Calcutta High Court (Appellete Side)
Bharat Express And Anr vs Union Of India And Ors on 15 February, 2011
Author: Kalyan Jyoti Sengupta
Bench: Kalyan Jyoti Sengupta
011
M.A.T 1554 of 2010
Bharat Express and Anr.
-versus-
Union of India and Ors.
Mr. P.K. Mullick
Mr. A.K Gayen
......... For the appellants
Mr. Ashoke Chakrabarty,
Mr. Saptarshi Roy
......... For the respondents
This appeal is against the judgment and order of the learned single Judge dated 12th November, 2010 by which the prayer of the appellant/writ petitioner has been refused.
The factual aspect of this case runs as follows:
By a written agreement for lease dated 3rd October, 2007 the petitioner was entrusted by the South Eastern Railway authorities to book parcel traffic in Train No. 2837 from Howrah to Puri. The aforesaid lease was for a consideration of Rs. 5,495/- to be paid by the petitioner for each single journey, aggregate payment was to be made at Rs.60,17,025/. The aforesaid lease was initially for a period of three years from the date of execution thereof. The said lease provides for right of one time extension and such extension would be for two more years at a lease rate of 25% more than the lumpsum leased freight rate subject to satisfactory performance by the leaseholder, without any penalty for overloading or violation of any provision of the contract. The initial period of three years was to expire on 26th October, 2010.
The appellant/writ petitioner before expiry applied for extension for two more years. Despite repeated requests, no decision was taken. Therefore, the 2 petitioner approached this court. At the initial stage, by an interim order the petitioner was allowed to carry on the operation upon payment of 25% above the existing lease rate. Ultimately, at the time of final hearing, the petitioner could not pursuade the Hon'ble trial Judge that it is entitled to extension. The learned trial Judge found that the grievance of the petitioner relates to policy decision of the Railway authorities. According to the learned trial Judge, the policy decision should not be interfered with by the court. Thus, the writ petition was literally dismissed. However, a direction was given for floating fresh tender.
Mr. Mullick, learned counsel appearing for the appellant submits that the decision of the learned trial Judge is absolutely misdirected on the facts and circumstances of this case as the real issue in the writ petition was that whether the policy decision taken subsequently can destroy the right already accrued in favour of the appellant on the strength of the said lease agreement. By the contract, the aforesaid right of being considered for extension of two years based on the norms mentioned therein, cannot be taken away. Subsequent policy decision cannot have any retrospective operation. Thus, it is hit by the principle of promissory estoppel.
That apart, he submits drawing our attention to the various documents annexed to the paper book, that the action of the Railway authorities is not only whimsical but capricious as well, as on 9th February, 2010 a decision was taken to lay down different policy which affects his client and within a month thereafter the Railway authorities withdrew the said notification dated 28th March, 2006 by 9th February, 2010 notification. In view of withdrawal of the 9th February, 2010 notification, his client's right to have extension has to be considered. Moreover, he contends that other contractors who are equally and similarly placed with that 3 of the petitioner, have been granted extension albeit the same situation as regard policy decision is concerned. More mala fide conduct of the respondent would appear from the records that at the appellate stage the Railway authorities pursuant to the representation, purported to have taken a decision to reject the claim of extension, and the grounds mentioned in the said rejection order do not support any norms of fair play and equity. This order though passed earlier, did not see the light of the day earlier as it was not revealed before the learned trial Judge, and the same could not be challenged. In the appellate stage it was filed along with the affidavit-in-opposition and his client has already filed affidavit-in- reply impugning the said decision. He submits further that this court will consider subsequent order of rejection as development is subsequent in continuation of the same proceeding. According to him, there is no reason not to grant extension and the learned trial Judge, however, ignored the aforesaid aspect of the matter, hence order of the learned trial Judge is not sustainable.
Mr. Saptarshi Roy, learned counsel led by Mr. Ashoke Chakrabarty submits that the dispute really is of private nature and it emanates from the contractual agreement which again is of private nature and nothing to do with the public character in the field of public domain. So, writ court will not entertain this grievance. The appellant's remedy lies in the agreement itself being clause 28 which is the arbitration agreement, being valid and subsisting.
Drawing our attention to the said clause he contends that the scope and purport of the said agreement is sweeping in nature. Whether the Railway authority has lawfully and justifiably rejected the claim or not, can also be taken care of by the method of arbitration and the writ petitioner should have resorted to that procedure. In substance, he submits without prejudice to his contention 4 that the disputes canvassed in the writ petition are of private nature and cannot be decided in the public law field, if the court feels that such dispute can be entertained then this court by applying the principle of Section 8 of Arbitration and Conciliation Act, 1996 should refer the dispute to the arbitrator and should not take upon itself to render a decision.
Since this point of jurisdiction has been taken on two grounds as stated above, it is incumbent for this court to decide this aspect first.
First, we deal with the implication of the existence of the arbitration agreement in the writ jurisdiction. We, therefore, set out Clause 28.0 of the Arbitration Clause in the following manner:
"In the event of any difference of opinion or dispute between the Railway Administration and the Leaseholder as to the respective rights and obligation of the parties hereunder of as the true intent and meaning of these presents or any articles of conditions thereof. Such difference of opinion shall be referred to the sole arbitrator or any officer appointed by the General Manager, S.E Railway, Garden Reach (name of Head Quarter) for the time being whose decision shall be final, conclusive and binding on the parties, the intention of the parties being that every matter in respect of this agreement must be decided by him as sole arbitrator and not taken to a Civil Court. All disputes are subject to the territorial jurisdiction of Courts located in the West Bengal only.
In witness whereby the parties have hereunder subscribed their names at the places and on the dates hereinafter mentioned respectively."
While noting the argument of learned counsel for the respondent, it boils down whether this arbitration agreement is an effective alternative remedy and further will stand in the way to entertain any dispute of this nature by the writ court or not. According to us, the invocation of alternative remedy is applicable at the threshold and if the parties without expressing any reservation call upon the writ court to decide the issue, the theory of alternative remedy is not applicable. From the records we do not find that there has been any whisper as 5 regard alternative remedy before the learned trial Judge, when this stand was not taken, we think that it was lawful for the court to proceed with the matter and it was done so. Moreover, it is settled law that existence of the alternative remedy does not oust jurisdiction of the writ court. The writ court under Article 226 having pervading power, even despite existence of the alternative remedy, can entertain any dispute within its para meter. It is the judicial restraint on the part of the court in case where the alternative remedy is very effective and exhaustive, not to entertain in exercise of its discretion to entertain this dispute. In spite of that if the writ court takes up any matter, it must be construed that the mechanism of alternative remedy is not an efficacious, and will not sub-serve interest of justice. Therefore, this arbitration clause, in our view, in the facts and circumstances of this case narrated above, is not bar to entertain this dispute.
Now question remains whether the dispute canvassed, is of private nature or not. It is true that this agreement is not an agreement of statutory character and the rights and obligations of both the parties are of private deal but the Railway authority being the State within the meaning of Article 12 of the Constitution of India cannot act like a private individual who can act in any manner whatsoever he likes unless it is interdicted or prohibited by the provision of law. State and instrumentality of State are to act fairly and without meeting out any discrimination and further without harbouring any element of arbitrariness and capriciousness. The State instrumentality should be treated as a model trader to deal with the public at large.
It is well settled that if any arbitrary and capricious action is complained of in any action of private or public character, the writ court will certainly spring to action within the public law field. This law has been well settled in Mahabir 6 Auto Stores vs. Indian Oil Corporation, reported in (1990) 3 SCC 752, Shrilekha vs. State of Uttar Pradesh, reported in (1991) 1 SCC 212 and R.D Shetty vs. International Airport Authority, reported in A.I.R 1979 SC 1628 long time back and this proposition of law is so firmly settled that the same does not require any repeated discussion and those cases mentioned above are good enough to guide us to hold that the disputes canvassed in this matter though of private character can be taken by the writ jurisdiction, so it has been done by the learned trial Judge. However, the appellant/writ petitioner did not find favour of the first court on merit.
We just look in to the matter in the context of the submission made by Mr. Mullick, and Mr. Roy led by Mr. Chakrabarty whether learned trial Judge has correctly concluded findings as reached by Her Ladyship. We find force in the submission of Mr. Mullick that the learned trial Judge has not addressed the real issue. In this matter the real issue was whether the Railway authority promised for consideration of extension by the written agreement or not. It is settled position of law that any executive policy decision taken subsequently, cannot take away the vested right as it is hit by the principle of promissory or equitable estoppel, however, in case of supremely legislative action, the concept of promissory estoppel does not apply, and in fit cases even the legislative action or executive decision backed by the legislative ratification can be given retrospective effect but in case of purely executive decision, no retrospective effect can be given for action of an executive is not action of sovereign and it is the decision of a particular officer who has been asked to take a decision in his own way. Therefore, subsequent decision taken in the month of February, 2010 will not 7 have any effect. Moreover, realizing perhaps this situation subsequently such notification was withdrawn.
Under this situation, we think that there was no bar to take a decision objectively with regard to the prayer for extension made by the writ petitioner. Indeed, the decision was taken, but such decision was not disclosed even before the learned trial Judge and it was disclosed for the first time in the appeal court.
Since the action is subsequent one, we think that we can take note of the same for effective adjudication cutting short the litigation. The approach of the court is to see that there should not be any multiplicity of proceeding and to take note of subsequent development, particularly when both parties are given opportunity to argue on those points.
We have seen this order and we find that this order of rejection does not conform to the norms mentioned in the extension Clause No. 20.1 of the argument. The extension cannot be refused except on the ground of unsatisfactory performance due to any penalty for overloading or violation of the provision of contract. In the impugned order, we do not find that there has been any unsatisfactory performance on account of any penalty for overloading being imposed or in view of violation of any provision of contract. Whether there has been any unsatisfactory performance or not could be found by the Respondent, however, the same has not been disclosed before this court. Unsatisfactory performance in a matter of trade and commerce has to be assessed in the context of the records. What was the performance of the writ petitioner/appellant, can only be adjudged by the Railway authority based on record and data.
Under those circumstances, we feel that the learned trial Judge was not justified to dismiss the writ petition on the ground mentioned therein. We, 8 therefore, set aside the order passed by the Railway authority subsequently and also set aside the order of the learned trial Judge.
We direct now the Chief Commercial Manager, South Eastern Railway to take decision afresh without taking note of the earlier decision which has been set aside. This time, the decision of granting extension shall be taken, taking into account the case of other contractors who are almost similarly situated and circumstanced and have been awarded extension. The decision shall be based on records and not any other materials. Before this court no material has been disclosed with regard to the unsatisfactory performance. However, if any material is to be found which might be used against the appellant/writ petitioner, copy of the same must be supplied to Mr. Mullick's client at least fortnight before taking up the hearing. Personal hearing shall be given by the said official and he himself shall communicate the decision. This matter shall be concluded within a period of four weeks from the date of communication of this order. It appears that already tenders have been floated. We, therefore, direct that no decision shall be taken with regard to the tender already issued and in the event for any reason Mr. Mullick's client is not favoured with the decision, the Railway authority will be free to proceed with the matter in accordance with law. Till such decision is taken, interim order passed by the appeal court, shall continue.
Xerox plain copy of operative portion of this order, duly countersigned by the Assistant Registrar (Court), be given to learned Counsel for the parties upon making application for obtaining Xerox certified copy of this order. In the event, Xerox certified copy is not taken delivery of, in spite of being notified; the effect of the Xerox plain copy will stand extinguished. 9 (Kalyan Jyoti Sengupta, J.) (Asim Kumar Ray, J.)