S. K. Jain and Co. v. Managing Director, U. P. Cooperative Federation Ltd.
1992-08-05
A.P.MISRA, R.B.MEHROTRA
body1992
DigiLaw.ai
JUDGMENT A.P. Misra, J. - Heard the learned Counsel for the Petitioners and also the learned Counsel for the Respondents. In view of counter and rejoinder having been exchanged, the present writ petitions are being disposed of finally at the stage of admission in accordance with Rules of the Court. 2. Four writ petitions have been filed challenging the advertisement dated 5-9-91 (Annexure-6 to W.P. No. 27322, Annexure-5 to the W.P. No. 27323, Annexure-6 to the writ petition no. 27324 and Annexure-11 to the W.P. No. 27423 of 1991) and since all the four writ petitions involve common question of law, all the four are being disposed of by means of this judgment. 3. The Petitioners have sought for quashing of the advertisement dated 5-9-91, by virtue of which Coal Agencies for appointment for various dumps, has been advertised. The further relief sought is for restraining the opposite parties in interfering with the functioning of the Petitioners as sole Agents for the dumps in question, for which the contracts were granted in their favour for a period of three years. 4. Before entering into questions involved in the present writ petitions, it is necessary to give certain facts. 5. The U.P. Cooperative Federation Ltd., Lucknow is apex society within the meaning of Section 2 (a-iv) of the U.P. Cooperative Societies Act, 1985. The management of the society is vested in the Committee of Management. Vide Section 31-A of the Act, the aforesaid Federation is to have a Managing Director, who is to be the Chief Executive Officer of the Federation. One of the important functions of the Federation is to supply coal to the various brick-kilns in the State of U.P. It supplies slack coal, soft coal to the brick-kilns and depot holders for the sale of coal in the market. The Federation for this purpose, obtains coal from the collieries. For this purpose, the Federation took a decision to appoint coal agents area-wise to perform services of obtaining coal from the collieries and for supplying the same, as aforesaid. It is in this context, the Federation awarded contract of service to the Petitioners who are appointed as Agents for supply of coal for the dumps in question.
For this purpose, the Federation took a decision to appoint coal agents area-wise to perform services of obtaining coal from the collieries and for supplying the same, as aforesaid. It is in this context, the Federation awarded contract of service to the Petitioners who are appointed as Agents for supply of coal for the dumps in question. These contracts were executed on various dates for a period of three years and under clause-22 of the said agreement, it could be renewed for a further period of three years on consent of the parties concerned. In pursuance to the said award, various contracts were executed by the Petitioners and they were working as coordinating agent, handling agent and selling agent. 6. The Petitioner's case is that after working for a little more than two years, the opposite party no. 1 issued a letter dated 11-1-91 to the Petitioners and sought for revising certain conditions relating to sharing of profits and also other conditions in the existing contract. One of the contention raised on behalf of the Petitioners is that this letter amounts to extension of the contract for a further period of three years. The aforesaid revision and modification also modified clause 7 of the contract and thereby 75% profit was to go to the Federation and 25% to the Petitioners. It is not disputed that the aforesaid letter dated 11-1-91 mentions the Petitioners to accept those conditions in the existing contract or to treat it to be a notice for termination of the existing contract, in case the conditions are not accepted. It is not disputed that the Petitioners did accept the conditions. At this juncture, it was open to the Petitioners to refuse, if it did not wish to accept those conditions and then to challenge the action of the Respondent, if so advised that such conditional notice to terminate the contract would not be a valid notice under clause-22 of the agreement. However, in this petition we are not called upon to decide the question, as it is not an issue. 7. The Petitioners in the writ petitions have challenged the aforesaid advertisement.
However, in this petition we are not called upon to decide the question, as it is not an issue. 7. The Petitioners in the writ petitions have challenged the aforesaid advertisement. Firstly, that the Federation has no right to make an advertisement during subsistence of the existing contract, secondly even after expiry of the said period the aforesaid letter dated 11-1-91 amounts to extension of the existing contract for a further period of three years, thirdly, the power vested in the matter of deciding, as to whom, the coal agencies is to be given, vests exclusively with the Managing Committee of the Federation and that power having been delegated to its Sub-Committee by means of a resolution dated 27-7-1991 (Annexure-13 to the writ petition No. 27423 of 1991, it can only be exercised by that Sub-Committee and thus issuance of advertisement by the General Manager Without Sub-Committee's approval is illegal. It has been averred that the General Manager, who has published the impugned advertisement, had no authority in the matter as it pertains to policy of distribution of coal agency, which exclusively is within the domain of the Committee of Management of the Federation. 8. It is not disputed that the Petitioner's period of contract, which was for a period of three years, has come to an end and during subsistence of existing contract the now coal agent has been appointed by the concerned Respondent to effect any of the right of the Petitioner. Hence first point raised by the Petitioners fails. 9. After coming to an end, the period of contract of three years, the question of getting the coal agents appointed arose for the purpose of distribution of coal by the Federation. The question to be entertained by the Federation was whether it desires to continue the contract with the consent of the Petitioners for a further period of three years in terms of clause 22 of the contract or wants to have it through a fresh coal agent, this itself is a policy decision which is to be taken by the Federation. Nothing to the contrary has been shown by any of the learned Counsel appearing for the Respondents. 10.
Nothing to the contrary has been shown by any of the learned Counsel appearing for the Respondents. 10. Coming to the second point, regarding extension of period of contract, we are not satisfied with the argument on behalf of Petitioner that letter dated 11-1-91 (Annexure-5 to the writ petition no 27322 of 1991) amounts to renewing the existing agreement for a further period of three years. The said letter specifically spells out that either to accept the terms mentioned in the said letter which was for modifying the terms of existing contract or threat the letter as notice for terminating the existing contract. This letter according to our considered view was a letter offering modification of the terms and conditions of the existing contract to which it was open to the Petitioners, either to accept or not to accept. As we have observed, the Petitioners accepted the modified terms of contract. The utility of this letter exhausted thereafter. The other part of termination of contract was only in the alternative in case condition was not accepted. That situation never arose in this case. But a part from this we fail to read any further through any word in the same to extend the period of contract by further period of three years. Thus we hold that this letter does not amount to extention of contract for a further period of three years. 11. Before embarking upon the third question regarding validity of the impugned advertisement it is necessary to give some more facts. After perusing the counter and rejoinder affidavits and after hearing the learned Counsel for the parties, we find that admittedly, vide resolution no. 4, the Committee of Management of the Federation constituted a Sub-Committee in accordance with the bye-laws. Though the question has been raised by Sri V.B. Upadhyaya, appearing on behalf of some of those tenderers, who applied in pursuance of the said advertisement, that actually in terms of the bye-laws the sub-committee has not been constituted properly as it must consist of three members atleast, but the resolution only speaks about two members.
Though the question has been raised by Sri V.B. Upadhyaya, appearing on behalf of some of those tenderers, who applied in pursuance of the said advertisement, that actually in terms of the bye-laws the sub-committee has not been constituted properly as it must consist of three members atleast, but the resolution only speaks about two members. So far constitution of Sub-Committee is concerned, paragraphs 22 and 23 of the counter affidavit, filed on behalf of the Federation, it has been admitted that a Sub-Committee has been constituted by the Committee of Management for the purpose of of distribution of coal but there is nothing that subcommittee has taken a decision in this regards to whom and how the coal agency has to give for the period subsequent to expiry of aforesaid three years. Annexure 10 to the writ petition no, 27324 of 1991 is a letter written by two member's of Sub-Committee to the General Manager that in the past they have been requesting for convening the meeting of Sub-Committee for the purpose of deciding the matter in question, bnt before this could be done an advertisement has been issued for the purpose of appointing fresh coal agents. No doubt this letter cannot constitute a decision of Sub-Committee as rightly argued by the learned Counsel for the tenderers, but it is definitely a grievance expressed by the members of the sub-committee against the publication of the said advertisement before even decision is made by the Sub Committee. 12. By reading affidavit it seems that there is some diversive view within Federation in the matter of issuance of coal agency. On one hand, the Managing Director got issued the said advertisement though General Manager as some feeble attempt was made to justify it under. Section 31-A of the Act or General Manager got it issued himself the said advertisement and on the other hand, two members of Sub-Committee who challenged the advertisement.
On one hand, the Managing Director got issued the said advertisement though General Manager as some feeble attempt was made to justify it under. Section 31-A of the Act or General Manager got it issued himself the said advertisement and on the other hand, two members of Sub-Committee who challenged the advertisement. But nothing was shown before us by the Federation about any decision having been actually taken by the Federation itself or by the Sub-Committee in this regard, It cannot be doubted looking to the various provisions of U.P. Cooperative Societies Act and bye-laws framed thereunder that the power absolutely vests in the Committee of Management of the Federation for making policy decision pertaining to it and if the Committee of Management has delegated its powers to any Sub-Committee, which seems as per the resolution of Committee of Management aforesaid it is only the sub-Committee which is empowered to take any such decision unless withdrawn or modified by the subsequent resolution of the Committee of Management. Further nothing has been shown that any decision as yet has been taken by any such Sub-Committee also. On the other hand, the issuance of the impugned advertisement by the General Manager, the question about which the Petitioners have challenged, the learned Counsel for the Respondents, could not show any authority under which the said advertisement was issued. Thus, we have no hesitation to hold that the impugned advertisement dated 5-9-91 (Annexure-6 to the writ petition No. 27322, Annexure-S to writ petition no. 27323, and Annexure-6 to writ petition no. 27324 of 1991) is invalid and illegal. 13. In view of this and specially in view of the fact that Annexure-10 to the Writ Petition No. 27324 of 1991, which shows conflict between the sub-committee member and the Managing Director/General Manager, further in view of the fact that distribution of coal being exclusively given to the Federation by the State of U.P., which is a vital distribution system for the whole State of U.P., it is necessary that a proper and early decision is made by the Federation. 14. Accordingly, we quash the advertisement dated 5-9-91 (Annexure-6 to Writ Petition No. 27322 of 1991, Annexure-5 two writ petition no. 27324 of 1991 and Annexure-6 to Writ Petition no. 27424 of 1991) and Annexure-11 to Writ Petition no.
14. Accordingly, we quash the advertisement dated 5-9-91 (Annexure-6 to Writ Petition No. 27322 of 1991, Annexure-5 two writ petition no. 27324 of 1991 and Annexure-6 to Writ Petition no. 27424 of 1991) and Annexure-11 to Writ Petition no. 2742 of 1991 and direct the Federation to expeditiously decide the matter of giving coal agency in accordance with the policy which they decide either by Committee of Management or the Sub-Committee, if any duly constituted in accordance with the bye laws, in the light of the observations, which we have made above for future distribution of coal through coal agency. Since the Federation has been exclusively given the power of distribution in the State of U.P. and it is likely to affect the consumers all over the U.P., we have no hesitation in observing that the Federation will not delay the matter and make decision at the earliest. We are also vacating the ad interim stay orders and till the decision is taken by the Federation, none of the Petitioners will be acting as coal agent of the said Federation. 15. With the aforesaid observations, all the aforesaid four writ petitions are allowed. Costs on parties. 16. Let a certified copy of this order may be given to the counsel for Petitioners within a week on payment of usual charges.