Sun Outdoors Through Proprietor ... vs Vadodara Municipal Corporation ...
2021 Latest Caselaw 10726 Guj

     C/SCA/19657/2019                             JUDGMENT DATED: 05/08/2021




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 19657 of 2019
                                   With
               R/SPECIAL CIVIL APPLICATION NO. 12089 of 2020


FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE J.B.PARDIWALA                                 Sd/-
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI                          Sd/-
================================================================

1     Whether Reporters of Local Papers may be allowed                YES
      to see the judgment ?

2     To be referred to the Reporter or not ?                          NO

3     Whether their Lordships wish to see the fair copy                NO
      of the judgment ?

4     Whether this case involves a substantial question                NO
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?


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    SUN OUTDOORS THROUGH PROPRIETOR PRITISH NANUBHAI SHAH
                            Versus
     VADODARA MUNICIPAL CORPORATION THROUGH THE MUNICIPAL
                    COMMISSIONER & 3 other(s)
================================================================
Appearance:
MR DIPEN DESAI, ADVOCATE for the Petitioner.
MR MAULIK NANAVATI, ADVOCATE for NANAVATI & CO. for the
Respondent No.1.
MR RONITH JOY, ADVOCATE for the Respondent No. 2.
NOTICE SERVED for the Respondent(s) No.3-4
================================================================

    CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
          and
          HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI

                              Date : 05/08/2021

                            ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)

C/SCA/19657/2019 JUDGMENT DATED: 05/08/2021

1. Since the issues raised in both the captioned writ- applications are interrelated, those were taken up for hearing analogously and are being disposed of by this common order.

2. For the sake of convenience, the Special Civil Application No.19657 of 2019 is treated as the lead matter.

3. By this writ-application, under Article 226 of the Constitution of India, the writ-applicant, proprietor of a proprietary concern, has prayed for the following reliefs :-

"A. The Hon'ble Court be pleased to issue a writ of mandamus or writ in the nature of mandamus, directing the respondent no.1 - Vadodara Municipal Corporation to act as per the tender conditions with regards to the contract awarded to the respondent No.2 for installation of Unipoles and direct the respondent No.1 - Corporation to immediately take action for removing the Unipoles installed at places which are different than the original places stipulated in the tender documents.

B. The Hon'ble Court be pleased to issue a writ of mandamus or writ in the nature of mandamus directing the respondent No.1 - Vadodara Municipal Corporation to scrupulously follow the tender notice with regards to installation of Unipoles and take action for any breach committed thereon.

C. Pending final hearing and disposal of the petition, the Hon'ble Court be pleased to direct the respondent No.1 - Vadodara Municipal Corporation to scrupulously follw the

C/SCA/19657/2019 JUDGMENT DATED: 05/08/2021

tender notice with regards to installation of Unipoles and take action for any breach committed thereon.

D. The Hon'ble Court may be pleased to grant such other and further relief/s as deemed just and proper by this Hon'ble Court in the interest of justice."

4. It appears from the materials on record that the writ applicant is in the business of outdoor advertising. The private respondents are also in the very same business. The respondent no.1 Vadodara Municipal Corporation invited tenders for the installation of unipoles at 81 different locations in the city of Vadodara as prescribed in the tender notice. The online tender notice was issued on 06.02.2018. It appears that in all four bids were offered by the following agencies for the installation of unipoles.

Name of the Participant The amount for which tender was filled up.

Sandesh Limited                                  Rs.2,17,00,000/-
Chitra Publicity                                 Rs.2,11,09,000/-
Sujal Advertisers Private Limited                Rs.3,45,45,453/-
Sun Outdoors                                     Rs.2,92,00,000/-

5. The participants referred to above are none other than the writ-applicant herein and the three private respondents.

6. The grievance of the writ-applicant herein is that having regard to the locations for the installation of the unipoles as fixed in the tender notice, he had offered his bid. However, the Corporation thereafter changed the locations. In other words, the

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grievance of the writ-applicant is that had he known that the Corporation is to permit change of location and thereby permit installation of the unipoles at prime places in the city, he would have offered his bid accordingly. It is the case of the writ- applicant that later in point of time the decision of the Corporation to change the location and permit the highest bidder to install the unipoles at prime places could be said to be something unreasonable and contrary to the terms and conditions of the contract.

7. The second grievance is that the Corporation is not taking appropriate action against the defaulting respondents in accordance with the terms and conditions of the tender or the agreement.

8. We have heard Mr.Dipen Desai, the learned counsel appearing for the writ-applicant, Mr.Ronith Joy, the learned counsel appearing for the respondent no.2 and Mr.Maulik Nanavati, the learned counsel appearing for the Vadodara Municipal Corporation. The respondents nos. 3 and 4 have not appeared before this Court.

9. At this stage, we may give a fair idea of the connected writ- application filed by the learned counsel Mr.Ajay S.Jagirdar. In the connected writ-application, the prayers are as under :-

"A. This Hon'ble Court may be pleased to issue appropriate writ of mandamus or any other writ, order or direction, directing the respondent corporation not to charge

C/SCA/19657/2019 JUDGMENT DATED: 05/08/2021

the licence fee puraunat to the list at Annexure-A during the completely lockdown period staring from 24.3.2020 and additional 30 days for normalisation after end of such lockdown;

B. This Hon'ble Court may be pleased to issue appropriate writ of mandamus or any other appropriate writ, order or direction, directing the respondent corporation to charge the licence fee pursuant to the list at Annexure-A on monthly basis instead of yearly.

C. Pending admission and/or final disposal of this petition, this Hon'ble Court may be pleased to direct the respondent not to demand licence fee and/or any amount during COVID-19 pandemic lockdown period starting from 24.3.2020 till the complete lockdown period is removed pursuant to the list at Annexure-A and further be pleased to direct the respondents not to take any coercive steps against the petitioners;

D. Any such other and further orders as thought fit in the interest of justice."

10. The client of Mr.Jagirdar in the connected writ-application wants a direction from this Court to the Corporation not to charge the license fee for the period of lock-down. In other words, the writ-applicant of the Special Civil Application No.12089 of 2020 wants this Court to issue a writ of mandamus to the Corporation to treat the entire period of lockdown as 'force majeure'.

C/SCA/19657/2019 JUDGMENT DATED: 05/08/2021

11. We are quite disturbed with the present litigation. We are saying so because over a period of time, we have come across many such matters, wherein the companies engaged in the business of outdoor advertising have defaulted in crores of rupees and still continue to retain the contract of putting up hoardings in major cities like Ahmedabad, Surat, Vadodara, etc. These are simple cases of contract. Once the Corporation enters into contract with the highest bidder, a license is issued under statutory regulations, by virtue of which the advertising company would put up hoardings of advertisement and such company has to pay the lease rent to the Corporation as fixed in the contract.

12. It is very disturbing to note that as on date, from each of the respondents herein including the writ-applicants, crores of rupees are to be recovered towards the arrears of the license fee.

13. In the aforesaid context, we may first look into the liability of the respondent no.2, represented by the learned counsel Mr.Ronith Joy. It appears from the additional affidavit of the respondent no.1 - Corporation that an amount of Rs.1,80,00,000/- remains due and payable by the respondent no.2 to the Corporation as on 30.07.2021. As if this is not enough, we take notice of the fact that an amount of Rs.5,05,77,998/- is due and payable by the respondent no.2 as on 24.10.2021. Thus, an amount of almost Rs.7,00,00,000/- is due and payable by the respondent no.2 to the Corporation.

C/SCA/19657/2019 JUDGMENT DATED: 05/08/2021

14. Ordinarily, what is expected of a licensor to do if the licensee defaults in payment of the requisite amount towards the license fees ? The obvious answer would be that the licensor would terminate the contract in accordance with the terms and conditions of the license agreement. In the aforesaid context, Mr.Desai, the learned counsel appearing for the writ-applicant of the Special Civil Application No.19657 of 2019 invited the attention of this Court to three important conditions of the license agreement, which read as under :-

"5. In the event of non-clearance of post dated cheques by the bank, the Vadodara Municipal Corporation will remove the advertisement from the unipole at risk and cost of the second party within 7 days of returning of cheque. It will be considered as a violation of terms of the contract and the amount of performance guarantee will be seized. No notice shall be given in this regard.

8. The second party, from the date of handing over the possession, is required to raise unipoles at their expenses at total 80 places as described in the list at Annexure-1. Before raising the unipoles, the Deputy Executive Engineer of concerned ward office shall be contacted and locations shall be decided accordingly.

9. Advertisement can be displayed on one side of a unipole. The measurements of a unipole shall be at 6.00 meters of width and 3.00 meters of height. The minimum height of lower border of a unipole from the road must be at 3.5 meters. It cannot be kept at a height lower than that.

The second party shall be responsible for maintaining the

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unipoles in good condition. The second party is required to raise and maintain the unipoles at their expense."

15. It is not in dispute that the respondent no.2 is guilty of dishonor of the postdated cheques issued by him in favour of the Corporation. It is conceded by Mr.Joy, the learned counsel that his client has to pay to the Corporation the amount referred to above. However, it is submitted by Mr.Joy that his client has many problems, more particularly, due to the pandemic lockdown. Whatever it may be, the respondent no.2 owes an obligation to pay the above referred amount to the Corporation in accordance with the terms of the license agreement.

16. It appears that the client of Mr.Dipen Desai, i.e. the writ- applicant of the Special Civil Application No.19657 of 2019 also owes an amount of Rs.17,44,851/- towards the payment of the license fee to the Corporation. However, Mr.Desai disputes such amount. By merely disputing the amount, the client of Mr.Desai cannot absolve himself of his liability to pay the requisite amount. On one hand, he complains against the others, and on the other, he does not want to pay. This is not done.

17. We also take cognizance of one letter by the Commissioner, Vadodara Municipal Corporation, dated 04-2021, addressed to the Standing Committee of the Corporation, which reads thus:-

"Vadodara Municipal Corporation Land and Estate Department (Com.) Date : 04/2021.

C/SCA/19657/2019 JUDGMENT DATED: 05/08/2021

To, The Secretary, Assembly Branch, Vadodara Municipal Corporation.

Subject : About seeking permission to carry out the procedure to publish new tender and to cancel the allocated contract, since condition no - 5 of the contract has been violated due to the return of the cheque of the license fee for the advertisement of Unipole given to Sujal Advertisers Pvt. Ltd.

The fact of this case is that, after publishing an advertisement vide PRO NO 690/2017-2018/DI 06-02-2018 and seeking online tender and putting proposal and upon obtaining permission of the Standing Committee vide Resolution No. 52 dated 11/05/2018 and Resolution No.212 dated 20/09/2018, a contract had been executed on 26/11/2018 with the Sujal Adv. Pvt. Ltd. for advertisement by raising total 80 unipoles at the sides of the roads of Vadodara Municipal Corporation and fixing advertisement boards on them for five years from 24/10/2018 with the condition of paying annual license fee. The period of contract is from 24/10/2018 to 23/10/2023. By this contract the Corporation earns Rs.4,17,99,998/- annually. But the cheque of the Indian Overseas Bank vide No. 698430 dated 24/10/2020 for Rs.4,17,99,998/- given by the contractor as the annual license fee for the third year of the contract for unipoles has been returned showing reason that Payment stopped by drawer, when it was deposited in the bank. Though instruction has been given to deposit the said amount, the same has not been deposited so far. The

C/SCA/19657/2019 JUDGMENT DATED: 05/08/2021

contractor has stated by producing Without Prejudice letter on 05/11/2020 that the cheque deposited for the third year license fee of the unipoles contract could not have been cleared due to the lockdown caused by Covid - 19 pandemic. Thereafter, vide letter dated 09/11/2020, permission has been sought to deposit the annual license fee for the third year of the unipole contract on monthly basis instead of paying the same in advance. It has been stated that its payments have been stopped because of the Covid-19 pandemic. Condition No - 5 of the contract of unipole says that, in the case where a post-dated cheque does not get cleared in a bank, the advertisements on the unipoles shall be removed by the Vadodara Municipal Corporation within 7 days at the cost and risk of the contractor and the amount deposited by the contractor as the performance guarantee shall be confiscated considering it as the breach of contract. It has been agreed that no notice shall be served in this regard.

Thus, the cheque of Rs.4,17,99,998 was returned towards the license fee for third year for the contract of Unipole by the contractor Shri Sujal Ad. Pvt. Ltd. and despite being issued notice, the amount is not deposited, hence violated condition no.5 of the contract. Therefore, the contract assigned to Sujal Ad. Pvt. Ltd. is liable to be canceled and the amount of Rs.34,54,545/- deposited by them as performance guarantee, is to be confiscated. Moreover, process is going on for the recovery of returned cheque amount under Negotiable Instrument Act by obtaining permission of Municipal Commissioner.

C/SCA/19657/2019 JUDGMENT DATED: 05/08/2021

Hence, considering the aforementioned facts, as the cheque for the license fee for third year towards the contract of Unipole by the contractor Shri Sujal Ad. Pvt. Ltd. was returned unpaid, violating condition no.5 of the contract, it is requested to submit this before the Standing committee and obtain permission to assign the authority to the Municipal Commissioner to seize the amount of Rs.34,54,545/-, deposited as performance guarantee by them and to get the possession of all 80 Unipoles with structure raised by them as per condition no.11 of the tender and to cancel the current contract and to notify tender again for new contract."

18. The letter referred to above has been produced by Mr.Dipen Desai, having obtained under the Right to Information Act. Whatever its worth, it was expected of the Standing Committee to look into the same when the authority like the Commissioner of Corporation is pointing out something serious to them. It gives an impression that someone in the Corporation is trying to protect all the defaulters at the cost of public revenue.

19. In such circumstances referred to above, we direct the Corporation to initiate recovery of the different amounts referred to above from the respective licensees in accordance with the terms of the license agreement at the earliest. Any laxity or favouritism on the part of the Corporation in recovering the requisite amount in accordance with the terms of the license agreement shall be viewed very seriously. We are saying so, because this huge amount which is to be recovered from these advertising companies is public money. The license fees which

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the companies pay to the Corporation is ultimately to be utilised for the welfare of the people of Vadodara. On one hand, these agencies default in making payment of crores of rupees and on the other hand, they continue to retain the contract. This is something not permissible and a matter of concern. We have been assured by Mr.Nanavati, the learned counsel appearing for the Vadodara Municipal Corporation, that necessary steps shall be taken at the earliest. At the same time, we have also been assured by all the learned counsel appearing for the respective advertising companies that they would make the payment to the Corporation at the earliest.

20. We now proceed with the connected writ-application wherein a writ of mandamus has been prayed against the Corporation to declare the entire lockdown period as 'force majuere'.

21. In the aforesaid context, we may refer to the stance of the Corporation as reflected in its reply as contained in paragraphs nos.6, 11, 12 and 13, which read thus :-

"6. The other grievance voiced by the petitioner is about Corporation permitting change in location for installation of unipole. It is not denied that the advertisement issued by the Corporation inviting offers from intending contractors for installation of unipoles as mentioned certain locations.

These locations were the desired spots for installation of unipole. However, post award of contract and commencement of work it was noticed by the contractor that it is not technically feasible to install a unipole at some

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locations. This aspect was independently examined by the Corporation, and it was agreed that it may not be technically feasible to install unipoles at some locations. A proposal was therefore moved before the Standing Committee of the Corporation for permitting variation im the executed contract, thereby enabling installation of unipole at alternative location. This proposal was made to ensure that space for installation of the advertised quantity of unipoles is made available to the contractor, failing which the contractor would have asked for reduction in the license fee payable to the Corporation. The proposal to change the location for installation of unipole was approved by the Standing Committee in its meeting held on 20.09.2018. This decision of the Corporation has not been challenged by petitioner, either in this petition or otherwise. The decision of the Corporation permitting the change in location for installation of Unipoles has been taken on germane grounds, and is in commercial interest of the Corporation.

11. I say that post extension of the aforesaid concession of relief in payment of license fee for one quarter, an amount of Rs.313,49,999/- was payable by respondent no.2 to the Corporation for the remaining period of 09 months. Petitioner has paid an amount of Rs. 1,19,49,999/-. An amount of Rs. 1,94,00,000/- is still outstanding, and payable by petitioner to the Corporation.

12. I say that this Hon'ble Court has passed an order on 26.02.2021, a copy of which is annexed herewith and marked as Annexure R-2, directing that no coercive steps

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shall be taken against respondent no. 2 (petitioner therein) till further order that may be passed by the Hon'ble Court. I submit that the said direction of the Hon'ble Court is being construed by respondent no. 2 to mean that it is not obligated to pay the license fee even for the period other than the lockdown, and accordingly is not making payment of the contractually determined license fee to the Corporation. I submit that respondent no.2, on the strength of the interim order passed by this Hon'ble Court, is refusing to make payment of license fee and is also restraining the Corporation from demanding the licence fee from it as per the terms of the contract.

13. I say that it is a matter of record and an undeniable fact that even today the respondent no. 2 has been displaying advertisements on the unipoles. And yet respondent no. 2, on the pretext of pendency of petition and grant of interim relief, has not been making payment of the license fee to the Corporation. I submit that the pending proceedings are being used as a methodology by respondent no. 2 to avoid payment of license fee and thereby frustrate performance of its obligations under the contract while insisting on the Corporation to perform its part of the contractual obligations."

22. We are in complete agreement with the aforesaid stance of the Corporation. No such mandamus can be issued by this Court. For issue of mandamus, the person seeking such writ has to establish his legal right, and at the same time, also point out the corresponding legal duty of the State or any instrumentality

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of State in that regard. After all, its a policy decision of the Corporation.

23. In the last, we deal with the submission of Mr.Desai about the change of the locations of the unipoles.

24. The grievance redressed by Mr.Desai is prima facie well founded. He is right in his submission that if he would have known that the Corporation is to permit change of location, then he would have offerred his bid accordingly. Be that as it may, we are not going into this issue at this stage. We record the statement made by Mr.Nanavati at the Bar that the Corporation is willing to invite fresh financial bids with an upset price of the amount which has been agreed to be paid in the existing contract. If ultimately such fresh bids are invited, it shall be open for the parties to offer their bids accordingly.

25. We hope and trust that none of the parties before us may have to come back to this Court. It is now for the Corporation to act in accordance with law, more particularly, in terms of the license agreements. The public money involved should be protected at any cost.

26. With the aforesaid, both the writ-applications are disposed of.

27. To give effect to this order passed by us today, we vacate the interim relief granted by this Court in the Special Civil Application No.12089 of 2020.

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28. Although we are disposing of both these matters, we direct the Registry to notify both these matters once again on 02.09.2021, so as to know what steps have been taken by the Corporation as directed by this Court. We shall also come to know whether the advertising agencies have cooperated with the Corporation or not.

29. Mr. Nanavati, the learned counsel appearing for the Corporation, shall file an appropriate report by the next date of hearing.

(J. B. PARDIWALA, J.)

(VAIBHAVI D. NANAVATI, J.) /MOINUDDIN/ VARSHA