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2005 DIGILAW 270 (GAU)

Benathung Odyuo v. Union of India

2005-03-31

B.LAMARE

body2005
ORDER B. Lamare, J. 1. Heard Mr. E.Y. Renthungo, learned Counsel for the petitioner and Mr. C. T. Jamir, learned Counsel for the respondents. 2. The brief of the case in a short compass is that by a letter dated 15-6-1997, the petitioner was requested by the respondents to supply one bus on hire basis with 42 sitting capacity. Pursuant to this letter, the petitioner purchased one Bus bearing Registration No. NL-05-B 0213. On supply of the said bus, an agreement dated 1st November, 1997 was executed between the petitioner and the respondents for a period of 3 (three) years from the date of execution of the agreement. The said agreement was, further extended for another period of 3 years w.e.f. 1-11-2000. By another letter dated 25-7-99, the respondents requested the petitioner to supply another Deluxe Bus on hire basis with 42 sitting capacity. On the request of the respondents, another bus was supplied to the respondents and an agreement dated 22-11-99 was executed between the petitioner and the respondents for a period of 3 years w.e.f. 17-8-99. On the expiry of the said agreement the period of hiring of bus was extended by another one year w.e.f. 17-8-2002 on the same terms and conditions vide extension order dated 17-5-2002. Of the two buses given by the petitioner to the respondents on hire basis, one is used for local staff duty at the site of DHEP, Doyang and the other bus is used as marketing bus for plying between the Project site and Golaghat in Assam. 3. In the month of June, 2003, the petitioner submitted a representation to the respondent No. 5 for extension of the hiring of the said two buses. At the same time, the President of the land owners Union. DHEP, Doyang also requested the respondent No. 5 to retain the two buses of the petitioner by explaining the reasons as to why the two buses are required to be retained by the respondents. As the term of the bus for marketing purpose was going to expire on 16-8-2003 and for the local staff bus to expire on 31-10-2003, a meeting was held between the petitioner and the representatives of the respondent No. 2 on 5-8-2003. In the said meeting, the rates for hiring of the two buses were reviewed and instead of Rs. As the term of the bus for marketing purpose was going to expire on 16-8-2003 and for the local staff bus to expire on 31-10-2003, a meeting was held between the petitioner and the representatives of the respondent No. 2 on 5-8-2003. In the said meeting, the rates for hiring of the two buses were reviewed and instead of Rs. 3,000/-per day for the local staff bus a lump sum amount of Rs. 75,000/- per month was agreed. So also the rate for marketing bus was changed from Rs. 3,500/- per day to Rs. 85,000/- per month. However, another meeting was held between the petitioner and the representatives of respondent No. 2 on 27-8-2003. In the said meeting the rates of hiring of two buses were also discussed, and accordingly, the rate for the marketing bus was again fixed at Rs. 2,975/- per day subject to a maximum of Rs. 85,000/- per month. So also the rate for the local staff bus was fixed at Rs. 2,550/- per day subject to maximum of Rs. 75,000/- per month. 4. On the basis of the said meeting held on 27-8-2003, the Deputy General Manager(E) DHEP issued a letter dated 12-11-2003 to the petitioner extending the hiring of the marketing bus for a period up to 30-4-2004, so also by another letter dated 12-11-2003, the period of hiring of local staff bus was extended up to 30-4-2004. Extension of the period of both the buses were, according to the rates agreed to on the said meeting held on 27-8-2003. 5. After the said extension of the 2 buses were made by the respondents, the petitioner submitted a representation dated 30-3-2004 to the Chairman-cum-Managing Director of NEEPCO, Shillong. However, the representation of the petitioner was not considered and the respondents instead issued the notice inviting quotation (NIQ) dated 26-6-2004 calling for quotations from the interested parties amongst the land affected persons of DHEP for supply of buses on hire basis to the project. One bus is for local staff duty and one bus is for marketing duty. The petitioner being aggrieved by the said notice has approached this Court in this writ petition. At the same time the respondents again extended the hiring of the buses of the petitioner for a period from 30-4-2004 to 30-9-2004. 6. One bus is for local staff duty and one bus is for marketing duty. The petitioner being aggrieved by the said notice has approached this Court in this writ petition. At the same time the respondents again extended the hiring of the buses of the petitioner for a period from 30-4-2004 to 30-9-2004. 6. The case of the petitioner is that the two buses were purchased by him on the request of the respondents. The buses were also utilised by the respondents throughout since the time buses were purchased by the petitioner. The petitioner had no other means to utilise the buses as the same were purchased for the use by the respondents. By issuing the impugned notice inviting quotations from other parties, the petitioner has been deprived of his right which is acquired for so long after the buses were purchased by him and the same were taken on hire by the respondents. The respondents are duty bond to utilise the buses of the petitioner as long as they need the services of the buses. Instead of continuing of the hiring of the buses belonging to the petitioner, the respondents are trying to throw away the petitioner by discontinuing the hiring of his buses thereby the buses of the petitioner shall remain idle as a result of which the petitioner shall suffer huge loss and injury. 7. It is also the case of the petitioner that dispute, if any, with regard to the hiring of the buses should be referred to an arbitrator as Clause 32 of both the agreements executed between the petitioner and the respondents provides for arbitration, in case of any such dispute. However, on the intention of the respondents to discontinue with the utilisation of the buses of the petitioner, the petitioner has approached the respondents for referring the matter to the arbitration; but the same was refused by the respondents vide their letter dated 24-6-2004. The respondents, therefore, have violated the arbitration clauses of the agreement. However, on the intention of the respondents to discontinue with the utilisation of the buses of the petitioner, the petitioner has approached the respondents for referring the matter to the arbitration; but the same was refused by the respondents vide their letter dated 24-6-2004. The respondents, therefore, have violated the arbitration clauses of the agreement. The further contention of the petitioner is that as per the meeting held on 27-8-2003, the petitioner has agreed to reduce the hiring charges of the two buses by reducing about 15% of the rate of the hiring charge of the two buses on condition that the continuity of the supply of the two buses be extended by another three years on execution of a fresh agreement for the same. The respondents instead of complying with the decision in the said meeting had extended the period of hiring of the buses only up to 30-4-2004 on the basis of the said meeting. This according to the petitioner, is a clear violation of the agreement in the said meeting. 8. The respondent Nos. 2-4 filed a joint affidavit in opposition and raised the question of maintainability of this writ petition. According to the respondents, the dispute between the petitioner and the respondents is purely a contractual agreement between the two parties for which the Court will not interfere under Article 226 of the Constitution. The respondents in their affidavit has also contended that the hiring of the petitioner's buses by the respondents is nothing but an offer and acceptance between the two parties. The agreement executed between the parties also shows that the same were made voluntarily between the petitioner and the respondents. It is also contended by the respondents that the meeting held on 5-8-03 and 27-8-03 was only a negotiation to enter into agreement for supply of the hire buses and no order was issued for extension of the supply of the buses for 3 years pursuant to the said meetings. On the other hand, according to the respondents, the petitioner is trying to impose a condition on the respondents on the basis of the negotiation held on 27-8-03. The respondents also contended that the petitioner cannot impose a condition on the respondents to hire his buses continuously. On the other hand, according to the respondents, the petitioner is trying to impose a condition on the respondents on the basis of the negotiation held on 27-8-03. The respondents also contended that the petitioner cannot impose a condition on the respondents to hire his buses continuously. The NIQ was issued by the respondents in order to acquire the bus offer by a wider competitive biddings for which the petitioner has no right to interfere with the actions of the respondents. The action of the petitioner in trying to stall the process of the NIQ dated 26-6-2004 is to jeopardise the entire process of NIQ. 9. Mr. C.T. Jamir, learned Counsel for the respondents assailing the maintainability of the writ petition submitted that as per Section 11 of the Arbitration and Conciliation Act, 1996, the petitioner has got alternative remedy to seek for appointment of Arbitrators by the Chief Justice. Instead of complying with this provisions of the Act, the petitioner has approached this Court by way of this writ petition. As per Clause 43 of the agreement between the petitioner and the respondents, arbitration clause is provided. The petitioner had prayed for referring the matter to arbitration; but the same was rejected by the respondents themselves by their letter dated 24-6-2004 issued by the Deputy General Manager (E) to the petitioner. In the instant case, it is seen that the dispute to be referred to the arbitration as per the agreements is with regard to the terms and conditions specified in the agreement; but in the instant case it is seen that the dispute is not for the terms and conditions of the agreement; but the dispute is with regard to the extension of the hiring of the two buses of the petitioner by the respondents. 10. The learned Counsel for the respondents further contended that matters relating to contract will not attract the provision of Article 226 of the Constitution. The learned Counsel is placing his reliance in the case of National Highways Authority of India v. Ganga Enterprises reported in AIR 2003 SC 3823 whereby the Apex Court has held that, it is a settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution. The learned Counsel is placing his reliance in the case of National Highways Authority of India v. Ganga Enterprises reported in AIR 2003 SC 3823 whereby the Apex Court has held that, it is a settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution. With regard to this view for entertainment of a writ petition under Article 226 of the Constitution in matter of contracts, we may also refer to the case of ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd. reported in (2004) 3 SCC 553 whereby in paragraphs 27 and 28 of the judgment, the Apex Court has laid down the principles regarding the maintainability of the writ petition as follows :-- "27. From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition : (a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. (b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. (c) A writ petition involving a consequential relief of monetary claim is also maintainable." "28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the Court should bear in mind the fact that the power to issue prerogative writs under Article 22 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. (See Whirlpool Corporation v. Registrar of Trade Marks.). And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction." 11. In the case in hand, it is seen that the two buses were acquired by the petitioner purely on the basis of the letters issued by the Assistant Manager (E/M) DHEP. The letters are identical. One of such letter is reproduced below :-- "To Shri Benathung Odyuo, Contractor/Supplier, Vill. Rephyim, Dist. Wokhq (Nagaland). Sub : Supply order for supply of 1 (one) No. Deluxe Bus (Model-TATA-1610) on hire basis with sitting capacity 42. Ref : Negotiation meeting, D/- 7-8-99. Dear Sir, Inviting reference to the above, we are pleased to confirm our verbal order for supply of 1 (one) new Deluxe Bus (Model-TATA-1610) on hire basis as per negotiated rate : Sl. No. Description Unit Rate per day 1. Supply of 1 (one) New deluxe Bus with 42 (forty two) seating capacity, Model TATA 1610 Rs.3,500/- (Rupees three thousand five hundred only This is also confirmed that the bus has been placed in the Project on 16-8-99. Please attend this office for signing formal agreement along with non-judicial stamp paper for Rs. 10.00 (Rupees ten) only. Thanking you. Yours faithfully Sd/- Asstt. Manager (E/M) Utility and Workshop Divn. DHEP Doyang : Nagaland" 12. The agreements for both the buses were initially for a period of three years with a Condition that the period may be extended for a further period on the same terms and conditions as may be mutually agreed upon 3 months before the expiry of the period. After expiry of the initial period of three years for both the buses, the respondents have extended the period on the same terms and conditions and the last extension was made till 16-8-2003 for the marketing bus and till 31-10-2003 for the local duty staff bus. The extension apparently was made by the respondents on their own without any negotiations and without complying with the required period of three months to decide the terms and conditions of the extension. Since the extension was made by the respondents, it shows that they are in need of the services of the two buses. By the abrupt termination of the using of the two buses, the action of the respondents can be termed as arbitrary and as such this Court is bound to intervene as per the law laid down by the Apex Court, in the case of ABL International Ltd. (2004) 3 SCC 553 (supra). 13. By the abrupt termination of the using of the two buses, the action of the respondents can be termed as arbitrary and as such this Court is bound to intervene as per the law laid down by the Apex Court, in the case of ABL International Ltd. (2004) 3 SCC 553 (supra). 13. For the aforesaid reasons, this Court is of the opinion that the writ petition is maintainable. 14. Now coming to the merits of the case, records shows that it is the admitted position that the two buses were purchased by the petitioner on the basis of the initiative taken by the respondents as per their aforesaid letters dated 15-6-97 and 27-8-99. After the two buses were acquired by the petitioner, the same were hired by the respondents and agreements thereto were executed between the petitioner and the respondents. Although there is a provision in Clause 22 of the agreement that the either parties has the right to terminate the contract by giving 3 months's notice, the contract was never terminated between the petitioner and the respondents. On the other hand the respondents have agreed to or rather on their own have extended the period of the hiring of the buses from time to time till 26-8-2003 for the marketing bus and 31-10-2003 for the local duty bus. After this last extension, meeting was held on 5-8-03 and 27-8-03 between the petitioner and the representatives of respondent No. 2. In order to appreciate the actual position with regard to the negotiation between the petitioner and the respondents, the minutes of the meeting held on 27-8-03 is reproduced below :-- "MINUTES OF MEETING HELD WITH MR. BENATHUNG ODYUO, SUPPLIER OF TWO BUSES i.e. ONE FOR MARKETING DUTY TO GOLAGHAT/WOKHA AND ANOTHER FOR LOCAL DUTY FOR STAFF AND SCHOOL DUTY. As directed by the competent authority, negotiation meeting was held in the chamber of the H.O.P. DHEP on 27th August, 2003, for further negotiation of revision of rates and other conditions for maintaining continuity of supply of the two buses by the said contractor/supplier to DHEP. After a continuous deliberation in connection with rate revision to reduce the rate, the contractor finally agreed to the conditions reluctantly but subject to condition that the fresh contract period must be valid for minimum period of 3 (three) years. After a continuous deliberation in connection with rate revision to reduce the rate, the contractor finally agreed to the conditions reluctantly but subject to condition that the fresh contract period must be valid for minimum period of 3 (three) years. Hence, the proposed and agreed conditions of the rates revision are as follows:-- AA : For Market Bus :-- a) Rs. 2975.00 (Rupees two thousand nine hundred seventy five) only per day while the same will ply in the route i.e. Doyang-Merapani-Golaghat-Doyang and Doyang--Wokha-Doyang and also as per directive/order of the Officer in-charge DHEP. b) Rs. 1487.00 (Rupees one thousand four hundred eighty seven) only for the off-day/rest day when the bus will not ply. c) Rs. 2550.00 (Rupees two thousand five hundred fifty) only for local duty within the project area. d) The total hire charges will be restricted to Rs. 85,000.00 (Rupees Eighty-five Thousand) only per month i.e. under all circumstances the total cost of hire charge per month will be within Rs. 85,000.00 (Rupees Eighty-five Thousand) only. e) The Bus should be new and as per prescribed TATA Model i.e. LPT-1613. BB : For Local Staff Bus :-- a) The rate per day will be Rs. 2550.00 (Rupees two thousand five hundred fifty) only for on duty days. The supplier/contractor has agreed to accept this reduced rate subject to the condition that the bus should run 30 (thirty) days in a month. b) There will be no payment for no run of the Bus. c) The total hire charges will be restricted to Rs. 75,000.00 (Rupees seventy five thousand) only per month i.e. under all circumstances the total cost of hire charge per month will be within Rs. 75,000.00 (Rupees seventy five thousand) only. d) The Bus should be new and as per prescribed TATA Model i.e. LPT-1512. CC : The other terms and conditions of earlier agreement for the above two buses will remain same. Member Present Sd/- Mr. N. Chakrabarty, GM (E) DHEP 27-8-03 sd/- Mr. Benathung Odyuo Supplier/contractor 27-8-03 (Fin), D/- 27-8-03 sd/- D. K. Baishya, Sr. Manager (E), G &SYD 27-8-03 Sd/- Mr. Jain Saikia, Dy. Manager (E) U & WD 27-8-03 Sd/- Mr. R. C. Murry, J.E. (E) Q/o The GM (E) DHEP." 15. Member Present Sd/- Mr. N. Chakrabarty, GM (E) DHEP 27-8-03 sd/- Mr. Benathung Odyuo Supplier/contractor 27-8-03 (Fin), D/- 27-8-03 sd/- D. K. Baishya, Sr. Manager (E), G &SYD 27-8-03 Sd/- Mr. Jain Saikia, Dy. Manager (E) U & WD 27-8-03 Sd/- Mr. R. C. Murry, J.E. (E) Q/o The GM (E) DHEP." 15. A perusal of the above minutes of the meeting will show that the rates were reduced by the petitioner reluctantly; but on condition that the fresh contract period must be valid for a minimum of three years. It is for this condition for the fresh agreement of three years that the petitioner has agreed to reduce the rate of hiring charges of the two buses by a margin of about 15% for both the buses. The respondents instead of complying with the minutes of the meeting which is agreed to between the parties had issued the extension of the two buses only for the period up to 30-4-2004 on the basis of the said meeting. The respondents have also not complied with the condition that a fresh contract period shall be for minimum of three years, although in the meeting it is decided that the terms and conditions of the earlier agreements for the two buses will remain the same. Instead of complying with the decisions as per the said meeting, the respondents have issued the NIQ and did not extend the period for 3 years as decided in the meeting. By the said decision in the meeting, the promise was made by the respondents to extend the period for 3 years on condition that the petitioner also agreed that the rate for hiring of the two buses be reduced as per the decision in the meeting. Therefore, the condition of extending for three years is condition precedent for reduction of the rate of the hiring charges of the two buses. The Supreme Court in the ease of Motilal Padampat, Sugar Mills Co. Ltd. v. State of U.P., reported in [1979] 118 ITR 326 (SC), in paragraphs 8 and 12 of the judgment held as follows :-- "8. The Supreme Court in the ease of Motilal Padampat, Sugar Mills Co. Ltd. v. State of U.P., reported in [1979] 118 ITR 326 (SC), in paragraphs 8 and 12 of the judgment held as follows :-- "8. ...The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not." "12. ...It may be pointed out that the Law Commission of India in its 13th Report adopted the same approach and recommended that, by way of exception to Section 25 of the Indian Contract Act, 1872, a promise, express or implied, which the promisor knows or reasonably should know, will be relied upon by the promisee, should be enforceable, if the promisee has altered his position to his detriment in reliance on the promise. We do not see any valid reason why promissory estoppel should not be allowed to found a cause of action where, in order to satisfy the enquiry, it is necessary to do so." 16. Coming to the case in hand, it is seen that since there already a decision by the parties to reduce the rate of the hiring charges of the two buses on condition of making a fresh contract period for three years, the respondents cannot go back to the decision arrived at between the parties. The extension of the services of the two buses by letter dated 12-11-2003 extending the period up to 30-4-2004 is not in terms of the said decision in the meeting held on 27-8-03, although the terms and conditions were retained as per the earlier agreement. The respondents are therefore, bound to implement the decision in letter and spirit. The extension of the services of the two buses by letter dated 12-11-2003 extending the period up to 30-4-2004 is not in terms of the said decision in the meeting held on 27-8-03, although the terms and conditions were retained as per the earlier agreement. The respondents are therefore, bound to implement the decision in letter and spirit. The respondents are not entitled to implement the operation of the decision in the meeting which is favourable to them and discard which is not favourable to them. After the decision in the meeting, the petitioner has also right to claim for implementation of the full decision in the meeting. The decision in the meeting simpliciter is that three conditions are made viz., that the rate of hiring charges for the two buses be reduced, the contract period shall be for a period of 3 years and the terms and conditions of earlier agreements for the two buses will remain the same. The respondents have implemented two conditions viz., reducing of the rates of hiring charges and retaining terms and conditions of the earlier agreements, but for the extension of the contract for another 3 years was neglected by the respondents which is detrimental to the interest of the petitioner. Once the decision is made the same has to be implemented in toto. Therefore, this Court feels that since the decision of the meeting dated 27-8-2003 has not been implemented in letter and in spirit by acting on the above three decisions, the respondents have acted arbitrarily and discriminately which calls for intervention by this Court. For the aforesaid reasons, the impugned NIQ/NIT dated 26-6-2004 issued by the respondents and proceedings undertaken thereto are hereby set aside and quashed. The respondents shall take necessary steps for extending the contract agreement for the two buses for a period of 3 (three) years as per the decision of the meeting held on 27-8-2003. This writ petition, is therefore, partly allowed and disposed of.