Telangana High Court

Mr M Bupati Reddy vs Union Of India on 9 June, 2022

Bench: G.Radha Rani

            THE HON'BLE Dr. JUSTICE G. RADHA RANI

                   WRIT PETITION No.16045 OF 2022

ORDER:

This writ petition is filed by the petitioner seeking a writ of

Mandamus directing the Respondents No 3 & 4 to extend the contract

Agreement dated 30-01-2019 for manning, maintenance of AC waiting

halls on PF.No.1 (2T&3T) at Tirupathi Railway Station for a further period

of one year from 30-04-2022 to 02-04-2023 holding that the Circulars

dated 07-09-2020 & 08-02-2021 and the Tender Notification dated

25-03-2022 were discriminative being in violation of Article 14 of the

Constitution of India, arbitrary, illegal and unconstitutional depriving the

petitioner of his right to livelihood.

2. Heard the learned counsel for the petitioner Sri Srinivas Chitturu

and Sri G Venkateshwarlu the learned Central Government Counsel on

record representing the respondents.

3. The learned counsel for the petitioner submitted that the

Respondent No.4 floated a Tender No: G/C.14/ AC Waiting Hall / Tender /

2018 dated 30.07.2018 for the award of contract for the Maintenance and

manning of prepaid AC Waiting Halls at Tirupathi & Renigunta Railway

Stations. The petitioner participated in the tender and on 10.09.2018 Dr.GRR,J

submitted his offer letter. The same was accepted by the Respondent No.4

and issued Letter of Acceptance (LoA) on 12.11.2018. The Petitioner paid

the License Fee and Security Deposit. The Respondent No.4 issued letter

dated 2-1-2019 confirming the award of tender. The petitioner and the

respondent executed the Contract Agreement for Maintenance of AC

Waiting Halls at Tirupathi Railway Station for the period from 03.01.2019

to 02.01.2022. The petitioner paid EMD amount of Rs.2,94,032/- and

deposited an amount of Rs. 6,23,301 towards the Security Deposit. The

petitioner has to pay an annual license fee of Rs.20,77,670/- and he paid

the same.

3.1. The learned counsel for the petitioner further submitted that

due to the COVID-19 pandemic, a National lockdown was declared in

March, 2020 and all the Railway Stations were closed and the petitioner's

contract also stood suspended as the railway station was closed.

Considering the pandemic situation the Respondent No.2 issued Circular

dt.07.09.2020 relaxing 90 days for license fee treating the period from

25.03.2020 to 22.06.2020 as 'dies-non'. The Respondent No.4 thereafter

issued another Circular dt.08.02.2021 granting further relief on account of

the COVID-19 pandemic. Under the Circular dt.08.02.2021, the

Competent Authority under the respective contracts was permitted to Dr.GRR,J

consider the 'dies-non' period of 90 days to be added at the end of the

contract period and accordingly the contract period stood extended and the

licensee had to pay the license fee for the extended period in terms of the

executed contract. Further to give equal opportunity to all Commercial

Contract Licensees after lockdown the phrase 'December 2020 and beyond'

was deleted in para-2 of Circular dt.07.09.2020. The Circular

dt.08.02.2021 also gave discretionary power to the Competent Authority to

consider extension of one year of contract period after the expiry of the

extended 90 days contract period for those Commercial Contracts which

had provision of extension of contract period in the tender and those

contracts which were expiring on 31.12.2021. It was submitted that the

Circulars dt.07.09.2020 & dt.08.02.2021 were qualified by restricting the

application of the Circular to only some categories of the Commercial

Contracts without any rationale and thereby discriminated other

Commercial Contracts like that of the petitioner. It was further submitted

that the rationale for considering only contracts expiring on 31.12.2021 for

extension was arbitrary ignoring the other Licensees like that of the

petitioner who also equally suffered on account of the pandemic.

3.2. It was further submitted that inspite of the report of the CCI

(Chief Commercial Inspector) indicating the period of closure and opening Dr.GRR,J

of AC Waiting Halls during Covid-19, the respondents had not considered

the loss suffered by the petitioner on account of such closure. It was

submitted that the report would disclose that the AC Waiting Halls were

closed from 22.3.2020 to 31.10.2020 (223 days), 14.11.2020 to 1.1.2021

(47 days) and 17.4.2021 to 7.7.2021 (91 days) i.e., in all 361 days. The

learned counsel for the petitioner submitted that nearly a year of the

contract period was lost. The Ministry of Railways proposed to resume the

regular trains in a phased manner from the middle of November, 2021 and

all the trains were not resumed till the date of filing the petition, effecting

the footfall and effecting the contract of the petitioner for want of

passengers. The respondents failed to appreciate the fact that the petitioner

was deprived of a substantial period of the contract during which period

the contract could not be commercially exploited to gain the profits.

3.3. On 27.12.2021, the petitioner submitted a representation to the

Respondent No.2 requesting to extend the relief granted under Circular

dated 08.02.2021 to the Petitioner also. The petitioner on 27.12.2021 also

gave a representation to the Respondent No.4 requesting to extend the

contract period by another 2 years to cope up with the losses on account of

pandemic. On 02.01.2022 the Respondents considering the representation

of the petitioner dated 27.12.2021, extended the relief under the Circular Dr.GRR,J

dt.08.02.2021 to the petitioner to utilize the dies-non period and

accordingly the contract was extended by 90 days i.e., from 03.01.2022 to

02.04.2022. On 22.01.2022 the petitioner submitted another representation

through email to the Respondents to extend the contract period by another

year relaxing the fixed date of 31.12.2021 under Circular dt.08.02.2021, as

the petitioner's contract was expiring just two days later and as the

petitioner also equally suffered on account of pandemic. The Respondents

failed to appreciate the same and deprived the petitioner of his legitimate

right for extension of contract for another year similar to that of the other

licensees. On 23.02.2022, the Responding No.4 rejected the request of the

petitioner for extension and immediately the petitioner had submitted

another representation on 25.02.2022 requesting to rationalize the Circular

by extending the same benefit to all the Commercial Earning Contracts

which existed during the COVID period to the same amount of duration as

per the original contract awarded. The Respondent No.3 had rejected the

representation of the petitioner on 09.03.2022 for extension of the period

of the contract.

3.4. It was further submitted that the petitioner filed the Writ Petition

No.14664 of 2022 challenging the arbitrary action of the respondents and

when the matter was listed on 23.03.2022 for admission, the counsel Dr.GRR,J

appearing for respondents represented that since the contract was expiring

on 04.04.2022, sought one week time for filing counter and this Court

granted time till 30.03.3022 for counter and hearing. However the

respondent instead of filing counter, in abuse of the process of law, issued

a fresh Tender Notification dt.25.03.2022 and compelled the petitioner to

file the writ petition.

4. The learned counsel for the respondents submitted that though the

period of contract of the petitioner was for 3 years from 03.01.2019 to

02.01.2022, the petitioner paid two years license fee only and not for the

entire three years. As per the Railway Board guidelines, the 90 days dies-

non granted vide letter dated 07.09.2020 was extended at the end of the

executed contract period i.e., from 03.01.2022 to 02.04.2022. The circular

dated 08.02.2021 was issued by R-2 (the apex body of the Indian Railway

Commercial department) and the petitioner was not eligible for extension

of contract period for one year after expiry of extended 90 days period as

per clause (vi) of Railway Board letter dated 08.02.2021. He further

submitted that, as per clause (vi) of Railway Board letter dated:

08.02.2021, the "Competent authority (as mentioned in the existing tender)

may consider extension of one year after expiry of extended 90 days

contract period (as the case may be) for those Commercial contracts (viz.

Dr.GRR,J

STD/PCO, Parking, ATM, Pay & Use toilet, PBCM) which had provision

of extension of contract period in the tender and the same was expiring by

31.12.2021. The said one year extension would be granted without

escalation of license fee." But in the present case, there was no provision in

the executed agreement for extension of contract beyond the period

expiring after 31.12.2021, hence, the proposal for extension of contract

period beyond 03.04.2022 for one year was not considered as per Railway

Board guidelines. The R-4 had never advised/instructed the petitioner to

close the AC waiting Halls for the period from 14.11.2020 to 01.01.2021

(49 days) and from 17.04.2021 to 07.07.2021 (82 days). However, the

period from 25.03.2020 to 01.11.2020 was treated as dies-non (from

25.03.2020 to 22.06.2020 dies non-granted by Railway Board vide letter

dated 07.09.2020 and from 23.06.2020 to 01.11.2020 dies-non granted by

the DRM Guntakal vide e-office file computer No. 128464).

4.1. It was further submitted that circulars dated 03.07.2020,

21.08.2020 and 24.12.2020 referred by the petitioner pertained to all NFR

Commercial Publicity and Advertisement contracts of Indian Railways

which was circulated by Joint Director (NFR)/ Railway Board, which were

not applicable to Commercial earning contracts dealt by Director Traffic

Commercial (G)/ Railway Board.

Dr.GRR,J

4.2. The learned Central Government counsel further submitted that

the process for calling of quotations to award the AC waiting hall contract

was initiated well in advance i.e., on 15.02.2022 which was more than one

month before the filing of WP No. 14664 of 2022, to obtain necessary

approvals from the competent authority, as the extended contract period of

the petitioner was going to complete by 02.04.2022. After obtaining

necessary approvals from the competent authority, on 24.03.2022, the

quotation notification was issued immediately on 25.03.2022 in the interest

of public convenience and considering the summer season.

4.3. He further submitted that the petitioner had choice to

participate in the quotations as well as tender notifications issued by the

respondents and prayed to dismiss the petition.

5. Perused the record. The agreement of contract entered between

the petitioner and respondents for maintenance of AC waiting halls at

Tirupathi Railway Station was for the period from 03.01.2019 to

02.01.2022. As per clause 35, the Licensee shall man the AC waiting hall

round the clock. Penal conditions were also laid down under clause No.9.

Clause No. 13 of the Special Conditions of the Contract provides for the

period of the contract. As per sub-clause (c):

Dr.GRR,J

"The Licensee has to run the contract for full term of the contract.

In the event of rescinding the contract, the Licensee has to give 3

months prior notice on completion of 12 months from the

commencement of the contract and has to continue till an

alternative arrangement is made by the administration, failing

which the Security Deposit will be forfeited."

6. Clause 17 of the Special Conditions of the Contract deals with

breach of contract. The contractor was liable to pay damages of a sum of

Rs. 5000 for each misconduct or breach of provisions of the agreement.

Clause 18 deals with termination of the contract by serving a notice of 14

days to the contracting party without any reason and clause 19 provides for

Arbitration for solving disputes. Clause 14 states the tariff for utilizing the

AC waiting hall as Rs.24/- per hour per passenger. It also provides with

the details of the Annual License fee payable to the Railways. Whether the

contractor generates revenue or not, he was liable to pay the license fee.

7. Due to the unforeseen Covid-19 pandemic, a National lockdown

was declared in March 2020 and all the Railway Stations were closed. The

movement of all the trains was also suspended effecting the businesses and

functioning of all the persons. As per the report given by the CCI (Chief Dr.GRR,J

Commercial Inspector), the AC waiting halls at Tirupathi Railway Station

was closed from 22.03.2020 to 31.10.2020 (223 days), 14.11.2020 to

01.01.2021 (47 days) and 17.04.2021 to 07.07.2021 (91 days) i.e., in all

361 days, 4 days short of an year.

8. Considering the situation and the representations from Zonal

Railways seeking relief in payment of License fee for commercial earning

contracts (STD/PCO, Parking, ATM, Pay & Use toilet, PBCM), the Joint

Director Traffic Commercial (G), Railways Board issued a Circular dated

07.09.2020 granting 90 days relaxation in License fee by treating the

period from 25.03.2020 to 22.06.2020 as 'dies-non'. A discretion was

given to Zonal Railways for addition/modification/review of the existing

agreements with mutual consent. A further relief was also granted to

commercial earning contracts (STD/PCO, Parking, ATM, Pay & Use

toilet, PBCM) on 08.02.2021, as a special case that the competent authority

might consider extension of one year, after expiry of extended 90 days

contract period in the tender for those whose contract period was expiring

by 31.12.2021.

9. The petitioner made a representation to the Director Traffic

Commercial (G), Railway Board on 27.12.2021 to extend the tender period Dr.GRR,J

and to reconsider the license fee and to grant the benefit of one time

relaxation given to commercial earning contracts due to Covid-19

pandemic to him also as the Local Competent Authorities were extending

the contract period to STD/PCO, Parking, ATM, Pay & Use toilet, PBCM

etc. He also stated the reasons for seeking extension as below:

1. The A/C waiting hall was closed in the first 3 months post the

allotment of tender, due to the infrastructure maintenance

activity to build new toilets and could not generate any revenue.

2. With the onset of pandemic due to Covid 19 set in, the petitioner

had to close the A/C hall in accordance with the Gol's order with

the invocation of Force Majeure in March, 2020 and kept it

closed between March, 2020 and September, 2020.

3. Though the A/C hall was reopened for passenger's use based on

the suggestion from the DCM, the passenger foot fall inside the

A/C hall was miniscule till the second wave of the pandemic

between February, 2021 and July, 2021.

4. With the relaxation in the government guidance from the mid of

year 2021, the A/C hall was fully functional, however the

passenger's usage of A/C waiting hall had tremendously reduced Dr.GRR,J

considering the perception among the public that the chances of

getting the covid-19 variants spread in closed space were high.

10. He also addressed another letter dated 25.02.2022 and also gave

representation through email dated 17.03.2022.

11. The Deputy Chief Commercial Manager vide letter dated

09.03.2022 replied that:

"In the absence of provision to extend the contract in the agreement, your contract cannot be extended. However, the period of dies-non has been added to your present contract i.e. from 03-01-2022 to 02-04-2022.

Hence your request for extension of contract beyond expiry period could not be entertained as per Covid relief measures issued by Railway Board."

12. Challenging the same as arbitrary, discriminative and was in

violation of Article 14 of the Constitution of India, the petitioner filed this

writ petition.

13. The learned counsel for the petitioner contended that the policy

adopted by the respondents in not extending the contract for another year

when his case was also similar to that of the other licensees was

discriminative as he also suffered the same loss on account of the

pandemic as much as the licensees whose contracts expired on

31.12.2021. He further submitted that his contract expired on Dr.GRR,J

02.01.2022, only two days later and he was deprived of the benefit for no

fault of his and relied upon the judgment of the Hon'ble Apex Court in

Senior Divisional Commercial Manager & Ors. Vs. S.C.R Caterers,

Dry Fruits, Fruit Juice Stalls Welfare Association & Anr.1, wherein it

was held that:

"20. The findings of the learned single Judge have been upheld by the Division Bench and we do not find any reason to interfere with the same. Article 14 of the Constitution of India mandates that state action must not be arbitrary and discriminatory. It must also not be guided by any extraneous considerations which are antithetical to equality.

A three Judge Bench of this Court in the case of R.D. Shetty v. International Airport Authority ((1979) 3 SCC 489) held as under:

"21. It must, therefore follow as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with any one, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non- discriminatory ground."

It was also held therein that the right to livelihood is a part of right to life, as held in the case of Olga Tellis. The chances of such persons being deprived of their right to livelihood is also an important factor which has to be taken into consideration by this court to interpret the policy framed by the appellants.

2014 SCC OnLine SC 1639 Dr.GRR,J

14. He also relied upon the judgment of the High Court of Madras

in Indian Railways Mobile Caterers Association Vs UOI & Ors.2,

wherein it was held that:

"18. Be it as it may, all the contractors, after securing the contracts, had created the infrastructure facilities inside and outside the suggested place for cooking, by employing various skilled human resources. The infrastructure of the petitioners itself is for preparing food in the base kitchens and pack it to the trains for service. Having allowed them to invest in the infrastructure and employ numerous skilled persons in this regard, the Railways could have sought their willingness to serve RTE food. The submission of the Railways that 50% of the members of the petitioners associations have been awarded the new contract itself shows that they are capable of serving RTE food also. When that being the admitted position, before floating the tender, the Railways could have very well sought their willingness to serve RTE food, till the subsistence of their contracts and only in the event anyone express their inability to do so, their individual agreements could have been terminated in accordance with law. In the absence of the same, the termination appears to be only a colourable exercise of power and thus, the decision making process of the authorities in floating fresh tender without amending the existing contracts is arbitrary, irrational and unreasonable and thus, suffers from mala fide. It is only to be stated that the authorities have committed wrong in taking advantage of the above COVID-19 pandemic situation as a weapon, to change the existing contracts in the special trains, which were being plied with the change in first digit of the train number. In this regard, learned Senior Counsels for the petitioners relied on the judgment of the Hon'ble Supreme Court in Shrilekha Vidyarthi (Kumari) v. State of U.P., (1991) 1 SCC 212, wherein, it has been held as follows:

"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.

2021 SSC OnLine Mad 1941 Dr.GRR,J

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.

23. Thus, in a case like the present, if it is shown that the impugned State action is arbitrary and, therefore, violative of Article 14 of the Constitution, there can be no impediment in striking down the impugned act irrespective of the question whether an additional right, contractual or statutory, if any, is also available to the aggrieved persons.

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 fulfill 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, Dr.GRR,J

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."

14. Considering the rationale of the above judgments, as the

petitioner was also effected in a similar manner as that of all the others

who were part of commercial earning contracts (STD/PCO, Parking, ATM,

Pay & Use toilet, PBCM) on account of Covid-19 pandemic lockdown

National wide and even though the AC halls were reopened subsequently,

the passenger footfall was reduced tremendously considering the

perception among the public that the chances of getting Covid in closed

places was high, and it was the petitioner who was effected more due to

these perceptions, the respondents ought to have extended the benefits

which were given to all the commercial earning contracts to the petitioner

also. The respondents extended the dies non period to the petitioner which

was extended to others who were part of commercial earning contracts but