Bombay High Court
M/S.Airwide Express Cargo vs Union Of India on 3 December, 2010
Author: D.Y.Chandrachud
Bench: D.Y.Chandrachud, Anoop V. Mohta
VBC 1 wpl2604.10-3.12
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O. O. C. J.
WRIT PETITION (L) NO.2604 OF 2010
M/s.Airwide Express Cargo. ..Petitioner
versus
Union of India, through General
Manager, Western Railway & Anr. ..Respondents.
.....
Ms.Neeta Masurkar i/b. Arun Kumar Roy for the Petitioner.
Mr.Suresh Kumar for the Respondents.
.....
CORAM : DR.D.Y.CHANDRACHUD &
ANOOP V. MOHTA , JJ.
3 December 2010.
ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :
The General Manager of the Western Railway invited tenders for leasing of parcel space in brake vans/parcel vans/Assistant Guard's Cabin of twenty five tonnes in the Firozpur Janata Express (Train No.9023/24) on a round trip basis between Mumbai Central and Firozpur. Bids were invited for all running days in a year on a long term basis. Tenders were opened 4 September 2006. A letter of acceptance was issued to the ::: Downloaded on - 09/06/2013 16:40:14 ::: VBC 2 wpl2604.10-3.12 Petitioner on 20 November 2006. The rate offered by the Petitioner was Rs.1,01,000/- for each round trip. The contract was to be valid until 6 December 2009. The contention of the Petitioner is that his performance was satisfactory and both a certificate of satisfactory performance and a no dues certificate was issued by the Divisional Commercial Manager. Clause 20 of the agreement contains a provision for extension of the contract which was as follows:
"20.0 Extension to lease contract:
20.1 Extension of lease is permissible only in case of long term lease of 3 years wherein the same can be extended only once, by 2 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."
2. The Petitioner sought an extension in terms of clause 20 for a period of two years on 2 November 2009. At the relevant time, the policy of the Ministry of Railways was governed by Freight Marketing Circular 12 of 2006 issued by the Railway Board on 28 March 2006. The relevant clause (Clause (E)) in relation to extension of leases was as follows:
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"(E) Extension of Lease :
1. Extension of lease is permissible only in case of long term lease of 3 years.
2. In case of Long Term Lease, on expiry of the contract period, the same can be extended only once, by 2 more years at a lease rate of 25% more than the lump-sum leased freight rate.
3. Such extension will be subject to satisfactory performance by the lease holder, without any penalty for overloading or violation of any provision of the contract.
4. In case of expiry of contract period and non- finalization of new contract due to administrative delays, temporary extension can be permitted by the CCM only once, for a period of 3 months."
This policy lays down the guidelines for leasing out parcel space in brake vans (SLR) on passenger trains and leasing of parcel vans on a round trip basis. An arbitration agreement was contained in the agreement entered into between the Petitioner and the Western Railway (clause 20). The Petitioner instituted a suit before the City Civil Court on 6 December 2009 and on 7 December 2009 an order of status quo was passed by that Court. This order was continued until eventually on 18 November 2010, the City Civil Court returned the plaint for presentation before the Competent Court.
These Proceedings have now been instituted before this Court on 22 November 2010 and the relief that is sought in the proceedings is a direction to the General Manager of the Western Railway to ::: Downloaded on - 09/06/2013 16:40:14 ::: VBC 4 wpl2604.10-3.12 extend the contract of the Petitioner for a period of two years in terms of clause 20.1 of the agreement dated 20 November 2006.
3. In the meantime, the Petitioner has been informed by a letter dated 25 November 2010, that the Competent Authority has decided to discontinue the lease contract of the Petitioner in the absence of any interim order of a Court. Accordingly, the Petitioner has sought an amendment of the Plaint in terms of the draft which is tendered before the Court. Amendment in terms of the draft is allowed, since the Petition has been pending admission, and is allowed to be carried out forthwith.
4. The earlier policy of the Railway Board was governed by Circular No.12 of 2006 dated 28 March 2006 to which a reference has been made already. Subsequently, a new policy was formulated on 9 February 2010 in terms of Freight Marketing Circular No.3 of 2010. By the new policy, the clause relating to extension that was contained in the earlier policy has been deleted.
Nonetheless, by a subsequent Circular dated 18 March 2010 of the Railway Board, it has been clarified as follows :
::: Downloaded on - 09/06/2013 16:40:14 :::VBC 5 wpl2604.10-3.12 "2.1 In case of existing contracts which are in operation and agreement/contract signed before issue of Freight Marketing Circular No.03 of 2010 i.e. prior to 09.02.2010, shall be governed by the policy guidelines applicable before issue of Freight Marketing Circular No. 03 of 2010."
Hence, according to the Petitioner though the clause for extension as stipulated in the Policy Circular 12 of 2006 is deleted by Policy Circular 6 of 2010, in the case of all existing contracts which are in operation, the earlier policy guidelines will continue to apply.
5. A Division Bench of this Court dealt with a Petition where there was a similar contract embodying clause (20) providing for conditions for extension. The Division Bench in its order dated 13 April 2010 noted the statement of the Respondent that a decision has been taken to grant extension to contractors like the Petitioners in terms of clauses (20) and (20.1) of the lease contract agreement and to continue their contracts for a further period till a new contract was finalised. The Division Bench recorded that this decision would be applicable to all such contractors whose contract period has come to an end and in ::: Downloaded on - 09/06/2013 16:40:14 ::: VBC 6 wpl2604.10-3.12 accordance with the policy decision, new tenders were being invited. In these circumstances, the Division Bench disposed of the Petition by directing that the Petitioners would be entitled to continue their contract till a new contract was finalized upon inviting of tenders. The earlier judgment of the Court was in Economic Commercial Service vs. Union of India and Ors. (Writ Petition (L) 247 of 2010). The direction of this Court in the earlier order dated 13 April 2010, was also extended in the case of a similarly placed Petitioner, by a Division Bench while disposing of Writ Petition (L) 2418 of 2010 (M/s.Kishan Freight Forwarder Vs. Union of India) on 28 October 2010. The Petitioner seeks the same benefit.
6. Counsel appearing on behalf of the Respondent has submitted that (i) There was no vested right to an extension of lease under clause (20) of the agreement and all that the agreement contemplated was that an extension is permissible only in the case of a long term lease of three years subject to the terms and conditions as spelt out therein; (ii) In the present case, the Western Railway invited bids for the allotment of an additional ::: Downloaded on - 09/06/2013 16:40:14 ::: VBC 7 wpl2604.10-3.12 parcel space on the Firozpur Janata Express in respect of which a contract had been awarded to the Petitioner. After tenders were invited, a letter of acceptance was issued on 23 September 2010 where the rate which is quoted is Rs.2,32,560/- for each round trip. Hence, it has been submitted that now that tenders have been invited and a new contract has been awarded, the Petitioner has no vested right to continue.
7. In our view, the earlier orders passed by the Division Bench of this Court on 13 April 2010 and 28 October 2010, both clarify that the Petitioners there who had existing contracts, would be allowed to continue only until a new lease contract was awarded. In the present case, the attention of the Court has been drawn to the fact that tenders were invited by the Western Railway albeit for the additional parcel space. The Petitioner could have submitted a bid for the allotment of a tender, but the Court has been informed by Counsel appearing on behalf of the Petitioner, the Petitioner did not do so. Counsel appearing on behalf of the Respondent states that one of the bidders, Shri Prajapati Gunwant Keshavlal submitted a bid on behalf of the Petitioner, but ::: Downloaded on - 09/06/2013 16:40:14 ::: VBC 8 wpl2604.10-3.12 according to Counsel for the Petitioner, he is a brother of one of the partners of the Petitioner who bid independently. As a matter of fact that bidder is also present before the Court.
8. Be that as it may, it is now clear that the condition subject to which the earlier orders were passed by Division Benches of this Court on 13 April 2010 and 28 October 2010 is fulfilled and a fresh contract has been awarded for a parcel van on the same train, namely, Firozpur Janata Express. The rate which has been accepted by the Western Railway of Rs.2,32,560/-
per round trip is almost double the rate which was quoted by the Petitioner and accepted for the contract which was entered into in 2006. The Petitioner has had the benefit of not only the period of the original contract of 2006-09 but as a result of the interim order of status quo that was passed by the City Civil Court, the Petitioner continued thereafter, at the same rate until 25 November 2010.
There is no vested right to extension or renewal of the contract.
Having regard to all these circumstances, we do not consider that it would be either appropriate or proper for this Court in the exercise of the writ jurisdiction to direct that the contract of the Petitioner ::: Downloaded on - 09/06/2013 16:40:14 ::: VBC 9 wpl2604.10-3.12 should be continued on the same terms and conditions. Whether the existing parcel van which was allotted to the Petitioner should be continued or discontinued and if it is continued whether it should be at existing rates, is a matter which is not within the jurisdiction of this Court under Article 226 of the Constitution.
9. Counsel appearing on behalf of the Respondent has stated before the Court that a final operational decision has still not been taken on whether the existing parcel van which was allotted to the Petitioner would be discontinued or whether a fresh tender would be invited in respect of that parcel van. In the event that the Respondents are inviting fresh tenders in respect of the parcel van which was allotted to the Petitioner and the Petitioner is ready and willing to match the rate of Rs.2,32,560/- received by the Western Railway in the contract which has been awarded on 23 September 2010, it would be open to the Petitioner to make a representation to the General Manager seeking a continuation of the existing contract until a fresh contract is finalized upon inviting tenders.
The First Respondent will consider and decide upon the representation. Save and except for the directions issued earlier, ::: Downloaded on - 09/06/2013 16:40:14 ::: VBC 10 wpl2604.10-3.12 we decline to accede to the prayers of the Petitioner. The Writ Petition is accordingly disposed of. No costs.
( Dr.D.Y.Chandrachud, J.) ( Anoop V. Mohta, J.) ::: Downloaded on - 09/06/2013 16:40:14 :::