Telangana High Court

M/S Sahasra Reg.No. 583/2015 vs The State Of Telangana And 3 Others on 29 August, 2022

Bench: Ujjal Bhuyan, C.V. Bhaskar Reddy

          THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
                                             AND
             THE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY
                                    W.A.No.554 of 2022
JUDGMENT: (Per the Hon'ble the Chief Justice Ujjal Bhuyan)


        Heard Mr. E.Madan Mohan Rao, learned Senior Counsel for

the appellant and Mr. B.S.Prasad, learned Advocate General for

the State of Telangana appearing for the respondents.

2. This intra-court appeal has been filed by the appellant

assailing the common order dated 01.08.2022 dismissing

W.P.No.20391 of 2022 filed by the appellant along with nine other

writ petitions.

3. The related writ petition was filed assailing the memo

dated 04.04.2022 issued by respondent No.1; circular

dated 07.04.2022 issued by respondent No.2; and the consequential

notice dated 12.04.2022 issued by respondent No.4. Appellant

further challenged the tender notice dated 16.04.2022 issued by

respondent No.3 and the related notice terminating the contract of

the appellant.

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4. Appellant was the existing contractor supplying diet to

respondent No.4- Gandhi Hospital, Secunderabad. Tender notice

dated 23.09.2021 was floated by respondents No.3 and 4 for supply

of diet to respondent No.4, in which appellant participated.

Following the tender process, appellant was awarded the contract

on 20.01.2022; the contract period being three years from the date

of commencement. Following the award of contract, a contract

agreement was entered into between the appellant and respondent

No.3 on 21.01.2022 whereafter, appellant submitted the caution

deposit money.

5. Respondent No.1 issued G.O.Ms.No.34 dated 21.03.2022 for

streamlining the delivery of nutritious food to in-patients of

Government hospitals and health centers leading to increase in the

diet charges on the basis of new diet schedule. Following the

above, respondent No.1 issued memo dated 04.04.2022, according

permission to respondent No.2 for cancelling the existing diet

contracts by giving one month's notice.

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6. According to the appellant, respondent No.1 had issued

G.O.Ms.No.34 dated 21.03.2022 streamlining delivery of nutritious

food to in-patients of Government hospitals; it did not call for

cancellation of existing diet contracts. Therefore, it was contended

that memo dated 04.04.2022 was contrary to G.O.Ms.No.34

dated 21.03.2022.

7. Be that as it may, circular dated 07.04.2022 was issued to opt

for fresh tenders for diet contract by terminating the existing

contracts after one month's notice. Following the same,

respondent No.4 issued advance notice dated 12.04.2022 to the

appellant for termination of diet contract.

8. Learned Single Judge, after due consideration, took the view

that the writ court under Article 226 of the Constitution of India

cannot enforce contractual obligation. As per the termination

clause, three months' notice was required to be given, which was

not challenged by any of the contractors. On the plea of the

appellant that only one month's notice was given as opposed to

three months, learned Single Judge was of the view that though the ::4::

same may result in some hardship to the appellant, larger public

interest would be sub-served by providing nutritious diet to the in-

patients of Government hospitals and that individual interest would

have to yield to public interest. As the Government had taken a

conscious decision not to continue the petitioner at enhanced rates

and invoked the termination clause, the writ court would not be

inclined to interfere with the decision of the Government. Finally,

learned Single Judge noted that the impugned decision of the State

could not be termed as arbitrary or mala fide as it is the policy

decision of the Government to introduce new diet. While

dismissing the writ petition, learned Single Judge observed that

though one month's termination notice was given to the appellant,

in the writ proceedings, appellant had obtained stay for more than

two months. If the two periods are considered together, appellant

had more than three months' time.

9. In the hearing today, learned Senior Counsel for the

appellant submits that appellant had not questioned the policy

decision of the State. All that the appellant has questioned is the ::5::

manner of termination of the contract. Given an opportunity,

appellant is ready to supply the new diet schedule at the rates fixed

by the State. Summary termination of the contract was not at all

justified.

10. In his submissions, learned Advocate General has stated that

the above decision of the State has been applied across the board

to 192 hospitals of the State. Justifying the order of the learned

Single Judge, he submits that there is neither any arbitrariness nor

mala fides in the decision making process, which would warrant

interference with the cancellation of contract and issuance of new

contract. He further submits that following the fresh tender

process, one M/s. Shivenary Canteen Services has been awarded

the contract for supply of diet to respondent No.4. In this

connection, letter of award of contract was issued to the new

contractor on 27.08.2022.

11. However, learned Senior Counsel for the appellant submits

that as on today, appellant is still continuing to supply diet to

respondent No.4.

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12. After hearing learned counsel for the parties and on due

consideration, we are of the view that there should be an inbuilt

provision for redressal of grievance arising out of a contract. On

perusal of the contract agreement dated 21.01.2022 entered into

between the Hyderabad District Diet Managing Committee and the

Diet Managing Committee of respondent No.4 on the one hand

and appellant on the other hand, we find that as per Article 11(b),

there is a provision for dispute resolution, which reads as follows:

"Dispute Resolution All disputes arising out of the Agreement may be got resolved through best efforts by mutual discussions amicably. In the event of the Parties not finding any acceptable solution to the disputes within 30 days the same shall be appealed to the State Level Committee as hereinbefore said, whose decision shall be final and binding on both the parties."

13. From the above, it is evident that in case any dispute arises

out of the agreement, the same may be resolved through the best

efforts by mutual discussions amicably. If such resolution of

dispute is not acceptable to either of the parties, it may appeal to ::7::

the State Level Committee, whose decision shall be final. At the

first instance, the dispute is to be resolved within thirty days.

14. Having regard to the above, we relegate the parties to dispute

resolution to be carried out in terms of Article 11(b) of the

Contract Agreement dated 21.01.2022, which shall be carried out

between respondent No.3 and the appellant and concluded within a

period of thirty days from the date of receipt of a copy of this

order. Till the period of thirty days, status quo as on today as