Citation : 2026 Latest Caselaw 3369 Ori
Judgement Date : 10 April, 2026
IN THE HIGH COURT OF ORISSA AT CUTTACK
AFR W.P.(C) No.1182 of 2024
M/s. Re-Sustainability Ltd. .... Petitioner
Mr. M. Mishra, Advocate
-Versus-
Bhubaneswar Municipal .... Opposite Party
Corporation
Mr. M.K. Mishra, Sr. Advocate
Mr. M.K. Panda, Advocate
Mr. N. Panda-1, Advocate
CORAM:
JUSTICE R.K. PATTANAIK
DATE OF HEARING:16.12.2025
DATE OF JUDGMENT:10.04.2026
1.
Instant writ petition is filed by the petitioner seeking a declaration that the actions of the opposite party (in short, 'the BMC') in not abiding by the terms of the Concession Agreement (CA) dated 6th November, 2013 at Annexure-1 is arbitrary, illegal and violative of Article 14 of the Constitution of India followed by a direction to the BMC to pay damages in the nature of compensation towards the injury caused to it due to such arbitrariness and illegality and realization of Rs.73,25,10,241/- (rupees seventy-three crores twenty-five lacs ten thousand two hundred forty-one) payable as on 30th November, 2023 along with interest, costs and expenses, pendent lite and future interest @ 9% per annum till such realization under the contract with such other reliefs granted on the grounds inter alia that such a
direction with appropriate writs/orders to the BMC is necessary in the interest of justice.
2. In fact, the petitioner is aggrieved by the improper conduct and dealings of the BMC for denying it the legitimate contractual claims under the CA and to the contrary having imposed penalties in an arbitrary and unjustified manner and in complete ignorance of the statutory responsibilities assigned under the Odisha Municipal Corporation Act, 2003 (in short, 'the Act'), Municipal Solid Wastes (Management and Handling) Rules, 2000 (shortly as 'the MSW Rules') and Solid Waste Management Rules, 2016 (hence called as 'the SWM Rules') qua handling of waste management, more particularly, when it has fulfilled the obligations for the period more than the prescribed time line under Annexure-1. The actions of the BMC, which are alleged to be illegal, are for (i) non-payment of tipping fees with escalated rates;(ii) wrongful deductions of 4% from each monthly bill; (iii) levy of arbitrary penalties contrary to terms of the CA; (iv) unilaterally withholding 20% amount from June 2019 bill for the additional services rendered during the 'Fani' cyclone period; (v) arbitrary withholding of consideration qua services rendered during the Covid-19 (2020/21);(vi) denying payment relating to services rendered in relation to MCC works and Kalinga Stadium;(vii) further withholding payment towards tonnage loss incurred upon deployment of NGO vehicles for door-to-door collection; and finally(viii) non-payment of interest claims on delayed receipts.
3. According to the petitioner, it is a Company registered under the Companies Act, 1956 involved in the business of waste management (Municipal), hazardous and biomedical, and other environment solutions having operational experience of more than 25 years and considered to be a pioneer in the above specialized field and earlier known as Ramky Enviro Engineers Ltd. changed to the present with effect from 10th February, 2022 and has been issued a Certificate of Incorporation as per Annexure-4.
3.1. The Government of India through Ministry of Environment and Forest notified the MSW Rules in exercise of power conferred under Section 3 of the Environment Protection Act, 1986, by virtue of which it was made mandatory for every Municipal Authority to implement a scientific solid waste management system wherein solid wastes are duly collected, transported, processed and the residual inert is disposed of in an engineered sanitary landfill. The procedures through which such waste is generated in any city or town shall be managed and handled are provided under Schedule-2 of the MSW Rules. Referring to Rules 4 & 7 of the MSW Rules, it is pleaded on record by the petitioner that the BMC is thus entrusted with statutory responsibilities pertaining to solid waste management within its jurisdiction and such responsibilities include collection, treatment and proper disposal of offensive sewerage, wastes and rubbish. The further pleading is that the BMC is also responsible for maintaining and cleaning drains, drainage works and public facilities and
other conveniences, moreover, it is accountable to adhere to the Rules framed by the Government of India under the Environment (Protection) Act, 1986, which regulates the management and handling of solid wastes.
3.2. In order to make the waste management more efficient and to follow the mandatory mechanism prescribed under the MSW Rules, the concept of Public-Private Partnership (in short, 'the PPP') for collection, segregation, processing and residual inert disposal and engineered sanitary landfill has been used. According to the petitioner, the objective is not only to efficaciously collect residual wastes but also to dispose it of in a scientific manner, which is economically viable and environmentally benign as per the Rules. To manage the waste collection and disposal in terms of the Rules and the Act, the BMC invited proposals from eligible bidders towards the same and on 26th February, 2013, it issued Notice Inviting Tender (NIT) followed by a Corrigendum (Annexure-6) on 22nd March, 2013 pursuant to the pre-bid meeting held on 13th March, 2013, whereby, necessary clarifications were issued upon considering the suggestions received from the bidders. Consequent to the BMC's proposal for collection and transportation of Municipal solid wastes, the petitioner submitted its bid for Package-I in respect of 12 Wards, which was approved by the Housing and Urban Development Department, Government of Odisha, whereafter, the Letter of Acceptance (LoA) i.e. Annexure-7 was issued in its favour, later to which, the CA was executed for a period of seven years and
subsequently, a supplementary agreement dated 20th October, 2014 came into being revising it to 15 Wards. In fact, the petitioner was awarded the project for collection and transportation of Municipal solid wastes for fifteen Wards and it contained the scope of work in detail.
3.3. Referring to the relevant provisions of the CA and in particular, Clause 3.19 thereof, it is pleaded by the petitioner that even though the BMC has the authority to impose penalties, it was to be followed by an order. According to the petitioner, Clause 3.25 deals with payment mechanism and it provides a step-by-step and clear procedure for submission of bills and its clearance as well as deadline for making such payment, inasmuch as, it is a comprehensive set of guidelines for compliance throughout the payment process from submission of bills to verify the same and payments while taking into account any such penalty that have been levied but the exercise as contemplated has not been duly followed and therefore, the decisions of the BMC, as per the petitioner, are arbitrary for non-compliance of Clause 3.25 of the CA, which enumerates situations, wherein, deductions can be made, amounts withheld and penalties levied as well as solutions to what is needed to be considered in case of non-payment in a timely manner and furthermore, the BMC failed in making payments taking into account the escalation of rates for computation of amount in terms of Clause 3.26 thereof, wherein, a clear cut calculation of rates applicable as per different components has been prescribed.
3.4. That the CA expired on 5th November, 2020, however, by unilateral extensions, the BMC kept on extending the tenure of the contract and such extension continued on regular intervals, but by letters of request, the petitioner expressed its unequivocal intention for closure of the contract and handing over the site in time. However, again with a letter issued on 11th October, 2021 stating therein that the parties entered into a supplementary agreement expanding the scope of work, the BMC extended the contract till 5th January, 2022 but it was inclined to notify to handover the project fifteen days prior to the extended date i.e. 5th January, 2022 as per Clause 3.23 of the CA and furthermore when has obligations to intimate the members of the workforce for closure of the project with such information shared with them with a month's prior notice.
3.5. After the petitioner expressed its disinterestedness in continuing the services and had given a formal intimation to the BMC to initiate pre-closure under the CA and for making alternative arrangements for replacement so that the services remain uninterrupted and in connection therewith, it issued the letters vide Annexures-9 series, 10 series and 11 series to the BMC. However, despite the above intention made clear, the BMC repeatedly issued unilateral extensions and finally on 10th October, 2022, issued notice of closure to it stating therein that the CA was to expire with retrospective effect from 30th September, 2022 and further communicated that it would require to demobilize all its assets, tools, vehicles and equipments within a month,
which has been a decision of the BMC in contravention to the terms of the contract, as such a decision caused financial loss and damage to it. According to the petitioner, the BMC is under obligation to issue a completion certificate, however, failed to do so effectively disabling it from participating in tenders of similar nature despite its admission of completion by letter dated 10th October, 2022, in response to which, necessary correspondences were made with a request to clear the outstanding dues payable to the petitioner but it was of no avail and lastly, on 31st January, 2023, the completion certificate was issued without clearing any such dues and because of such conduct, there has been a gross failure to abide by the reciprocal obligations under the CA from the side of the BMC. Since there was unilateral extension of the contract and finally with inordinate delay that the completion certificate arrived in the month of January, 2023 and that too, without clearing the outstanding payments, as pleaded by the petitioner, hence, was compelled to file the writ petition when the BMC failed to resolve the issue even amicably in view of Clause3.30(a) of the CA despite best efforts put forward from its side. According to the petitioner, it sought to resolve all the outstanding disagreements/disputes with the BMC multiple times through amicable settlement but the same yielded no fruitful result.
3.6. It is further pleaded that the decision of the BMC on each of the heads is arbitrary including imposition of penalties and deduction of amounts from the legitimate bills
payable to the petitioner, which fulfilled its obligations to the best of the abilities in terms of the CA. It is alleged that the imposed penalties are not according to the provisions of the contract since Clause 3.19 thereof specifically stipulates that the BMC is required to record the service shortfall on a daily basis and communicate the same to it and a consolidated monthly achievement was to be taken under consideration while evaluating the purposes, however, instead of informing any such shortfall in service, the penalties were imposed without intimation, which is contrary to the CA itself. With the above facts pleaded on record, the action of the BMC is questioned as illegal.
4. The following are the grounds challenging the decision of the BMC, such as, (i) right to live and personal liberty guaranteed under Article 21 of the Constitution of India includes within its right to have clean environment and ecology, which is considered to be a paramount responsibility of the State to ensure the same and that the environmental impact on the society and the larger ramification in the world dealing with the complex nature of environmental issues in tandem with national policy and the responsibility of the Urban Local Bodies (ULBs) with all such activities in public utility service and discharge of contractual obligations by a concessionaire and the related projects are not merely contracts whereby the remedies only to be adjudicated before a civil court's jurisdiction, rather, all such aspects are to be taken cognizance by this Court in exercise of its writ jurisdiction in order to redress the
grievances of the petitioner in order to ensure and safeguard the Fundamental Rights of the inhabitants of the city of Bhubaneswar; (ii) upon execution of the CA during operation of the period of contract, the difficulties faced by the petitioner while performing contractual obligations towards public utility service are the issues, which are writ large and require indulgence of this Court for the purpose of enumerating guidelines for the future contracts for being smooth and operationally efficient; (iii) the Apex Court over a period of time has formulated a very fulcrum of jurisprudential evolution of public law wherein the issue in respect of the State or its agencies executing a contract with a private entity, the issues and remedies thereof, have been dealt with notwithstanding availability of remedy lying within the civil court's jurisdiction at Bhubaneswar, hence, its actions are amenable to the test of arbitrariness, which is engraved in Article 14 of the Constitution of India, which means even, the action of a party is still amenable to writ jurisdiction to test the fairness in the judgment and the very reason for seeking indulgence of this Court is to demonstrate the conduct and the manner by which the BMC responded while discharging its contractual obligations under the CA and the violations, which are being alleged, are not limited to the conditions of the contract but it is an outcome of Executive's highhandedness taking advantage of its dominant position, which has substantially prejudiced the operation of the contract and also the financial wellbeing of the petitioner; (iv) referring to the case laws cited, the
petitioner finally pleads that every action of the State and its instrumentality whether contractual or otherwise is subjected to judicial review on the anvil of Article 14 of the Constitution of India. As a matter of contractual right, according to the petitioner, it is entitled to receive tipping fees at the revised escalated rate during the term of the CA and for the extended period with interest. According to the petitioner, the BMC arbitrarily levied penalties and deducted amounts from the legitimate bills payable to it despite fulfillment of the contractual obligations and therefore, such a decision is in contravention of the contract. The petitioner alleges that despite the obligations under the CA were discharged, the BMC arbitrarily deducted 4% from the monthly bills for MSW Funds, which is nowhere provided in contract; withholding payment of amount towards the services provided during 'Fani' cyclone for no apparent reasons; not making payment towards the MCC and the services provided in Kalinga Stadium at Bhubaneswar on the instructions of the BMC; not releasing payment towards compensation for tonnage loss due to deployment of the NGO vehicles for door-to-door collections of waste contrary to the terms of the contract and the above conduct clearly revealed the disinterestedness shown in performing their part of duty under the CA and hence, being an instrumentality of the State, any such decision detrimental to the interest of the petitioner must have to be backed by reasons and if it does not satisfy the
test of reasonableness, it shall automatically attract the vice of the arbitrariness.
5. On the contrary, a preliminary objection has been raised by the BMC regarding maintainability of the writ petition in view of the directions for recovery demanded by the petitioner arising out of a contract dated 6th November, 2013 since such demand on each head is seriously disputed and specifically denied. It is pleaded by the BMC that in the garb of a writ petition, the petitioner demands recovery of money, which is not legally impermissible. That apart, according to the BMC, the petitioner has knocked the doors of this Court after nine years in order to avoid limitation of three years to institute a suit and hence, the cause of action is also time barred and therefore, the writ petition deserves to be dismissed on such ground and also for the delay and laches and as per the records, the entitlements have been already paid to the petitioner after its determination in terms of the CA. According to the BMC, on a plain reading of the averments in the writ petition and the relief demanded on each of the claims put forth is based on disputed questions of facts, which are of complex nature and require evidence and physical verification on the field and hence, the same cannot be adjudicated upon in a writ petition and therefore, it shall have to be dismissed. It is pleaded further that when the entire amount claimed by the petitioner has been disputed, jurisdiction of this Court though wide enough but in respect of pure contractual matters, the parties should be directed to move the forum agreed to. The contention is that
when there is no admission on the part of the BMC and it is not possible to crystalise the amount payable to the petitioner without verification of records and determination of the disputed questions of facts, the writ jurisdiction should not be invoked since the law is well settled that money claims per se arising out of a contractual obligation are normally not to be entertained barring in exceptional circumstances. As per the BMC, it has acted as per the terms and conditions of the contract and there is no illegality committed while considering the entitlements of the petitioner.
6. Heard Mr. M. Mishra, learned counsel for the petitioner and Mr. M.K. Mishra, learned Senior Advocate along with Mr. N. Panda-I, learned counsel appearing for the BMC.
7. Law is well settled that a writ court can exercise discretionary powers vested under Articles 226 & 227 of the Constitution of India for curbing arbitrariness of the State or its instrumentalities whenever alleged and demonstrated. In Kumari Shrilekha Vidyarthi & others Vrs. State of U.P. & others (1991) 1 SCC 212 cited at the Bar, it has been held that the impact of every State action is also on public interest and therefore, even if the dispute is purely contractual, the challenge to a contract may be on the ground of violation of Article 14 of the Constitution of India since the conduct of the BMC is alleged as arbitrary, unreasonable, unfair and in clear contravention of the provisions of the CA. Further referring to a decision in
Suresh Kumar Wadhwa Vrs. State of Madhya Pradesh and others (2017) 16 SCC 757, it is contended by Mr. Mishra, learned counsel for the petitioner that a party to a contract has no right to unilaterally alter the terms and conditions of the same and since the contract has been extended as a matter of contractual right, the petitioner is entitled to receive the tipping fees at the revised escalated rate during the extended period. That apart, the petitioner is entitled to payment of interest on the outstanding amount since the principle of carrying cost is nothing but restitution for the time value of money lost and in order to adequately compensate, it is entitled to interest, which is also a well settled law, as according to Mr. Mishra, learned counsel for the petitioner, referring to the decision in Uttar Haryana Bijli Vitran Nigam Ltd. And another Vrs. Adani Power (Mundra) Ltd. And another (2023) 2 SCC 624. The other citations are to the following, namely, Vice-Chairman and Managing Director, City & Industrial Development Corporation of Maharashtra Ltd. And another Vrs. Shishir Realty Private Ltd. & others (2021) SCC OnLine SC 1141 regarding applicability of Article 14 of the Constitution of India to the conduct of a Government body in a private contract; Karnataka Power Corporation Ltd. Vrs. EMTA Coal Ltd. And another AIR 2022 SC 2478 on the maintainability of writ petition concerning contractual disputes in certain circumstances; and ABL International Ltd. And another Vrs. Export Credit Guarantee Corporation of India Ltd. & others (2004) 3
SCC 553 and Joshi Technologies International Inc. Vrs. Union of India & others (2015) 7 SCC 728; and Union of India & others Vrs. Tantia Construction Pvt. Ltd. (2011) 5 SCC 697 have been placed for reliance from the side of the petitioner to contend that the action of the BMC is violative of the provisions of the contract and for such arbitrary action, the writ jurisdiction is invocable and so the demands payable to the petitioner.
8. On the other hand, Mr. M.K. Mishra, learned Senior Advocate appearing for the opposite party to counter the allegations of arbitrariness and at the same time questioning the maintainability of the writ petition especially when the cause of action demanding any such relief(s) is clearly time- barred cited the following decisions, such as, State of Bihar & others Vrs. Jain Plastics and Chemicals Ltd. (2002) 1 SCC 216; Joshi Technologies International INC. Vrs. Union of India & others (2015) 7 SCC 728; Union of India & others Vrs. Puna Hinda (2021) 10 SCC 690; Divisional Forest Officer Vrs. Biswanath Tea Co. Ltd. (1981) 3 SCC 238; State of U.P. & others Vrs. Bridge and Roof Company (India) Ltd. (1996) 6 SCC 22; Shiv Dass Vrs. Union of India & others (2007) 9 SCC 274; Rushibhai Jagdishbhai Pathak Vrs. Bhavnagar Municipal Corporation (2022) 18 SCC 144; and V. Chandrasekaran and another Vrs. Administrative Officer & others (2012) 12 SCC 133.
9. The Apex Court in a catena of decisions concluded that Article 226 of the Constitution of India is not to be invoked for adjudicating any such dispute arising out of contracts. In Jain Plastics and Chemicals Ltd. (supra), it has been held and observed that under the law when a party is having the remedy to approach a court of competent jurisdiction for appropriate relief on account of breach of contract and when any such alternative and equally efficacious remedy is open, the same is required to be pursued instead of invoking the writ jurisdiction and equally the existence of alternative remedy does not affect the jurisdiction of the Court to issue writs, but ordinarily that would be a good ground in refusing to exercise the discretion. In the decision (supra), the Apex Court referring to the contentions raised in the affidavits and counter affidavits concluded that it would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. It has been further held therein that serious disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence adduced before a civil court. In Puna Hinda (supra), it has been held that the dispute could not have been raised by way of a writ petition on disputed questions of facts and therein observed further that though the jurisdiction under Article 226 of the Constitution of India is wide but pure contractual matters in field of private law having no statutory flavour are better adjudicated upon before the forum agreed to by parties,
inasmuch as, a dispute as to whether amount is payable or not and/or how much amount is payable are disputed questions of facts especially when there is no admission on the part of the State or its agencies to infer that amount stands crystalised. The above decisions are referred to from the side of the BMC to convince the Court that any such dispute raised by the petitioner on the strength of a contractual agreement should not be entertained but instead to be left open for determination in appropriate forum all the more when there has been delay of nine years and as such, institution of a suit is barred by limitation. Essentially, the argument is that when the suit is no more liable and grossly barred, on the self-same cause of action, the petitioner's claim for recovery should not be entertained at all. Mr. M.K. Mishra, learned Senior Advocate for the petitioner cites the decision in Shiv Dass (supra) to contend that therein the Apex Court in case of delay in filing the writ petition beyond three years in a matter wherein disability pension for an Army employee was demanded held and concluded that negligence, delay and laches on the part of the writ petitioner may be a ground to refuse considering the same.
10. Law is well settled that in case of a contract having no statutory flavour, a writ court is not to entertain any such action leaving the parties to approach the appropriate forum. That apart, whenever there is a claim put forth demanding payment of outstanding dues and specifically denied by the State or its instrumentalities and it cannot be crystallized, in such a situation, determination of the outstanding payable
needs evidence, hence, the writ court is to step aside leaving it for parties to seek relief before the forum agreed to as a part of the contract. Insofar as the case of the petitioner is concerned, it is no doubt a contract and the contract emanated from a statutory obligation imposed on the BMC, the Court is to consider whether at this juncture any such direction may be issued to the BMC vis-à-vis the relief sought for. The petitioner's demand stands at a staggering amount of Rs.73,25,10,241/-, which would obviously require scrutiny and verification. When for the determination, the materials on record are necessarily to be evaluated, the contention of the BMC is that the writ petition is not to be entertained. But considering the fact that there can be a decision on the basis of the contract and in terms thereof regarding the entitlements, this Court is of the view that a direction may perhaps be issued in that regard to freshly examine reconciling it with the records already in place being alive to the settled position of law that jurisdiction under Article 226 of the Constitution of India is generally not invoked for enforcing contractual payments, if it involves disputed facts, as alternative remedy either by a suit or arbitration is the best possible way. The Court is of the above view that when actions of the BMC in imposing penalties, deductions etc. with decisions are alleged to be arbitrary, in a given set of circumstances, a direction to revisit it could be a desirable option. Such a course of action is necessary to end the dispute between the parties arising out of a contract. From the record, the Court finds that there
had been discussions between the parties with communications and assurances received from the BMC to look into the claims of the petitioner but no result could be achieved. Even though the Court is not in a position to determine the entitlements in full, which the petitioner demands and it needs quantifiable data, which can best be possible with all such materials exchanged between the parties, this Court is of the view that though the claims are based on a contractual obligation, it would be justified to direct consideration of any such outstanding dues payable with interest or otherwise in terms of the CA.
11. A lot of emphasis has been laid by Mr. Mishra, learned counsel for the petitioner with reference to the provisions of the CA on the basis of the escalation of rate and its computation and the non-payment of tipping fees at such escalated rate and though its determination depends on the relevant records maintained by it at the ground level, this Court deems it proper to direct reconsideration of the same by the BMC for a decision vis-à-vis outstanding dues payable. In fact, the conditions of the contract are not in question but only its enforcement and corresponding contractual obligations but insofar as determination of the outstanding payable to the petitioner is concerned, this Court reiterates that it can be sorted out with exchange of the relevant records and all such quantifiable data for consideration of each other and for a final decision in that regard instead of outrightly rejecting and dismissing the plea on the premise that the writ petition is not to be entertained
since it relates to a contract, which is when, it has statutory flavour and to be performed in terms of the Rules and Act and not entirely a private contract. The Court is also of the view that the delay in raising plea and in not demanding the outstanding dues immediately should not always weigh against it and the same depends on the facts and circumstances of each particular case for a Court to determine whether a writ jurisdiction is to be invoked. In the peculiar facts and circumstances of the case at hand, the Court, considering the fact that the parties have had attempts quite at intervals to settle the dispute, which failed to result in an outcome and that there has not been any denial by the BMC during the subsistence of the contract that it is not liable to honour the same, rather, entertained correspondences to deal with the request of the petitioner, is also one of the grounds to persuade the Court to adopt the above course of action for a fresh decision by the BMC on the basis of the records available and reconciled. If there has no intimation about any such data necessary for considering the entitlements to the petitioner in terms of the CA and it was necessary on a daily basis, the objection of the BMC denying the claims cannot be sustained. For instance, any service shortfall since required to be shared with the petitioner in the manner contemplated and as per the CA, if not communicated at right point of time by the BMC, it shall have to ensure payments as any such materials relied on behind the back of the petitioner cannot be the basis to deny the legitimate payments.
12. On the point of maintainability of the writ petition in contractual dispute, the Court is inclined to elaborate further with reference to the case laws cited from the side of the petitioner. The submission of Mr. Mishra, learned counsel for the petitioner is that the BMC being an instrumentality of the State having a statutory responsibility and having acted in complete contravention of the Rules and Act, this Court is required to exercise the writ jurisdiction to curb the same. It has been alleged that there is arbitrariness in the decision of the BMC, hence, indulgence of the Court is absolutely necessary. A reference is made to the decision in Shrilekha Vidyarthi (supra). The BMC's response is that the State is not a party, as it should have been impleaded, nevertheless, the Court is not to invoke the writ jurisdiction where further evidence is needed to consider the claim of the petitioner. The Court is inclined to reproduce the relevant extract of the decision in Shrilekha Vidyarthi case, wherein, it has been held that every action of the State's instrumentality contractual or not shall be subject to judicial review and the same is herein below:
"22. There is an obvious difference in the contracts between private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirements of
public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article
14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions.
24. The State cannot be attributed the split personality of Dr. Jekyll and Mr. Hyde in the contractual field so as to impress on it all the characteristics of the State at the threshold while making a contract requiring it to fulfil the obligation of Article 14 of the Constitution and thereafter permitting it to cast off its garb of State to adorn the new robe of a private body during the subsistence of the contract enabling it to act arbitrarily subject only to the contractual obligations and remedies flowing from it. It is really the nature of its personality as State which is significant and must characterize all its actions,
in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. There is a basic difference between the acts of the State which must invariably be in public interest and those of a private individual, engaged in similar activities, being primarily for personal gain, which may or may not promote public interest. Viewed in this manner, in which we find no conceptual difficulty or anachronism, we find no reason why the requirement of Article 14 should not extend even in the sphere of contractual matters for regulating the conduct of the State activity.
28. Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Article 14 and permit judicial review, we have no hesitation in saying that the ultimate impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. We, therefore, find it difficult and unrealistic to exclude the State actions in contractual matters, after the contract has been made, from the purview of judicial review to test its validity on the anvil of Article 14."
In view of the above decision, the scope of judicial review is to test the validity of the action of the State or its instrumentality on the touchstone of Article 14 of the Constitution of India when there is arbitrariness alleged.
13. The case of the petitioner is that the CA was to expire in 2020, but it was extended unilaterally and after such extension, there has been action from the side of the BMC even imposing penalties not in consonance with the contract between the parties. On unilateral extension, the decision of the Apex Court in Suresh Kumar Wadhwa (supra) is relied on by Mr. Mishra, learned counsel for the petitioner, wherein it has been concluded that a party to the contract can insist on performance of the terms and conditions stipulated therein and has no right to unilaterally alter the same nor having the right to add any terms and/or conditions, but insofar as the petitioner is concerned, the contract has been accepted and acted upon during the extended period. Strictly speaking, it is not a case of any alteration of terms and conditions of the agreement but the parties proceeded further in terms of the original contract. According to the Court, even with the extension of the same having taken place beyond 2020, the petitioner cannot be allowed to claim that such decision by the BMC materially affected its interest and rights thereunder and therefore, the contention of Mr. Mishra, learned counsel for the petitioner referring to the decision of Suresh Kumar Wadhwa (supra) is not of any real assistance.
14. The plea is that 4% deduction from the monthly bills for MSW Funds to be illegal and not in terms of the CA and such other decisions of the BMC to be violative of Article 14 of the Constitution of India. It has been alleged that as the State's instrumentality, it should have been backed by
reasons and as the actions do not specify the test of reasonableness, the Court is to exercise the writ jurisdiction to set it right. In Srilekha Vidyarthi (supra) relied on by Mr. Mishra, learned counsel for the petitioner, it has been held as to be following:
"36. The meaning and true import of arbitrariness is more easily visualized than precisely stated or defined. The question, whether an impugned act is arbitrary or not, is ultimately to be answered on the facts and in the circumstances of a given case. An obvious test to apply is to see whether there is any discernible principle emerging from the impugned act and if so, does it satisfy the test of reasonableness. Where a mode is prescribed for doing an act and there is no impediment in following that procedure, performance of the act otherwise and in a manner which does not disclose any discernible principle which is reasonable, may itself attract the vice of arbitrariness. Every State action must be informed by reason and it follows that an act uninformed by reason, is arbitrary. Rule of law contemplates governance by laws and not by humour, whims or caprices of the men to whom the governance is entrusted for the time being. It is trite that 'be you ever so high, the laws are above you'. This is what men in power must remember, always."
In the above decision, the act of arbitrariness and its consequences have been discussed and it has been concluded therein that reasonableness should be the foundation of every action of the State based on reasons. In the case at hand, the petitioner alleges that decisions have
been taken on deductions and for such actions of the BMC, the Court shall have to intervene exercising jurisdiction under Article 226 of the Constitution of India. The Court is of the view that the fairness of the decision of the BMC having been challenged by the petitioner and to a reasonable extent demonstrated, it is a fit case where such interference by this Court is necessary and therefore, the objection from the side of the BMC on the maintainability of the writ petition is liable to rejection.
15. In Noble Resources Ltd. Vrs. State of Orissa and others (2006) 10 SCC 236, the Apex Court held and observed that if an action on the part of the State is violative of the equality clause containing Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field, but a distinction must be borne in mind between a matter, which is at the threshold of a contract and a breach of contract since in the former the Court's scrutiny is more intrusive and in the latter, it may not ordinarily exercise its discretionary jurisdiction of judicial review unless it is found to be in violation of Article 14 of the Constitution of India and while exercising contractual powers, the Government and its instrumentalities may be subjected to such review in order to prevent arbitrariness or favourtism on their part and indisputable inherent limitations exist, but it would not be correct to conclude that under no circumstances, a writ shall lie only because it involves a contractual dispute. In view of the aforesaid decision and considering the claim of the
petitioner and non-consideration of the plea advanced even with request for mediation having not been acceded to, this Court is inclined to entertain the writ petition since the actions of the BMC are alleged to be arbitrary and it is demonstrated to an extent clearly revealed from the record. According to the Court, the decisions need a scrutiny and judicial review.
16. The decision in Shishir Realty Private Ltd. (supra) outlines the principles laid down by the Apex Court on upholding fairness and equality in the rule of law by the Government and public authorities while dealing with contractual matters and therefore, it has been held that to examine the role of a Constitutional Court, every action of the State or its instrumentality must have to follow the rule of law while exercising executive powers. It has been categorically held and observed therein that being governed under rule of law, action of the State and its instrumentalities must recognize the existence of a freedom to enter or not to enter into contracts, the manner, method and motive behind the decision can be subjected to judicial review on the touchstone of equality, fairness, proportionality and natural justice and therefore, the decision of the Executive must strike a balance with the alleged violations with that of the penalties imposed. A reference may also be placed on ABL International Ltd. besides Joshi Technologies International Inc. (supra), wherein, principles have been elaborately discussed for the High Courts to take judicial notice of at the time of
exercising writ jurisdiction in contractual disputes between the State and a private party. In Tantia Construction Pvt. Ltd. (supra), the Apex Court held that even on the question of maintainability of the writ petition on account of arbitration clause included in the contract, any such alternative remedy does not stand as an absolute bar to the invocation of writ jurisdiction and that without exhausting such remedy, it would not be maintainable, rather, the law is well established that the constitutional powers vested cannot be fettered by any alternative remedy available to the authorities as injustice whenever and wherever it takes place has to be struck down as anathema to the rule of law and the provisions of the Constitution of India. Having taken cognizance of the case laws cited by Mr. Mishra, learned counsel for the petitioner, the Court is to reiterate the view that the action of the BMC needs judicial scrutiny.
17. As regards delay in filing the writ petition and the contention of Mr. M. K. Mishra, learned Senior Advocate for the BMC in that regard is that the writ petition is not maintainable as the suit for any such reliefs sought for is grossly barred. This Court is not inclined to accept the contention and to respectfully disagree with it for the reason that even though the contract is for seven years, it was extended from time to time and at last, brought to an end in 2022-2023. Though it is claimed that there is delay of nine years in approaching this Court and as such, the civil action is barred by limitation as a suit was needed to be filed within three years from the date of cause of action and it has
been counted from 2015 when the CA was for a period of seven years commencing from 2013, according to the Court, the cause of action is not time barred. If in course of continuation of the contract, any such action of the BMC has not been questioned, it is not to debar the petitioner to challenge the same after the closure of the contact in 2022- 2023. In fact, all along the petitioner have had correspondences for consideration towards payment of tipping fees at escalated price, deductions etc. and even suggested for mediation, which could not be successful and filing of the writ petition towards the end upon closure of the contract cannot be said to be barred by limitation, hence, the contention on limitation is liable to be rejected.
18. Insofar as in payment of tipping fees at escalated rate as per the CA, a reference has been made to the Gazette notification at Annexure-16 series and the submission is that the minimum wages for the labour force have been increased, as a result thereof and that apart, there was drastic rise in manpower cost, maintenance, lubricants and price of spare parts and hence, the petitioner was entitled to such payments at the escalated rates. In reply to the above, Mr. M. K. Mishra, learned Senior Advocate for the BMC would submit that no any quantifiable data was ever produced by the petitioner while claiming payment on escalation of price. Admittedly, the CA provides a clause on escalation towards labour component, fuel and lubricants, repair, maintenance and replacement, minimum wages (unskilled) as notified by the Government of Odisha, and therefore, the BMC shall
have to comply the same. In fact, Clause 3.26 of the CA stipulates the formula for escalation of rates and according to Mr. M. K. Mishra, learned Senior Advocate for the BMC, such escalation is not automatic, but on a subjective satisfaction in terms thereof. When the petitioner demands escalation in respect of the tipping fees, the Court is in agreement with Mr. M. K. Mishra, learned Senior Advocate for the BMC that it shall have to be considered with regard to the labour deployment and actual payment of service to the labour force at the relevant point of time in order to demand such payment in terms of Clause 3.26 at escalated rates. For the said purpose, the petitioner is required to submit the bills on labour component with such other expenses incurred at a higher price for consideration of the BMC. If a case is made out by the petitioner with all such facts and figures submitted to the BMC, the Court is of the view that it would be entitled to payment of tipping fees for the relevant periods at escalated rates in view of Clause 3.26 of the CA.
19. From the record, it is made to reveal that necessary correspondences have been made by the petitioner to the BMC vide Annexure-18 series and 20 with a demand for payment of tipping fees at the revised rates, but it was not considered. The Court finds that the petitioner moved the BMC seeking an amicable settlement on several issues including non-payment of tipping fees, however, it led to no solution. It is, therefore, necessary that the petitioner, if having submitted the data on labour component etc. while
demanding payment on tipping fees at escalated rates, it shall have to be considered by the BMC. Any such payment without the relevant data as rightly pointed by Mr. M. K. Mishra, learned Senior Advocate for the BMC could result in unjust enrichment.
20. According to the petitioner, deduction @ 4% from the monthly bills towards MSW Funds is illegal and contrary to the terms of the contract is seriously opposed by Mr. M. K. Mishra, learned Senior Advocate for the BMC with the submission that it is a part of the CA vide Clause-2.1.5 Part- E under the heading of 'Ancillary Activities'. It is submitted that said Clause stipulates setting up of state of art control room and instrument to facilitate real time, tracking and monitoring solid waste management system and to provide required resource support for registration, monitoring and compliance and at the same time, to undertake community interaction and consultations at regular intervals along with the BMC officials and as the petitioner did not adhere to the same, as the scope of work also included the rate fixed for tons of MSW collected and transported, a meeting was held under the Chairmanship of the Commissioner, BMC to set up a City Solid Waste Management Fund in order to ensure successful operationalization of the contracts assigned and therein a decision was taken and placed before the Standing Committee of the Corporation vide Resolution dated 30 th December, 2014 and thereafter, in the next meeting held on 4th December, 2014, there was participation of the petitioner and it was decided therein that for generation of fund for
solid waste management, 4% deduction shall be made from each monthly bill of SWM Operators. In fact, several correspondences with the BMC are shown to have taken place with pleading that 4% deduction from the monthly invoice to be illegal, but having regard to the relevant Clause under Part-E, the BMC in order to ensure compliance and to cover the scope of work in terms of the contract and for proper tracking and monitoring of Solid Waste Management System created the fund allowing 4% deduction from the monthly bills. According to the BMC, such deduction was not objected to by the petitioner and when it is in terms of Clause 2.1.5 of the contract, the same is in accordance with the CA, not in breach thereof. The Court is inclined to hold that such a deduction is permissible and the source of the deduction from the monthly bills is a part of an exercise for ensuring successful tracking and monitoring of the Solid Waste Management System. It was also within the knowledge of the petitioner regarding the purpose of the deductions taking place and when it is in terms of the contract in view of Clause 2.1.5 Part-E thereof, this Court is of the view that any such decision by the BMC in that regard does not call for interference.
21. The petitioner alleges that there has been levy of penalties arbitrarily contrary to the provisions of the contract. It is alleged that the penalties have been regularly imposed without following any of the contractual terms and following Clause 3.19 of the CA, which stipulates that the BMC is required to record the service shortfalls on a daily
basis and communicate the same to it on a regular basis. Mr. Mishra, learned counsel for the petitioner submits that solid waste management achievement must be taken into consideration while evaluating the performance, however, the BMC instead of any intimation to the petitioner regarding the shortfall in service levied penalties, which is contrary to the contract itself. In reply to the above, Mr. M.K. Mishra, learned Senior Advocate for the BMC would submit that such imposition of penalties is in accordance with the contract. A reference is made to Clause 2.1.7 of the CA, which relates to exclusion of certain activities from the scope of work. It has been alleged by the BMC that collection and disposal of construction wastes do not form a part of the petitioner's contractual obligations but in order to get more tonnage, the materials like concrete, soil, bricks, wood, asphalt and metals were transported by the petitioner and it has been physically verified and certified by the Sanitary Inspector on duty on each day with report received, and therefore, on account of such collection and transportation to the Temporary Transit Station (TTS), the levy of penalties is justified as it is in accordance with Clause 2.1.9. When it is claimed by the BMC that regular inspection was held upon receiving the solid wastes at TTS and some of the reports have been produced for the Court's perusal, it is not forthcoming from the record as to if the petitioner had the intimation about the same. The petitioner claims that no shortfall in service was ever informed by the BMC and therefore, the penalties could not have been
levied. Such service shortfalls, though, have not been alleged, but the levy of penalties, as claimed by the BMC, was on the ground that the same is in terms of Clause-2.1.7. The Court is of the view that the BMC might have intimated the petitioner regarding the reports received from the Sanitary Inspector on a daily basis. It is not discernable from the record whether the BMC ever had issued such intimation on a daily basis with regard to the reports about collection and transportation of such materials, which do not form part of the contract, but to be governed by its exclusion clause, hence, a direction in that regard is necessary.
22. The claim of the petitioner that there has been withholding of 20% of the amount from June, 2019 bill for the service rendered by it during 'Fani' cyclone period, but the response of the BMC is that the cyclonic storm had landfall on 3rd May, 2019 and the restoration work in the City of Bhubaneswar was substantially completed by the end of June, 2019 with limited removal of trees and branches, which continued till July, 2019. It is also responded by claiming that the per day average waste transported to the TTS during June to July, 2019 had increased disproportionately compared to the preceding and succeeding months and while claiming so, a reference was made to the additional counter affidavit filed by the BMC. The explanation of the BMC is that the weightage of garbage suddenly increased and it was claimed as abnormal with the apprehension expressed that waste from nearby peripheral areas beyond the jurisdiction of the BMC may
have been transported to the TTS resulting thereby increased tonnage figures and keeping in view the same and in order to safeguard the public exchequer, the City Health Officer recommended withholding of 20% of the invoice amount for the alleged period with a direction to release the same only after receipt of the audit observation and it is within the realm of contract agreement. Nothing is brought to the notice of the Court regarding any such audit held justifying withholding 20% of the bill amount for June, 2019. Any such apprehension that wastes from peripheral areas of the BMC to have been shown as collection and disposal by the petitioner is based on no material. In other words, it is merely an assumption that the petitioner might have collected the waste and transported it to the TTS, which are cyclone related debris and hence, the recommendation to withhold 20% of the invoice amount was received and acted upon is misconceived. To justify any such decision by the BMC merely on the ground that there has been sudden increase in collection of waste at the relevant point of time alleging that the garbage of cyclone related debris might have been collected by the petitioner without any specific evidence shall have to be rejected outrightly, hence, it shall have to clear the bill for the month of June, 2019 furthermore in absence of any such finding from the audit.
23. Insofar as the additional cost, expenses and daily tonnage loss incurred during Covid-19 period is concerned, it is claimed by the petitioner that such loss is to be
calculated and paid to it by the BMC and even for that, a force majeure as per Annexure-28 was issued in terms of Clause-3.31 of the CA. Replying to the same, it is contended by the BMC that the contract does not contain any clause assuring a Minimum Guarantee Quantity (MGQ) of waste supplied and in absence of any such assurance, demand of compensation for the alleged shortfall or tonnage loss is wholly misleading and cannot be entertained. A dispute is over the collection and transportation on a tonnage basis, which according to the BMC, collected more than the previous years and as such, the petitioner sustained no loss, all the more when the contract does not assure MGQ. No necessary correspondence by the petitioner to the BMC is shown to have taken place demanding compensation for the period between 2020 and 2021. The record needs verification in view of the claim of the BMC that there has been no tonnage loss with reference to the terms of the contract. If the CA does not have any such clause to assure the MGQ of waste supply in a given period and there is a rival claim to the effect that there was rather no shortfall or tonnage loss referring to relevant data on record, the Court is inclined to direct the BMC to reconsider the plea of the petitioner.
24. As regards the claim of the petitioner on withholding payment relating to the services rendered vis-à-vis MCC and Kalinga Stadium, it is seriously disputed by the BMC with the plea that such an action and decision is on the basis of SoP on decentralized management systems issued by the
Department of Housing and Urban Development, Government of Odisha, in consequence whereof, MCC and Material Recovery Facility (MRF) together known as Wealth Centres were established and operationalized. The further explanation is that on the observation of the then Principal Secretary, Housing and Urban Development Department-cum-Administrator, BMC in the file dealing with sanitation bill payments to the effect that the proposal does not seem to be fully in alignment with the progress of the Wealth Centres established and in operation recommended a Committee to re-examine it and submit its view and as an interim measure, to direct release of 60% of the proposed payment, later to which, 40% of the bill was withheld but according to the Court, such a direction could not have been issued for not being a part and parcel of the contract and therefore, a further direction to the BMC is necessary to ensure release balance of the sanitation bill.
25. If the BMC instructed the petitioner to undertake sanitation work at the Stadium for any event to happen, it is under obligation to make the payment. In fact, any such payment beyond the contract with consent of the BMC cannot be avoided. It is based on the doctrine of quantum meruit, that apart, the BMC utilized the services of the petitioner and appropriated the benefits and hence, it is liable to ensure payment on sanitation bill and simply cannot sit over the matter with a plea that necessary requisition has been placed before the Sports and Youth Department, Government of Odisha.
26. On the additional work taken up at Kalinga Stadium, Bhubaneswar, it is submitted that no payment has been made to the petitioner. Referring to Annexure-31 series, which are the copies of the letters addressed to the BMC, it is claimed by the petitioner that there is non-payment for the works done in spite of the request made to the BMC at whose instance garbage disposal and cleaning inside its premises for the ensuing Hockey World Cup was carried out. The reply by the BMC is that after receipt of the bill, it has requisitioned the Sports and Youth Department, Government of Odisha for reimbursement of the expenditure towards sanitation during the World Cup and therefore, there is no arbitrary withholding of payment, but the fact remains, it is for the BMC to ensure that the payment towards sanitation on the bills received from the petitioner is ensured and for that, it cannot be allowed to take a stand that the Government has not been impleaded as a party herein. In other words, the petitioner was engaged to clean the stadium for the event and the payment whether the bills submitted should have been honoured. Merely placing a requisition before the Government does not absolve the BMC from its responsibility and therefore, such payment shall have to be ensured without delay along with interest, as has been claimed.
27. On the claim of the petitioner in withholding payment towards tonnage loss incurred qua deployment of NGO vehicles from door-to-door collection contrary to the CA similar is the response of the BMC that the contract does not
contain any clause with a guarantee of minimum tonnage nor does it contemplate any compensation mechanism for reduction in waste quantity due to changes in the Municipal Collection System. No material is on record to show from the side of the petitioner that for any such collection of solid wastes, there was any tonnage loss due to the involvement of the NGO vehicles. Rather, the Court is inclined to accept the explanation of the BMC in that regard. There has been no such guarantee clause that a minimum tonnage and anything less could entitle the petitioner to compensation and that apart, the action and exercise undertaken have been in consonance with the Rules and it was to stop indiscriminate dumping of wastes. The contention is that the Government took a policy decision that each ULB shall implement door-to-door collection of segregated wastes through SHGs, community-based non-profit groups etc. That apart, the contract being tonnage based, the petitioner is entitled to payment strictly on the basis of actual waste handed without any entitlement to compensation for any decrease in the quantity and therefore, the petitioner is not entitled to demand compensation on such count.
28. With the discussions as aforesaid and conclusion arrived at taking note of the case laws cited by both the sides, this Court further reaches at a decision that the BMC should have been open and transparent in dealing with grievance of the petitioner, which made an attempt for mediation, but it received a cold response. The details of the attempts made by the petitioner for mediation are pleaded
on record. Since the Court is inclined to direct payment on the heads identified hereinabove leaving the rest for reconsideration by the BMC, it is of the ultimate view that immediate exercise is necessary for a decision thereon with the participation of the petitioner making it available with all the relevant records. It is also realized that the petitioner is to reciprocally respond by placing the facts and figures for consideration of the BMC while demanding payment of tipping fees with escalated rates permissible under the CA, especially with regard to labour and other components discussed earlier. The Court is inclined to observe that even though it is a contractual obligation on the part of the BMC, it shall have to deal with the demands of the petitioner strictly in accordance with the contract fairly and transparently or else every decision thereon could be branded as acts of arbitrariness. To obviate any such eventuality, this Court observes that the BMC shall have to consider the relevant records to re-examine the claim of the petitioner on the heads vis-à-vis the payments demanded releasing the dues for the remainder, as has been directed.
29. Accordingly, it is ordered.
30. In the result, the writ petition stands allowed to the extent indicated hereinabove. As a necessary corollary, the BMC is directed to release the dues of the petitioner in respect of the claims admitted by this Court and to re- examine/reconcile the records with a decision vis-à-vis payments demanded on other heads by undertaking an
exercise at the earliest and concluding it preferably within a period of three months from the date of receipt of a copy of this judgment. The Court directs that the BMC shall hold convenient sessions/sittings for the participation of the petitioner to freshly examine and to take a decision on the claims winding up the exercise in time and before expiry of the above stipulated period.
(R.K. Pattanaik) Judge
Manoj
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