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1984 DIGILAW 287 (MAD)

Chandrika v. Divisional Railway Manager, Southern Railway

1984-07-18

S.NAINAR SUNDARAM

body1984
ORDER: The Divisioanl Railway Manager, Southern Railway, Madras, the first respondent, invited tenders in the prescribed form for contractors for collection of fees on Cycles/Motor Cycles/Scooters parked in the area allotted for Cycle Stand at Perambur Railway Hospital, Jolarpettai and Perambur, and also for the collection of fees on Private Cars parked in the Car Stand at Madras Central Railway Station. The period of licence was from 25-10-1983 to 24-10-1985. The petitioner and three others made their tenders and the concerned Tender Committee recommended that the contract be awarded to the petitioner, she being the highest bidder. By the proceedings dated 14-10-1983, the petitioner was awarded the contract. We are more concerned with one term in the contract which runs as follows: “The contract is liable to be Summarily terminated in the event of any violation of the conditions of the contract including unsatisfactory service, subletting or any other improper act on your part. The contract is ordinarily terminable on two months notice in writing on either side without assigning any reason.” At the outset, it must be pointed out that it is not the case of the petitioner that the contract was entered into by the first respondent in exercise of any statutory power under any Act or Rules framed thereunder and, admittedly, the contract did not contain any statutory term or obligation. 2. On 3-1-1984, the first respondent passed an order as follows:. “The above contract was awarded to you for a term of two years from 25-10-83 to 24-10-85 with a specific condition that the parking fees for private cars levied by you should not exceed Rs.1/ per car per clay or part thereof. But complaints have been received alleging that you are collecting Rs.l.50 per car per day or part thereof. This is highly irregular. In fact an advocate who parked his car in the car parking area has produced a receipt (Token) given by your representative at the Car Park for Rs.1.50 and complained about excess collection. you are fined Rs.25/- for this excess collection of licence fee. Please note that if you do not stop this excess collection with immediate effect, action will be taken to terminate the contract and recover any loss that may be suffered by the Railway by awarding the contract to other party.” We are not very much concerned with the aforesaid order in the present writ petition. Please note that if you do not stop this excess collection with immediate effect, action will be taken to terminate the contract and recover any loss that may be suffered by the Railway by awarding the contract to other party.” We are not very much concerned with the aforesaid order in the present writ petition. But, it must be pointed out that the petitioner has not expressed any grievance over the imposition of fine by this order. On 12-1-1984, the order impugned in the writ petition has come to be passed by the first respondent, the terms of which run as follows: “The contract of car park at Madras Central was awarded to you for a term of two years from 25-10-1983 to 24-10-1985 for a sum of Rs.4,44,447/-with a specific condition that the parking fees levied on private cars shall not exceed Re.1/- per car per day or part thereof. On receipt of complaint from a local advocate that you were collecting Rs.1-50 per car per day, the section superintendent, Madras Central had conducted a surprise check on 3-1-84 at the private car Parking area and seized a few bundles of tickets both issued and non-issued. All these tickets were bearing Rs.1-50. This has confirmed that you are collecting Rs.1-50 which is more than the authorised rate of Re.1/-. Moreover, you have not executed the agreement and produced the current Income-tax Clearance Certificate so far even though you have taken up the contract on 25-10-1983. In view of the gross violation of the important terms and conditions of the contract, the contract of Car Park awarded to you for a term of two years from 25-10-1983 to 24-10-1985 is terminated with effect from 12-3-1984.” 3. In attacking the order of the first respondent dated 12-1-1984, Mr.R.Sunda-ravaradan, learned counsel for the petitioner, would put forth two grounds. One is that the petitioner was not afforded an opportunity to make her say against the cancellation of the contract before the impugned order came to be passed. Learned counsel is conscious that the matter relates to contract. In attacking the order of the first respondent dated 12-1-1984, Mr.R.Sunda-ravaradan, learned counsel for the petitioner, would put forth two grounds. One is that the petitioner was not afforded an opportunity to make her say against the cancellation of the contract before the impugned order came to be passed. Learned counsel is conscious that the matter relates to contract. The ordinary rule is, if the State or its agent or a statutory Corporation enters into the field of ordinary contract, having no source in any statutory power or attracting any statutory power or obligation, the relations are no longer governed by the constitutional provisions, but by the provisions of the contract which determine the rights and obligations of the parties inter se. Learned counsel would plead that in the instant case, there is a violation of the principles of natural justice and this Court can definitely intervene and exercise the writ power. In support of this submission, learned counsel first relies on a pronouncement of the Supreme Court in D.F.O.South Kheri v. Raw Sanehi D.F.O.South Kheri v. Raw Sanehi (1971)3 S.C.C.864=A.I.R.1973 S.C.205. From the facts disclosed in that judgment, I find that it was a case of an auction held by the concerned Forest Officer and, obviously, such an auction had come to be held pursuant to statutory powers. In the said context, after referring to the earlier pronouncement in K.N.Guruswamy v. State of Mysore K.N.Guruswamy v. State of Mysore 1954 S.C.J.644=(1955)1 S.C.R.305=A.I.R.1954 S.C.592, it was held that merely because the source of the right which the aggrieved party claims was initially in a contract, he need not resort to a suit for obtaining relief against any arbitrary and unlawful action on the part of a public authority and there could be a resort to a petition by way of writ. The case is clearly distinguishable. It was obviously a case where the contract was entered into pursuant to powers invested therefor by statute. The view expressed in K.N.Guruswamy v. State of Mysore K.N.Guruswamy v. State of Mysore 1954 S.C.J.644=(1955)1 S.C.R.305=A.I.R.1954 S.C.592, is also that a writ petition is maintainable even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power. 4. Next, learned counsel would rely on the pronouncement of the Supreme Court in State of Punjab v. Ajudhia Nath (1981)3 S.C.C.251=A.I.R.1981 S.C.1374. 4. Next, learned counsel would rely on the pronouncement of the Supreme Court in State of Punjab v. Ajudhia Nath (1981)3 S.C.C.251=A.I.R.1981 S.C.1374. That again was a case of grant of licence under the Punjab Excise Act and the Rules framed thereunder and it was recognized that although an opportunity of being heard has to be given to a liquor vendor when his licence is sought to be cancelled, the same principle of natural justice does not come into play when the demand is merely for payment of a sum becoming due under the conditions, subject to which the licence was granted. The ratio of this case also cannot be applied to the facts of the present case, because the present case does not concern a contract entered into or awarded under any statutory power, nor the contract contains nor is circumscribed by any statutory term or obligation. It is non-statutory and purely contractual. 5. In Radhakrishna Agarwal and others v. State of Bihar and others Radhakrishna Agarwal and others v. State of Bihar and others (1977)3 S.C.C.457=(1977)3 S.C.R.249=A.I.R.1977 S.C.1496, it was found that the contracts did not contain any statutory terms or obligations and no statutory power or obligation which would attract the application of Article 14 of the Constitution of India was involved, and it was held that the limitations imposed by rules of natural justice cannot operate upon powers which are governed by the terms of an agreement exclusively and the only question which normally arises in such cases is whether the action complained of is or is not in consonance with the terms of the agreement. The Supreme Court approved the following division of the types of cases involving breaches of alleged obligations by the State or its agents, as done by the Patna High Court, from whose decision the matter had come before the Supreme Court: “(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on an assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Article 299 of the Constitution, (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under a certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the State; and (iii) Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State.” The cases before the Supreme Court did not belong to either the first category or the second category. Equally so, the case before me does not belong to either the first or the second category. The cases before the Supreme Court and the case before me belonged to the third category, where the contract entered into was non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms or the contract alone. The cases relied on by Mr.R.Sundaravaradan relate to the second category and, in fact, the Bench consisting of three learned Judges of the Supreme Court, in Radhakrishna Agarwal v. State of Bihar Radhakrishna Agarwal v. State of Bihar (1977)3 S.C.C.457=A.I.R.1977 S.C.1496, distinguished the cases in D.F.O.South Kheri v. Ram Sanehi D.F.O.South Kheri v. Ram Sanehi (1971)3 S.C.C.864=A.I.R.1973 S.C.205 and K.N. Guruswamy v. State of Mysore K.N. Guruswamy v. State of Mysore 1954 S.C.J.644=A.I.R.1954 S.C.592, as belonging to the second category. The principles recognised by the Supreme Court in Radhakrishna Agarwal v. State of Bihar Radhakrishna Agarwal v. State of Bihar (1977)3 S.C.C.457=A.I.R.1977 S.C.1496, have been well brought out in the relevant extracts in the Head Notes of the report and they can be appropriately imported as hereunder. The principles recognised by the Supreme Court in Radhakrishna Agarwal v. State of Bihar Radhakrishna Agarwal v. State of Bihar (1977)3 S.C.C.457=A.I.R.1977 S.C.1496, have been well brought out in the relevant extracts in the Head Notes of the report and they can be appropriately imported as hereunder. “At the very threshold or at the time of entry into the field of consideration of persons with whom the Government could contract at all, the State, no doubt, acts purely in its executive capacity and is bound by the obligations which dealings of the State with the individual citizens import into every transaction entered into in exercise of its constitutional powers. But, after the State or its agents have entered into the field of ordinary contract the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Article 14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some Statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract. Held that (i) the contracts did not contain any statutory terms or obligations and no statutory power or obligation which could attract the application of Article 14 was involved. (ii) It was the contract and not the executive power regulated by the Constitution, which governed the relations of the parties on the facts apparent in the instant cases. They involved questions of pure alleged breaches of contract. No writ or order could issue under Article 226 in such case to compel the authorities to remedy a breach of contract pure and simple.” “The limitations imposed by rules of natural justice cannot operate upon powers which are governed by the terms of an agreement exclusively. They involved questions of pure alleged breaches of contract. No writ or order could issue under Article 226 in such case to compel the authorities to remedy a breach of contract pure and simple.” “The limitations imposed by rules of natural justice cannot operate upon powers which are governed by the terms of an agreement exclusively. The only question which normally arises in such cases is whether the action complained of is or is not in consonance with the terms of the agreement.” In the latter case of State of Punjab v. Ajudhia Nath (1981)3 S.C.C.251=A.I.R.1981 S.C.1374, the further line of distinction has been drawn even in respect, of cases where the contract has its source in the statutory power or contains or is circumscribed by statutory terms or obligations, and it has been pointed out that reasonable opportunity has to be given for cancellation and not with regard to enforcement or avoidance of terms or obligations under the contract. 6. We can take it as well settled that if there is a violation of the rights under a contract simpliciter, which has neither a source under a statute nor contains nor is circumscribed by statutory terms or obligations, such violation of contractual obligations cannot be remedied by writ petition, merely on the ground that one of the contracting parties happens to be the Government or a Governmental agency or a statutory corporation. In contractual sphere, even if one of the parties to the contract is a Government or a Governmental agency or a statutory corporation, there is no scope for importing the principles of natural justice unless it is found that the very source of the contract is the statute or it contains or is circumscribed by statutory terms or obligations. 7. Further pressing forth the first submission, learned counsel for the petitioner would contend that the action itself is punitive and arbitrary in character and hence, the principles of natural justice will be attracted and this court should intervene in writ powers. 7. Further pressing forth the first submission, learned counsel for the petitioner would contend that the action itself is punitive and arbitrary in character and hence, the principles of natural justice will be attracted and this court should intervene in writ powers. This submission, in my view appears to be of no consequence and substance because once it is admitted that the matter relates to contractual terms and obligations simpliciter, it cannot get out of the limitations delineated above and which must be kept in mind with regard to exercise of jurisdiction under Article 226.I had occasion to recapitulate the principles in E.Dhanapal v. Neyveli Lignite Corporation Limited W.P.No.912 of 1982, Order dated 5-2-1982, while dealing with a case belonging to the third category, referred to above. Hence, I have to eschew the first ground of attack put forth by the learned counsel for the petitioner. 8. The second ground of attack urged by the learned counsel for the petitioner is that the notice of termination is not in accordance with the concerned term in the contract. This submission comes within the vice of the first principle recognised and it is not possible to countenance the submission and this contention could not be justiciated in writ jurisdiction. Hence, I have to repel the same. For all these reasons, the writ petition fails and the same is dismissed. I make no order as to costs. Petition dismissed.