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Allahabad High Court

Bundel Khand Advertising Association ... vs State Of U.P. And 8 Others on 8 March, 2018

Bench: Dilip B. Bhosale, Manoj Kumar Gupta

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

											A.F.R.
 
											Reserved
 
Chief Justice's Court
 
Case :- WRIT - C No. - 35910 of 2017
 
Petitioner :- Bundel Khand Advertising Association And 5 Others
 
Respondent :- State Of U.P. And 8 Others
 
Counsel for Petitioner :- Javed Husain Khan,Gulrez Khan,Javed Husain Khan,Sr. Advocate
 
Counsel for Respondent :- C.S.C., Ashok K Pandey, M.D.Singh "Shekhar",    
 
                                               Nikhil Agrawal,S.K. Mishra,S.M. Shukla
 
			and
 
Case :- WRIT - C No. - 32507 of 2017
 
Petitioner :- Anoop Publicity, Jhansi
 
Respondent :- State Of U.P. And 7 Others
 
Counsel for Petitioner :- Gulrez Khan,Javed Husain Khan,Sri W.H. Khan
 
Counsel for Respondent :- C.S.C., Ashok K Pandey, Rahul Sahai
 

 
Hon'ble Dilip B. Bhosale,Chief Justice
 
Hon'ble Manoj Kumar Gupta,J.
 

(Per - Manoj Kumar Gupta, J.) The first writ petition (Writ-C No. 35910 of 2017), under Article 226 of the Constitution of India, is filed by one Bundelkhand Advertising Association (for short, 'the Association') and its members, whereas the second writ petition (Writ-C No. 32507 of 2017) is filed by M/s. Anoop Publicity alone, who is also a member of the Association. The prayers made in both the writ petitions and factual matrix against which they are arising are similar. Even the respondents in both the writ petitions are common. Hence both the writ petitions were heard together and are being disposed of by this common judgment.

1.1 In the first writ petition, initially the petitioners had challenged the order dated 27th July 2017, whereby their applications seeking renewal of permissions for displaying advertisements for the years 2016-17 and 2017-18 made under the provisions of the U.P. Municipal Corporation Act, 1959 (for short, 'the Act') were rejected. The petitioners, by way of an amendment, also raised a challenge to the order dated 20th October 2016 passed by respondent no.8, another order dated 20th October 2016 passed by respondent no. 3/4 and the agreement dated 4th January 2017 executed between the respondent - Nagar Nigam and respondent no.5 - Midas Infra Tech Private Limited. By the order dated 20th October 2016, respondent no.4 Municipal Commissioner, Nagar Nigam, Jhansi (for short 'Municipal Commissioner') decided/allowed the representation made by respondent no.5 dated 10th October 2016 and re-allotted the contract that was cancelled earlier vide order dated 4th August 2016, for two years, commencing from 20th October 2016 to 19th October 2018, by executing an agreement dated 4th January 2017. The challenge raised in the second writ petition is similar. Thus, the petitioners have principally raised challenge to the order of re-allotment dated 20th October 2016 of the contract in favour of respondent no.5 on grounds, to which we propose to make reference after narration of the factual matrix and at an appropriate stage in latter part of the judgment. We may also observe at this stage that if the order dated 20th October 2016 is set aside and the subsequent contract dated 4th January 2017 is cancelled as a consequence thereof, then alone it would be necessary to consider whether the petitioners are, as of right, entitled to seek renewal of the permission to display advertisements.

2. The factual matrix, sans unnecessary details, is as follows: the respondent - Nagar Nigam, as usual, for realising the advertisement fee from advertisers, who are engaged in the business of advertisement, and who install hoardings in the territorial limits of the Nagar Nigam, Jhansi, decided to appoint contractors for financial years 2016-17 and 2017-18 and, consequently, issued an advertisement on 13th January 2016, inviting tenders. However, there was no response to the tender notice. In other words nobody came forward to participate in the tender proceedings. Thereafter, two more tender notices dated 12th March 2016 and 27th March 2016 were issued, and to these advertisements also, there was no response and hence, fourth time, making some changes in terms and conditions of the tender notice, an advertisement was published in newspapers on 13th April 2016. In response to this advertisement, respondent no.5 and two more advertising agencies submitted the tender. None of the petitioners participated in the tender process in view of the typical terms and conditions mentioned in the advertisements, including the condition whereby the defaulters were debarred from participating in the tender process. Respondent no.5, being the highest bidder, after negotiations, enhanced the auction amount by 15% and, accordingly, the bid was finalised for an amount of Rs. 1,27,80,000/- for a period of two years. In pursuance thereof, an agreement was entered into between respondent no.5 and the Nagar Nigam on 18th May 2016.

3. According to respondent no.5, it could not start the work as per the contract as the Association and its members did not hand over the sites assigned for exhibition of hoardings, and continued to exhibit their advertisements notwithstanding the expiry of the period for which license was granted to them. As a result, the Corporation started facing financial loss, consequently, respondent no.8 proceeded to cancel the contract dated 18th May 2016 vide order dated 4th August 2016. The order of cancellation of the contract dated 4th August 2016 was challenged by respondent no.5 in Writ-C No. 39671 of 2016. The said writ petition was, however, dismissed vide order dated 29th August 2016, which reads thus:

"Heard learned counsel for the parties.

The writ petition has been filed against the order dated 4.8.2016 cancelling the agreement entered into between the petitioner and the Nagar Nigam, Jhansi.

The parties can resort to arbitral proceeding in view of Clause-19 of the agreement.

In view of the aforesaid, the writ petition is dismissed with liberty to the petitioner to approach the authority concerned."

3.1 In view of the order dated 29th August 2016 passed by this Court, respondent no.5 made a representation dated 10th August 2016 before the Municipal Commissioner for resolution of dispute in terms of Clause 19 of the agreement. The Municipal Commissioner allowed the representation vide order dated 20 October 2016 and, in pursuance thereof, a fresh agreement dated 4 January 2017 was entered into between respondent no.5 and the Nagar Nigam for a period of two years, commencing from 20th October 2016 to 19th October 2018. This agreement was for 588 hoardings at 14 specified locations/ places. It is this order of the Municipal Commissioner dated 20th October 2016 and the agreement dated 4th January 2017 which are under challenge in both the writ petitions.

4. Before we proceed further, it would be relevant to have a glance at some more facts that are necessary to be noticed for dealing with the questions raised in the writ petition. The members of the Association, including petitioner nos. 2 to 6 and the petitioner in the second writ petition are in the business of advertisement within the limits of Nagar Nigam, Jhansi by installing and displaying hoardings, kiosks etc. on Nagar Nigam and private sites. Petitioner no.1 is an Association of advertising agencies registered under the Societies Registration Act, 1860, which looks after the interest of advertising agencies and represent them before the official respondents. They have about 25 members, including the remaining petitioners in both the writ petitions.

4.1 The petitioners, altogether, filed about seven writ petitions in this Court from time to time, starting with Writ-C No. 28056 of 2017 which was dismissed as withdrawn on 30th June 2017 with liberty as prayed therein. Even before that, some of the members of the Association, including petitioner nos. 2 to 6, had challenged Vigyapano Par Kar Ka Nirdharan Upvidhi, 2012 (for short, "Bye-laws, 2012") by means of Writ-C No. 61307 of 2015. The said writ petition was, however, dismissed vide order dated 7th December 2015.

4.2 The petitioners, it appears, had also instituted a civil suit bearing Original Suit No. 168 of 2016 in the Civil Court, Jhansi for permanent injunction restraining the Nagar Nigam from removing the petitioners' hoardings in view of the contract entered into between them and respondent no.5. During pendency of the suit, without disclosing anything about the same, the petitioners filed Writ-C No. 28056 of 2017 in this Court. The said writ petition was, however, dismissed as withdrawn on 30th June 2017.

4.3 On 3rd July 2017, once again some members (including Anoop Publicity, the petitioner in the second writ petition) of the Association filed another petition, bearing Writ-C No. 28135 of 2017. While filing this petition also, it appears, the petitioners did not make any reference to the civil suit, though it was pending on the date of filing of the writ petition. This writ petition was also dismissed as withdrawn, with liberty to the petitioners to file a fresh petition challenging the agreement dated 4th January 2017, vide order dated 3rd July 2017.

4.4. Thereafter, the petitioners filed one more petition on 27th July 2017, once again suppressing the pendency of the suit, bearing Writ-C No. 28567 of 2017. This writ petition was disposed of vide order dated 19th July 2017, with liberty to the petitioners to make application for renewal of the permission for displaying advertisements for the year 2017-18, and directed that, till their applications are considered and decided by the respondent - Nagar Nigam, no coercive action would be taken against them, but, at the same time, the petitioners were restrained from displaying any advertisements.

4.5 On 28th June 2017, the very next day, Anoop Publicity filed the second writ petition (Writ-C No. 32507 of 2017), principally challenging the order dated 20th October 2016 and the agreement dated 4th January 2017. Similarly, even the first writ petition (Writ-C No. 35910 of 2017) was filed on 31st July 2017, once again without disclosing anything about the suit that was filed by them and even the writ petitions filed earlier (Writ-C Nos. 28056 of 2017, 28135 of 2017 and 28567 of 2017).

4.6 Anoop Publicity filed one more petition, bearing Writ-C No. 49411 of 2017, challenging the demand notice. The said writ petition was simply withdrawn, as per the instructions, by Mr. W.H. Khan, learned Senior Counsel appearing for the petitioners.

4.7 Even the petitioners in the first writ petition, including the Association, had filed a petition, bearing Writ-C No. 49413 of 2017, against the demand notices and the said writ petition was disposed of as withdrawn, recording the concession made by Mr. W.H. Khan, learned Senior Counsel appearing on behalf of the petitioners that they would deposit the amounts demanded, without prejudice to their rights and contentions in the first writ petition, i.e. Writ-C No. 35910 of 2017, within 10 days.

4.8 Thereafter, one M/s. Jai Baba Flex and two others, who are also members of the Association, filed Writ-C No. 47866 of 2017, seeking a writ of mandamus commanding the respondents to renew their permissions for the year 2017-18 on the basis of their pending renewal applications and also prayed for a direction to the respondents not to remove their hoarding/advertisement. The said writ petition was dismissed to avoid multiplicity of proceedings making reference to the order dated 19th July 2017 passed in Writ-C No. 28567 and the prayers made in the first writ petition filed by the Association.

5. The first agreement was entered into between respondent no.5 and Nagar Nigam on 18th May 2016, clearly stipulating therein, being Clause No. 2, that the Nagar Nigam shall be responsible for handing over the physical possession of all sites to respondent no.5 and that the agreement would commence from such date on which complete physical possession of the sites is handed over to respondent no.5. The relevant Clause 2 in the agreement, reads thus:

"2& f}rh; i{k dks gksfMaZx@foKkiu iV@;wuhiksy@xUV~zh@iksy fD;ksLd LFkkfir djus gsrq opuc}rk&vuqcU/k frfFk ls 2 ekg dk le; (tslVs'ku ihfj;M ds :i esa) fn;k tk;sxkA vr% Bsds dh vof/k tslVs'ku ihfj;M ds lekfIr ds i'pkr~ tksfd 18@07@2016 ls izkjEHk gksxhA tslVs'ku ihfj;M ds nkSjku izFke i{k dks >kWalh uxj fuxe {ks= ds leLr LFkkuksa dk HkkSfrd dCtk (vukf/kd`r foKkiudrkZvksa }kjk yxk;s x;s foKkiu iV o lkexzh dks gVkus dk dk;Z) f}rh; i{k dks nsuk gksxkA iw.kZr;k HkkSfrd dCtk u ns ikusa fd fLFkr esa Bsds ds 'kq:vkr dh frfFk 18@07@2016 ls iw.kZr;k HkkSfrd dCtk nsus dh frfFk rd c 5.1 According to respondent no.5, they requested the Nagar Nigam from time to time to handover possession of the sites but, in view of the hurdles created by petitioners/members of the Association, the Nagar Nigam could not handover possession as per the agreement on or before 18th July 2016 i.e. within the gestation period. According to respondent no.5, the members of the Association physically prevented them from taking possession even of the sites located on the land of the Nagar Nigam. The members of the Association created hurdles and also made false and frivolous complaints against them to the Nagar Nigam. In this backdrop, respondent no.5 made a representation to the District Magistrate, Jhansi dated 13 June 2016 requesting him to extend necessary protection to enable them to operate the contract by erecting hoardings and advertisements. Inspite thereof, according to respondent no.5, no steps were taken by the District Magistrate to enable respondent no.5 to operate the contract. The inaction on part of the official respondents in performing their part of the contract forced respondent no.5 to approach this court by way of writ petition, bearing Writ-C No. 29438 of 2016, for appropriate directions. The said writ petition was, however, withdrawn in view of some assurance given by the respondent authorities as stated by respondent no.5. It appears, respondent no.5 addressed several letters, as stated by them in paragraph 18 of their counter affidavit dated 9th October 2017, to Municipal Commissioner/Vigyapan Prabhari, requesting them to abide by their assurance by removing the unathorised hoardings, to enable commencement of the contract.

6. In this backdrop, respondent no.8 - Prabhari Adhikari (Vigyapan) issued notice dated 4th August 2016, based on order of the Municipal Commissioner dated 28.7.2016, cancelling the contract dated 18th May 2016 on the ground that respondent no.5 did not start the work as per the contract and thereby caused financial loss to the Corporation. Respondent no.5 challenged the notice dated 4th August 2016 in this Court by filing Writ-C No.39671 of 2016, but it was dismissed vide order dated 29th August 2016, as quoted in paragraph 3 of this judgment.

7. By the order dated 29th August 2016, the petition was dismissed with liberty to respondent no.5 to approach the authority concerned, observing that parties can resort to arbitral proceedings in view of "Clause 19" of the agreement. Clause 19 of the agreement, which is in Hindi, reads thus:

"19& nksuksa i{kksa ds e?; fdlh Hkh fookn fuLrkj.k dk vf/kdkj uxj vk;qDr >kWalh uxj fuxe dks gksxkA"

The office translation of Clause 19 in English, reads thus:

"Clause 19- The Nagar Ayukta, Nagar Nigam Jhansi, shall have the power to resolve any dispute between both the parties."

7.1 Our attention was also drawn to the terms and conditions appended to the advertisements inviting tenders, in particular Clause 25 thereof. Clause 25, which is in Hindi, reads thus:

"25. izpkj ,tsUlh vkSj uxj fuxe ds chp fdlh Hkh izdkj dk fookn mRiUu gksus ij uxj vk;qDr uxj fuxe >kWalh dk fu.kZ; vfUre gkssxk tks nksuks i{k dks ekU; gksxkA bl lEcU/k esa vkjchV~zs'ku ,DV ds vUrZxr uxj vk;qDr dks vkjohV~zsV fu;qDr djus dk vf/kdkj gksxkA"

English translation of Clause 25, reads thus:

"Clause 25. In event of any dispute having arisen between Advertisement Agency and the Nagar Nigam, the decision taken by the Nagar Ayukta, Nagar Nigam, Jhansi shall be final and binding on both the parties. The Nagar Ayukta, Jhansi shall have power to appoint an Arbitrator under the Arbitration Act in this respect."

8. On the basis of the aforesaid clauses and in view of the order dated 29th August 2016 passed in Writ-C No. 39671 of 2016, Mr. W.H. Khan, learned Senior Counsel appearing for the petitioners, vehemently submitted that the act of re-allotting contract in favour of respondent no.5, without resorting to arbitration was not only illegal, improper but also contemptuous. He submitted that the Municipal Commissioner committed gross illegality in allotting the contract once again in favour of respondent no.5 after cancelling the earlier contract for violating the terms and conditions thereof, without inviting fresh tenders and/or without resorting to arbitral proceedings as provided for in Clause 19. Respondent no.5 ought to have taken recourse to arbitration under Clause No.19 of the agreement, as rightly relegated to by this Court vide order dated 29th August 2016. The Municipal Commissioner on receipt of the representation made by respondent no.5 ought to have initiated and conducted arbitral proceedings and after granting an opportunity to both, i.e. respondent no.5 and the Nagar Nigam, dispose of the same by way of an award. He had no authority in law to entertain representation and settle the dispute, the manner in which he did so and, that too, in the light of the fact that the earlier contract was cancelled in view of violation of the terms and conditions mentioned therein.

8.1 Mr. Khan, after drawing our attention to sub-section (5) of Section 12 of the Arbitration and Conciliation Act, 1996 (for short 'the Arbitration Act') and to the judgment of the Supreme Court in M/s. Voestalpine Schienen GMBH Vs. Delhi Metro Rail Corporation Ltd., AIR 2017 SC 939, submitted that the Municipal Commissioner himself was ineligible to act as an arbitrator, being an employee of Nagar Nigam. In other words, he submitted that in view of the insertion of sub-section (5) by the Arbitration and Conciliation (Amendment) Act, 2015 (for short, "Amendment Act"), the appointment of an arbitrator would be beyond the pale of the arbitration agreement or even to act as an arbitrator in view of Clause 19 of the agreement dated 18th May 2016. He then invited our attention to the interim order passed by this Court dated 28th July 2017 in Writ-C No. 32507 of 2017 (the second petition) and submitted that the Director of respondent no.5 - Midas Infra Tech Private Ltd., having failed to file affidavit in response to the notice of contempt, has lost right to defend in this petition. He submitted that the order dated 20th October 2016 passed by the Municipal Commissioner re-allotting the contract to respondent no.5 is not only illegal but also contemptuous in the face of the order dated 28th July 2017. In other words, he submitted that such an act of the Municipal Commissioner is a deliberate attempt to overreach the judgment of this Court (dated 29th August 2016 in Writ-C No. 39671 of 2016, quoted in paragraph 3), which was binding between the parties. Mr. Khan further submitted that Clause 19 of the agreement dated 18th May 2016 and Clause 25 in the advertisement (quoted in paragraphs 7 and 7.1 of this judgment) need to be read together to understand the intent of parties. He submitted that, irrespective of the Amendment Act, respondent no.5 ought to have approached the Municipal Commissioner for arbitration in view of the judgment of this Court dated 29th August 2016 and, in which case, the only course open to the Municipal Commissioner was to conduct arbitration and pass award. It was not open to the Municipal Commissioner to entertain the representation and re-allot the contract to respondent no.5.

8.2 On the other hand, learned counsel for the Nagar Nigam and respondent no.5, vehemently submitted that Clause 19 of the agreement cannot be termed as an arbitration clause and, therefore, the course of action adopted by the Municipal Commissioner, entertaining the representation and resolving the dispute amicably, is perfectly legal and sustainable in law. It was further submitted that even Clause 25 of the terms and conditions appended to advertisement inviting tenders also provides for an amicable settlement/resolution of dispute and, in case of its failure, it states that the Municipal Commissioner shall have power to appoint an arbitrator for its resolution through arbitration. It was further submitted that even if it is assumed that Clause 19 is an arbitration clause, it was open to the Municipal Commissioner to adopt the procedure agreed upon by parties for resolution of the dispute as contemplated by Section 19 which provides for determination of rules of procedure or even to encourage settlement of the dispute as contemplated by Section 30 of the Arbitration Act. It was further submitted that, in any case, the petitioners have no locus to raise any such challenge in view of the fact that they are not parties to the agreement nor did they participate in the tender process at any point of time. As a matter of fact, it was further submitted that the members of the petitioner Association were not even qualified to participate in the tender process being defaulters and perhaps that was the reason why none of the members of the Association participated in the process when four advertisements inviting tenders were issued.

9. Before we formulate the question and deal with the same in the light of the rival contentions urged by learned counsel for the parties, we would like to have a glance at few provisions of the Arbitration Act. Clause (b) of sub-section (1) of Section 2 defines "arbitration agreement" to mean an agreement referred to in Section 7. Section 7 deals with "arbitration agreement". It would be advantageous to reproduce the provisions contained in Section 7 of the Arbitration Act, which reads thus:

"7. Arbitration agreement.--(1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in--

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication including communication through electronic means which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."

10. The agreement of the parties to refer their disputes to the decision of the Arbitral Tribunal must be intended to be enforceable by law. It is well settled that it must satisfy all the requirements of enforceability as prescribed by Section 10 of the Indian Contract Act, 1872 and there must also be the intention of entering into a legally binding obligation. To constitute an arbitration agreement, there must be an agreement, that is to say, the parties must be ad idem. The arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise between them in respect of the subject matter of contract, such dispute shall be referred to arbitration, then such an arrangement would spell out an arbitration agreement. (See Rukmanibai Vs. Collector, (1980) 4 SCC 556).

10.1 Section 19 provides for determination of rules of procedure. From bare perusal of sub-section (1) of Section 19, it is clear that the Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. Subject to first Part of the Arbitration Act, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. In the absence of any such agreement, it is open to the arbitral tribunal to conduct the proceedings in the manner it considers appropriate. While conducting the arbitration, the power of the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence. Thus, it is clear from the provisions contained in Section 19 that the Arbitral Tribunal can conduct the proceedings in the manner it considers appropriate even if the parties do not agree on the procedure to be followed in conducting its proceedings, subject to the first Part of the Arbitration Act. Section 21 speaks about commencement of arbitral proceedings. It provides, unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for such dispute to be referred to arbitration is received by the respondent.

10.2 Section 30 of the Arbitration Act is also important for our purpose, which reads thus:

"30. Settlement.--(1) It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage settlement of the dispute and, with the agreement of the parties, the arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement.

(2) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.

(3) An arbitral award on agreed terms shall be made in accordance with Section 31 and shall state that it is an arbitral award.

(4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute."

10.3 If, during arbitral proceedings, which commences, as contemplated under Section 21, on the date on which a request for dispute to be referred to arbitration is received by the respondent, the parties settle the dispute, the arbitration Tribunal, as a matter of fact, gets terminated or the arbitral tribunal can terminate the proceedings and, if requested by the parties and not objected to by arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms. From a plain reading of Section 30, in our opinion, it deals with a situation where the parties themselves settle the dispute during, may be upon inducement, the arbitral proceedings. In the backdrop of these provisions, to which our attention was invited by learned counsel appearing for the respondents, we would now like to formulate the question that requires to be considered and addressed as follows: whether Clause 19 of the agreement dated 29th August 2016 entered into between the Nagar Nigam and respondent no.5 is in the nature of an "arbitration clause" as contemplated by sub-section (2) of Section 7 of the Arbitration Act?

11. Clause 19 of the agreement dated 29th August 2016, that was entered into between the Nagar Nigam and respondent no.5, states that the Municipal Commissioner shall have the power to resolve any dispute between both the parties. From plain reading even in Hindi, it appears to us that it empowers the Municipal Commissioner to resolve any dispute between both the parties. It does not make any reference to arbitration or appointment of an arbitrator for resolution of the dispute. The words used in Hindi in Clause 19 giving power to the Municipal Commissioner are " fdlh Hkh fookn fuLrkj.k dk vf/kdkj". It does not use the word "e/;LFk" of which the English meaning, as per Legal Glossary, is "arbitrator". The English meaning of the word "arbitration" in the said Dictionary is given as "ek/;LFke~". Even otherwise, from plain reading of Clause 19 even in Hindi, to us, it means that the Municipal Commissioner shall have the power to "resolve any dispute" between both the parties. The resolution of dispute could be on basis of consensus or without it. In case it is not a result of consensus, there is nothing in Clause 19 or any other clause of the contract which makes the same binding on the parties. One of the essential requirements of a valid arbitration agreement is the binding nature of the decision of the arbitral tribunal. The agreement should envince an unequivocal intention of the parties to make the award final and binding upon them. A necessary corollary of the binding nature of the award is it's enforceability through a court of law. Under Section 36 of the Act, the award of arbitral tribunal is enforceable like a decree of the civil court. In the absence of any specific provision in the agreement, in particular Clause 19, making the decision of the Municipal Commissioner final and binding on the parties or providing for such decision being enforceable through a court of law, we feel that Clause 19 was never intended to confer arbitral powers on the Municipal Commissioner. The power conferred on the Municipal Commissioner is more in the nature of an alternate dispute resolution mechanism, then an adjudicatory role. It is expected that the Municipal Commissioner would use his good office to resolve the dispute, if possible amicably, to avoid the dispute being taken to arbitral tribunal or a court of law.

12. In this connection, we would like to refer to the judgment of the Supreme Court in M/s. P. Dasaratharama Reddy Complex Vs. Government of Karnataka & Anr., MANU/SC/1103/2013-AIR 2014 SC 168. By this judgment, the Supreme Court disposed of a bunch of SLPs (converted into civil appeals), wherein the interpretation of clauses of the agreements entered into between the parties fell for consideration. Relevant clauses 29(b) and 29(c), that fell for consideration in the leading appeal, read thus:

"(b) Subject to other form of settlement hereafter provided, the Chief Engineer's decision in respect of every dispute or difference so referred shall be final and binding upon the Contractor. The said decision shall forthwith be given effect to and contractor shall proceed with the execution of the work with all due diligence.

Remedy when Chief Engineer's decision is not acceptable to Contract

(c) In case the decision of the Chief Engineer is not acceptable to the contractor, he may approach the Law Courts for settlement of dispute after giving due written notice in this regard to the Chief Engineer within a period of ninety days from the date of receipt of the written notice of the decision of the Chief Engineer."

In this judgment, the Supreme Court also quoted similar clauses in other appeals and also made reference to similar clauses in the judgments relied upon in support of the interpretation based on clause 29 that fell for its consideration. In paragraphs 21 and 22, the Supreme Court observed thus:

"21. To the aforesaid proposition, we may add that in terms of Clause 29(a) and similar other clauses, any dispute or difference irrespective of its nomenclature in matters relating to specifications, designs, drawings, quality of workmanship or material used or any question relating to claim, right in any way arising out of or relating to the contract designs, drawings etc. or failure on the contractor's part to execute the work, whether arising during the progress of the work or after its completion, termination or abandonment has to be first referred to the Chief Engineer or the Designated Officer of the Department. The Chief Engineer or the Designated Officer is not an independent authority or person, who has no connection or control over the work. As a matter of fact, he is having over all supervision and charge of the execution of the work. He is not required to hear the parties or to take evidence, oral or documentary. He is not invested with the power to adjudicate upon the rights of the parties to the dispute or difference and his decision is subject to the right of the aggrieved party to seek relief in a Court of Law. The decision of the Chief Engineer or the Designated Officer is treated as binding on the contractor subject to his right to avail remedy before an appropriate Court. The use of the expression ''in the first place' unmistakably shows that non-adjudicatory decision of the Chief Engineer is subject to the right of the aggrieved party to seek remedy. Therefore, Clause 29 which is subject matter of consideration in most of the appeals and similar clauses cannot be treated as an Arbitration Clause.

22. As a corollary to the above, we hold that the judgment of the Designated Judge in Mysore Construction Company v. Karnataka Power Corporation Ltd. (2001) AIR Kant HCR 480) (supra) lays down the correct law."

12.1 The Supreme Court also considered the judgment of a three Judge Bench in State of Orissa Vs. Damodar Das, (1996) 2 SCC 216, which interpreted Clause 25 of the contract entered into between the appellant and the respondent for construction of sump and pump chamber etc. for pipes W/S to Village Kentile. In that case, the respondent abandoned the work before completion of the project and accepted payment of fourth running bill. Subsequently, he raised dispute and sent communication to the Chief Engineer, Public Health, Orissa for making reference to an arbitrator. The Subordinate Judge allowed the application filed under Section 8 of the Arbitration Act, 1940 and the order passed by him was upheld by the High Court. The Supreme Court referred to Clause 25 of the agreement, relied upon the judgment in State of U.P. Vs. Tipper Chand, (1980) 2 SCC 341, and held that the said clause cannot be interpreted as providing resolution of dispute by an arbitrator. Paragraphs 9 and 10 of the judgment which are relevant for our purpose, read thus:

"9. The question, therefore, is whether there is any arbitration agreement for the resolution of the disputes. The agreement reads thus:

"25. Decision of Public Health Engineer to be final.-- Except where otherwise specified in this contract, the decision of the Public Health Engineer for the time being shall be final, conclusive and binding on all parties to the contract upon all questions relating to the meaning of the specifications; drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work, or as to any other question, claim, right, matter or thing, whatsoever in any way arising out of, or relating to, the contract, drawings, specifications, estimates, instructions, orders or these conditions, or otherwise concerning the works or the execution or failure to execute the same, whether arising during the progress of the work or after the completion or the sooner determination thereof of the contract."

10. Section 2(a) of the Act defines "arbitration agreement" to mean "a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not". Indisputably, there is no recital in the above clause of the contract to refer any dispute or difference present or future to arbitration. The learned counsel for the respondent sought to contend from the marginal note, viz., "the decision of Public Health Engineer to be final" and any other the words "claim, right, matter or thing, whatsoever in any way arising out of the contract, drawings, specifications, estimates, instructions, orders or these conditions, or otherwise concerning the works or the execution or failure to execute the same, whether arising during the progress of the work or after the completion or the sooner determination thereof of the contract" and contended that this clause is wide enough to encompass within its ambit, any disputes or differences arising in the aforesaid execution of the contract or any question or claim or right arising under the contract during the progress of the work or after the completion or sooner determination thereof for reference to an arbitration. The High Court, therefore, was right in its conclusion that the aforesaid clause gives right to arbitration to the respondent for resolution of the dispute/claims raised by the respondent. In support thereof he relied on Ram Lal Jagan Nath v. Punjab State through Collector AIR 1966 Punj 436 : 68 Punj LR 522. It is further contended that for the decision of the Public Health Engineer to be final, the contractor must be given an opportunity to submit his case to be heard either in person or through counsel and a decision thereon should be given. It envisages by implication existence of a dispute between the contractor and the Department. In other words, the parties construed that the Public Health Engineer should be the sole arbitrator. When the claim was made in referring the dispute to him, it was not referred to the court. The respondent is entitled to avail of the remedy under Sections 8 and 20 of the Act. We find it difficult to give acceptance to the contention. A reading of the above clause in the contract as a conjoint whole, would give us an indication that during the progress of the work or after the completion or the sooner determination thereof of the contract, the Public Health Engineer has been empowered to decide all questions relating to the meaning of the specifications, drawings, instructions hereinbefore mentioned and as to the quality of workmanship or material used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of, or relating to, the contract drawings, specifications, estimates, instructions, orders or those conditions or otherwise concerning the works or the execution or failure to execute the same has been entrusted to the Public Health Engineer and his decision shall be final. In other words, he is nominated only to decide the questions arising in the quality of the work or any other matters enumerated hereinbefore and his decision shall be final and bind the contractor. A clause in the contract cannot be split into two parts so as to consider one part to give rise to difference or dispute and another part relating to execution of work, its workmanship etc. It is settled now that a clause in the contract must be read as a whole. If the construction suggested by the respondent is given effect then the decision of the Public Health Engineer would become final and it is not even necessary to have it made rule of the court under the Arbitration Act. It would be hazardous to the claim of a contractor to give such instruction and give power to the Public Health Engineer to make any dispute final and binding on the contractor. A careful reading of the clause in the contract would give us an indication that the Public Health Engineer is empowered to decide all the questions enumerated therein other than any disputes or differences that have arisen between the contractor and the Government. But for clause 25, there is no other contract to refer any dispute or difference to an arbitrator named or otherwise."

12.2 In State of Maharashtra Vs. Ranjeet Construction (Civil Appeal No. 4700 of 1985), the Supreme Court considered Clause 30 of the agreement entered into between the parties, which was almost identical to the clauses that fell for consideration, to hold that Clause 30 cannot be relied upon for seeking a reference to an arbitrator of any dispute arising under the contract.

12.3 In K.K. Modi Vs. K.N. Modi, (1998) 3 SCC 573, the Supreme Court interpreted Clause 9 of the Memorandum of Understanding (MoU) signed by two groups of Modi family. To resolve the dispute and differences between two groups, the financial institutions, which had lent money, got involved. Ultimately, an MoU was signed by the parties on 24th January 1989, Clause 9 of which reads thus:

"Implementation will be done in consultation with the financial institutions. For all disputes, clarifications etc. in respect of implementation of this agreement, the same shall be referred to the Chairman, IFCI or his nominees whose decisions will be final and binding on both the groups."

The Supreme Court, after making reference to relevant facts and formulating the question whether Clause 9 of the MoU constituted an arbitration agreement and whether the decision of the Chairman, IFCI constituted an award, culled out the following attributes of an arbitration agreement in paragraph 17:

"(1) The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement, (2) that the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of the parties or from an order of the court or from a statute, the terms of which make it clear that the process is to be an arbitration, (3) the agreement must contemplate that substantive rights of parties will be determined by the agreed tribunal, (4) that the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal owing an equal obligation of fairness towards both sides, (5) that the agreement of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law and lastly, (6) the agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal.

18. The other factors which are relevant include, whether the agreement contemplates that the tribunal will receive evidence from both sides and hear their contentions or at least give the parties an opportunity to put them forward; whether the wording of the agreement is consistent or inconsistent with the view that the process was intended to be an arbitration, and whether the agreement requires the tribunal to decide the dispute according to law."

Then, the Supreme Court, after referring to several precedents, observed thus:

"33. In the present case, the Memorandum of Understanding records the settlement of various disputes as between Group A and Group B in terms of the Memorandum of Understanding. It essentially records a settlement arrived at regarding disputes and differences between the two groups which belong to the same family. In terms of the settlement, the shares and assets of various companies are required to be valued in the manner specified in the agreement. The valuation is to be done by M/s S.B. Billimoria & Co. Three companies which have to be divided between the two groups are to be divided in accordance with a scheme to be prepared by Bansi S. Mehta & Co. In the implementation of the Memorandum of Understanding which is to be done in consultation with the financial institutions, any disputes or clarifications relating to implementation are to be referred to the Chairman, IFCI or his nominees whose decision will be final and binding. The purport of clause 9 is to prevent any further disputes between Groups A and B. Because the agreement requires division of assets in agreed proportions after their valuation by a named body and under a scheme of division by another named body. Clause 9 is intended to clear any other difficulties which may arise in the implementation of the agreement by leaving it to the decision of the Chairman, IFCI. This clause does not contemplate any judicial determination by the Chairman of the IFCI. He is entitled to nominate another person for deciding any question. His decision has been made final and binding. Thus, clause 9 is not intended to be for any different decision than what is already agreed upon between the parties to the dispute. It is meant for a proper implementation of the settlement already arrived at. A judicial determination, recording of evidence etc. are not contemplated. The decision of the Chairman, IFCI is to be binding on the parties. Moreover, difficulties and disputes in implementation may not be between the parties to the Memorandum of Understanding. It is possible that the valuers nominated in the Memorandum of Understanding or the firm entrusted with the responsibility of splitting some of the companies may require some clarifications or may find difficulties in doing the work. They can also resort to clause 9. Looking to the scheme of the Memorandum of Understanding and the purpose behind clause 9, the learned Single Judge, in our view, has rightly come to the conclusion that this was not an agreement to refer disputes to arbitration. It was meant to be an expert's decision. The Chairman, IFCI has designated his decision as a decision. He has consulted experts in connection with the valuation and division of assets. He did not file his decision in court nor did any of the parties request him to do so."

13. In the light of the aforesaid judgments of the Supreme Court, it is clear and we have no slightest doubt in our mind that Clause 19 of the agreement cannot be construed as an arbitration clause. The intention appears to be more to avoid disputes than to decide formulated disputes in a quasi judicial manner.

14. The agreement dated 18th May 2016 does not state or does not contain a clause making the terms and conditions appended to the advertisement a part of the agreement. In other words, the terms and conditions appended to the advertisement do not form part of the agreement dated 18th May 2016. Even the terms and conditions appended to the advertisement do not provide that those terms and conditions shall be binding on parties even after execution of the agreement. The Supreme Court in M.K. Abraham & Co. Vs. State of Kerala & Anr., AIR 2010 SC 1265, observed that where the contract has several annexures/attachments, prepared at different points of time, unless a contrary intention is apparent, the latter in point of time would normally prevail over the earlier in point of time. The principle culled out from the judgment was, in the event of any conflict, the terms of the articles of agreement will prevail over the terms of notice inviting tenders for works. Similarly, the Supreme Court in M/s. Kaikara Construction Company Vs. State of Kerala & Ors., AIR 2014 SC 3067, after making reference to M.K. Abraham & Co. (supra), reiterated the principle relating to construction of contract in which it was observed that the terms of articles of agreement will prevail over the terms of notice inviting tenders for works. In view of the settled position of law, in our opinion, Clause 25 of the terms and conditions appended to the advertisement need not be looked into and cannot be taken recourse to for any purpose whatsoever. But, we would like to examine Clause 25 also, assuming that it would apply to the facts of the present case and that needs to be read with Clause 19 of the agreement. The language of the first part of Clause 25, namely, "in the event of any dispute having arisen between Advertisement Agency and the Nagar Nigam, the decision taken by the Municipal Commissioner, Nagar Nigam, Jhansi shall be final and binding on both the parties", is identical to the Clause that fell for consideration of the Supreme Court in Punjab State and others Vs. Dina Nath (AIR 2007 SC 2157), on which reliance has been placed by Mr. Khan. The second part of this clause, however, provides that the Municipal Commissioner shall have the power to appoint an arbitrator under the Arbitration Act in this respect. Thus, a plain reading of Clause 25 as a whole, in our opinion, would show that it is open to the Municipal Commissioner to decide all disputes and his decision would be final and binding on both the parties and if, for any reason, the Municipal Commissioner cannot resolve/decide the dispute, it is open for him to appoint an arbitrator under the Arbitration Act in this respect. The second part of the Clause makes it clear that the Municipal Commissioner while acting under the first part does not act as an arbitrator. Infact, the arbitral proceedings commence under Clause 25 only when the Municipal Commissioner, under the second part appoints an arbitrator, as per the provisions of the Arbitration Act. Before that, the exercise of power under the first part would be like a conciliator or mediator, to avoid the dispute going to the arbitrator. In case he fails to achieve the same, the Municipal Commissioner, under the second part, would refer the dispute to an arbitrator named by him. The judgment of the Supreme Court in Dina Nath (supra) would therefore not apply, if entire clause 25 is read as a whole.

15. In the present case, the Municipal Commissioner, in exercise of his power/jurisdiction conferred under Clause 19 and Clause 25 for that matter, resolved the dispute amicably for the reasons stated in the order dated 20th October 2016. We do not find anything wrong in the procedure adopted by the Municipal Commissioner in resolving the dispute and in doing so, he cannot be condemned for having shown any disrespect to the order of this Court dated 29th August 2016. It is not in dispute and it cannot be disputed that when the order dated 29th August 2016 was passed, Clause 19 and even Clause 25 were not examined by this Court in the light of the judgments referred to by us in the instant judgment. In fact, the order of this Court dated 28 August 2016 was not at all a 'judgment', but only an order summarily dismissing the writ petition, allowing the parties to get the dispute resolved through arbitral proceedings in view of Clause 19 of the agreement. Thus, we find no force in the contention of Mr. W H Khan, that the Municipal Commissioner acted in contempt of the order of this Court dated 29 August 2016 in not proceeding to decide the dispute as an Arbitrator. For the same reasons, the contention that the order dated 20 October, 2016 amounts to review of the order terminating the contract, also cannot be countenanced. As in our firm opinion, the Municipal Commissioner has not exercised the power of review, but has played the role of a mediator/conciliator, conferred upon him under the agreement.

16. We would now like to examine the challenge led to the action of the Municipal Commissioner in reviving the contract from another angle. It was urged that the Municipal Commissioner, being an employee of the Municipal Corporation, and also having terminated the agreement himself, was vitally interested in the subject mater of the dispute. Consequently, he was ineligible to act as an Arbitrator and his decision dated 20 October 2016, assuming it to be an Award under the Arbitration Act was a nullity in the eyes of law and not binding on the parties nor the petitioners. Thus, according to him, the rights to liabilities of parties cannot come to be regulated by an Award which is void ab initio.

16.1 In support of the said contention, a strong reliance was placed on sub-section (5) of Section 12, read with the Seventh Schedule and the decision of the Supreme Court in Bihar State Mineral Development Corporation and another Vs. Encon Builders (I) (P) Ltd. (2003) 7 SCC 418. In the said case, Clause 60 of the agreement which came up for consideration was in the following terms:-

"60. In case of any dispute arising out of the agreement, the matter shall be referred to the Managing Director, Bihar State Mineral Development Corporation Limited, Ranchi, whose decision shall be final and binding."

16.2 The Managing Director, who was conferred with the power to decide disputes arising out of agreement, had himself terminated the agreement. Having regard to the same, the Supreme Court held that he could not assume role of an arbitrator, as the decision, which was subject matter of challenge, was taken by him. It was held to be a case of actual bias which led to an automatic disqualification of the Managing Director to act as an Arbitration. It was observed as under:-

"32. It will bear repetition to state that the action of the second appellant itself was in question and, thus, indisputably, he could not have adjudicated thereupon in terms of the principle that nobody can be a judge of his own cause."

16.3 Mr. Khan also placed reliance on M/s Voestalpine Schienen GMBH Vs. Delhi Metro Rail Corporation Ltd. AIR 2017 SC 939, wherein the issue that fell for consideration by the Supreme Court was whether the names proposed to be appointed as arbitrator by the Delhi Metro Rail Corporation Ltd. comprised of persons who were ineligible to act as Arbitrator in view of Sub-Section (5) of Section 12 read with the Seventh Schedule. Sub-section (5) of Section 12 which was inserted by Act No.3 of 2016 with retrospective effect from 23.10.2015 provides that:-

"(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, false under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator :

Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing."

16.4 The relevant entry under the Seventh Schedule which was pressed in support of the claim that the panel proposed by the Delhi Metro Rail Corporation Ltd. to act as Arbitrator was ineligible, reads thus:-

"THE SEVENTH SCHEDULE Arbitrator's relationship with the parties or counsel

1. The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party."

16.5 The Supreme Court considered the recommendations made by the Law Commission for inserting Section 12 (5) and observed that the intention was to ensure that all suspicion relating to impartiality of arbitrator is totally ruled out. The main purpose for amending the provision, the Supreme Court observed, was to provide for neutrality of arbitrators. In order to achieve this, sub-section (5) of Section 12 was inserted. Where the named arbitrator or the proposed arbitrator is related to the parties or counsel or the subject matter of the dispute, he would stand disqualified to act as an arbitrator. In such an eventuality, the Court would get empowered to appoint an arbitrator. However, in the facts of that particular case, the Supreme Court, after examining the panel of proposed arbitrators held that they do not fall within the prohibited category and repelled the contention relating to their ineligibility to act as arbitral tribunal. Paragraph 17 of the report which is relevant for our purposes is reproduced below:-

"17. Keeping in mind the afore-quoted recommendation of the Law Commission, with which spirit, Section 12 has been amended by the Amendment Act, 2015, it is manifest that the main purpose for amending the provision was to provide for neutrality of arbitrators. In order to achieve this, Sub-section (5) of Section 12 lays down that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject matter of the dispute falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as an arbitrator. In such an eventuality, i.e., when the arbitration Clause finds foul with the amended provisions extracted above, the appointment of an arbitrator would be beyond pale of the arbitration agreement, empowering the court to appoint such arbitrator(s) as may be permissible. That would be the effect of non-obstante Clause contained in Sub-section (5) of Section 12 and the other party cannot insist on appointment of the arbitrator in terms of arbitration agreement."

16.6 It is clear from the above pronouncements that an arbitrator, who decides rights of the parties should be neutral, independent and impartial. The test to determine whether an arbitrator is neutral and independent is not that there is any actual bias but whether the circumstances obtaining in a given case lead to justifiable apprehensions of bias. The law cannot permit appointment of an arbitrator, who is himself a party to the dispute or who is employed (or similarly dependent) on one party, even if this is what the party had agreed to. There could not be any waiver on basis of an agreement between the parties executed prior to the dispute having arisen. Sub-section (5) inserted to Section 12 thus puts a statutory disqualification on a person who falls within the prohibited category specified in the Seventh Schedule notwithstanding prior agreement to the contrary. This safeguards the interest of a party who may not have foreseen such a bias on part of arbitrator at the time of entering into the agreement. Since, however, the bias on part of the arbitrator is a defence available to party to the agreement and to nobody else and, therefore, the Proviso to sub-section (5) permits a party to waive the applicability of sub-section (5) by an express agreement in writing entered into subsequent to the dispute having arisen. Thus, even a person falling under the prohibited category specified in the Seventh Schedule could act as an arbitrator, provided the parties agree to assign such a role to him after the dispute has arisen. In other words, the parties may still feel that such a person could act independently and entrust him with the role of an arbitrator.

17. Under Clause 18 of the agreement dated 18.5.2016, the Municipal Commissioner was competent to cancel the contract. The parties were aware of the fact that in case of breach of conditions of the contract, the decision to repudiate the contract would be taken by the Municipal Commissioner. It is presumably for the said reason that the parties chose not to assign him the role of an arbitrator, but that of a mediator/conciliator. The aforesaid view also stands fortified from the stipulations contained in Clause 25 wherein the Municipal Commissioner has been conferred with the power to decide the dispute between the parties, but in case he is unable to do so, to appoint an arbitrator for deciding rights of the parties. We have already held in the earlier part of the judgment that the role conferred upon the Municipal Commissioner was to resolve the dispute so that it may not go before the arbitrator or a court of law and not that of an arbitrator as understood in legal parlance. We are of the firm opinion that the doctrine of bias nor the prohibition contained in sub-section (5) of Section 12, nor the Seventh Schedule would in any manner eclipse the power conferred upon him under Clause 19 or Clause 25. Apart from it, as noted above, sub-section (5) of Section 12 which is based on doctrine of bias could not be pressed into service by the petitioners who had neither submitted the tenders nor were party to the agreement. It was a personal defence available only to respondent no.5 and not to the petitioners. Consequently, it is not open to the petitioners to assail the validity of the decision of the Municipal Commissioner dated 20.10.2016 on the ground of bias or by placing reliance on Section 12 (5).

18. We now proceed to consider the other limb of the argument of learned senior counsel. It was contended that the contract was cancelled as respondent no.5 committed breach of the conditions of contract, firstly by not erecting the hoardings and second, by not making payment of the contract money, in terms of the agreement, in time. In such circumstances, the only course open to Nagar Nigam was to invite fresh tenders, in which case the petitioners would have got the opportunity to participate and obtain the contract. It was further submitted that Nagar Nigam has taken a false defence before this Court that it was forced to cancel the contract as the sites over which hoardings were to be installed, were not vacated by members of the petitioner's Association and not on account of breach of conditions of contract by respondent No.5. The order of respondent no.8 dated 4 August 2016 cancelling the contract mentions that vacant sites were available but respondent no.5 failed to install hoardings and deposit contract money in terms of the agreement. It was pointed out that a similar stand was taken by Nagar Nigam, even while reviving the contract. As such, Nagar Nigam cannot be permitted to go beyond the recitals contained in the orders 4 August 2016 and 20 October 2016 in justifying its action. In support, a strong reliance was placed on the judgement of the Supreme Court in Mohinder Singh Gill and another Vs. the Election Commissioner of India and others AIR 1978 SC 851.

18.1 We have already noticed that under Clause 2 of the agreement dated 18.5.2016, a period of two months is provided as gestation period and the contract was to commence from 18.7.2016. During the gestation period, the Nagar Nigam was obliged to hand over possession of vacant sites, where hoardings were to be installed, to respondent no.5, after removing unauthorised hoardings. It was further contemplated thereunder that in case Nagar Nigam fails to carry out the said obligation, then the gestation period would stand extended. Meaning thereby that making available vacant sites to respondent no.5 was one of the essential terms of the contract and in case of failure on part of Nagar Nigam to perform said part of contract, the period of two years for which respondent no.5 was entitled to erect hoardings would not commence. It is the specific case of respondent no.5 that it made repeated requests to the officials of Nagar Nigam, even the officials of district administration, including District Magistrate, Jhansi to make available vacant sites to enable it to erect its own hoardings, but no heed was paid to the said request nor unauthorised hoardings erected by the petitioners/ members of the association were removed. If that be true, the breach at the initial stage was on part of the official respondents and not respondent no.5. The decision on this issue would enable us to adjudge whether the contract was cancelled by Nagar Nigam on account of breach of terms of the agreement by respondent no.5 or to shield its own lapses.

18.2 It is not disputed that two of the office bearers of the Association namely Maqsood Akhtar and Anil Paliwal instituted Original Suit No.168 of 2016 on 4.7.2016. The suit was filed as the plaintiffs felt threatened by the action of Nagar Nigam in entering into agreement dated 18.5.2016 with respondent No. 5. Although, respondent No. 5 was not impleaded in the suit, but the relief claimed was for restraining the sole defendant Nagar Nigam from interfering in the advertising work of the plaintiffs by removing their hoardings and to further restrain Nagar Nigam to take work from any private person in pursuance of agreement dated 18.5.2016. It was admitted in paragraph 1 of the plaint that work of advertising/hoardings by the plaintiffs was continuing on the date suit was instituted. In para 5 of the plaint, Nagar Nigam was sought to be restrained from interfering in the advertising work of the plaintiffs by removing their hoardings. It is thus admitted that on 4.7.2016, the date on which suit was instituted, the sites allotted to respondent No. 5 under the agreement dated 18.5.2016 were not vacant, as their hoardings were in existence.

18.3 In the counter affidavit filed by Ajit Kumar Singh, Up Nagar Ayukt, Nagar Nigam Jhansi, the categorical stand taken is that members of the Association did not remove their hoardings and created hurdles in the way of Nagar Nigam as well as respondent no.5, as a result whereof, respondent no.5 could not start work under the contract. The relevant assertions made in this regard are reproduced below for convenience of reference:-

"11. ........... The respondent no.5 was highest bidder, hence he was given contract for two financial years namely 2016-17 and 2017-18 for Rs.1,27,80,000/-. According to the terms and conditions of the contract, the contractor was entitled to get unauthorized hoardings removed, so that he may install his hoardings and to start his business, but due to hurdles created by the petitioners, the contractor could not be permitted to start his business. The Nagar Nigam, Jhansi could not remove unauthorized hoardings, hence under peculiar circumstances, Nagar Nigam, Jhansi cancelled the agreement entered into between Nagar Nigam and the respondent no.6.

24. ........ It is stated that as a matter of fact, the petitioners who were continuing their business created much hindrance in removal of structure and inspite of efforts made by Nagar Nigam, Jhansi, they did not remove their structures, whose period had expired. In the aforesaid circumstances, the contractor could not start his business. Since the Nagar Nigam was unable to give vacant possession of sites to the contractor, hence under compulsion agreement of the contractor was cancelled and the petitioners were permitted to continue their business upto the end of financial year 2016-17, which ended on 31.3.2017.

26. ...... It is stated that since the contract was given to the contractor for two years and due to the hurdles created by the present petitioners, he could not start his business inspite of execution of agreement, whereas he had satisfied all the terms and conditions of the agreement and further since in the intervening period the private advertisers had been permitted to run their business, hence it was necessary for the Nagar Nigam to extend the period of contract from 20.10.2016 to 19.10.2018. There was nothing wrong in the said extension. It is further submitted that the contractor had already deposited first installment as per agreement and he had deposited security money also, but he could not start his business.

29. ...... The Nagar Nigam for the purpose of advertisement followed the procedure prescribed under Rules and granted permission to the respondent no.5, but due to much uproar created by the private advertisers and a lot of hardship created by them creating law and order problem, on the one hand the contractor could not start his business and on the other hand Nagar Nigam had no option but to continue the private contractors as stopgap arrangement. Such stopgap arrangement will confer no right upon the petitioners nor they can be treated as licensee of Nagar Nigam, Jhansi."

(emphasis supplied) 18.4 It is not disputed that after cancellation of the contract of respondent no.5 on 28.7.2016/4.8.2016, the Nagar Nigam, having regard to the fact that members of the Association had continued to display their hoardings/advertisements, by order dated 29.8.2016, renewed their licence with retrospective effect from 1.4.2016 till 31.3.2017. In pursuance of the said renewal, individual notices were issued to members of the Association intimating them about the order of renewal and requiring them to deposit arrears of license fee. In these notices, the details of hoardings installed by members of the Association over public places as well as over private sites has been disclosed separately. The notices also disclose dimension of the hoardings that had been displayed by members of the Association in the months of July, August and September, 2016, with a further request to deposit license fee for the months of October 2016 to March 2017 in advance. It is noteworthy that the order of renewal dated 29.8.2016 was passed on basis of an office report dated 9.8.2016 in which also details of various hoardings installed by members of the Association including the sum due, was clearly disclosed, alongwith recommendation to renew the permission. The members of the association do not dispute the contents of these notices. They themselves have brought these notices on record by way of rejoinder affidavit dated 14.9.2017 sworn by Maqsood Aktar, President of the Association. They also do not dispute that since they continued to display advertisements on the hoardings installed by them over public places, therefore, without any resistance, they preferred to deposit license fee demanded by notice dated 29.8.2016 and continued to display their hoardings.

18.5 In the counter affidavit filed by Nagar Nigam it has duly been explained as to why and in what circumstances, it was compelled to renew permission/grant license to members of the Association for the year 2016-17. It is noteworthy that even after license granted to members of the Association, as a stop gap arrangement, expired on 31.3.2017, the members of the Association did not remove their hoardings. They moved applications seeking renewal for the period 2017-18. When renewal applications remained pending, members of the Association filed Writ-C No.28567 of 2017 seeking a direction to the Nagar Nigam authorities to renew permission for the period 2017-18. The said writ petition was disposed of on 19.7.2017 by the following order:-

"Heard Mr. W.H. Khan, learned Senior Counsel assisted by Mr. J.H. Khan, learned counsel for the petitioners, Mr. Ashok Kumar Pandey, learned counsel for respondents 2 and 3 and Mr. Ravi Kant, learned Senior Counsel for respondent No. 5.

This petition is preferred for the following reliefs:

"I. Issue a writ, order or direction in the nature of Certiorari quashing the order dated 20.10.2016 (Annexure-1) and agreement dated 4.1.2017 (Annexure-2) and the order dated 9.12.2017 (Annexure-3) and 27.05.2017 (Annexure-4) and notice dated 26.06.2017 published in Dainik Jagaran dated 28.06.2017 (Annexure-5).

II. Issue a writ, order or direction in the nature of mandamus commanding the respondent no.2 and 3 to restrain the respondent no.5 from installing hoardings/advertisements within the limits of Nagar Nigam Jhansi and to remove the hoarding etc. already installed by it.

III. Issue a writ, order or direction in the nature of mandamus commanding the respondent nos. 2 and 3 to renew the permission of the petitioners for the year 2017-18 on the basis of applications of renewal given by the petitioners to respondent no.3 in February, 2017 and restraining the respondents interfering in petitioners right to install hoardings/ advertisements from removing the petitioners hoardings/ advertisements already installed."

Learned counsel appearing for the parties, having regard to the nature of prayers made in the writ petition, have agreed for the order that we propose to pass. Hence, we dispose of this writ petition by the following order:

Learned Senior Counsel for the petitioners submits that the applications of the petitioners seeking renewal under Section 305 of the U.P. Municipal Corporation Act, 1959 are pending. Counsel for the respondent-Corporation submits that the petitioners' applications for renewal of the permissions for displaying the advertisements for the year 2017-18 shall be considered and decided within a period of ten days from today (i.e. till 29.07.2017) and till then they shall not take any coercive action against the existing hoardings erected by the petitioners. His statement is recorded and accepted. Till the petitioners' applications are considered and decided, the petitioners shall not use the existing hoardings for displaying any advertisements. With these observations, petition is disposed of. Petitioners are directed to produce a copy of this order alongwith a copy of the writ petition and annexures before the concerned authority on or before Friday (21.7.2017).

It is open to the petitioners to adopt appropriate remedy/proceedings, if their applications for renewal are rejected. All contentions and challenges raised in the writ petition are kept open."

18.6 In pursuance of the said order, the applications filed by members of the Association were duly considered by Nagar Nigam and were rejected by order dated 27.7.2017. The Association thereafter filed the instant petition challenging the said order. One of the prayers made in the instant petition, as noted above, is to restrain the respondents from interfering in the petitioners' carrying on advertising business from 388 sites.

18.7 It is the specific case of respondent no.5 that members of the petitioner's Association had been in possession of most of the sites in respect whereof contract was awarded to respondent no.5. Since they refused to remove the hoardings and created hurdles in way of respondent no.5 in installing its hoardings, respondent no.5 could not enjoy the rights and privileges conferred upon it under the contract. The stand taken by respondent no.5 before this Court is not a new one, but consistent with the material on record. Even the own case of the petitioners, including prayer made in the instant petition (as noted above), fully corroborates the stand taken by Nagar Nigam and respondent no.5 to the effect that respondent no.5 could not operate the contract because members of the Association did not remove their hoardings from various sites allotted to respondent no.5 under the contract.

19. In the aforesaid backdrop, we now proceed to examine whether there was breach of conditions of the contract on part of respondent no.5, resulting in its cancellation, or the reason was that members of the Association created hurdles and did not remove their hoardings, as a consequence whereof, respondent no.5 could not commence the contract and the Nagar Nigam, apprehending loss of revenue, cancelled the contract.

19.1 The original record relating to the award of contract to respondent no.5 and its cancellation was produced before us. It contains a report dated 14.7.2016 by Incharge Officer, Advertisement addressed to Upper Nagar Ayukt/Nagar Ayukt in which it is stated thus:-

Þ;g fd feMkl bUQzkVSd fy0 xkft;kckn }kjk fu/kkZfjr dk;Z{ks= LFyksa dks miyC/k djkus gsrq vuqjks/k fd;k x;k gS fd bl foHkkx }kjk Hkjld iz;kl Hkh fd;k x;k gS ijUrq mDr ,tsUlh dks vHkh rd fu/kkZfjr fpfUgr LFyksa dks miyC/k djk;k tkuk lEHko ugha gks ldk D;kasfd iwoZ eas dk;Zjr ,tsfUl;ksa }kjk blesa lg;ksx iznku ugha fd;k x;k] blds fy;s mUgsa i=kpkj Hkh fd;k x;k rFkk ekSf[kd :i ls Hkh voxr djk;k x;k] iwoZ dk;Zjr ,tsfUl;ksa }kjk fujUrj dk;kZy; esa bl lEcU/k esa vlg;ksx fd;k tkrk jgk gS] rFkk nSfud lekpkj i=ksa ds ek/;e ls Hkh bl fo"k; dk fojks/k djrs gq, eqn~nk mB;k x;k] dkQh iz;kl djus ds mijkUr iwoZ dk;Zjr ,tsfUl;ksa }kjk LFkku [kkyh ugha fd;k x;k] vkSj yxkrkj buds }kjk foKkiu djk;k tk jgk gS] ifj.kkeLo:i feMkl bUQzkVSd fy0 xkft;kckn dk vHkh rd dk;Z izkjEHk fd;k tkuk laEHko ughas gks ldk] iwoZ ,tsfUl;ksa dks vusdks ckj uksfVl fn;k x;k ijUrq muds }kjk dksbZ dkjxj dk;Zokgh ugha dh x;h cfYd iwoZ ls yxs fu/kkZfjr LFkykas ds LVDpjksa ij yxkrkj foKkiu dj jgsa gSa bl lEcU/k esa ftyk iz'kklu dks Hkh ;Fkk voxr djk;k x;kA bl izdkj feMkl bUQzkVSd fy0 xkft;kckn }kjk vius fy[kr i= esa of.kZr fLFkfr lR; gS fd dEiuh }kjk fof/kd lEiw.kZ dk;Zokgh djus ds mijkUr Hkh foKkiu dk dk;Z izkjEHk fd;k tkuk lEHko ugha gks ldk] mYys[kuh; gS fd feMkl bUQzkVSd fy0 xkft;kckn ckgj dh ,tsUlh gS] LFkkuh; ,tsfUl;ksa dh gB/kfeZrk ,oa LFkku miyC/k u djkus ds dkj.k dk;Z izkjEHk ugha dj ik;h gS] oLrqfLFkfr ;g gS fd orZeku ifjiz{; esa feMkl bUQzkVSd fy0 xkft;kckn dk foKkiu dk dk;Z djuk lEHko izrhr ugha gksrk vkSj bl fookn dk ifj.kke ;g gks jgk gS fd uxj fuxe dks fujUrj jktLo {kfr gks jgh gS tks Hkfo"; esa dHkh Hkh vkfMV vkifRr dk fo"k; cu ldrk gS bl izdj.k ds fuLrkj.k gsrq ;g lehphu gksxk fd mDr Bsdk fujLr dj iqu% fufonk,a vkefU=r dh tk,a rFkk Bsdk gksus rd foKkiu'kqYd dh olwyh uxj fuxe Lrj ls dh tk, rFkk iqu% fufonk,a vkeaf=r djus ij ;fn fufonk,a 'krksZa ds vuq:i izkIr ugha gksrh gSa rks uxj fuxe vius Lrj ls gh foKkiu 'kqYd dh olwyh fd;k tkuk bl foRrh; o"kZ esa mfpr gksxkA pwafd ;g izdj.k laLFkk ds jktLo ls tqM+k gqvk gS vkSj Hkfo"; esa dksbZ dfBukbZ mRiUu u gks bl fy, ;g mfpr jgsxk fd eq[; uxj ys[kk ijh{kd dh v/;{krk esa iwoZ ls xfBr foKkiu fufonk desVh ls Hkh fof/kd ijh{k.k djk fy;k tk;s rkfd dHkh Hkh dksbZ =qfV vFkok vU; dksbZ vkifRrtud fLFkfr mRiUu u gksAß (emphasis supplied) Thereafter there is an endorsement by Up Mukhya Nagar Adhikari dated 18.7.2016 to the effect that the agreement with respondent no.5 could be cancelled in exercise of power under clause 18. The said recommendation was approved by Municipal Commissioner on 28.7.2016 by putting his signature beneath the recommendation. In pursuance thereof, the Incharge Officer, Advertisement by notice dated 4.8.2016 apprised respondent no.5 about cancellation of the contract. No doubt, in the notice dated 4.8.2016, issued by Incharge Officer, Advertisement, Nagar Nigam Jhansi, it was alleged that respondent no.5 did not take possession of vacant sites despite repeated requests made to it, verbally and telephonically, and also by sending communication, resulting in financial loss to Nagar Nigam. It was further alleged that the aforesaid default on part of respondent no.5 constitutes a breach of conditions of the agreement, therefore, in terms of the order of the Municipal Commissioner dated 28.7.2016, the agreement dated 18.5.2016 had been cancelled.

19.2 It is noteworthy that under Clause 18 of the agreement, the power to terminate the contract was with Municipal Commissioner. The report of Incharge Officer, Advertisement dated 14.7.2016, quoted above, clearly shows that the local advertisers i.e. members of the Association did not remove the hoardings erected by them from the sites allotted to respondent no.5. Consequently, respondent no.5, which is an agency from outside Jhansi, could not operate the contract. The Nagar Nigam authorities apprehending financial loss and audit objections, decided to cancel the contract, and realise license fees from members of the Association, who had succeeded in exhibiting their advertisements on the hoarding put by them albeit illegally. As noted above, the report of Incharge Officer, Advertisement dated 14.7.2016 on basis of which contract was cancelled did not speak of breach of any condition of the contract by respondent No. 5. On the contrary, it candidly admits that respondent No. 5 could not operate the contract in view of various hurdles created by members of the Association. The Incharge Officer, Advertisement, Nagar Nigam Jhansi, as noted above, was not competent to terminate the contract. He was only communicating the decision of the Municipal Commissioner dated 28.7.2016 to respondent no.5. If while communicating the same, Incharge Officer, Advertisement has mentioned in the notice certain facts which were contrary to the admitted facts on record, in our considered opinion, the same cannot be relied upon for determining the cause which led to the cancellation of the contract. It seems that Incharge Officer, Advertisement thought it better to shift blame on respondent no.5 while communicating the decision of Municipal Commissioner dated 28.7.2016 or lest, in future, the Nagar Nigam may be hauled up for having failed to perform its part of contract. We have no hesitation in holding that the contract was cancelled, as members of the petitioner Association did not remove their hoardings, nor make available the sites to respondent no.5, resulting in a situation in which respondent no.5 was not in a position to operate the contract, and not on account of breach of terms of the agreement by respondent No. 5.

19.3 Before we come to the next contention, we would like to take note of one more plea taken by the petitioners in relation to the report dated 14.7.2016 and order of the Municipal Commissioner dated 28.7.2016. They have tried to assail the report and the order of Municipal Commissioner dated 28.7.2016, by contending that these documents are a result of manipulation. It was sought to be contended that these documents were not in existence earlier, but were prepared for the purposes of the instant case. However, we are not ready to accept these contentions. The notice issued by Officer Incharge, Advertisement dated 4.8.2016 also refers to order of the Municipal Commissioner dated 28.7.2016 terminating the contract. As noticed above, the order of Municipal Commissioner is in shape of an approval to the reports placed before him, as it only bears his signatures. There is nothing on record which may arouse suspicion about the authenticity of the report or the order of the Municipal Commissioner signifying approval to the office reports.

20. We now proceed to consider the effect of the recitals contained in the order of Municipal Commissioner dated 20.10.2016 whereby the contract in favour of respondent no.5 was revived. While passing the said order, the Municipal Commissioner has reiterated the stand taken by Nagar Nigam while issuing notice dated 22.7.2016 to respondent no.5 that it had failed to display its advertisement even on vacant sites, resulting in financial loss, and ultimately, resulting in issuance of notice dated 4.8.2016 cancelling the contract. It further records that against the said order, respondent no.5 filed Writ-C No.39671 of 2016 which was dismissed by order dated 29.8.2016 with liberty to invoke arbitral proceeding under clause 18 of the agreement. The order further records that subject matter of the contract was only hoardings and kiosks, whereas while executing the agreement, banners, posters and wall paintings was also mentioned, which was impermissible. Consequently, the work order issued earlier was amended and the contract awarded to respondent no.5 was confined to hoardings and kiosks. The previous order dated 4.8.2016 cancelling the contract was withdrawn.

20.1 The recital in the order of Municipal Commissioner dated 20.10.2016 to the effect that respondent No. 5 did not erect hoardings, despite vacant sites being made available, was presumably based on the stand taken by Nagar Nigam in its notice dated 4.8.2016. The recital in the notice dated 4.8.2016 shifting blame on respondent No. 5, as observed above, was only an effort on part of Nagar Nigam authorities, to shield themselves from legal proceedings. It appears that the Municipal Commissioner was also having in his mind the fact that in case respondent no.5 sues Nagar Nigam for breach of contract, it would be difficult for him to justify his action in a court of law and, therefore, when he got opportunity to resolve the dispute between the parties, he lost no opportunity to secure his position by shifting the blame on respondent no.5. However, at the same time, in order to prevent the dispute going to the court/arbitrator, he proceeded to revive the contract, but on certain modified terms. This time the Municipal Commissioner did not leave it at the mercy of members of the Association to determine when the period of contract would commence. He prevailed upon respondent no.5 not to request for any gestation period as provided earlier under Clause 2 of the previous agreement. This is clear from the stand taken by respondent No. 5, the then Municipal Commissioner in the counter affidavit dated 16.8.2017, wherein a specific plea has been taken to the effect that while executing fresh agreement in favour of respondent no.5, clause 2 of the earlier agreement providing for gestation period was omitted. The relevant averment made in para 12 is extracted below:-

"12. That it is pertinent to mention here that in terms of clause 2 of the Agreement dated 18.05.2016, which provided that the agreement will not commence, until the possession of all the sites were handed over to the Respondent no.5, there was deadlock created due to practical impossibility to ascertain the factum of handing over of the possession and in view of claims and counter claims, it was thought advicable in the interest of Nagar Nigam to remove clause 2 and execute a fresh agreement for limited period. Thereafter an agreement was entered into between the petitioner and Nagar Nigam for a period of two years from 20.10.2016 to 19.10.2018. A true translated typed copy of the agreement dated 04.01.2017 executed by the Petitioner is being filed herewith and marked as Annexure No.C.A.6 to this Affidavit."

20.2 In the backdrop of the above facts, we now proceed to examine the contention based on decision of the Supreme Court in Mohinder Singh Gill. No doubt the Supreme Court in the aforesaid celebrated judgement has observed that validity of an order of a statutory authority is to be tested on reasons mentioned in the order. The authority cannot be permitted to supplement reasons by filing affidavits to justify its action. However, we are of the considered opinion that the said judgement would not be applicable to the facts of the instant case for more than one reason. Firstly, as noted above, the power to cancel the contract was with the Municipal Commissioner and not the Incharge Officer, Advertisement. The order of the Municipal Commissioner dated 28.7.2016 terminating the contract, was only an approval of the report of Incharge Officer, Advertisement, which unequivocally acknowledges that respondent no.5 had not been able to enjoy fruits of the contract because of the hurdles created by members of the Association. The office report, upon being approved, became part and parcel of the order of the Municipal Commissioner. It means that the Municipal Commissioner was id idem with the suggestions and reasonings given in the report. Consequently, when we place reliance on the reports in ascertaining the cause which led to cancellation of the contract, it is not finding out reasons from any extrinsic material, nor amounts to permitting Nagar Nigam to supplement the reasons not taken earlier.

20.3 Second, even as a matter of fact, the contract was cancelled not on account of any fault of respondent no.5. It is admitted in the report that the first instalment of Rs.31,95,000/- had already been tendered. The next instalment, as per Clause 9 of the contract, was payable on 18.11.2016 and had thus not fallen due on 28.07.2016, when the contract was cancelled. Thus, it is also not possible to accept that there was default on part of respondent no.5 in depositing the instalment due at the relevant time. It is abundantly clear that the Incharge Officer, Advertisement and the Municipal Commissioner subsequently chose to level allegations of breaches upon respondent no.5 to secure their position.

20.4 Thirdly, the own contention of learned counsel for the petitioner that validity of an order has to be adjudged on the basis of grounds stated in the order and not by placing reliance on additional grounds set up subsequently, dis-suades us from placing reliance on the recital contained in the notice dated 4.8.2016 and the order dated 28.7.2016 in adjudging the cause which led to cancellation of the contract. We are of considered opinion that the law laid down by Supreme Court in Mohinder Singh Gill (supra), would be of no assistance to the petitioners. We reiterate that the Nagar Nigam was compelled to cancel the contract not because of any fault on part of respondent no.5 but on account of hurdles created by members of the Association.

21. In the backdrop of the findings and the conclusions drawn above, we now proceed to examine the challenge led to the wisdom of the Municipal Commissioner in re-settling the contract with respondent no.5. It is urged that the Municipal Commissioner, while re-settling the contract, and even while granting initial contract, showed undue favour to respondent no.5 in permitting it to pay the contract money in instalments. Mr. Khan, learned senior counsel appearing for the petitioners vehemently contended, by placing reliance on condition no.10 of the terms and conditions of tender document, that entire contract money was supposed to be deposited soon after bid was accepted. However, the Municipal Commissioner showed undue favour to respondent no.5 in relaxing the said condition, permitting it to deposit contract money in four six monthly instalments. It is urged that members of the petitioner Association are small advertisers and it was on account of the said requirement that they could not participate in the tender process being not in a position to deposit the entire money in one go. Had they known that contract money could be paid in installments, they would have participated in the tender process. It was thus sought to be contended that not only favour was shown to respondent no.5 in reviving the contract but the essential conditions of the tender document were also relaxed. It not only resulted in undue gain to respondent no. 5 but caused serious prejudice to members of the Association, preventing them from participating in the tender process. It was also urged that only five days time was granted to submit the bid, which period was too short. The members of the Association found it difficult to complete the formalities in such a short period, preventing them from participating in the tender process.

22. On the other hand, Sri M. D. Singh Shekhar, learned senior counsel appearing on behalf of Nagar Nigam, Jhansi and Sri Nikhil Agarwal, learned counsel appearing for respondent no.5 opposed the said contention by submitting that members of the Association did not participate in the tender process, not because of the requirement laid down in Clause 10 or because only five days time was granted to submit the bids, but because they were ineligible to participate in the tender process under condition no.6, whereunder a person who is defaulter of any money due and payable to Nagar Nigam, Jhansi was disqualified. It is urged that members of the Association had huge sums due against them towards licence fee and being aware of the said fact, they preferred not to participate in the tender process. They further submitted that no favour was shown to respondent no.5. Infact, under Clause 27 of the terms and conditions of the tender, the Municipal Commissioner was vested with power to relax of any condition, keeping in mind the requirements of the prevailing situation. It is pointed out that before contract was awarded to respondent no.5, in pursuance of advertisement dated 12/13 April 2016, three previous attempts inviting tenders failed to yield any result as nobody came forward to participate in the tender process. Consequently, when for fourth time advertisement was issued and in which, apart from respondent no.5, two other persons participated and the Municipal Commissioner, after negotiation, also succeeded in enhancing the highest bid by 15%, he considered it in the interest of Nagar Nigam to accept the request of respondent no.5 to permit deposit of auction money in four six monthly instalments. It was further contended that the decision to revive the contract and relax condition relating to deposit of contract money were taken in larger public interest. The petitioners, nor members of the Association, who were defaulters, not eligible to participate in the tender process, have any locus to challenge the same. It is further submitted that even this Court, in exercise of its power of judicial review, may decline to go into these issues, particularly at the instance of the petitioners.

23. Under condition no.6 of the terms and conditions of tender document, a person should not be in arrears of any money payable to Nagar Nigam under any head, otherwise he would not be able to furnish no-dues certificate, nor able to participate in the tender process. Condition no.6 reads thus :-

Þ6- uxj fuxe] >kWlh ds fdlh Hkh en dh dksbZ /kujkf'k 'ks"k u gksus ds dkj.k izek.ki= vkosnu dks izLrqr djuk gksxkß In order to deal with the contention of the respondents regarding locus of the petitioners and members of the Association to challenge action of Municipal Commissioner awarding/resettling/varying terms of the contract, we first proceed to examine whether members of the Association were defaulters, thus ineligible to participate in the tender process or they could not participate because of onerous conditions of the tender document, as claimed by the petitioners.

23.1 The first advertisement, inviting tenders for award of contract for realisation of licence fee from advertisers was issued in the news paper on 13 January 2016. However, no one came forward to submit bid. Thereafter, two more tender notices dated 12 March 2016 and 27 March 2016 were issued. Again, there was no response, compelling the authorities to issue another advertisement on 13 April 2016, after making certain changes in terms and conditions of the tender notice. In response to this advertisement, respondent no.5 and two more advertising agencies submitted their tenders. It is not in dispute that one of the eligibility conditions of these tender notices was that the participants should not be a defaulter of any money payable to Nagar Nigam, otherwise, he would not be eligible to participate. There is also no dispute about the fact that members of the Association did not participate in any of the tender processes. The specific stand of Nagar Nigam in the supplementary counter affidavit filed by it is that members of the Association had not paid the licence fee for the previous years and being defaulter of money payable to Nagar Nigam, were ineligible to participate in the tender process. It is for the said reason that they did not submit their tenders in pursuance of any of the four advertisements. A list giving details of sum due against members of the Association has been brought on record as Annexure SCA-2. The said list discloses the number of hoardings displayed by each member of the Association, the amount payable by it during financial year 2015-16, the amount paid by it and the amount due. A perusal of the said list reveals that all members of the Association had been in default of some amount or the other. The correctness of the said list has been seriously disputed by learned counsel for the petitioners. He submitted that the licence of the members of the Association were admittedly renewed by order dated 29.8.2016, with retrospective effect from 1 April 2016 to 31 March 2017. It was urged that under Section 451 (4), the renewal of license was possible only if no sum was due. It was thus sought to be contended that the fact that licenses were renewed, itself establishes that there were no arrears.

23.2 The petitioners, alongwith their rejoinder affidavit, have brought on record, the reports submitted by officials of Nagar Nigam to Municipal Commissioner, on basis of which, ultimately licenses were renewed. It seems that separate reports were submitted in respect of each of member of the Association. The reports disclose number of hoardings put by each member during financial year 2015-16, the amount payable as license fee, the amount already paid and the amount due. In each of these reports, some amount or the other was alleged to be due towards license fee against members of the Association. For instance, in respect of Maqsood Akhtar, the President of the Association, a sum of Rs.25,40,880/- was found payable as licence fee for period 1.7.2015 to 31.3.2016, out of which Rs.10,10,722.50p remained unpaid. On 29.8.1996, a notice was issued to Maqsood Akhtar, proprietor M/s. Prince Publicity Service, whereby, Incharge Officer, Advertisement, while informing him about the decision of the Municipal Commissioner, renewing permission for financial year 2016-17, called upon him to pay Rs.5,34,627/- as licence fee from the period April to September 2016. It is admitted to the petitioner that in pursuance of the notice, the requisite amount was duly deposited. Thus, it is clear that on 13.1.2016, 12.3.2016, 27.3.2016 and 13.4.2016 when tender notices were issued, he was in arrears of license fee, but the amount was deposited only when notice was issued, to facilitate renewal of the permission. Likewise, the notice of the same date issued to Anil Paliwal, another member of the Association, who is running advertising agency in the name of M/s Paliwal Advertising Service, as well as the receipt evidencing deposit of arrears on 24.8.2016, have been brought on record by the petitioners themselves. Similar notices were issued to the other members and they also deposited the arrears of license fee as a prelude to grant of renewal on 29.8.2016. These undisputed facts lead to irresistible conclusion that even in August 2016, members of the Association, were in arrears albeit deposit of such amount thereafter to obtain the renewal. The fact that members of the Association deposited the arrears of license fee, in pursuance of demand notices, is conclusive evidence of the fact that substantial amounts were due and payable by members of the Association to Nagar Nigam during the period when advertisements were issued and contract was settled with respondent no.5. We thus find sufficient force in the contention of learned counsel for Nagar Nigam and the fifth respondent that members of the Association were in arrears of license fees, thus were ineligible to participate in the tender process in terms of Clause 6.

24. It is noteworthy that the license of the members of the Association was not renewed at the start of the financial year, as Nagar Nigam had decided to settle the advertising rights by contract. The Nagar Nigam, after repeated attempts, also succeeded in awarding contract to respondent no.5, but on account of hurdles created by members of the Association, respondent no.5 could not successfully operate the contract, compelling Nagar Nigam to terminate the same by order dated 28.7.2016. The report of the Incharge Officer, Advertisement, quoted in the foregoing paragraphs of the judgement reveals that Nagar Nigam, apprehending loss of revenue, decided to renew permission for exhibiting advertisement in favour of members of the Association, as they had continued to exhibit their advertisements even without a valid license. This is also clear from the report submitted by the Incharge Officer, Advertisement on 9.8.2016 in respect of each member of the petitioner Association. The Nagar Nigam got compelled to take such measure to save itself from financial loss, as otherwise, it would not have been able to realise any amount from respondent no.5, whose contract had been cancelled, nor from the members of the Association, whose licenses had not been renewed by that time, albeit uninterrupted display of advertisements by them. It was apparently an adhoc arrangement to save financial loss to the public exchequer. This is also exactly the stand taken by respondent, Nagar Nigam in the counter affidavit wherein it is pleaded that renewal of license of members of the Association for the period 2016-17 was a stop gap arrangement, pending its efforts to award contract for realisation of license fee, and such a stop gap arrangement would not confer any right in favour of members of the Association.

25. In Poonam vs. State of U.P. and others (2016) 2 SCC 779, the Supreme Court was considering the right of a person who comes into picture by way of an adhoc arrangement on account of cancellation of license/allotment of the original licensee/allottee. The Supreme Court held that such a person does not get any independent legal right and thus has no locus to challenge the order reviving the license/allotment. The relevant observations made in this regard in paragraph 49 and 53 of judgement are extracted below :-

49. In the instant case, Shop no.2 had become vacant. The appellant was allotted the shop, may be in the handicapped quota but such allotment is the resultant factor of the said shop falling vacant. The original allottee, that is, the respondent, assailed his cancellation and ultimately succeeded in appeal. We are not concerned with the fact that the appellant herein was allowed to put her stand in the appeal. She was neither a necessary nor a proper party. The appellate authority permitted her to participate but that neither changes the situation nor does it confer any legal status on her. She would have continued to hold the shop had the original allottee lost the appeal. She cannot assail the said order in a writ petition because she is not a necessary party. It is the State or its functionaries, who could have challenged the same in appeal. They have maintained sphinx like silence in that regard. Be that as it may, that would not confer any locus on the subsequent allottee to challenge the order passed in favour of the former allottee. She is a third party to the lis in this context".

"53. We have referred to the said decision in Ramesh Hirachand Kundanmal v. Municipal Corpn. of Greater Bombay, (1992) 2 SCC 524 in extenso as there is emphasis on curtailment of legal right. The question to be posed is whether there is curtailment or extinction of a legal right of the appellant. The writ petitioner before the High Court was trying to establish her right in an independent manner, that is, she has an independent legal right. It is extremely difficult to hold that she has an independent legal right. It was the first allottee who could have continued in law, if his licence would not have been cancelled. He was entitled in law to prosecute his cause of action and restore his legal right. Restoration of the legal right is pivotal and the prime mover. The eclipse being over, he has to come back to the same position. His right gets revived and that revival of the right cannot be dented by the third party."

26. A strong reliance reliance has been placed by learned counsel for respondent no.5 on a decision of Bombay High Court by Hon'ble S.A. Bobde, J. (as he then was) in M/s A.M. Yusuf Vs. Mumbai Municipal Corporation 2009 (111) Bom. LR 452, wherein a person, who had not submitted tender and was also ineligible to participate in the tender process, was held having no cause of action to challenge the tender process. The relevant observations made in this regard are as under:-

"13. .....The Petitioner has challenged the tender process before this Court without even submitting tender and being an Applicant ineligible or otherwise. The very locus of the Petitioner in filing this Petition would be looked upon with some suspicion by the Court. This is cause of action, which is a private cause of action, if at all available to the Petitioner, is not an action in public interest.

14. The doctrine of Locus Standi is well established in administrative law, law of contract and other allied laws. A person prejudicially affected would have a cause of action while in the specified class of cases a third party may be able to bring an action in public interest despite the fact that he may not have personal interest.

But in the cases of present kind, the cause of action would be personal to the aggrieved party and not a cause of action in rem.

Even if Litmus Test Principle is not strictly applied keeping in view the developing law, still it is difficult for us to hold that the Petitioner without being an Applicant to the tender process could maintain the present Writ Petition, in the peculiar facts and circumstances of the case. As such an approach would neither subserve the public interest and would also hold in avoidance of public mischief."

27. We are of the considered opinion that members of the Association, who were ineligible to participate in the tender process and also did not participate, but were granted license in the year 2016-17 only as a stop gap arrangement, have no locus to challenge the award of contract to respondent no.5, its revival, including the terms and conditions of the tender notice, as well as action of the Municipal Commissioner in permitting respondent no.5 to deposit auction money in instalments.

28. However, we would still like to examine the challenge, as it is claimed that the action of the Nagar Nigam in this regard is not a bonafide exercise of power, but actuated by malafides. In support of the said contention, Mr. Khan has placed reliance on certain decisions of the Supreme Court, which we would like to refer. The first judgement cited by Mr. Khan is in Central Coalfields Limited and another Vs. SLL-SML (Joint Venture Consortium) and others (2016) 8 SCC 622, where the person whose bid was rejected for not furnishing bank guarantee in prescribed format, challenged the action contending that such condition could have been waived. The challenge was repelled by holding that the court should exercise judicial restraint in interfering with administrative action. It has been held that while soundness of the decision ought not to be examined but the decision making process can be subjected to judicial review. The soundness of the decision could be questioned on limited ground of irrationality, malafides or discrimination. It has been observed that the decision of the authority as to whether a particular term could be deviated or not has to be ordinarily respected. The courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical or procedural violation. Principles of equity and natural justice stay at a distance, in commercial transactions. The power of judicial review would not be permitted to be invoked to protect private interest at the cost of public interest. If the tenderer or contractor has any grievance, he can seek damages in a civil suit. After laying down these broad principles, the decision of the authority in not permitting relaxation to the requirement of furnishing bank guarantee in prescribed format was held to be justified and it has been observed thus:-

"43. Continuing in the vein of accepting the inherent authority of an employer to deviate from the terms and conditions of an NIT, and re-introducing the privilege-of-participation principle and the level playing field concept, this Court laid emphasis on the decision making process, particularly in respect of a commercial contract. One of the more significant cases on the subject is the three-judge decision in Tata Cellular v. Union of India (1994) 6 SCC 651 which gave importance to the lawfulness of a decision and not its soundness. If an administrative decision, such as a deviation in the terms of the NIT is not arbitrary, irrational, unreasonable, mala fide or biased, the Courts will not judicially review the decision taken. Similarly, the Courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical or procedural violation."

28.1 The next judgement cited is in West Bengal State Electricity Board Vs. Patel Engineering Company Ltd. and others (2001) 2 SCC 451. In para 14 of the said judgement, the Supreme Court quoted with approval the principles governing judicial review in contractual matters enumerated in Tata Cellular v. Union of India (1994) 6 SCC 651 as under:-

"Before proceeding to ascertain answers to the above questions, it will be useful to bear in mind the principles governing the exercise of power of judicial review by the High Courts. We consider it unnecessary to refer to cases on the scope of the power of judicial review of administrative action by the High Court as a three Judge Bench of this Court has, after exhaustive consideration of long line of authorities, succinctly summarised the position and laid down the following principles in Tata Cellular Vs. Union of India :

(1) The modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."

28.2 Again in the same judgement, the Supreme Court observed that adherence to the pre-qualification stipulation in the ITB (Instructions to Bidders) was in public interest ruling out scope of discrimination, arbitrariness and favouritism. The contention of the respondent bidder that it should be permitted to correct certain mistakes in the bid documents was repelled by observing thus:-

"The controversy in this case has arisen at the threshold. It cannot be disputed that this is an international competitive bidding which postulates keen competition and high efficiency. The bidders have or should have assistance of technical experts. The degree of care required in such a bidding is greater than in ordinary local bids for small works. It is essential to maintain the sanctity and integrity of process of tender/bid and also award of a contract. The appellant, respondent Nos.1 to 4 and respondent Nos.10 & 11 are all bound by the ITB which should be complied with scrupulously. In a work of this nature and magnitude where bidders who fulfil prequalification alone are invited to bid, adherence to the instructions cannot be given a go-bye by branding it as a pedantic approach otherwise it will encourage and provide scope for discrimination, arbitrarinessand favouritism which are totally opposed to the Rule of law and our Constitutional values. The very purpose of issuing Rules/instructions is to ensure their enforcement lest the Rule of law should be a casuality. Relaxation or waiver of a rule or condition, unless so provided under ITB, by the State or its agencies (the appellant) in favour of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the Rules, it has to be done strictly in compliance with the Rules. We have, therefore, no hesitation in concluding that adherence to ITB or Rules is the best principle to be followed, which is also in the best public interest."

29. In Air India Ltd. v Cochin International Airport Ltd. (2000) 2 SCC 617 the judgement relied upon by the respondents, the Supreme Court considered the scope of judicial review by the High Court under Article 226 in matters relating to award of contract by the State and its instrumentalities. The Supreme Court, after referring to its previous decision in Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489, Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India (1981) 1 SCC 568, CCE v. Dunlop India Ltd. (1985) 1 SCC 260, Tata Cellullar v. Union of India (1994) 6 SCC 651, Ramniklal N. Bhutta v. State of Maharastra (1997) 1 SCC 134 and Raunaq International Ltd. v. I.V. R. Construction Ltd. (1999) 1 SCC 492 held that the power of judicial review under Article 226 in contractual matters is to be exercised with great caution and only and only in furtherance of public interest and not merely on the making out of a legal point. The ultimate consideration to be kept in mind is larger public interest and the interference by the court should be limited only when it comes to a conclusion that overwhelming public interest requires such an action. The other important principle laid down is that the State is free to choose its own method to arrive at a decision. It can fix its own terms of invitation to tender; it is free to enter into negotiation before finally deciding to accept one of the offers; price need not be the sole criterion for awarding a contract; it is free to relax any terms of the contract, if the tender condition permit such a relaxation, provided the power is exercised for bonafide reason. The courts can examine the decision making process and interfere with it only if it is found to be vitiated by malafide, unreasonableness and arbitrariness. The relevant observations made in this regard are as under :-

"The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene".

30. Keeping in mind the above principles, we proceed to examine whether the decision of the Municipal Commissioner to relax condition relating to immediate deposit of bid amount was a bonafide exercise of power or was actuated by malice or favouritism or has resulted in any prejudice to members of the Association. Condition no.27 of the terms and conditions of tender empowers Municipal Commissioner to relax any condition of the tender document or to add any new condition having regard to the requirements of the prevailing situation. It reads thus:-

Þvko';drk ,oa ifjfLFkfr;ksa ds vuqlkj mijksDr 'krksZa esa ls fdlh Hkh 'krZa dks f'kfFky djus vFkok dksbZ ubZ 'krZas tksM+us dk vf/kdkj uxj vk;qDr esa fufgr gksxkAß

31. Concededly, the Nagar Nigam, prior to award of contract to respondent no.5, in pursuance of advertisement dated 13 April, 2016 made three attempts to settle the contract, but could not get any response. On the fourth occasion, apart from respondent no.5, two more advertising agency submitted their tender. The bid of respondent no.5 was highest at Rs.1,09,00,000/-. During course of negotiations, the Nagar Nigam succeeded in getting the bid enhanced by 15% so that the final amount settled was Rs.1,27,80,000/-. The specific stand of Nagar Nigam is that the total recovery of license fee from individual advertising agency during previous years was a meager sum of Rs.40 lacs whereas, under the contract with respondent no.5, the Nagar Nigam became entitled to a substantially higher sum, resulting in considerable enhancement of revenue. The aforesaid stand has been taken by Nagar Nigam in paragraph 23 of the counter affidavit by stating thus :-

"23. That the contents of paragraph No.8(iii) of the writ petition are misleading, hence denied. It is stated that in financial year 2016-17, when the petitioners and other persons were given permission for hoardings, only Rs.40 lacs were collected by Nagar Nigam as fee. Hence inspite of the fact that the respondent no.5 submitted tender for an amount of Rs.94 lacs for two years, the Nagar Nigam made all efforts to get the tender money increased and it was increased to Rs.1,27,00,000/-. The calculation which has been given in the paragraph under reply is also incorrect."

31.1 The petitioners in paragraph 8 of the rejoinder affidavit have not specifically traversed the facts and figures mentioned in para 23 of the counter affidavit, although in an application dated 11.7.2017, they allege that Rs.1 crore was collected by Nagar Nigam from the advertisers, during the previous year. The said assertion has again been emphatically denied by Nagar Nigam in para 8 of the counter affidavit dated 4.9.2017 and even a chart, showing details of amount collected from each advertiser has been annexed. Having regard to these facts, we have no hesitation in accepting the contention that as a result of award of contract to respondent no.5, there was considerable increase in the earnings of Nagar Nigam.

31.2 Indisputably, the Municipal Commissioner, while negotiating with respondent no.5 the highest bidder, was having in his mind the fact that three previous attempts to award contract had failed and the amount which respondent no.5 agreed to pay was much more than the total revenue collected from license fees during the previous years. He must also have had in his mind the fact that in case respondent no. 5 also backs out, it would be difficult to attract new participants and settle contract. He was conscious of his power under Clause 27, whereunder he was competent to relax any condition of the tender document or lay down fresh conditions to meet prevailing situation. The decision to relax the requirement of depositing bid amount immediately and permit deposit in installments was a decision taken in course of negotiation with the highest bidder. In words of their Lordships of the Supreme Court in Air India Ltd, "in arriving at a commercial decision considerations which are paramount are commercial considerations." The court would be loath in interfering with the wisdom of the administrative authority, taken in course of finalization of a purely commercial deal, in the absence of convincing and clear evidence of abuse of the power of waiver. We accordingly reject the contention that any undue favour was shown to respondent no.5 in relaxing the condition or it had resulted in any prejudice to the petitioners, who even did not participate in the tender proceedings.

32. We now proceed to examine the challenge put forth to the order dated 27.7.2017, by which the Municipal Commissioner refused to renew license of members of the Association. It is specifically recorded in the order that members of the Association, while submitting their application, have failed to comply with the requirements laid down in the bye-laws. It has also been held that the right to install hoardings and display advertisements over all 588 sites, in respect of which members of the Association have made applications for renewal, had already been settled with respondent no.5, thus it was not possible to grant permission in respect of those sites, to members of the Association.

32.1 Learned Senior Counsel appearing on behalf of the petitioners assailed the correctness of the order refusing to renew license of members of the Association by contending that bye-law 5 would not apply, as it stipulates the procedure for grant of fresh permission, whereas members of the Association were seeking renewal, in respect whereof, bye-law 11 would apply, whereunder there is no requirement of depositing application fee of Rs.500/- or of making application in any prescribed format. It is further submitted that two of the petitioners gave cheques of Rs.2600/- and 7000/- with their applications, but no orders were passed, despite the fact that renewal application had been pending since a long time. It is urged that once the renewal application had been duly filed and remained pending, members of the Association were entitled to display their hoardings unless the request for renewal is rejected in view of proviso to sub-section (4) of Section 451 of the U.P. Municipal Corporations Act, 1959. In case of Anoop Publicity, the petitioner in the second writ petition, it is urged that renewal application filed by the petitioner dated 28.2.2017 has not been disposed of so far. Therefore, the said petitioner is entitled to display its hoardings pending consideration of the renewal application and impugned notices issued by Nagar Nigam threatening to remove the hoardings by use of force are wholly illegal. It was further submitted that at the time when previous Writ Petition No.35910 of 2017 was filed by the Association seeking relief of renewal of the license of members of the Association, Nagar Nigam agreed to decide the applications within 10 days. At that time, Nagar Nigam did not take any plea that the applications filed by members of the Association stood automatically rejected, as contract in respect of the same sites had been settled with respondent no.5. In such circumstances, it was not open to Nagar Nigam to reject the renewal application on the said ground.

33. Before we proceed to examine the contention of learned senior counsel, we would like to refer to the relevant provisions of the Act regulating the display of hoardings and sky signs within the limits of Municipal Corporation. Section 172 empowers the Corporation to impose a tax on advertisements not being advertisements published in newspapers. Section 192 stipulates that where the Corporation has imposed advertisement tax, no person can erect, exhibit, fix or retain upon or over any land, building, wall, hoarding or structure any hoarding or display any advertisement to pubic view, whether public or private, without payment of a tax calculated at such rates and in such manner and subject to such exemptions as may be provided by the Act or Rules made thereunder. Section 193 places a prohibition for exhibiting advertisement without permission of the Municipal Commissioner. It also stipulates that such permission shall not be granted if any tax remains unpaid. Section 305 provides the procedure for regulating sky-signs of the kind prescribed by the rules. The relevant part of Section 305 is extracted below:-

305. Regulation as to sky-signs. - (1) No person shall, without the written permission of the Municipal Commissioner, erect, fix or retain any sky-sign of the kind prescribed by rules whether existing on the appointed day or not. Such written permission shall be granted, or renewed, for any period not exceeding two years from the date of each such permission or renewal, subject to the condition that such permission shall be deemed to be void if -

(a) any addition is made to the sky-sign except for the purpose of making it secure under the direction of the Municipal Commissioner

(b) any change is made in the sky-sign or any part thereof;

(c) the sky-sign or any part thereof fall either through accident, decay or any other cause;

(d) any addition or alteration is made, to or in, the building or structure upon or over which the sky-sign is erected, fixed or retained, involving the disturbance of the sky-sign or any part thereof;

(e) the building or structure upon or over which the sky-sign is erected, fixed or retained becomes unoccupied or be demolished or destroyed.

(2) .............................

(3) If any sky-sign be erected, fixed or retained contrary to the provisions of this section, or after permission for the erection, fixing or retention thereof for any period shall have expired or become void, the Municipal Commissioner may, by written notice, require the owner or occupier of the land, building or structure upon or over which the sky-sign is erected, fixed or retained, to take down and remove such sky-sign.

33.1 Section 451 embodies the general provisions regarding grant, suspension or revocation of licenses and written permission and levy of fees etc. The relevant part of the said provision is extracted below:-

"451. General provisions regarding grant, suspension or revocation of licenses and written permissions and levy of fees, etc. - (1) Whenever it is provided by or under this Act that a licence or a written permission may be given for any purpose, such licence or written permission shall specify the period for which, and the restrictions and conditions subject to which, the same is granted and the date by which application for the renewal of the same shall be made and shall be given under the signature of the Municipal Commissioner or of a Corporation Officer empowered under Section 119 to grant the same.

(2) Except as may otherwise be provided by or under this Act, for every such licence or written permission a fee may be charged at such rate as shall from time to time be fixed by the Municipal Commissioner, with the sanction of the Corporation."

(3) ..............................

(4) When any such licence or written permission is suspended or revoked, or when the period for which the same was granted has expired, the person to whom the same was granted shall, for all purposes of this Act be deemed to be without a licence or written permission, until the Municipal Commissioner's order for suspending or revoking the licence or written permission is cancelled by him or until the licence or written permission is renewed, as the case may be:

Provided that when an application has been made for the renewal of a licence or permission by the date specified therein the applicant shall be entitled to act as if it has been renewed pending the receipt of orders".

33.2 Section 540 empowers the State Government to frame rules to carry out the purposes of the Act and to make model rule for the guidance of a Corporation in any manner connected with the carrying out of the provisions of the said or any other enactment. Under Section 541, the Corporation has been conferred with the power to make bye laws, interalia, for the purposes of prescribing and regulating advertisements.

34. The Nagar Nigam Jhansi in exercise of the powers conferred upon it under the Act has framed bye laws published in U.P. Gazette dated 27.6.2015.

34.1 Before proceeding further, we would like to mention that the validity of these bye-laws was subject matter of challenge in Writ-C No.61307 of 2015 by Maqsood Akhtar, President of the Association and five other members on the ground that the Municipal Corporation lacked legislative competence to frame bye laws stipulating payment of a fee/premium for display of advertisements on public land. The contention of the petitioners was that in view of provisions of Section 193 and 194 of the Act, an advertisement could only be subjected to a tax imposed by framing rules and not bye-laws. A Division Bench of this Court, in Writ-C No.61307 of 2015 Maqsood Akhtar & 5 others Vs. State of U.P. and others, after examining the provisions of the Act in great depth, rejected the challenge by judgment dated 7.12.2015, holding thus:-

'Premium' is defined as 'periodical payment for the property'. Premium is charged from the advertisers, for using property where advertisement is done, is owned by Nagar Nigam or it has been leased in favour of the Nagar Nigam and in reference of properties that are not owned by Nagar Nigam or that has not been leased by Nagar Nigam, no premium is being charged. The Nagar Nigam, in its wisdom, on the same criteria as a private owner on premium gives its property for advertisement on its land and is charging the premium that has to be determined/fixed by auction/tender, which is not refundable by the Nagar Nigam as owner of the property over which any person wants some advertisement. In lieu of providing site to display advertisement, premium is being charged.

Under U.P. Municipal Corporation Act, chapter XXXIII deals with the power to make rules, bye-laws and regulations. Under this Chapter, section 540 deals with power of State Government to frame rules and section 541 deals with the power of Corporation to make bye-laws and item no.48 clearly authorizes the U.P. Municipal Corporation to frame bye-laws in respect to the field of advertisement in reference of prohibition and regulation of advertisement and clause 41 empowers Municipal Corporation to fix fee for any license, sanction or permission to be granted under this Act. Clause 49 talks of framing bye-laws for carrying out generally the provisions and intention of the Act and the said bye-laws should not at all be inconsistent with the Acts and Rules.

Bye-laws can be framed for regulating the Advertisements. Regulations in the shape of that are subordinate legislation validly made becomes part of the Act and should be read as such."

"Regulations thus can be framed to regulate the Advertisement business and in the said direction, Municipal Corporation has the authority to lay down terms and conditions for providing advertising sites on non-discriminatory basis, making provision for competition providing for a level playing field to all in the field of advertising business to obtain Advertising sites belonging to Municipal Corporation or leased out in favour of Municipal Corporation. Fixation of minimum premium and offering of advertising sites owned by Municipal Corporation or leased out in favour of Municipal Corporation on premium to generate the revenue of Municipal Corporation falls within the regulatory powers of Municipal Corporation.

Once there is an authority to frame bye-laws and bye-laws in question have been framed providing for a transparent procedure to auction the sites belonging to Nagar Nigam or leased out in favour of Nagar Nigam to be used by advertisers for carrying out advertisement and in order to make the system more transparent, more revenue generating and more competitive, procedure has been prescribed that it would be done only by a tender/auction and a minimum premium would be fixed and then on the basis of price offered, the bids would be finalized, then to say, in the facts of the case, that Jhansi Municipal Corporation lacks authority to ask for premium, cannot be accepted, inasmuch as, Section 541 (41), (48) and (49) clearly authorizes the Jhansi Nagar Nigam to make bye-laws and nothing has been brought before us which would go to show that the bye-laws that has been subjected to challenge before us and has been subjected to criticism in any way are inconsistent to the provisions of U.P. Municipal Corporation Act and the Rules framed thereunder rather same is in the direction to ensure free/fair/transparent manner in the direction of regulation of advertisement sites, and premium is being charged only in reference of property belonging to Nagar Nigam or leased out in favour of Nagar Nigam to generate the revenue of Municipal Corporation and in order to ensure transparency, then to say that U.P. Municipal Corporation lacks legislative competence cannot be accepted rather such an exercise is for fulfilling the aim/object of the Act.

Premium and tax have been dealt with differently and there should be no confusion on this issue of the matter that tax is to be charged on each and every advertisement whereas premium in question is to be charged only in reference to the properties that belong to Nagar Nigam or such properties that has been leased out in favour of Nagar Nigam. Premium amount is paid for privilege to use the site for advertisement purpose belonging to Nagar Nigam or leased out in favour of Nagar Nigam. Payment of premium is a voluntary act. Chief purpose of tax is to raise funds for the support of Municipal Corporation or for public purpose, while premium is charge for the previledge/benefit conferred. While charging premium there is admittedly quid pro quo as Municipal Corporation in lieu of premium is according permission to use the site for the purposes of Advertisement that belongs to Nagar Nigam or that has been leased out to Nagar Nigam.

The word "Premium" as has been spelt out in By-Law no. 7 is a terminology used in Section 105 of the Transfer of Property Act wherein lessor, lessee, premium and rent has been defined, and as per the same transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent and once the property in question belonging to Nagar Nigam or leased out to Nagar Nigam is being parted for specific purpose and in lieu of the same, the amount in question is being asked for, then to say that Nagar Nigam would have no jurisdiction or authority in law to ask for the premium or the price for the same, cannot be accepted. Demand of premium is fully subscribed under law and at the point of time when bye-laws in question have been framed, there is no inconsistency reflected qua the Act and Rules, rather it is in consonance with the provision of the Act, as Section 193 clearly provides that in case advertisement contravenes any bye-law made by Corporation under Clause (48) of Section 541 of the Act, then no permission shall be accorded and Section 194 makes permission accorded as void. In view of this, the challenge made on this score is turned down."

34.2 The second petition seeks to challenge the validity of the Bye-laws, once again, on the ground that mandatory provisions for framing of Rules and Bye-laws was not complied with and that the impact of Sections 174, 192, 194, 199, 201, 540, 541, 542 and 543 was not considered by the Division Bench. It was also urged that another Division Bench of this Court has struck down identical Bye-laws framed by Kanpur Nagar Nigam and thus the judgement in Maqsood Akhtar requires reconsideration by a Larger Bench. Again, by moving amendment applications, both the petitioners seek to question the power of Nagar Nigam to impose and realise advertisement tax after 1.7.2017 in view of clause (b) of sub-section (2) of Section 172 and Section 192 and Section 193 being omitted by U.P. Goods and Services Tax Act, 2017. It was sought to be contended that after 1.7.2017, the Nagar Nigam has been denuded of its powers to impose advertisement tax.

34.3 In the first place, we are not inclined to accept that the judgement in Maqsood Akhtar requires reconsideration. Second, we do not feel inclined to delve deep into the validity of the bye-laws in the instant petition, where the main challenge is to the order of the Municipal Commissioner, Nagar Nigam, reviving the contract of respondent no.5, rejecting renewal applications, and directing the petitioners to remove their hoardings in view of the contract having been settled with respondent no.5. As noticed above, in the judgment inter-parties, this Court has drawn a distinction between the two entities viz, tax and fees/premium. In the instant matter, as the petitioners do not dispute that they were seeking permission for renewal in respect of hoardings over public places for which fee/premium was payable and which was settled by inviting tenders in favour of respondent no.5, therefore, the right of Nagar Nigam, Jhansi to collect advertisement tax, in our opinion, is not directly in issue in these petitions. The petitioners had themselves shown willingness to deposit the premium/license fee for obtaining renewal and in fact they claim that they had also deposited such amount in pursuance of the liberty given by us in the Writ Petition filed by the Association. We, therefore do not consider that the challenge to the bye-laws is germane to the controversy involved herein nor requires re-consideration in the instant case. We accordingly, reject the amendment application, but leave the challenge open for being examined in an appropriate case.

35. We now proceed to take a bird eye view of the bye-laws. Bye-law 3 provides for constitution of a Committee under the chairmanship of the Municipal Commissioner to identify sites at which display of advertisements would be permissible, size of the advertisement, height at which it could be displayed and other requirements. Under bye-law 7, the Municipal Commissioner has been conferred with the power to prescribe minimum rates of premium for each site. Under bye-law 4, no person can erect or display hoarding/ advertisement without written permission of the Municipal Commissioner. Bye-law 5 prescribes the procedure for seeking permission. It envisages filing of a formal application prescribed in Schedule-I alongwith receipt evidencing payment of application fee of Rs.500/-. The applicant has to specify the site in respect of which permission is being sought. Various details regarding size of the advertisement, height and building or other structure over which it is to be displayed has to be specified alongwith a map showing the position of the advertisement at the proposed site. The premium calculated at the minimum rate has to accompany the application. Bye-law 6 stipulates that the permission shall only be effective for the period in respect of which tax or premium, as the case may be, has been paid. The advertiser would be entitled to display advertisement during the period in respect of which permission has been granted. He shall remove the advertisement within one week of the expiry of the permission. Bye-law 10 provides that the right to display advertisement over various sites could be settled by adopting one or more modes prescribed thereunder namely, by public auction, or by inviting tenders. Bye-law 11 provides that the permission or the renewal would be valid for two years only. Bye-law 13 empowers the Municipal Commissioner to remove advertisements and hoardings in certain circumstances; one amongst them being when the permission granted has expired.

36. In the impugned order, a specific finding has been recorded that members of the Association namely petitioners no.2 to 6 in the first writ petition had not submitted applications seeking renewal in the form prescribed under the bye laws. It has also been held that requisite application fee of Rs.500/- had not been deposited nor proposed premium payable for the site. The petitioners contend that they were not required to comply with these conditions as they were seeking renewal and not fresh permission and thus, bye-law 5 would not apply; bye-law 11 would be applicable, which does not prescribe any application fee. The relevant part of bye-law 5 and 11 are extracted below:-

"5(1) vuqKk izkIr djus ds fy, izR;sd vkosnu vuqlwph ,d esa fofufnZ"V fpafgr izi= easa fd;k tk;sxk] ftls ikap lkS :i;s Hkqxrku djds uxj fuxe ds dk;kZy; ls izkIr fd;k tk;sxk ;k fuxe ds osclkbV ls MkmuyksM fd;k tk ldrk gS] rFkkfi vkosnu&i= izLrqr djrs le; vkosnu&i= ds ewY; dh jlhn vkosnu&i= ds lkFk izLrqr dh tk;sxhA"

"(9) izR;sd vkosnu i= ds lkFk izLrkfor izhfe;e dh iw.kZ /kujkf'k layXu gksxhA"

"11- vuqKk dh vof/k%& vuqKk] vuqKk vkns'k esa fofufnZ"V vof/k ds fy, gksxhA izR;sd ,slh vuqKk ;k uohuhdj.k ds fnukad ls vuf/kd nks o"kZ dh vof/k ds fy;s ,slh fyf[kr vuqKk iznku dh tk;sxh ;k mldk uohuhdj.k fd;k tk;sxkA"

36.1 A bare perusal of the bye-law 11 shows that it does not prescribe the procedure for filing application for renewal but only the duration for which permission or renewal could be granted, which is two years in both the cases. There is no other provision under the bye-laws prescribing for the manner in which an application seeking renewal is to be filed. Bye-law 5 not only envisages filing of a formal application but also provides that application fee of Rs.500/- alongwith the premium amount payable for the site has to be enclosed. It also prescribes various other formalities which are required to be carried out while seeking permission of the Municipal Commissioner like submission of a map of the site indicating the exact location where the advertisement/hoarding would be placed; in case the hoarding is proposed to be displayed over a private site, the permission in form of agreement with the owner permitting display of hoarding over his land or building has to be annexed. In case it is held that a person seeking renewal is not required to follow the procedure prescribed in bye-law 5, in that event, in our opinion, it would become impossible for the Municipal Commissioner to examine claim of such person seeking renewal. We are, thus, of the opinion that a person seeking renewal has to also comply with all the requirements laid down in bye-law 5. It may be a different matter that some of the formalities stipulated under bye-law 5 like providing site map of the proposed hoarding/advertisement need not be carried out again in case the permission is sought for the same sites and for the hoarding of the same size, but even in that case, the applicant has to clearly disclose these facts in his application. Once these formalities are completed, then alone it would be possible for the Municipal Commissioner to examine the claim and grant renewal. The renewal, if granted, as in case of permission sought for the first time, would then enure for a period two years as per bye-law 11. Accordingly, we find no force in the contention of learned counsel for the petitioners that while seeking renewal, bye-law 5 would not apply or a simple application merely stating that renewal is being sought would suffice.

37. In respect of Paliwal Advertising and Tirupati Media, petitioners no.3 and 5 in the first writ petition, an additional ground was taken for assailing the impugned order refusing renewal. It was contended that Paliwal Advertising alongwith its application dated 26.2.2017 annexed a cheque of Rs.2600. Likewise, it is alleged that Tirupati Media alongwith its application dated 28.2.2017 enclosed a cheque of Rs.7000/-. However, in the impugned order, a specific finding has been recorded that apart from the fact that the application filed by these two petitioners was not in prescribed form nor accompanied by application fee nor the premium amount but even cheque alleged to be enclosed with these applications had never been received by the Nagar Nigam. The petitioners have not filed any evidence to prove that the cheques were duly handed over or received by Nagar Nigam or was ever encashed. Even otherwise, in the face of the finding recorded in the impugned order that no such cheques were received by Nagar Nigam, Jhansi, we are not inclined to go into the said factual controversy, under the writ jurisdiction. We thus find no illegality in the order dated 27.7.2017 by which the Municipal Commissioner rejected request of members of the Association for renewal of permission.

39. We now proceed to examine the second ground on which the renewal has been declined. In fact, if this ground is upheld, then members of the Association were not entitled to even a consideration of their request for renewal. The Municipal Commissioner has observed that all 588 sites in respect of which renewal was sought, had already been settled in favour of respondent no.5, being the highest bidder in pursuance of the fourth advertisement dated 13.4.2016. Consequently, the same sites could not be given to the members of the Association. In other words, whether application for renewal was filed or not, Nagar Nigam itself was not competent to renew permission, once the contract in respect of same sites was awarded in favour of respondent no.5. It is noteworthy that in the entire writ petition, there is no challenge to finding recorded by Municipal Commissioner that permission for renewal was sought in respect of the sites already allotted to respondent no.5 under the contract. Even at the time of oral arguments, we sought clarification from Mr. Khan on this aspect. He admitted that the dispute is confined to the sites which have been reserved for respondent no.5. This, in fact, is also clear from the case set up in the Writ Petitions.

38.1 As noticed above, the bye-laws permit settlement of advertising rights by public auction or by public tender. Concededly, in the instant case, the Nagar Nigam had decided to settle the advertising rights by contract. Consequently, advertisement was issued inviting tenders, and in pursuance whereof, the contract for erecting hoardings and display advertisements over all 588 sites within the municipal limits was settled with respondent no.5. Clause no.5 of the agreement dated 4.1.2017, with respondent no.5, specifically prohibits Nagar Nigam from granting permission to any third party for display of advertisements, within the limits of Nagar Nigam, during the subsistence of contract. The right to erect hoarding and to display advertisement having been settled with respondent no.5, members of the Association nor the petitioner in the second writ petition had any lawful claim to apply for renewal. Thus, even if the application filed by the petitioner of the second writ petition has not been disposed of by a specific order, it is of no consequence.

39. We have already held that the renewal of permission of the members of the Association for year 2016-17, on 29.8.2016, was by way of stop gap arrangement. We have also noticed in detail the facts and circumstances in which Nagar Nigam was compelled to renew permission of members of the Association, though they were not entitled to the same. The said renewal, in our opinion, was effected only to prevent loss of revenue to the State exchequer. The renewal was granted without following the procedure prescribed under the Act and the Bye-Laws. The orders do not specify any date by which members of the Association could apply for renewal, which is otherwise required to be stated, in case permission is granted under Section 451 (1). The proviso to sub-section (4) of Section 451 would apply only when the application seeking renewal is filed by the date specified for such purpose in the original permission. Since no such time limit was provided in the original permission, as it was a stop gap arrangement, the proviso to sub-section (4) of Section 451 would have no application. We thus reject the contention of learned counsel for the petitioner in the second writ petition that the renewal application being pending, the petitioner was entitled to act as if the renewal had been granted.

40. One more aspect, which requires a brief mention is regarding the conduct of the petitioners. Concededly, the permission to advertise/erect hoardings, for the year 2016-17 was initially not granted/renewed in favour of members of the Association. It was granted in favour of respondent no.5 in pursuance of it's bid being accepted. The members of the Association, who even did not participate in the tender process, created all sorts of obstacles. They filed a suit, but could not succeed in getting any injunction. Still they continued to display their advertisements/hoardings over the same sites, which had been allotted to respondent no.5, under the contract. They indulged in frivolous litigation even before this Court, as discussed in foregoing paragraphs of the judgement, without disclosing complete and true facts. The Nagar Nigam and respondent no.5 were involved in unmindful litigation, resulting in wastage of time and public money. Although, the license of members of the Association were not renewed, still they continued to exhibit their advertisements and refused to remove the hoardings. They created a situation where a statutory authority was forced to abandon a legally binding contract. They admit that Nagar Nigam has succeeded in removing some of the hoardings by use of force, but they still continue to exhibit their advertisements illegally, over the remaining sites, as admitted in the writ-petition. They have taken law in their hand, in perpetrating the illegalities. These facts disentitle the petitioners to discriminatory relief under Article 226 of the Constitution.

41. Before parting, we wish to bring on record the fact that during course of hearing, we expressed doubts in regard to certain conditions contained in clauses 1 to 4 of agreement dated 4.1.2017. There under, respondent no.5 is entitled to work even beyond two years, in case fresh contract is not awarded for any reason and for extension of the term for a further period of one year, subject to certain conditions. When we so expressed, learned counsel for the Nagar Nigam Sri M.D. Singh Shekhar and learned counsel for respondent no.5 Sri Nikhil Agarwal agreed that they would not insist for enforcement of these conditions. Sri M.D. Singh Shekhar also assured us that Nagar Nigam would go for fresh advertisement, well in advance, before the period of contract with respondent no.5 is over, so that there is no vacum. In view of the aforesaid statement made by learned counsel appearing on behalf of Nagar Nigam and respondent no.5, we provide that clauses 1 to 4, to the extent discussed above, shall not be enforceable between the parties and Nagar Nigam shall go for fresh advertisement for settling the contract well in advance. For the time being, Nagar Nigam shall proceed to enforce the impugned notices and remove all unauthorised hoardings. It shall also be open to it to realise a sum equivalent to license fee for the period unauthorised hoardings/advertisements were in use by petitioners and members of the Association.

42. Subject to the aforesaid, both the writ petitions are dismissed with cost quantified at Rs.50,000/- in each petition, which shall be deposited by the petitioners within three weeks with the Mediation and Conciliation Centre of this Court.

 
Order Date :- 8.3.2018
 
AHA/SKV/SL
 
(M K Gupta, J)                (Dilip B Bhosale, CJ)