Calcutta High Court
R. K. Associates And Hoteliers Private ... vs The Union Of India & Anr on 7 April, 2017
Author: Debangsu Basak
Bench: Debangsu Basak
ORDER SHEET
WP No. 218 of 2017
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
R. K. ASSOCIATES AND HOTELIERS PRIVATE LIMITED
Versus
THE UNION OF INDIA & ANR.
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
Date : 7th April, 2017.
Appearance:
Mr. Pratap Chatterjee, Sr. Adv.
Mr. Joy Saha, Adv.
Mr. Manish Bishnoi, Adv.
Mr. Meghajit Mukherjee, Adv.
For the petitioner.
Mr. Ashok Kumar Chakraborty, Sr. Adv.
Mr. Swapan Banerjee, Adv.
For the respondents.
The Court :- The petitioner assails a show cause notice dated March 28, 2017 issued by the railway authorities.
The petitioner had obtained leave in the morning to move an application in the present writ petition challenging the termination notice issued subsequent to the filing of the writ petition. Such leave was granted. The application is taken up for hearing as an unlisted application, along with the writ petition, by consent of the parties.
Learned Senior Advocate appearing for the petitioner submits that, the petitioner enjoys a catering contract in respect of Sealdah New Delhi 2 Rajdhani Express by virtue of a Master license agreement dated June 23, 2014. The first petitioner was discharging its obligation under such contract satisfactorily. The railway authorities claim to have received 138 complaints up to the period March 26, 2017 as against the petitioner in respect of such contract. The railway authorities had imposed fines in respect of such complaints. The petitioner had paid such fines. He refers to an incident of March 27, 2017 and submits that, allegedly a section of the passengers in coaches B8 and B9 were served with a dinner which was claimed to be spoiled. He submits that, immediately on receipt of such complaints, the Pantry Car Manager and the Train Manager had attended to such complaints. The Pantry Manager did not find anything untoward with the dinner. The Train Manager was of the same view as that of the Pantry Manager. He refers to the writing of these persons as annexed to the Writ Petition. He submits that, Hon'ble Minister for Railways had made a statement in Parliament in answer to a written question during question hours. He plays the video clip of the answer of the Hon'ble Minister as given in the Parliament. He submits that, the Railway Authorities had taken a decision to terminate the contract on March 29, 2017 when the Hon'ble Railway Minister had made such statement in Parliament. The petitioner, thereafter, had received the impugned show-cause notice dated March 28, 2017. The petitioner has, however, replied to the show-cause notice. Such reply does not mean that, the petitioner has waived the contention that, the Railway Authorities had acted with a closed mind in issuing the show cause notice. With the Hon'ble Railway Minister making such statement in Parliament, it is inconceivable that, the 3 Railway Authorities would be in a position to take a decision other than that of termination of contract. In fact, he submits that during the pendency of the Writ Petition the apprehension expressed by his client have come true. The petitioner had received a letter of termination dated April 6, 2017 by electronic mail at about 9 p.m. yesterday. He submits, therefore, the fact that, the Railway Authorities are acting with a closed mind stand established. He relies upon (2010) 13 Supreme Court Cases 427 (Oryx Fisheries Private limited Vs. Union of India & Ors.) and submits that, when the authorities are acting with the closed mind, the ritual of hearing is an idle formality. Since in such case the Supreme Court had quashed the show-cause notice and the decision of termination, he submits that, the Court should quash the show-cause notice and the decision of termination in the present case also. He submits that, it is one thing to quash the show-cause notice and the other is not to direct adjudication upon the complaints of the incidents happening on March 27, 2017. He submits that, the authorities are at liberty to issue fresh show-cause notice with regard to such incidents if it chooses to.
Learned Senior Advocate for the petitioner refers to contract existing between the parties, particularly, Article 18 which deals with termination. He refers to Articles 18.4 and 18.5 and submits that, the Railway Authorities can terminate the agreement, by giving a notice for six months. In the present case, the impugned show cause notice, does not contain a notice period of six months time. Assuming that the Railway Authorities are acting in terms of the contract between the parties, the impugned show-cause notice not containing the agreed 4 notice period of six months, the Railway Authorities should not be allowed to terminate the contract. In such circumstances, the notice of termination should be set aside.
Referring to (2012)10 SCC 1 ( Natural Resources Allocation, In Re, Special Reference No.1 of 2012), he submits that the State actions in the contractual field are meant for public good and in public interest and are expected to be fair and just. He also refers to paragraphs 170 to 170.7 of that judgment which according to him, lays down law in this regard.
Learned Senior Advocate for the petitioner further submits that, the existence of an arbitration agreement in the contract between the parties is not an absolute bar to the maintainability of the Writ Petition. The right to carry on business of the petitioner is at stake.
The Writ Petition is being opposed by the Railway Authorities. The learned Senior Advocate appearing for the Railway Authorities submits that, the Railway Authorities were receiving numerous complaints as against the petitioner in respect of such of the contract. He submits that, the petitioner enjoys catering contracts in respect of eight trains. The Railway Authorities had received numerous complaints with regard to the conduct of the petitioner in respect of such contracts also. The complaints against the petitioner in respect of Rajdhani Express are the subject matter of the present show-cause notice. There are 138 complaints against the petitioner for the period commencing from March 1, 2016 to February 28, 2017. There was a complaint against the petitioner on March 27, 2017 made by a number of 5 passengers of coach B8 and B9. He submits that, the petitioner had accepted the jurisdiction of the Railway Authorities. The petitioner had submitted a reply to the show-cause notice. The reply was considered by a person who is an officer of higher rank than the person who had issued the show-cause notice. Upon consideration of the reply to the show-cause notice the Railway Authorities have issued the notice of termination dated April 6, 2017. There is no infirmity in such action warranting an interference under Article 228 of the Constitution.
Learned Senior Advocate for the Railway Authorities refers to the terms of the conditions of the contract between the parties particularly to Article 18 of the Contract. He refers to Article 18.3 and submits that, the Railway Authorities are entitled to terminate the contract on the happening of a material breach. Article 16 defines the events of default or material breach on the part of the licensee. He submits that, events contemplated under Article 16 happening, the Railway Authorities had invoked the provisions of termination as contemplated under Article 18 of the contract between the parties. He refers to Article 20 which relates to dispute resolution arriving under the contract between the parties. Article 20 contemplates resolution of dispute initially through negotiation and thereafter under the provisions of the Arbitration & Conciliation Act, 1996. The manner of appointment of the Arbitrator is indicated in such Article. He submits that, the disputes between the parties and the Railway Authorities being in the contractual field and the contract between the parties contemplating an arbitration mechanism to resolve such disputes, it would not be proper to entertain the Writ Petition as the same is not maintainable. He 6 relies upon (2015) 7 Supreme Court Cases 728 (Joshi Technologies International Inc Vs. Union of India & Ors) and submits that, although there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised, as there is a forum identified for the purpose of resolution of such disputes, the Court ought not to entertain the Writ Petition. He refers to paragraphs 69 and 70 of such report in support of such contention.
Relying upon All India Reporter 2004 Supreme Court 1467 (Special Director & Another Vs. Mohd. Ghulam Ghouse & Another), he submits that, where a show-cause notice has been issued, the Court should not interfere therein. He submits that, the show-cause notice cannot be said to be non est due to lack of jurisdiction. He refers to the conduct of the writ petitioner subsequent to the issuance of the show-cause notice. The petitioner has accepted the jurisdiction unconditionally. Therefore, he submits that, it cannot be said that the Railway Authorities did not have the jurisdiction to issue the show-cause notice.
He refers to the conduct of the petitioner with regard to the discharge of its obligations under the contracts. He submits that, the Railway Authorities had received complaints in respect of other trains under the management of the petitioner also. He refers to the conduct of the petitioner so far as the Rajdhani Express is concerned. He submits that in respect of 138 complaints against the petitioner, the Railway Authorities had imposed fines which the petitioner had paid without raising any objection. Having paid the fine imposed without any 7 objections, the petitioner had accepted the jurisdiction of the Railway Authorities and had accepted its guilt. It is, therefore, no longer available to the petitioner to contend that, the petitioner is not responsible for the infractions for which the fines were imposed. The Railway Authorities thereafter had received the complaint on March 28, 2017 in respect of incident of March 27, 2017. The Railway Authorities had decided to proceed against the petitioner in terms of the subject contract and had issued the show cause notice on March 28, 2017. The petitioner has replied thereto. The authorities have taken a decision as contained in the termination of letter dated April 7, 2017.
Learned Senior Advocate for the Railway Authorities submits that, neither a prima facie case has been made out nor is the balance of convenience and inconvenience is in favour of the petitioner for granting any interim relief. The Railway Authorities have engaged IRCTC to take over the catering in respect of the train. Therefore, at this stage if the Court is pleased to intervene, it would cause immense inconvenience to the public at large. The Railway Authorities after having received a number of complaints had decided to terminate the contract. The petitioner has alternative remedy which it can avail of. The Court should not intervene by way of an interim order. He refers to the letter of termination dated April 7, 2017 and submits that, the present writ petition has become infructuous. He submits that the present writ petition is limited to the show cause issued by the Railway Authorities. The show cause notice has since then has culminated into the letter of termination which, at best, gives rise to a fresh cause of action to the petitioner.
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I have considered the rival contentions of the parties and the materials made available on record.
The petitioner holds a catering contract for the Sealdah-Rajdhani Express. In addition thereto, the petitioner holds catering contract for eight trains runs by the Indian Railway. It is an admitted fact that, there were number of complaints against the petitioner in respect of other trains. The Railway authorities had imposed fines on the petitioner in respect of such complaints. Learned Senior Advocate for the petitioner submits that, the petitioner had paid the fine imposed under protest.
The maintainability of the writ petition is required to be adjudicated. Joshi Technologies International Inc (supra) is of the view that, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. Paragraphs 69 and 70 are as follows:-
" 69. The position thus summarised in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, it can refuse to exercise. It also follows that under the following circumstances "normally", the Court would not exercise such a discretion.9
70. Further, the legal position which emerges from various judgements of this Court dealing with different situations/aspects relating to contracts entered into by the State/public authority with private parties, can be summarised as under".
In Natural Resources Allocation, In re, Special Reference No.1 of 2012 (supra), Paragraphs 170 to 170.7 are as follows:-
"170. The legal propositions laid down in the instant judgement in Shrilekha Vidyarthi Case may be summarised as follows:-
170.1. Firstly, State actions in the contractual field are meant for public good and in public interest and are expected to be fair and just. 170.2. Secondly, it would be alien to the constitutional scheme to accept the argument of exclusion of Article 14 of the Constitution of India in contractual matters.
170.3 Thirdly, the fact that a dispute falls in the domain of contractual obligation, would make no difference to a challenge raised under Article 14 of the Constitution of India on the ground that the impugned act is arbitrary, unfair and unreasonable.
170.4 Fourthly, every State action must be informed of reason and it follows that an act uninformed by reason is arbitrary. 170.5. Fifthly, where no plausible reason or principle is indicated (or is discernible), and where the impugned action ex facie appears to be arbitrary, the onus shifts on the State to justify its action as fair and reasonable.10
170.6. Sixthly, every holder of public office is accountable to the people in whom the sovereignty vests. All powers vested in a public office, even in the field of contract, are meant to be exercised for public good and for promoting public interest.
170.7. And seventhly, Article 14 of the Constitution of India applies also to matters of governmental policy even in contractual matters, and if the policy or any action of the Government fails to satisfy the test of reasonableness, the same would be unconstitutional".
The petitioner has a right to carry on its business. A catering contract existed between the parties prior to its termination. The Railway authorities being an Article 12 authorities are obliged to act fairly and justly in respect of its contractual obligations. Under the subject contract, the Railways are entitled to terminate the contract. They are also entitled to issue a show-cause notice. These actions of the Railways are justiciable. Whether the petitioner succeeds in its challenge finally, to such actions of the Railways is a different issue. The right to approach the High Court under Article 226 of the Constitution does not stand abridged by the existence of alternative remedy. The petitioner has a right to approach the High Court under Article 226 of the Constitution of India for the purpose of canvassing its grievances with regard to the course of action undertaking by the railway authorities ostensibly under a contract between the parties. The act of railway authorities in issuing the show cause notice and thereafter proceeding to issue the letter of termination is questioned by the petitioner. The petitioner is entitled to do so.
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It is contended that, the issuance of the letter of termination renders the writ petition directed against a show-cause notice infructuous. The letter of termination has been issued during the pendency of the writ petition and on a day when the writ petition was taken up for hearing. The parties were advancing arguments on the grant of interim order. The Railway authorities had proceeded to issue the letter of termination in such circumstances. Such of a course of action of the Railway authorities in seeking to no-suit a litigant is not appreciated. The maintainability of the writ petition is to be considered on the basis of the facts pleaded on the date of presentation of the same. The letter of termination is subsequent to the filing of the writ petition. The petitioner has a right to contend that, the show-cause notice is bad.
In such circumstances, I am of the view that the present writ petition is maintainable.
The next question is of grant of interim order pending adjudication of the writ petition. Existence of a prima facie case and the balance of convenience being favour of grant of interim order are parameters which are to be looked into. The petitioner alleges that the railway authorities have acted with a closed mind in issuing the show cause notice. Reference is made to the answer of the Hon'ble Minister for Railways given in the Parliament in this regard. According to the petitioners, the letter of termination is a product of the closed mind and of the railway authorities. In such circumstances, the show cause notice of the letter of termination is required to be set aside in view of the ratio laid down in Oryx Fisheries Private Limited (supra). In such case, the show-cause notice and the 12 letter of termination were set aside upon finding that the authorities had acted with a closed mind. A prima facie case, therefore, has been made out by the petitioner to go to trial.
Making out a prima facie case alone will not entitle the petitioner an interim relief. It has to establish that the balance of convenience and inconvenience to of granting any interim relief is in its.
In the present case, the Railway Authorities have already terminated the contract. The Railway Authorities claim it has taken possession of the pantry car of the Sealdah-Rajdhani which is scheduled to leave very shortly. There are passengers involved. The interest of the public has to be kept in mind for the purpose of grant of any interim order at this stage.
Keeping the public interest in view, and keeping in view the fact that the Railways have arranged for catering by IRCTC, it would not be appropriate to pass an order of restraint on the notice of termination at this stage or to permit the petitioner to continue with the catering services any further.
In such circumstances, the interim order as prayed for, by the petitioner is not granted.
Let affidavit-in-opposition be filed within four weeks from date; reply thereto, if any, be filed within a week thereafter.
List the writ petition under the heading "For Hearing" five weeks hence.
(DEBANGSU BASAK, J.) snn/TR