Delhi High Court
Media Transasia Ltd. And Anr. vs Indian Airlines Ltd. And Ors. on 20 December, 2002
Equivalent citations: 103(2003)DLT237
Author: A.K. Sikri
Bench: A.K. Sikri
JUDGMENT A.K. Sikri, J.
1. This appeal is preferred by the appellants/plaintiffs against the judgment and order dated 14.8.2002 passed by learned Single Judge in I.A. No. 6418/2002 in Suit No. 1198/2002. The appellants have filed the aforesaid suit for declaration and permanent injunction against the defendants/respondents and in this Suit I.A. 6418/2002 was filed which was an application under Order XXXIX Rules 1 and 2 read with Section 151, CPC. Through this application the appellants wanted ad interim injunction in their favor and to restrain the respondents from placing on board of Indian Airlines and Alliance Air flights, their offices and in lounges at various Airports in the country, any other in-flight magazine except the appellants' magazine named "SWAGAT". This application has been dismissed by the learned Single Judge vide impugned order which is subject matter of the present appeal.
2. It is imperative to take stock of the jejune facts of the case in order to appreciate the controversy involved:
The appellants had entered into an agreement dated 14.5.1998 with Indian Airlines/respondent No. 1 (hereinafter referred to as IA 'for short') for publication of IA's in-flight magazine titled "SWAGAT". As per this agreement the appellants agreed and undertook to print, publish and provide IA the in-flight magazine "SWAGAT" with monthly 12 issues per year comprising at least 84 pages to be printed on 100 gsm imported art paper and 300 gsm imported art card cover (Japanese or similar quality). Total cost of printing, publishing and producing this magazine is to be borne by the appellants without any liability on the part of the IA. The appellants also agreed to print and deliver 60,000 copies free of cost. The magazine is to be printed and published by the appellants at their costs without any remuneration from the IA. In fact, the appellants have agreed to pay to IA a sum of Rs. 8,75,000/- per month and for fulfillment of this obligation on the part of the appellants they had furnished a bank guarantee for Rs. 50 lakhs. However, the appellants are entitled to all the proceeds from advertisement appearing in the magazine. IA is given right to publish two coloured full page advertisements in every issue of the magazine free of cost so as to generate goodwill among public and promote travel on IA. In addition the pro vision for aforesaid features, the agreement also deals with contents of the magazine, warranty, constitution of the editorial board and meetings of-the editorial board. Duration of the agreement is 5 years starting from June, 1999 and expiring on 31.5.2004. The appellants and IA also agreed in the said agreement that in case of any disputes only Courts in Delhi would have jurisdiction for filing any suit in relation to the said agreement. Agreement is to be governed by the laws of India.
3. In terms of the aforesaid agreement the plaintiffs are printing and supplying 60,000 copies of the magazine "SWAGAT" to IA every month and are also paying royalty of Rs. 8,75,000/- per month.
4. Respondent No. 2, namely, Allied Air Services Ltd. (Alliance Air) was incorporated as subsidiary of IA. At the request of IA, the appellants started publishing the logo of Alliance Air also on the cover of the magazine. This magazine has also been placed in the seat pockets of Alliance Aircrafts.
5. However, Alliance Air decided to have its own inflight magazine and in this view of the matter, issued a public notice for appointment of an agency for inflight magazine which could undertake designing and printing thereof. This notice dated 9th October, 2001 was published in various newspapers including in the 'Times of India' New Delhi. The appellants did not respond to the aforesaid advertisement. Instead they wrote letter dated 19.10.2001 objecting to the publication of the proposed magazine. Notwithstanding this objection from the appellants, Alliance Air went ahead with necessary drill and after evaluating bids submitted pursuant to the aforesaid notice, entered into an agreement dated 10.5.2002 with M/s. CMYK Multimedia Pvt. Ltd./respondent No. 3.
6. Recital of this agreement indicates that Alliance Air was desirous of printing and publishing an inflight magazine under the name "DARPAN" for circulation on board its and/or Indian Airlines domestic and international flights and/or for use in IA and/or Alliance Air lounges at various airports and offices and at any other places for promoting their interests and respondent No. 3 had agreed and undertaken to print and publish the said magazine on the terms and conditions provided therein. Broadly speaking the terms and conditions include printing of at least 20,000 copies at the cost of respondent No. 3 which are to be delivered to Alliance Air. This print order is increased to 25,000/- copies during the period October, 2002 to January, 2003. Alliance Air is free "to distribute this magazine for inflight reading and through its sister ancillary companies for promotion of its commercial interest, in any manner at the sole discretion of Alliance Air". Respondent No. 3 has also to pay royalty in the sum of Rs. 1,75,000/- per month for the first year from 2002 and Rs. 14,40,000/- per year in the second year in equal monthly Installments i.e. 20% escalation in the revenue to be paid to Alliance Air. The duration of the agreement is 5 years starting from 15.8.2002 when inaugural issue was to be published. The agreement is valid till August, 2007. There are other usual terms and conditions on the same standard format on which agreement dated 14.5.1998 is entered into between the appellants and IA. It may, however, be mentioned that in various such terms relating to contents of magazine, advertisements, remuneration, warranty, editorial board etc. at many places reference is not confined to Alliance Air but "Alliance Air/IA".
7. After the aforesaid agreement was signed, the respondent No. 3 started working on it and sent communication dated June 3, 2002 to various prospective advertisers soliciting advertisements. The appellants lodged their protest vide letter dated 5.6.2002. The main ground of objection was that when Alliance Air was formed appellants were advised that since it was a subsidiary and integral part of IA there would be no reduction in print quantities of 'SWAGAT' as the size remained unchanged. The Alliance Air logo was incorporated on the front cover of 'SWAGAT' and the editorial coverage also included Alliance Air destinations and news on the airlines activities. Even editorial board of 'SWAGAT' consisted of Alliance Air officials. In these circumstances if there was going to be new inflight magazine for Alliance Air it had serious ramifications. This letter was followed by other communications dated 10.6.2002, 13.6.2002 and 24.6.2002. However, these communications had no effect on either on IA or Alliance Air. All communications of the appellants were repelled by the IA by one consolidated reply dated 26.6.2002 refuting the stand of the appellants. On the very next date i.e. 27.6.2002 the appellants sent legal notice not only to IA but also to Ministry of Civil Aviation, Air India as well as their officials. This legal notice also did not deter the respondents and evoked reply dated 16.7.2002 sent on behalf of IA. Thereafter, aforementioned suit was filed by the appellants on 23.7.2002 along with IA 6418/2002, which has met the fate of dismissal by impugned order dated 14.8.2002.
ORDER OF THE LEARNED SINGLE JUDGE
8. It was primarily argued by the appellants before the learned Single Judge that all over the world the inflight magazine is identified as the brand ambassador of the concerned Airline and as such has characteristic of exclusivity. It was also argued that the respondents could not undertake publication of another magazine 'DARPAN' during the subsistence of agreement dated 14.5.1998 between the appellants and IA. Thus agreement dated 10.5.2002 between Alliance Air and respondent No. 3 was in breach of the appellants' agreement and the exclusivity reserved for them in respect of their magazine 'SWAGAT'.
9. The case of the respondents on the other hand was that no such exclusive agreement was entered into between the appellants and IA nor was there any such negative covenant in the agreement. Therefore, IA was free to have another inflight magazine on its aircrafts. Same was the stand of Alliance Air as well as respondent No. 3. Both these respondents additionally submitted that there was no privity of contract between the appellants and Alliance Air. Various other submissions were advanced by learned Counsel appearing on either side.
10. After considering the submissions of all the parties and learned Single Judge dismissed the application by reason of impugned order, inter alia records the following prinia facie opinion:
(i) The appellants had not been able to establish prima facie case in regard to exclusivity of their right for the circulation of their magazine 'SWAGAT' on board IA flights,
(ii) There was no privity of contract between the appellants and Alliance Air/defendant No. 2 which is altogether separate entity and had full liberty to have its own inflight magazine.
(iii) IA was not violating any terms and conditions of the agreement dated 14.5.1998 between appellants and IA. It had issued directions to respondents 2, 3 and 4 to refrain from representing or projecting to the public as well as tourism and hospitality industry that inflight magazine 'DARPAN' was an inflight magazine of LA. Insofar IA was concerned, it was to receive 60,000 copies per month from the appellants and would continue to place them on its flights and shall abide by the terms and conditions of agreement.
(iv) The apprehension of the appellant that magazine of respondents 2 and 3 would eat into their advertisements and thereby cause loss of revenue to them may have some truth but so long as IA was acting within terms of its agreement with the appellants this apprehension of the appellants could not be made a ground for depriving IA of its right to have on its board the magazine of Alliance Air. The learned Single Judge observed that the appellants must get prepared and geared up for a healthy competition with respondent No. 3 and improve the quality and content of their magazine so as to attract more advertisements for their magazine 'SWAGAT'.
(v) Even the balance of convenience is more in favor of the defendants.
(vi) As the appellants had themselves reserved their right to sue the defendants for damages the same would dearly convey that damages is an alternate remedy and in case the appellants succeeded ultimately they could be compensated in terms of money.
(vii) The appellants were to be denied the relief of ad interim injunction even on the ground of laches and delays.
11. Mr. Savant/ learned Senior Counsel appearing for the appellants vehemently argued that each and every prima facie finding on the aforesaid aspects as recorded by learned Single Judge was erroneous. We shall record his submissions a well as response thereto by the Counsel for respondents while dealing with these facts of the case.
12. However, before embarking thereon, it would be apposite to deal with another significant aspect of the matter at the outset. We have already noted above that suit filed by the appellants is founded on the allegations that during the currency of agreement dated 14.5.1998 between the appellants and IA, neither IA nor Alliance Air has any right to publish or get published another inflight magazine or to keep the same on board IA or Alliance Air flights. This contention of the appellants proceeds on the basis that during the period of contract between the appellants and IA, it is only appellants' magazine 'SWAGAT' which can be placed on board not only on IA flights but also Alliance Air flights as Alliance Air was subsidiary of IA and the IA had specifically agreed to do so. The prayer is also made in the suit to this effect as would be clear from the prayer Clauses (i) and (ii) which are worded as under:
"(i) Declare that the plaintiffs are contractually entitled, under the contract dated 14th May, 1998 entered into with M/s. Indian Airlines Ltd., to the exclusive right of circulating "SWAGAT", as the sole and exclusive inflight magazine, on board all Indian Airlines and Alliance Air flights till 31.5.2004; and
(ii) Grant an order of Permanent Injunction restraining M/s. Indian Airlines Ltd., Alliance Air Ltd., as well as their employees, subsidiaries, associated concerns from in any way interfering with the contractual rights of the plaintiffs which guarantee, the exclusive right of circulating "SWAGAT", as the sole and exclusive in-flight magazine, on board all Indian Airlines and Alliance Air flights till 31.5.2004."
13. However, the order of learned Single Judge reveals that at the time of arguments Mr. Gopal Subramanium, learned Senior Counsel who appeared for the appellants submitted that he was limiting the prayer to the grant of interim injunction restraining the IA from putting on the flights of IA only the proposed magazine 'DARPAN' which is being printed by respondent No. 3 for respondent No. 2 i.e. Alliance Air. This would show that as per the aforesaid concession, the appellants did not have any objection to respondent No. 3 printing and publishing magazine 'DARPAN' and supplying the same to Alliance Air and as a sequitur appellants had no objection in Alliance Air placing on its flights of the said magazine. The objection was only to placing in the flights of IA magazine 'DARPAN' printed for Alliance Air.
14. However, in this appeal the appellants have filed CM 839/2002 under Section 151, CPC for permission to urge additional grounds wherein the appellants have reproduced the prayer made in their application under Order XXXIX Rules 1 and 2 and submitted that the appellants intended to press all these prayers which included restraining the respondents including respondent Nos. 2 and 3 from publishing the magazine 'DARPAN' and putting the same even on Alliance Air. Serious allegation is made in this application to the effect that the concession of learned Senior Counsel who appeared for the appellants seeking limited prayer was not proper as no such instructions were given to the Counsel. The language in which this allegation is couched makes the following reading:
"It is humbly submitted that to under-score the fact that the present applicants and plaintiff in Original Suit No. 1198 of 2002 neither expressly nor impliedly desired, instructed or consented to limiting their prayer for grant of interim relief by restraining the defendant No. 1 from putting on the flights of Indian Airlines only the proposed-Magazine 'DARPAN' which has been printed by defendant No. 3 for defendant No. 2."
XXX XXX XXX "It is humbly submitted that a concession made to the Court by the Counsel, as reflected in para 5 of the paper book which has decided the subject matter of the case as well as the pleaded case of the party and without any consent or authority by the parties is not in the least binding on the parties. It is further submitted that the above submission is fully in line with the dictum of the Apex Court laid down in a large number of cases, hence this Hon'ble Court in view of the submissions put forth and the law laid down by the Apex Court, be pleased to ignore the concession made for limiting the relief of ad interim injunction and for full appreciation of the pith and substance of the case, the entire text of the pleadings submitted by documentary evidence as well as the relief claimed therein in the original suit and the application filed under Order 39 Rules 1 and 2, CPC be taken on board and read as part and parcel of this accompanying appeal as well as the application filed under Order 39 Rules 1 and 2, CPC for grant of interim injunction against the respondents by restraining them from interfering with the contractually vested rights of the appellant in the contract dated May 14, 1998 whereby the appellants as the sole and exclusive right to print, publish and circulate the in-flight magazine SWAGAT on board of all domestic and international flights of Indian Airlines and Alliance Air till May 31, 2004."
15. This conduct of the appellants to say the least is reprehensible and deserves strongest condemnation. It is matter of common knowledge that when a lawyer (in this case a senior lawyer) makes a statement before the Court, the same is normally accepted as correct. The Court, having faith and trust in a lawyer would not require such a statement to be put in writing and/or insist on the affidavit of the party at whose behest the statement is made. That apart there are various reasons which would compel us to conclude that such a move on the part of appellants is clearly an after-thought. These are :
(a) If the lawyer was not instructed to make such a concession the first reaction would have been to move an application before the learned Single Judge itself pointing out the same. No such steps were taken.
(b) Even when the appeal was filed on 27.9.2002 against the impugned order, when obviously it was prepared at the instance of the appellants after the impugned order had been read and understood by the appellants, there is not even a whisper in the appeal that the Senior Counsel made the concession without the instructions from the appellants as is now alleged. In the appeal various grounds are taken to challenge the impugned order but the appeal is conspicuously silent about this aspect.
(c) For the first time this allegation surfaces in CM 839/2002 filed on 7.10.2002.
(d) It would be amazing to note that even when Mr. Savant, learned Senior Counsel argued this appeal before us, we echoed the statement which was made by Mr. Gopal Subramanium who appeared on behalf of the appellants before the learned Single Judge. To repeat, he also conceded while opening his arguments that he was confining the relief to only against the act of IA in placing magazine 'DARPAN' on their flights and was not pressing relief against the respondents 2 and 3 or publication of magazine 'DARPAN' per se. This conduct of the appellants in taking U-turn is really intriguing and exposes the falsehood in the CMP wherein serious allegations are made against a Senior Counsel.
16. Injunction is a discretionary relief. To claim such a relief the plaintiffs have to approach the Court with clean hands. The party who has conducted itself in a manner like the appellants would not be entitled to such a relief which is equitable in nature. Present appeal filed by the appellants deserves to be dismissed on this ground alone. However, while dismissing the appeal on this score, we shall also make certain observations on the merits of the case, only because of the lengthy arguments addressed before us in this behalf.
IN RE: EXCLUSIVITY OF THE AGREEMENT
17. The core issue is, as was conceded by the learned Counsel for the appellants, as to whether the agreement in question confers a right in favor of the appellants to publish, print and place on board IA flights, their magazine 'SWAGAT' to the exclusion of all others. If appellants are not able to cross this hurdle, the inevitable conclusion is that they have no prima facie case and thus it may even be not required to go into other incidental issues. Learned Counsel for the appellants was candid in his admission that the appellants agreement dated 14.5.1998 with IA does not have any specific covenant which would give it a flavour of exclusivity. Admittedly, there is no specific clause in the agreement as per which it would be the exclusive right of the appellants only to print such a magazine and no other person would be given similar contract by IA. It is also an admitted fact that it is nowhere expressly stated in the agreement that 'SWAGAT' would be the only inflight magazine to be kept in the seat pocket of IA flights. Thus there is no negative covenant to this effect. However, the learned Counsel for the appellants wants us to read negative covenant by inference. He laboured to suggest that going by the peculiar concept of inflight magazine on board of an aircraft and the spirit of the agreement in question such a negative covenant is implied therein. His submission was that the appellants' right is to be in the seat pocket as a brand ambassador of the particular airlines and all over the world every airline had only one such inflight magazine. His submission was that the inflight magazine is totally different from the other magazines which are kept on the shelf in the Aircraft and which an Airlines purchases and when demanded by the passenger on board the Aircraft, the same is supplied for reading. His submission was also that from the agreement also it should be inferred that the intention of the parties was only to have one inflight magazine, inasmuch as very onerous terms were imposed upon the appellants by the agreement in question which was loaded in favor of the IA which had being a mighty party, better bargaining power. His further submission was that by introducing the magazine 'DARPAN' the respondents could not raise the bogie of competition as there was no level playing field for the two players 'SWAGAT' and 'DARPAN'. He was at pains to suggest that the appellants had to pay much higher royalty and bank guarantee than respondent No. 3. Further the appellants were supposed to supply 60,000 copies free of cost whereas third respondent had to supply only 25,000 copies of the magazine per month and thus cost of printing to the appellant was abnormally higher. Also the appellants magazine was of minimum 84 pages of a very high quality rich paper whereas this requirement in respect of respondent No. 3 was of minimum 60 pages. In respect of exclusivity, the learned Counsel for the appellants also referred to the conduct of the IA itself which was depicted in the form of two letters dated 2.8.1997 and 28.8.1997 and it was submitted that by means of these letters the IA had specifically prohibited the appellants from circulating or selling their 'SWAGAT' outside the fleet of IA by advising the appellants in the following terms:
"As per the contract "SWAGAT' is the inflight magazine of IA and in order to maintain its exclusivity, the magazine is not permitted for sale".
[Quote from letter dated 2.8.1997] It was submitted that since the magazine was to be supplied to the IA at no cost, it earns revenues because it is placed exclusively in the seat pockets of the Airline, displaying its logo. Therefore, it has a captive audience during the flight. While other periodicals are available through subscriptions and news-stand sales, SWAGAT cannot be sold on the news-stands or accept advertisements from competing Airlines. In exchange for these restraints SWAGAT is given the rights to earn advertising revenues. By introducing second magazine this revenue which is the heart beat of contract is adversely affected and, therefore, in order to protect this interest of the appellants exclusivity has to be inferred.
18. We have broadly stated that various clauses of agreement dated 14.5.1998 in the earlier part of this judgment. None of these clauses touches the aspect of exclusivity. Even the cumulative reading of the entire agreement does not suggest that the appellants were given any exclusive right to circulate their magazine on board IA flights. The attempt on the part of the appellants by alleging the concept of such inflight magazine and then contending that exclusivity should be inferred there from is a far fetched plea. We agree with the observations of the learned Single Judge that such a contention that such magazines are exclusive and are treated as brand ambassador of their respective airlines cannot be accepted in the face of written agreement dated 14.5.1998 in which exclusivity clause is conspicuously missing. We may state here that even this assertion of the appellants that airlines all over the world keep one inflight magazine only was disputed by the respondents who attempted to show from the documents filed by the appellants themselves that in respect of come of the airlines there were more than one inflight magazines. Be that as it may, it is trite law that when there is a specific agreement between the parties which is in writing and which governs the rights and obligations of the parties, for drawing such an influence onus is heavy on the appellants and right cannot be founded merely by alleging the concept of such in flight magazine. Insofar as various terms of the agreement relating to publication of number of copies, royalty etc. are concerned, they are the usual terms in such contracts and would not confer right on the appellants to print, publish and place their magazine on board IA flight to the exclusion of all others.
19. Insofar as letters dated 2.8.1997 and 28.8.1997 of the IA are concerned, the same are to be read in the context in which they were written. The appellants wanted open sale of their magazine 'SWAGAT' as well. This was objected to by the IA by writing aforesaid letters and in this context expression 'exclusivity' was used by stating that SWAGAT was the inflight magazine of IA and in order to maintain its exclusivity, sale was not permitted. It is thus clear that exclusivity was used in the context of 'circulation of the magazine'. Limiting the rights of the appellants by not permitting sale of magazine, converse would not follow i.e. it cannot be said that it would also attach an embargo on IA second magazine on its board.
20. Thus when we do not find any exclusive right of the appellants to have their magazine only in IA flights and agree with the prima facie opinion of learned Single Judge on this point the inevitable consequence is that this appeal has to fail. In view of this, it may not be necessary to deal with other arguments in detail. However, we would be failing in our task if we do not point out some more factors which disentitle the appellants to claim temporary injunction of the nature prayed for:
(A) The Alliance Air had decided to have its own inflight magazine for which public notice was issued way back in October, 2001. The appellants came to know thereof and even protested against this proposed action by making repeated representations to the IA in October, 2001 itself. They have accepted the factum of this knowledge in their pleadings itself as can be seen from paragraphs 22 and 43 of the plaint. However, they chose not to take immediate legal action. A company like the appellants does not require more than reasonable common sense to understand that when no heed is paid to their protests and Alliance Air is going ahead with the tender process, it would culminate into an agreement with one of the successful tenderers. The appellants chose not to participate and allowed the process to be completed. They woke up out of a slumber only when agreement dated 10.5.2002 was entered into between respondent No. 2 and respondent No. 3 and respondent No. 3 started soliciting advertisements. Even at this stage they did not immediately approach the Court but again started correspondence with IA and other Government functionaries. The suit was filed only towards end of July, 2002 by which time new contract was born and third party rights had been created in favor of respondent No. 3. Again, by this time respondent No. 3 would have made substantial investment as, it was obligated under contract to bring out first issue by the middle of August, 2002. The delay in filing the suit, therefore, is fatal and appellants are not right in their submissions that learned Single Judge had erred on this account.
(B) Even in the suit filed the main plank of attack, as already noticed is that it is the right of the appellants only to have their magazine both in IA flight as well as Alliance Air flight. It is only at the time of arguments that the appellants made submission through Counsel that they would be satisfied if the IA is injuncted from having copies of 'DARPAN' on the seat pockets of the IA flights. The way appellants have acted in a slipshod manner in this respect depicting vacillating stand has already been noted above.
(C) We find that the learned Single Judge has exercised his discretion on sound legal principles in passing an interim order. Such discretionary exercise by the learned Single Judge is not to be lightly interfered with by the DB in appeal against an interim order. Law to this effect has been stated and restated by Supreme Court in number of pronouncements. One can usefully refer to the judgment of the Apex Court in the case of Wander Ltd. and Anr. v. Antox India (P) Ltd., reported in 1990 (Supp.) SCC 727, wherein the Supreme Court gave the following caution:
"The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the Court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the Court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the Court below if the one reached by that Court was reasonably possible on the material. The Appellate Court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the Trial Court reasonably and in a judicial manner the fact that the Appellate Court would have taken a different view may not justify interference with the Trial Court's exercise of discretion. After referring to these principles Gajendragadkar, J. in Printers (Mysore) Private Ltd. v. Pothan Joseph, :
".... These principles are well established, but as has been observed by Viscount Simon in Charles Osenton and Co. v. Jhanaton, 1942 AC 130 ..... the law is to the reversal by a Court of Appeal of an order made by a Judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case."
The appellate judgment does not seem to defer to this principle."
21. In view of the aforesaid discussion it is not necessary to deal with the arguments of the appellants to the effect that the Alliance Air is subsidiary of IA and the Court should lift the corporate veil and go beyond the corporate personality to reach the individual members, beyond the upper legal entities. This aspect of the matter is inconsequential and falls into the pale of insignificance.
22. However, before we conclude, we may answer another submission of learned Counsel for the appellants which was repeatedly emphasised. The argument raised was that the respondents 1 and 2 being Public Sector Undertakings and instrumentality of the State could not violate the mandate of Article 14 even when the matter involved contractual obligations. In support of this submission, reference was made to number of judgments cited by the appellants in their written submissions:
(i) Ramana Dayaram Shetty v. International Airport Authority of India, .
(ii) Kasturi Lal Lakshmi Reddy v. State of J & K, .
(iii) Fasih Chaudhary v. Director General, Doordarshan, .
(iv) Union of India v. Hindustan Development Corporation, .
(v) Tata Cellular v. Union of India, .
(vi) New Horizons Ltd. and Anr. v. U.O.I. and Ors., .
(vii) Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation, (1948) 1 KB 223.
(viii)Raunaq International Ltd. v. I.V.R. Construction Ltd., .
(ix) Shrilekha Vidyarthi v. State of U.P., .
Specific reliance was placed on the cases of New Horizons Ltd. and Shrilekha Vidyarthi (supra), to contend that IA and Alliance Air were supposed to act fairly and mere fact that the issue was in the domain of contractual obligation, it would not relieve the State or its instrumentally like the IA of its obligation to conform to with the mandate of Article 14.
23. In answer to this submission, it would be suffice to observe that such an argument is available only when the contract has public law element. In a pure and simple commercial contract entered into between a private person and the Government or governmental authorities, parties are to be governed by the terms and conditions of law contract and the private party cannot invoke Article 14 of the Constitution. The judgments in support of this proposition are in abundance. The purpose, however, would suffice by referring to Radha Krishan Aggarwal and Ors. v. State of Bihar, . In that case the action of the State Government revising the rate of royalty payable by the petitioner/appellant under a lease of 1970 and after cancelling the lease by a letter of 15.3.1975 was subject matter of challenge and revision of the royalty payable by the petitioner under the lease to collect and exploit seeds from forest was challenged as illegal during the subsistence of lease and consequently it was the case of the petitioner that cancelling of lease itself was illegal for various reasons. Writ petition filed challenging the action of the State Government and the question arose whether such a writ petition was maintainable. In paragraph 2 of the judgment the case of the petitioner set up. Para 2 reads as under:
"Primarily, the case of the petitioners is that of a breach of contract for which the State would be liable ordinarily to pay damages if it had broken it. If the petitioners could establish some right, either contractual or equitable to continue in possession, the State could be prevented by appropriate proceedings, from ousting the petitioners from the forest land from which the petitioners have been gathering sal seeds. The petitioners had also set up mala fides on the part of the conservator of Forest, in enhancing the royalty unreasonably and then cancelling the lease, allegedly acting under the influence of friends and associates of the Forest Minister of Bihar."
24. The Court noted that as per relevant clause of the lease agreement between the parties, the Government had right to revise the royalty. The argument of the petitioner that action of the State Government in terminating the contract was in violation of lease agreement has been answered in the following words in para 5 of the judgment:
"......The questions which apparently arose appertained to action alleged by the State to fall within the terms of the agreement between the parties regulated by the duly signed contract which was presumably executed in compliance with the provisions of Article 299 of the Constitution, prima facie, therefore, the appellants can only get their remedies, if they can obtain any at all, through ordinary suits for damages or for injunctions to restrain breaches of contract provided they could show how the contracts were broken or were going to be broken."
25. However, the judgment thereafter proceeded in noticing the arguments of the petitioner that the State in its executive capacity through its Government or its officers, even in the contractual field, cannot escape the obligation imposed upon it by Part III of the Constitution i.e. Article 14. Answering this contention, the Court observed in para 9 of the judgment as under:
"Dr. Singhvi's argument that the State Government had some special obligations attached to it would have appeared more plausible if it could be shown that the State or its officers or agents had practiced some discrimination against the petitioners-appellants at the very threshold or at the time of entry into the field of contract so as to exclude them from consideration when compared with others on any unreasonable or unsustainable ground struck by Article 14 of the Constitution. It is true that Article 14 of the Constitution imports a limitation or imposes an obligation upon the State's executive power under Article 298 of the Constitution. All constitutional powers carry corresponding obligations with them. This is the rule of law which regulates the operation of organs or Government functioning under a Constitution. And, this is exactly what was meant to be laid down by this Court in Erusian Equipment and Chemicals Ltd. v. State of West Bengal, on which learned Counsel for the appellants sought to rely strongly."
The Supreme Court has taken similar view in the case of State of Gujarat v. M.P. Shan Charitable-Trust, (1994) 3 SC 552, and in the case of Union of India v. Graphic Industries Co. and Ors., ; albeit in the context of maintainability of the writ petition, but observing that the parties would be bound by the terms and conditions of the contract when the contract is to be worked out and such plea of violation of Article 14 would not be maintainable at that stage.
26. In the aforesaid analysis, the appeal fails and is hereby dismissed. Keeping in view the conduct of the appellants in moving CM 839/2002, we are constrained to impose a cost of Rs. 10,000/- while dismissing the appeal. Cost should be paid to Delhi Legal Services Authority within a period of one month from today.