Rajasthan High Court - Jodhpur
Siddhi Vinayak Associates vs State & Ors on 26 August, 2017
Author: Vijay Bishnoi
Bench: Vijay Bishnoi
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Civil Writ Petition No. 9515 / 2015
Siddhi Vinayak Associates, Shop No.20, Near Chetan Dhaba
Jhopdi, Khed Road, Balotra, through its proprietor Kheraj S/o Sh.
Kera Ram, aged about 32 years, by caste Jat, Resident Samara,
Tehsil: Pachpadra, District: Barmer (Raj.)
----Petitioner
Versus
1. State of Rajasthan through Secretary to the Government,
Local-Self Government Department, Jaipur.
2. Municipal Council, Balotra, through its Commissioner,
Municipal Council, Balotra, Distt. Barmer
3. Balotra Water Pollution Control Treatment & Research
Foundation Trust, Balotra, through its Secretary, Balotra,
Distt. Barmer
----Respondent
_____________________________________________________
For Petitioner(s) : Mr Sandeep Shah
Ms Shambhavi Maradiya
For Respondent(s) : Dr Pratishtha Dave
Mr Vinay Kothari
Ms Apeksha Lodha
_____________________________________________________
HON'BLE MR. JUSTICE VIJAY BISHNOI
Order
26/08/2017
On 21.08.2017, the matter came up for consideration
of the application (APPLW No.1488/2015) filed under Article
226(3) of the Constitution of India for vacating the ex parte
interim stay order dated 02.09.2015, however, with the consent of
learned counsels for the parties, the matter was finally heard and
order was reserved.
This writ petition is filed by the petitioner under Article
(2 of 12)
[CW-9515/2015]
226 of the Constitution of India seeking following reliefs:
"It is, therefore, respectfully prayed that this petition for writ in
the nature of mandamus may kindly be allowed and by any
other appropriate writ, order or direction:
1. The respondents may kindly be directed to amend the
agreement/contract dated 02.12.2014 (Annex.2) in terms
of Clause 38 of the Agreement and permit the petitioner
to deposit the actual collection of cess tax being received
by it till the date industries are again functional.
2. The Clauses 11 and 22 of the Agreement may be
declared invalid being unconscionable terms of the
contract.
3. The respondents be directed to refund the amount of
loss incurred to petitioner of Rs.1,79,88,373/- along with
interest @ 18% per annum.
4. Any other appropriate order, which this Hon'ble Court
deems fit and proper in the facts and circumstances of
the case, may kindly be passed in favour of petitioner.
5. Allow cost of the writ petition to the petitioner."
Brief facts, necessary for adjudication of this writ
petition, are that the Municipal Council, Balotra issued an E-tender
on 19.09.2014 for collection of cess tax from the bales of cloth,
which were being processed in Balotra Town. The petitioner-firm
participated in the said E-tender and its bid was accepted and
pursuant to that an agreement (Anneuxre-2) was executed
between the petitioner-firm and the respondent Nos.2 and 3 on
02.12.2014. As per the said agreement, the petitioner was
entitled to collect cess tax on the bales of cloth, which were
coming in the city of Balotra up to 31.03.2016 and was required to
pay Rs.1,65,55,551/- per month to the respondent Nos.2 and 3.
As per the agreement, 90% of the above amount was deposited
with the Balotra Water Pollution Control Treatment and Research
(3 of 12)
[CW-9515/2015]
Foundation Trust and 10% was to be deposited with the Municipal
Council, Balotra.
Clauses 11 and 22 of the agreement dated 02.12.2014
(Annexure-2), which the petitioner has prayed to be declared as
invalid, are reproduced hereunder:
"11- ;g Bsdk dk;kZns'k frfFk ls 31-03-2016 rd ds fy,
uxjifj"kn {kS= esa iznw"k.k tU; O;olk; dj e; 'kkfLr
laxzg.k ds lacafU/kr gksxk rFkk ekuuh; U;k;ky; tks/kiqj }kjk
iznwf"kr ikuh dks yw.kh unh esa izokfgr ugha djus laca/kh ikfjr
fu.kZ; fnukad 17-02-2012 ,oa ekuuh; U;k;ky; }kjk ikfjr
gksus okys blls lacaf/kr fu.kZ;ksa ds v/khu jgsxkA mDr Bsds esa
U;k;ky;Jh ds fdlh izdkj ds vkns'k gksus ij Bsdk olwyh esa
vojks/k gksus ij ifj"kn o ckyksrjk okWVj ikasY;q'ku
dUVªksy ,oa fjlpZ Qkm.Ms'ku VªLV] ckyksrjk dh dksbZ
tokcnkjh ugha gksxhA
22- izkd`frd o vkikrdkyhu ifjfLFkfr;ksa ,oa LFkkuh; vkS|
ksfxd mRiknu can gksus ij Hkh Bsdsnkj Lo;a ftEesnkj
gksxk ,oa Bsdk vof/k lekIr gksus ij vkxkeh o"kZ u;s laosnd
ds vkus rd iwoZ ds Bsdsnkj dks mlh Lohd`r nj ds vuqlkj
dk;Z djuk gksxkA"
Clause 38 of the said agreement regarding the
provisions for amending the contract is reproduced hereunder:
"38- fdlh Hkh 'krZ esa la'kks/ku djus dk vf/kdkj lHkkifr
uxjifj"kn ckyksrjk o v/;{k okVj iksY;q'ku daVªksy ,oa
fjlpZ Qkm.Ms'ku VªLV] ckyksrjk ds ikl lqjf{kr jgsxkA "
The grievance raised by the petitioner in this case is
this that on account of order dated 15.05.2015 (Annexure-4)
passed by the National Green Tribunal, the industrial activities in
the industrial units, who are members of the respondent No.3 are
closed. It is contended that on account of closer of industries in
Balotra Town, the collection of cess tax by the petitioner was
(4 of 12)
[CW-9515/2015]
adversely affected as no bales of cloth were reaching in the
industrial units. Facing this situation, the petitioner filed detailed
representations to the respondent Nos.2 and 3 and prayed that as
the collection of cess tax was adversely affected on account of
closer of industries, the agreement/contract dated 02.12.2014 be
amended and the petitioner be permitted to deposit actual amount
of cess tax received by it. The Commissioner of the Municipal
Council, Balotra has forwarded the said representation to the
Director Local Bodies for seeking necessary instructions, however,
nothing has happened and, therefore, the petitioner has filed this
writ petition seeking the reliefs as quoted above.
Learned counsel for the petitioner has submitted that
there was no fault on the part of the petitioner as the collection of
cess tax was reduced to a great extent on account of closer of
industries by virtue of the order passed by the National Green
Tribunal and, therefore, the respondents were duty bound to
amend the agreement/contract dated 02.12.2014 as per clause 38
of it and were required to allow the petitioner to deposit the actual
cess collected by it during the period when the industries were
closed. It is also contended that the National Green Tribunal has
ordered for closer of industries on account of various shortcomings
in the Common Effluent Treatment Plant (for short 'the CETP'
hereinafter) run by the third respondent-trust.
It is further argued that clause 11 of the
agreement/contract dated 02.12.2014 speaks about only the
orders passed by the Rajasthan High Court and does not speak
about an order passed by the National Green Tribunal or any other
(5 of 12)
[CW-9515/2015]
court.
It is further argued that clause 22 of the agreement
speaks about the natural and emergency situations, whereas in
the present case no natural or emergency situations arose but the
industries were closed down as per the order of the National
Green Tribunal because the CETP run by the third respondent was
not functioning in proper manner.
Alternatively, learned counsel for the petitioner has
argued that otherwise the clauses 11 and 22 of the
agreement/contract dated 02.12.2014 were unconscionable
conditions as the petitioner was not having bargaining power and
was made to sign up the agreement/contract under the pressure
of the respondent Nos.2 and 3.
In support of the above contentions, learned counsel
for the petitioner has placed reliance on decisions of the Hon'ble
Supreme Court rendered in Central Inland Water Transport
Corporation Limited & Anr. vs. Brojo Nath Ganguly and
Anr., (1986) 3 SCC 156 as well as of Division Bench of this
Court rendered in State of Rajasthan & Anr. vs. Dr. Kantesh
Khetani & Ors., 2015(3) RLW 1870 (Raj.) and has prayed that
the relief as prayed for in this writ petition be allowed.
Per contra, learned counsel for the respondents has
argued that the petitioner cannot claim amendment in the
contract/agreement dated 02.12.2014 as a matter of right and
also cannot claim any reduction of tax and as per the terms and
conditions of the agreement/contract, it is liable to pay the cess
tax. It is further argued that as per the clauses 11 and 22, the
(6 of 12)
[CW-9515/2015]
petitioner cannot claim exemption, abolition or reduction in
depositing the amount as agreed by it taking the excuse of closer
of industries for whatever reason.
It is submitted by learned counsel for the respondents
that the terms of the contract are clear and ambiguous and the
petitioner after knowing it had entered into the contract with open
eyes and now it cannot turn back from the terms of the contract.
The clauses 11 and 22 of the agreement/contract cannot be said
to be unconscionable in any manner. There is no question of
putting pressure over the petitioner to enter into the said
agreement and it is wrong to say that at the time of entering into
the agreement, the petitioner was not having any bargaining
power. It is submitted that if the petitioner was not agreed to the
terms of the contract, it was always open for it not to execute the
contract. It is further submitted that since it is purely a contractual
matter, the writ petition filed by the petitioner under Article 226 of
the Constitution of India is not maintainable.
In support of the above contentions, learned counsel
for the respondents has placed reliance on the decision of Hon'ble
Supreme Court rendered in Joshi Technologies International
Inc. vs. Union of India & Ors., (2015) 7 SCC 728 as well as
the decision of this Court dated 10.02.2017 rendered in SBCWP
No. 14047/2016, M/s Vedprakash Rambhagat Choudhary
vs. Commissioner, Nagar Parishad, Balotra & Ors., which was
affirmed by the Division Bench of this Court vide judgment dated
02.03.2017 passed in D.B.Special Appeal Writ No.187/2017.
Heard learned counsel for the rival parties.
(7 of 12)
[CW-9515/2015]
As per the clauses 11 and 22 of the
agreement/contract dated 02.12.2014, the respondent Nos. 2 and
3 were not liable for any loss in collection of cess tax on account
of any order passed by the Hon'ble Court Jodhpur. The term used
in clause 11 of agreement is 'ekuuh; U;k;ky;'. The contention of the
petitioner to the effect that the term ' ekuuh; U;k;ky;' connotes to
Rajasthan High Court only, cannot be accepted. As a matter of
fact, a PIL (W) was earlier filed before this Court, which was later
on transferred to National Green Tribunal and the National Green
Tribunal, Circuit Bench at Jodhpur passed the order dated
15.05.2015, on account of which the industries were closed and
from those facts, it can be gathered that the order dated
15.05.2015 was passed in a PIL(W) filed before this Court, which
was transferred to the National Green Tribunal.
Clause 22 of the agreement says that even if on
account of any natural calamity or emergency situation, the
industrial production remains stopped, the contractor is liable to
pay the agreed amount. So the clauses 11 and 22 are clear and
ambiguous and the petitioner knowing fully the said conditions in
advance, had entered into the agreement with respondent Nos.2
and 3 with open eyes and now it cannot turn back and say that
the above mentioned clauses are not applicable.
This Court in SBCWP No.14047/2016, while dealing
with the plea of a contractor, in whose favour the contract of
collection of bales of cloth was awarded for the year 2017, who
had also prayed for reduction, abolition and exemption in the cess
tax, has held as under:
(8 of 12)
[CW-9515/2015]
"6..............Moreover, even a person suffering the
liability of tax cannot claim suspension/
abolition/reduction of tax as a matter of right much
less the petitioner, which is only an awardee of of
contract for collection of cess on the terms and
conditions agreed upon. In any case, if the petitioner
is at all entitled to claim deduction in the amount
payable in terms of the contract, it is always open for
it to raise the grievance in this regard by way of
appropriate representation to the Municipal Board,
Balotra."
The aforesaid order passed by the learned Single Judge
in SBCWP No.14047/2016, M/s Vedprakash Rambhagat
Choudhary vs. Commissioner, Nagar Parishad, Balotra has been
upheld by the Hon'ble Division Bench of this Court in D.B.Special
Appeal Writ No.187/2017.
The argument of the learned counsel for the petitioner
to the effect that the clauses 11 and 22 of the agreement/contract
dated 02.12.2014 were unconscionable, is also not tenable. It is
settled principle of law that the party claiming any term of an
agreement or contract as unconscionable must be a weaker party
in a position which has no choice or rather no meaningful choice
except to give his consent to a contract despite the fact that the
conditions of the contracts are unfair, unreasonable and
unconscionable.
Even the Hon'ble Supreme Court in Central Inland
Water Transport Corporation Limited & Anr. vs. Brojo Nath
Ganguly and Anr. (supra) has observed as under:
"This principle is that the courts will not enforce and
will, when called upon to do so, strike down an unfair
and unreasonable contract, or an unfair and
(9 of 12)
[CW-9515/2015]
unreasonable clause in a contract, entered into
between parties who are not equal in bargaining
power. It is difficult to give an exhaustive list of all
bargains of this type. No court can visualize the
different situations which can arise in the affairs of
men. One can only attempt to give some
illustrations. For instance, the above principle will
apply where the inequality of bargaining power is the
result of the great disparity in the economic strength
of the contracting parties. It will apply where the
inequality is the result of circumstances, whether of
the creation of the parties or not. It will apply to
situations in which the weaker party is in a position in
which he can obtain goods or services or means of
livelihood only upon the terms imposed by the
stronger party or go without them. It will also apply
where a man has no choice, or rather no meaningful
choice, but to give his assent to a contract or to sign
on the dotted line in a prescribed or standard form or
to accept a set of rules as part of the contract,
however unfair, unreasonable and unconscionable a
clause in that contract or form or rules may be. This
principle, however, will not apply where the
bargaining power of the contracting parties is equal
or almost equal. This principle may not apply where
both parties are businessmen and the contract is a
commercial transaction."
In Central Inland Water Transport Corporation
Limited & Anr. vs. Brojo Nath Ganguly and Anr. (supra), the
Hon'ble Supreme Court has interfered with Rule 9(i) of The Central
Inland Water Transport Corporation Limited (A Government of
India Undertaking) - Service, Discipline and Appeal Rules, 1979
while taking into consideration the fact that the workers of the
Central Inland Water Transport Corporation Limited had not much
of a choice except to enter into an agreement with it because had
they not accepted the appointments, they would have at the
(10 of 12)
[CW-9515/2015]
highest received some compensation which would have been
probably meagre and would certainly have exposed themselves to
the hazard of finding another job. If they had refused to accept
the said conditions, it would have resulted in termination of their
service and the consequent anxiety, harassment or uncertainty of
finding alternative employment.
Here in the present case, no such foundation is laid by
the petitioner to demonstrate that it was not equal with the
respondents and had no choice except to agree to the conditions
of the contract. The petitioner is a firm carrying out business at
Balotra has failed to demonstrate that it was forced to execute the
agreement with the respondents. It is unbelievable that the
respondents had forced the petitioner to enter into the agreement
with them though the petitioner was not willing. As a matter of
fact, in the E-tender floated by the Municipal Council, Balotra, the
petitioner had voluntarily participated and when its bid was
accepted, agreed to execute the agreement.
Similarly, the Division Bench of this Court in State of
Rajasthan & Anr. vs. Dr. Kantesh Khetani & Ors., has given
verdict in favour of contesting respondents taking into
consideration the fact that the respondents, who were admitted to
P.G.Course (MS/MD) had no choice except to agree to the
conditions that they will not claim any honorarium or salary in lieu
of work and, therefore, the Division Bench has observed that
taking work from the DNB students in the hospitals in the State of
Rajasthan, for three years without any payment, was wholly
unfair, unreasonable and is violative of Article 14 of the
(11 of 12)
[CW-9515/2015]
Constitution of India.
As stated earlier, in the present case, no such situation
is present and the petitioner has failed to demonstrate that it was
under pressure or had no choice except to enter into the
contract/agreement with the respondent Nos.2 and 3 containing
clauses 11 and 22.
Moreover, in catena of decisions, the Hon'ble Supreme
Court has specifically held that in purely contract matters,
extraordinary remedy of writ under Article 226 or Article 32 of the
Constitution of India cannot be invoked.
The Hon'ble Supreme Court in Joshi Technologies
International Inc. vs. Union of India & Ors. (supra) after
taking into consideration the earlier decisions on this point has
held as under:
"70. Further legal position which emerges from various
judgments of this Court dealing with different
situations/aspects relating to contracts entered into by the
State/public Authority with private parties, can be
summarized as under:
....................
70.4 Writ jurisdiction of High Court under Article 226 of the Constitution of India was not intended to facilitate avoidance of obligation voluntarily incurred.
70.5 Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the license if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the license, if he finds it commercially inexpedient to conduct his business.
(12 of 12) [CW-9515/2015] 70.6 Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages.
.....................
70.11 The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes."
In view of the above discussions, I do not find any merit in this petition and the same is hereby dismissed. There shall be no order as to costs.
(VIJAY BISHNOI)J. m.asif/PS