall be for a period of 03 years
and further extendable for another 02 years subject
to satisfactory performance of the firm and as
decided by the Commissioner, EDMC and 10%
enhancement in awarded MLF from 4th year and
also 10% increase on awarded MLF every year
during the extended period, if extended by the
Commissioner EDMC. After expiry of the contract
period, either on account of completion of the
concession period or pre-termination of the contract
on any account whatsoever, the contractor shall
hand over , possession of the unipole(s) with
complete structures, fittings and fixtures to the
Commissioner, EDMC or any other person
authorized by him. At the time of handing over of
possession to the EDMC, it shall be ensured that the
unipoles(s) is/are in proper condition and that no
damage is caused by removing the fixtures and
fittings, except the advertisement boards.
15 Extension of Contract The contract of each cluster will be awarded to the
successful H-1 bidder, initially for 3 years only,
extendable for 2 terms of one year each, subject to
satisfactory performance of contract. However, the
contractor may apply for the extension of contract, 3
months prior to completion of three year contract
period. Any application made during the last 3
months of contract, will not be entertained by the
department. The application for extension of
contract does not entitles any right of extension of
contract, the commissioner EDMC or any
authorized officer by him shall be at liberty to grant
or reject request for extension of contract
8. It has been argued by learned counsel for the appellant that Clause 7
clearly stipulates that the contract period initially shall be three years which
is extendable for another two years subject to satisfactory performance of
the firm. It has thus been argued that the only consideration which ought to
have weighed with the Commissioner while taking a decision on the prayer
made by the petitioner seeking extension of the period of contract, was as to
whether the performance of the appellant has been satisfactory or not.
9. He has further argued that though as a matter of right, the appellant
does not have any absolute right seeking extension of the term of the
contract, however, the earlier contract vested a right in the appellant to seek
extension and consideration of such prayer in accordance with the terms of
the contract which provided that the term of the contract shall be extended
for a further period of two years, in case the performance of the appellant
has been satisfactory.
10. Learned counsel for the appellant has also stated that in terms of
Clause 15 of the earlier contract, the appellant had made an application
within time seeking consideration of his case for extension of the period of
contract, however the said application was not being decided. In this
context, it has been stated that application was made by the appellant
seeking extension of contract period on 06.01.2025 and thereafter several
reminders were also given. However, since no decision was taken on the
said application/ prayer, the appellant was constrained to file a writ petition
before this Court, namely W.P.(C.) No. 3587/2025. The said writ petition
was decided on 24.03.2025 directing the MCD to take a decision on the
prayer made by the appellant seeking extension of the contract within three
weeks, however, within the facts stipulated by the Court in its order dated
24.03.2025. The prayer was not decided by the Corporation which led the
appellant to institute contempt proceedings.
11. It is further the submission of learned counsel for the appellant that it
was only once the advance copy of the contempt proceeding was served on
the Corporation that the decision, which was impugned before the learned
Single Judge dated 21.04.2025, was taken.
12. Learned counsel for the appellant thus submitted that the said conduct
of the authorities of the Corporation in not taking prompt and timely
decision on the prayer made by the appellant seeking extension of contract
itself shows that they have not been acting in bona fide manner so far as
grant of extension of the contract is concerned.
13. On behalf of the appellant, reliance has been placed on a Division
Bench judgment of this Court in the case of SK Associates v. MCD, 2024
SCC Online Del 2300 and it has been stated that the Division Bench
construing somewhat similar term of contract in the said case has allowed
the writ petition and quashed the notice issuing fresh tender and issued
certain directions based on the earlier tender.
14. Mr. Tushar Sannu, learned Standing Counsel for the MCD, on the
other hand has stated that Clauses 7 and 15 of the earlier contract does not
vest any right in the appellant to seek extension and further that extension in
the term of the earlier contract is dependent on the decision to be taken in
this regard by the Commissioner of the Corporation. He has refuted the
submission made by the learned counsel for the appellant based on his
reliance on the judgment in the case of SK Associates (supra) stating that the
extension clause in SK Associates (supra) was worded differently than the
extension clause in the subject contract on the basis of which extension is
being sought by the appellant.
15. It is also the submission on behalf of the MCD that the reasons given
by the MCD in the order dated 21.04.2025 do not suffer from any illegality
or irregularity and, therefore, the learned Single Judge has rightly not
interfered with the same. He, therefore, submits that no interference in this
intra Court appeal is warranted and is liable to be dismissed.
16. Having considered the respective submissions made by learned
counsel for the parties, we are not convinced with the submissions made by
learned counsel for the appellant.
17. If we carefully examine Clauses 7 and 15 of the contract, what we
find is that the contract period initially was for a period of three years which
was extendable for another two years. However, such extension was subject
to not only satisfactory performance of the appellant but also subject to
decision to be taken by the Commissioner. Clause 7 of the earlier contract is
very clear which enables the contractor to seek extension and also enables
the MCD to extend the term, however, in our opinion, satisfactory
performance of the contractor is not the only or sole basis for conferment of
any right of extension in that contract.
18. The appearance of the phrase "subject to satisfactory performance of
the work and as decided by the Commissioner" assumes importance to
arrive at the conclusion that it is not the satisfactory performance of the firm
which is the sole basis for taking a decision as to whether the earlier term of
the contractor was to be extended or not. Satisfactory performance of the
firm is only one such consideration, however, the final decision is vested in
the Commissioner on account of the appearance of the phrase "and as
decided by the Commissioner".
19. Clause 7 further stipulates that 10% enhancement in the awarded
Monthly License Fee from fourth year and also 10% increase on awarded
Monthly License Fee every year during the extended period will be
chargeable, if extended by the Commissioner.
20. Accordingly, we have no doubt in our mind that satisfactory
performance of the appellant was not the only consideration to have
weighed to the Commissioner while taking a decision on the prayer made by
the appellant seeking extension of time.
21. If we peruse the order dated 21.04.2025 which was impugned before
the learned Single Judge in the proceedings of the writ petition, what we
find is that after discussing the stipulations made in the earlier contract, the
competent authority has also given a reason for re-tendering on account of
strategic policy shift and market alignment.
22. In our opinion, any policy shift or possibility of more income are
relevant considerations for the Commissioner of the respondent Corporation
to arrive at a conclusion that in his discretion it was not appropriate to
extend the term of the earlier contract. Even otherwise, the appellant does
not have a fundamental right to do business with the public authority,
including the MCD.
23. As regards the reliance placed by learned counsel for the appellant on
the judgment in SK Associates (supra) is concerned, Clause 4 of the contract
which has been considered in the judgment is worded differently. Clause 4
of the term of the contract in the said case relates to duration of contract
which is extracted hereinbelow:
"".......
4. Period : The contract is for temporary allotment of the above parking
site for 02 years from the date of handing over. After the expiry of two years,
the monthly licence fee will be enhanced by 05% (five percent) for the next
year, subject to the satisfactory completion of period of two years of contract.
The parking site allowed operating beyond three years period (in any
circumstances) then the contractor has to pay monthly license fee by
enhancing 05% of last/current MLF as provided in clause No. 4 of the NIT
No. D-98 dated 14.08.2020."
(Emphasis supplied)"
24. A comparison of Clause 4 of the terms of contract considered in SK
Associates (supra) and Clause 7 and 15 of the contract in the instant case
would reveal that they are differently worded and accordingly conveyed
different meaning. In Clause 4 of the contract considered in SK Associates
(supra), there is a clear stipulation that after expiry of two years, the
Monthly License Fee will be enhanced by 5% for the next year, subject to
the satisfactory completion of period of two years of contract, whereas in
Clause 7 of the contract in the present case provides that after completion of
initial period of three years, the contract is extendable subject not only to
satisfactory performance of the firm but also "as decided by the
Commissioner, EDMC".
25. Thus, in our opinion, Clause 7, as noticed above, gives a larger
discretion to the Commissioner of the MCD in the present case and,
therefore, apart from satisfactory performance of the firm other relevant
aspects could also have been taken into account by the Commissioner while
taking a decision on the prayer made by the appellant seeking extension in
the term of the contract. The judgment in SK Associates (supra) is thus
clearly distinguishable.
26. So far as the scope of interference or judicial scrutiny under Article
226 of the Constitution of India is concerned, we are in complete agreement
with the findings recorded in that regard by the learned Single Judge which
are based on well known pronouncements of the Hon‟ble Supreme Court.
27. For the reasons aforesaid, the instant Letters Patent Appeal is liable to
be dismissed, which is hereby dismissed with a cost of Rs.50,000/- to be
deposited by the appellant within a period of one month with the Delhi High
Court Advocates Welfare Trust, [Account No.15530210002995, IFSC-
UCBA0001553, UCO Bank].
28. We further direct that in case the cost is not deposited as directed
hereinabove, the Registrar General of this Court shall take appropriate steps
for recovery of the same, including, if required, by taking recourse to the
process of recovery by way of arrears of land revenue.
DEVENDRA KUMAR UPADHYAYA, CJ
TUSHAR RAO GEDELA , J
MAY 26, 2025/ N.Khanna
