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2006 DIGILAW 1860 (BOM)

Tejpal Singh Arora v. State of Maharashtra

2006-11-17

A.B.CHAUDHARI, V.C.DAGA

body2006
V. C. DAGA, J.:- This petition is directed against the order dated 8.10.2002 passed by the State of Maharashtra, Department of Fisheries cancelling fishing lease given under contract dated 2.7.2001 executed between the petitioner and respondent no.5 Vidarbha Irrigation Development Corporation (for short, "VIDC"). The petitioner is also challenging communication dated 12.7.2002 issued by the respondent no.5 VIDC suspending the contract by and between the petitioner and respondent no.5 VIDC. 2. The factual matrix reveals that the dispute relates to the Upper Wardha Reservoir owned by the respondent no.2 of which fishing rights to be given were under the control of respondent no.1, State of Maharashtra, Ministry of Fisheries. The said water Tank has a spread area of about 5,500 hectares. 3. The State Government somewhere in the year 1993 took a policy decision that fishing contract should be awarded by inviting open tenders. Pursuant to the said policy decision, in the year 1997, tenders to award fishing rights of the tank were invited by the Regional Deputy Director of Fisheries, Amravati. Petitioner participated in the tender process. The tender came to be awarded in favour of the petitioner, with the result, petitioner became recepient of the fishing right of the tank in question. The contract was executed on 21.8.1997 between the petitioner and the Regional Deputy Director, Department of Fisheries, Amravati under which the petitioner acquired fishing right for a period of five years in consideration of which the petitioner claims to have paid Rs.10,71,301/- per annum from 1997 to 2002 to the respondent no.1. 4. In the month of March, 1997, respondent no.5 VIDC came to be constituted. The tank fell within the area of operation of respondent no.5. Accordingly, as per petitioner all rights came to be vested in respondent no.5 including right to award fishing rights in the Tank. 5. It appears that there was some dispute between the petitioner on one hand and the State Government and VIDC on the other, which led to filing of Writ Petition No.520 of 1998 by the present petitioner. The matter was, ultimately, amicably settled and it was decided between the parties that the contract would be transferred by respondent no. 1 in favour of respondent no.5 along with the amount of consideration paid or to be paid by the petitioner. The matter was, ultimately, amicably settled and it was decided between the parties that the contract would be transferred by respondent no. 1 in favour of respondent no.5 along with the amount of consideration paid or to be paid by the petitioner. Consequently, fresh agreement was executed on 6.10.1998 between petitioner and respondent no.5 under which the petitioner claims to have acquired fishing right from 1998 to 2002. 6. The petitioner claims to have developed the said tank and incurred substantial amount of expenditure in development thereof. According to him, he was also required to invest huge amount for putting seeds in the tank. However, he could not exploit benefits in view of the poaching and non-Co-operation from the local residents which led to several police complaints. Consequently, he claims to have filed an application for extension of lease period for another five years which, according to the petitioner, came to be granted subject to acceptance of increase in lease rent by 15% VIDC agreement dated 2.7.2001. Petitioner contends that the lease period for fishing in favour of the petitioner came to be extended from 20th June, 2002 to 30th June, 2007 with 15% increase in the basic lease amount. The petitioner accordingly claims to have deposited the lease money in the sum of Rs.12, 31, 996/ - for the year 2002-03. 7. Respondent no.6 Executive Engineer, Upper Wardha Dam Division, VIDC issued letter dated 12.7.2002 to the petitioner directing him to stop/suspend all fishing and management activities in the reservoir with immediate effect until further orders. The said letter was issued pursuant to the fax message dated 12.7.2002 received by respondent no.6 from respondent no.3 and letter dated 12.7.2002 received from the Chief Engineer, Irrigation Department, Amravati. Petitioner challenged the said letter of suspension of working contract by filing Writ Petition No.2542 of 2002 before this Court in which the Division Bench of this Court passed an order dated 25.7.2002 reading as under: "The learned government pleader appearing on behalf of respondents no.1, 2 and 3 seeks time of one week to file reply. S.O. for one week. The petitioner will be permitted to depute a security guard at the site." Thereafter, on 14.8.2002, the Division Bench passed another order reading as under: "The G.P. states that the decision will be taken up within two weeks by the Government. In view of this, stand over to 16.09.02. S.O. for one week. The petitioner will be permitted to depute a security guard at the site." Thereafter, on 14.8.2002, the Division Bench passed another order reading as under: "The G.P. states that the decision will be taken up within two weeks by the Government. In view of this, stand over to 16.09.02. If any decision is taken by the govt., needless it is to mention that the same shall be immediately communicated to the petitioner. " It appears that no decision was taken inspite of the aforesaid undertaking given on behalf of the Government. At least, no order was communicated to the petitioner. 8. The petitioner claims to have received notice dated 1.10.2002, on 8.10.2002 from the State Government calling upon him to remain present before the Minister of Fisheries (respondent no.4) at 03.00 p.m. on that very day at Mumbai. According to the petitioner, the said notice did not disclose any reason as to why it had proposed to cancel the agreement. Petitioner states that to his surprise, petitioner received by fax letter dated 8.10.2002 on 9.10.2002 from the respondent no.3 communicating order of cancellation of lease. 9. Petitioner filed civil application for amendment of petition in Writ Petition No.2542 of 02 in order to bring on record subsequent fact leading to the said order dated 8.10.02. However, on 11.10.2002 when the petition came up before the Division Bench, petitioner withdrew the petition with liberty to file fresh composite petition. That is how the petitioner claims to have filed the present writ petition to challenge the order dated 8.10.2002 issued by the respondent no.4 and letter dated 12.7.2002 issued by respondent no.3 suspending the contract in question. 10. On being noticed, the respondent State appeared and filed its counter affidavit/Return denying the case of the petitioner and did not dispute that original agreement was executed between the petitioner and the State on 2.7.2001 and it was to expire on 30th June, 2002 and subsequently, contract period was extended through official order dated 25.5.2001 upto August, 2003. Respondent no.1 submits that as per the Government Resolution of Agricultural Department dated 6.4.2000 fishing rights of all irrigation tanks are transferred to the Fisheries Department, meaning thereby; right to extend lease period came back to the Fisheries Department. Respondent no.1 submits that as per the Government Resolution of Agricultural Department dated 6.4.2000 fishing rights of all irrigation tanks are transferred to the Fisheries Department, meaning thereby; right to extend lease period came back to the Fisheries Department. It is, thus, stated that extension of lease by agreement dated 2.7.2001 by the VIDC for a further period of five years was irregular and illegal. Respondent no.1 further submits that there was no clause permitting renewal or for grant of extension of lease period in the Agreements dated 21.8.1997 and 6.10.1998 and, therefore, the said Agreement dated 2.7.2001 is nothing but a fresh contract of lease for which the procedure, as prescribed in the Government Resolution has not been followed. It is, thus, contended in the counter affidavit that the action of the respondents is perfectly legal, valid and no fault can be found in the procedure followed by the State Government. ISSUE 11. The above rival pleadings by the parties have given rise to the following substantial issue: Whether the action of the State Government in terminating the contract is legal and valid? CONSIDERATION 12. Heard rival parties. Undisputed facts emerging from the record are that the petitioner participated in the tender process. The fishing rights in Upper Wardha Reservoir were acquired by him under duly executed contract dated 21.8.1997 for a period of five years therefrom, on payment of consideration of consideration of Rs.10,71,30l/- p.a. 13. After formation of the respondent no.5 in the year 1997 under the provisions of the Vidarbha Irrigation Development Act, 1997, area of operation of respondent no.5 covered area of Upper Wardha Reservoir, consequently, new agreement was executed in favour of the petitioner by the 5th respondent No.5-VIDC. Pursuant to the new agreement, the petitioner had agreed to pay Rs.10,71,301/- per annum to the respondent no.5 VIDC for a period from 1998 to 2002 and has, in fact, paid such an amount each year to the respondent no.5 VIDC. 14. The petitioner on 7.4.1999 requested the respondent no.5 VIDC for extension of lease period for another five years. Pursuant to the new agreement, the petitioner had agreed to pay Rs.10,71,301/- per annum to the respondent no.5 VIDC for a period from 1998 to 2002 and has, in fact, paid such an amount each year to the respondent no.5 VIDC. 14. The petitioner on 7.4.1999 requested the respondent no.5 VIDC for extension of lease period for another five years. After prolonged correspondence, Under Secretary, Irrigation Department, Government of Maharashtra issued letter to the Executive Engineer of the respondent no.5 VIDC informing him that the Government has decided to extend the lease of petitioner for another five years with 10% increase and requested him to get necessary approval from the Board of Directors of the respondent no.5 VIDC. 15. Consequently, an Agreement was executed by respondent no.5 on 2.7.2001 in favour of the petitioner and lease period was extended for another five years i.e. from 20.6.2002 to 30.6.2007 with 15% increase in the basic lease amount and agreement was acted by the parties to the agreement. 16. On 12.7.2002, petitioner received letter from the respondent no.6 directing the petitioner to suspend all fishing operations, with the result, petitioner was required to suspend fishing operations. The said order of suspension of contract was challenged by the petitioner before this Court by filing Writ Petition No.2S42 of 2002. In the said writ petition, this Court VIDC order dated 18.9.2002 directed the Government to take final decision in the matter within a period of two weeks from the date of order. 17. On 8.10.2002 the petitioner received registered communication in the afternoon calling upon him to remain present before the Honourable Minister of Fishers on that very day at Mumbai. The notice did not set out any reason for the proposed cancellation of the agreement. On 9.10.2002 the petitioner received a fax message communicating an order of cancellation of lease executed in favour of the petitioner. This order dated 8.10.2002 is subject-matter of challenge in the present petition. 18. One of the grounds of challenge, amongst several, raised in the petition is that the action is in breach of the principles of natural justice and that no fair and reasonable' opportunity was given to the petitioner to defend or to put forth his say. 19. This order dated 8.10.2002 is subject-matter of challenge in the present petition. 18. One of the grounds of challenge, amongst several, raised in the petition is that the action is in breach of the principles of natural justice and that no fair and reasonable' opportunity was given to the petitioner to defend or to put forth his say. 19. Considering the rival submissions advanced by the parties, it is not in dispute that the impugned action was taken by the respondents without compliance with the minimal requirement of principles of natural justice. It is now trite law that natural justice has to be viewed in circumstantial flexibility. 20. Mr. V. M. Deshpande, learned special counsel for respondent no.1, however, submitted that the principles of natural justice were not required to be followed, relying on the Apex Court judgment in the case of M. C. Mehta Vs. Union of India & Ors. (1999 AIR SCW 2754) and decision of this Court in the case of Bansilal Narayandas Kankaria & Anr. Vs. Special Land Acquisition Officer, Pune & Ors. reported in 2001(1) Mh.L.J. 638 : [2000(4) ALL MR 127]. In both the cases, it has been held that if on admitted or indisputable factual position only one conclusion is possible and permissible, the Court need not issue a writ merely because there is violation of principles of natural justice. 21. Mr. Dharmadhikari, learned counsel for petitioner while canvassing his contentions urged that present case is not such wherein only one conclusion is possible and permissible. In his submission, the petitioner has raised several debatable questions on which two views are possible. 22. In order to test the rival submissions advanced in this behalf, it is necessary to turn to the case of the respondent State of Maharashtra wherein the basic question for consideration raised is: whether the respondent no.5 VIDC was entitled to enter into an agreement for giving lease of fishing rights in respect of the tank in question after expiry of the original agreement on 30th June, 2002 in view of the promulgation of the VIDC Act. Further contention of the respondent no.1 is that Section 25 of the VIDC Act empowers the State Government to issue directions to the VIDC, both general and special, with respect to policy matter or for exercise of powers or performance of functions excepting in respect of levy and recovery of water charges by the VIDC and it further empowers the State Government to issue such directions which the State Government thinks necessary and expedient for carrying out the purpose of the Act and the VIDC is bound to follow and act as per the directions of the State Government. According to the respondent no.1 State in exercise of the said powers, respondent no.4 on 6.4.2000 issued directions which are incorporated in the last paragraph of the Government Resolution No.1296/14183/CR132/PDMM/13 dated 6.4.2000 by which all the tanks stood diverted and vested to the Fisheries Department. It is further pointed out that on 31.5.2001 an Ordinance was also promulgated, being Ordinance No.XVII of 2001 proposing to amend Section 19 of the VIDC Act and more Specifically Section 19(2)(d) thereof and that the Ordinance was in force till 31.11.2001 Consequently, it is contended that the Agreement dated 2.7.2001 in favour of the petitioner was absolutely illegal and void ab initio under Section 25 of the VIDC Act. It is further urged that in absence of renewal clause or clause granting extension in the agreements dated 21.8.1997 and 6.10.1998, agreement dated 2.7.2001 is nothing but a fresh contract for which the procedure, as prescribed in the Government Resolution of 1995, was not followed. Consequently, the contract entered into cannot create any right in favour of the petitioner as the same is a nullity and an action which is void ab initio. It is further submitted that communication dated 7.9.2001 was not issued by the Department of Fisheries, but it was issued by the Irrigation Department which was not competent to issue in respect of fishing right and that the said communication had no force in view of the Government Resolution dated 6.4.2000 and the Ordinance. It is, thus, contended that if initial action was itself void and contrary to law, its termination cannot be struck down only because principles of natural justice were not followed. It is further contended that the petitioner cannot contend that only because he was not properly heard the impugned order vitiates and is liable to be declared a nullity. It is, thus, contended that if initial action was itself void and contrary to law, its termination cannot be struck down only because principles of natural justice were not followed. It is further contended that the petitioner cannot contend that only because he was not properly heard the impugned order vitiates and is liable to be declared a nullity. 23. Mr. S. P. Dharmadhikari, learned counsel for petitioner urged that considering the contentions raised by the respondent no.1, intricate questions of law were required to be considered before resorting to the action of cancellation lease, by the Honourable Minister for Fisheries. Admittedly, neither the State Government nor the Department of Fisheries was party to the contract, in that view of the matter, the issue required to be addressed was whether Section 25 of the VIDC Act permits termination of contract entered into by VIDC and the State Government to which the State Government was not a party. 24. Mr. Dharmadhikari also urged that one of the important questions to be considered was, whether the Government itself having approved the proposal of granting extension to the contract of the petitioner and having invited the VIDC to take appropriate decision in that behalf, could it be said that the ultimate decision of granting extension by VIDC fell foul of the Government Resolution dated 6.4.2000. He also submitted that the Government Resolution dated 6.4.2000 could not have been applied to water reservoirs in question which has water spread of more than 5500 hectors. 25. Mr. Gilda, learned counsel appearing for the VIDC, surprisingly, sought to support the contentions raised by the petitioner and took the stand contrary to one taken by the State Government even though the State Government claims that VIDC is nothing but its third extended arm bound by the policy decisions of the State Government. In the present litigation, the VIDC has taken a stand just cutting the stand taken by the State Government contending that VIDC can take independent decisions on their own and that the State Government had no business to interfere with their decision making process. To what extent such stand is justified is also one of the questions requiring consideration. 26. Having recapitulated rival contentions, it is not in dispute that case at hand involves debatable questions, and they were required to be considered before order of cancellation of the agreement is passed. 27. To what extent such stand is justified is also one of the questions requiring consideration. 26. Having recapitulated rival contentions, it is not in dispute that case at hand involves debatable questions, and they were required to be considered before order of cancellation of the agreement is passed. 27. Having said so, it is well-known, in view of the decision of the Supreme Court in the case of The Regional Manager & Anr. Vs. Pawan Kumar Dubey ( AIR 1976 SC 1766 ) that one additional or different fact can make a world of difference between conclusions in two cases even when the same principles are applied in each case to similar facts. A distinction has to be borne in mind where a contract is terminated on the ground of violation of any conditions of contract and where such contract is terminated dehors the terms of contract. The Supreme Court in the case of Tata Cellular V s. Union of India reported in (1994)6 SCC 651 has laid down in para 94 parameters governing the judicial review. 28. The question as to whether the principles of natural justice if complied with would be rendered in futility or not cannot be judged by this Court. The writ petitioner has made an attempt before this Court to show that the purported reasons assigned by the respondent no. I in support of its action cancelling the agreement is non est in the eye of law. It is not necessary for this Court to go into the merit of such submission inasmuch as it is well known that non-compliance of principles of natural justice itself may cause prejudice to the petitioner. The question as to whether in a given situation compliance of the principles of natural justice would be impractical or not does not also fall for consideration in this petition as nothing has been shown in the facts of the case that it was impractical to give an opportunity of hearing. The question as to whether the principles of natural justice would be attracted or not depends upon facts and circumstances of each case. It has to be considered in circumstantial flexibility and situational fairness. 29. The facts of the present case clearly suggest that in the instant case the respondent No.1 wanted to comply with the principles of natural justice. 30. The contention of Mr. It has to be considered in circumstantial flexibility and situational fairness. 29. The facts of the present case clearly suggest that in the instant case the respondent No.1 wanted to comply with the principles of natural justice. 30. The contention of Mr. V. M. Deshpande is that principles of natural justice were not required to be followed, is without any substance in view of the factual matrix that the State Government very much desired to comply with the principles of natural justice. Had it not been so, no registered notice would have been issued to the petitioner calling upon him to appear for hearing before the Honourable Minister for Fisheries on 8.10.2002 at 03.00 p.m at Mumbai. 31. The notice itself was also inadequate. It was received by the petitioner on 8.10.2002 at Nagpur to appear for hearing before the Honourable Minister at Mumbai. It was humanly impossible for petitioner much less for anybody to reach Mumbai on the same day to attend hearing. The notice also did not contain any proposed reason for termination or cancellation of contract. It was expected on the part of the State Government to serve advance notice to give reasonable opportunity of appearing before it and to prima facie disclose reasons for the proposed action so as to enable the noticee to address the issue. In the instant case, neither show-cause notice containing reasons nor any advance notice was given. On the contrary, the notice itself was received by the petitioner at Nagpur on the very same day when the hearing was fixed at Mumbai. It is thus clear that the impugned action is clearly in breach of principles of natural justice. 32. Necessity to follow the principles of natural justice is one of the requirements flowing from the provisions of Article 14 of the Constitution of India. It is thus clear that the action of the State Government is arbitrary, since it failed to follow principles of natural justice. 33. In the case of Mahabir Auto Stores Vs. India Oil Corporation ( AIR 1990 SC 1031 ) the same question was considered. In that case the petitioner's firm was carrying on business of sale and distribution of lubricants for 18 years on the basis of suppfy being made by Indian Oil Corporation. Abruptly the supply of lubricants was stopped to the firm by the Indian Oil Corporation without any notice or intimation. In that case the petitioner's firm was carrying on business of sale and distribution of lubricants for 18 years on the basis of suppfy being made by Indian Oil Corporation. Abruptly the supply of lubricants was stopped to the firm by the Indian Oil Corporation without any notice or intimation. In that connection it was pointed out as follows: "In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi monopoly dealings, it should meet the test of Article 14 of the Constitution." 34. In connection with termination of the appointment of the District Government Counsel by the State Government of Uttar Pradesh the same question was considered by the Supreme Court in the case of Kumari Shrilekha Vidyarthi Vs. State of U.P. (1990)3 SCJ 336). "Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, can it be said that the State can thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more? We have no hesitation in saying that the personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract mere I because some contractual rights accrue to the other party in addition. We have no hesitation in saying that the personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract mere I because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot co-exist." (Emphasis added) It was further said : "We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. In our opinion it would be alien to the constitutional Scheme to accept the arguments of exclusion of article 14 in the contractual matters. The scope and permissible grounds of judicial review in such matter and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modem trend is also to examine the unreasonableness of a terms in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard from contracts between unequals." It was then said : "However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basis requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in additional thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of nonarbitrariness at the hands of the State in any of its actions." 35. This Court would, therefore, be well within its jurisdiction to hold and declare that the impugned action of the respondents is arbitrary and violative of Article 14 of the Constitution of India. The impugned order is also liable to be quashed and set aside for not following the principles of natural justice. 36. This Court would, therefore, be well within its jurisdiction to hold and declare that the impugned action of the respondents is arbitrary and violative of Article 14 of the Constitution of India. The impugned order is also liable to be quashed and set aside for not following the principles of natural justice. 36. In the above view of the matter, it is not necessary for us to advert to other questions raised in the petition and consider large number of citations pressed into service by rival parties. We keep all those rival contentions open. 37. For the foregoing reasons, this writ petition is allowed. Impugned order dated 8.10.2002 is quashed and set aside. However, it goes without saying that it would be open for the respondent no.1 to pass appropriate order after giving opportunity of being heard to the petitioner. But for any reason if the State Government decides not to exercise the said option, in that event, right of the petitioner as lessee shall automatically come to an end with the expiry of term on 30th June, 2007 and the fresh fishing rights shall be granted only by inviting fresh tenders in accordance with law. Rule is accordingly made absolute in terms of this order with no order as to costs. Petition allowed.