Research › Search › Judgment

Madhya Pradesh High Court · body

2007 DIGILAW 352 (MP)

Mahanagar Safai Kamgar, Kalyan Sahkari Samiti Maryadit v. Municipal Corporation, Jabalpur

2007-03-23

ABHAY M.NAIK

body2007
ORDER Abhay M. Naik, J. 1. Petitioner is co-operative society and was granted contract of cleaning and sanitation by the Municipal Corporation, Jabalpur. Two different agreements were duly executed on 27-4-2006 for Zone No. 1 and Zone No. 2 on the basis approval by Mayor in Council which are contained in Annexures P/5 and P-6. Certain Committees were formed for inspection and keeping checks on the work of petitioner. The work order contained in Annexure P-7 was accordingly issued and the petitioner commenced its work on 1-5-2006. It has been stated by the petitioner that the work undertaken by the petitioner society was being discharged in satisfactory manner. Satisfaction reports were submitted from time to time and the bills of the petitioner were also cleared from time to time upto 12-10-2006. The next bill was presented on 13-10-2006 and same was objected to on various grounds. On enquiry certain deficiencies were found and a deduction of Rs. 10,000/- was made from the bills of both the zones. On 28-10-2006 a show cause notice was issued by the respondents Corporation that a surprise inspection was made on 16-10-2006 and it was found that the cleanliness was not upto the mark and insecticides and pesticides were not properly spread. Petitioner sent a reply that the inspection was made behind the back and the particulars of location where the work was not found satisfactory were not disclosed in the notice. Show cause notice and its reply are on record as Annexures P-10 and P-l 1. Two more show cause notices dated 13-11-2006 marked as Annexures P-12 and P-13 were also served on the petitioner that why the contract be not cancelled and allotted to any other agency. Petitioner submitted its reply refuting thereby the allegations levelled against it. A period of 15 days was sought to submit a detailed reply, after obtaining the complete report regarding shortcomings. It has been further stated in the petition that while the petitioner society was awaiting the information sought by it under Right to Information Act, 2005, it was served with the impugned order dated 23-11-2006 that the reply of the society to the show cause notice dated 28-10-2006 was not found satisfactory. Yet another inspection was conducted on 7-11-2006 and the work of the petitioner society was again not found upto the mark. Yet another inspection was conducted on 7-11-2006 and the work of the petitioner society was again not found upto the mark. There was lack of human resources and physical equipments and consequently, a notice dated 14-11-2006 was issued to the effect that why the contract be not terminated. Ultimately, the contract in favour of the petitioner was terminated vide the impugned order dated 23-11-2006 contained in Annexure P-l which is assailed in the present writ petition. 2. Respondents vide their reply stated that the petitioner was not performing the work under the contract in a satisfactory manner and various complaints were received regarding non-clearance of waste, garbage and drains. Such waste and garbage were being spread all over the road by animals. The entire vicinity of Zone Nos. 3 and 6 was stinking with dirty odour and the public in general were facing great inconvenience. The insecticides and pesticides were not spread regularly giving rise to various diseases like Chicken Gunea, Malaria etc. Various show cause notices were issued from time to time but the petitioner society failed to perform the work in accordance with the terms and conditions of the contract. Petitioner was required to submit the certified report to the Divisional Officer/Chief Health Inspector in a daily routine manner which was not observed. Despite show cause notice, the petitioner failed to improve his work and remove the shortcomings. It has been provided in the contract itself that in case, the work of the contractor is not found satisfactory or he commits default by violating any of the terms and conditions of the contract agreement, the contract would be terminated at any time and would be given to some other agency. As a preliminary objection, the respondents raised a plea that the matter being contractual one, the same is not entertainable in writ jurisdiction. In support of the plea contained in the return, the respondents submitted various complaints and documents running in about more than 100 pages. Thus, the respondents stated that the petition has no merits and is liable to be dismissed. 3. An application for intervention has been submitted by Mahatma Gandhi Safai Kamgar Sahkari Samiti Maryadit and Dr. Bhimrao Ambedkar Safai Kamgar Sahkari Samiti Maryadit. Thus, the respondents stated that the petition has no merits and is liable to be dismissed. 3. An application for intervention has been submitted by Mahatma Gandhi Safai Kamgar Sahkari Samiti Maryadit and Dr. Bhimrao Ambedkar Safai Kamgar Sahkari Samiti Maryadit. It is stated by the intervenors that after termination of the contract they have been awarded the work of cleaning and sanitation on temporary basis and they are carrying out the work in place of petitioner society. It is therefore prayed by them that they may be heard before any order is passed in the present writ petition, since, adverse decision would affect the interest of the intervenor. They reserved their right to file a detailed reply/return in case, if, they are permitted to intervene. Intervenors, too, submitted about 400 papers in order to support the termination of the contract. 4. I would first like to take up for consideration the application for intervention. It is a trite law that an intervention may be permitted either to support or oppose the petition and no positive relief may be claimed by the intervenor in its favour. Accordingly, the fact that the intervenors have been awarded the work of cleaning and sanitation after termination of the contract with the petitioner is not a valid and sufficient ground to allow the intervention. However, the petition is related to the cleaning and sanitation of the city of Jabalpur and involves an important issue of the interest of public at large. This Court permitted Shri N. S. Kale, learned Senior Counsel to address this Court on the issues involved in the petition without allowing the intervenors to submit reply/return with an expectation that his submissions would assist this Court in rendering the decision. Application for intervention, accordingly, stands disposed of. 5. Shri Shashank Shekhar, learned counsel for the petitioner contended that a sanitation contracts for Zone Nos. 3 and 6 within the limits of Municipal Corporation, Jabalpur were entered into on 27-4-2006 between the petitioner and Respondent No. 1. Agreements are on record as Annexures P-5 and P-6. Application for intervention, accordingly, stands disposed of. 5. Shri Shashank Shekhar, learned counsel for the petitioner contended that a sanitation contracts for Zone Nos. 3 and 6 within the limits of Municipal Corporation, Jabalpur were entered into on 27-4-2006 between the petitioner and Respondent No. 1. Agreements are on record as Annexures P-5 and P-6. Payments were to be made on monthly basis only after submission of satisfaction certificate issued by the Chief Health Inspector which was to be preceded by the report of satisfaction submitted by the petitioner Society on daily basis in the light of Panchanama of satisfaction from Councillor of the Ward and local residents of the respective beats. Payments were released up to October, 2006 without any hindrance. However, surprise inspections are stated to have been made on 16-10-2006 and 7-11-2006 behind the back of the petitioner and without any notice. The representations were made available to the petitioner and the alleged shortcomings were not pointed out to it, Certain show cause notices were issued to the petitioner alleging that its work was not found satisfactory. The notices were duly replied but Respondent No. 1 did not feel satisfied and terminated the agreements vide Order dated 23-11-2006 contained in Annexure P-l. Relying upon Clause 47 it has been contended by learned counsel Shri Shekhar Sharma that a penalty was liable to be imposed for unsatisfactory work. The alleged complaints received against the petitioner were not forwarded to it. A Committee was formed under Clauses 6 and 7 of the agreement to lookafter the work of the petitioner Society. Petitioner was not in receipt of any complaint either from the said Committee or from the private individuals. Thus, the impugned action of termination of the contract vide Annexure P-l has been challenged on the ground of mala fides. Moreover, the impugned order Annexure P-l having been passed by the Commissioner of the Municipal Corporation himself, a right to prefer appeal against the order of Commissioner under Clause 27 of Annexure P-6 is taken away which establishes arbitrariness in addition to mala fides. The show cause notice dated 28-10-2006 (Annexure P-10) terminated into fine of Rs. 10,000/- for each zone. Clause-20 of the sanitation agreement (Annexure P-6) empowered the Municipal Corporation, Jabalpur and not Municipal Commissioner to terminate the sanitation contract. The show cause notice dated 28-10-2006 (Annexure P-10) terminated into fine of Rs. 10,000/- for each zone. Clause-20 of the sanitation agreement (Annexure P-6) empowered the Municipal Corporation, Jabalpur and not Municipal Commissioner to terminate the sanitation contract. The impugned order is also hit by Section 73 read with Rules 3 and 4 of The M. P. Municipal Corporation (Financial Powers of Authorities and Contract) Rules 1994. It has been further contended that the sanitation work has been awarded to Dr. Bheemrao Ambedkar Safai Kamgar Shahkari Samiti without following the process of inviting contracts for the sanitation purposes. The petitioner was performing the work in a satisfactory manner. However, Respondent No. 3 (who joined as Municipal Commissioner) terminated the sanitation contract in an arbitrary, illegal and mala fide manner with ulterior motive. He awarded the contract on ad hoc basis to the intervenor (Dr. Bheemrao Ambedkar Safai Kamgar Shahkari Samiti) without following the due process. The alleged complaints against the petitioner's work were concocted and far from the reality. The petitioner has not committed breach of contract and the sanitation contract awarded to it cannot be legally terminated in the impugned manner. The impugned order is vitiated due to mala fides, arbitrariness and favouritism. It is clearly violative of Article 14 of the Constitution of India. 6. Reliance has been placed on the decisions in the cases of Noble Resources Ltd. v. State of Orissa and Anr. AIR 2006 SCW 5408 , Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. (2004)4 SCC 19 , State of U.P. and Anr. v. Johari Mai, (2004)4 SCC 714 , Asia Foundation and Construction Ltd. v. Trafalgar House Construction (I) Ltd. and Ors. (1997)1 SCC 738 , Surjit Ghosh v. Chairman and Managing Director, United Commercial Bank and others, AIR 1995 SC 1053 , ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Ltd. and Ors. (2004)3 SCC 553 , Surendra Gupta v. Bhagwan Devi (Smt.) and another, (1994)4 SCC 651 and Director of School Education and Anr. v. A. N. Kandaswamy and another, (1998)8 SCC 26 . v. Export Credit Guarantee Corporation of India Ltd. and Ors. (2004)3 SCC 553 , Surendra Gupta v. Bhagwan Devi (Smt.) and another, (1994)4 SCC 651 and Director of School Education and Anr. v. A. N. Kandaswamy and another, (1998)8 SCC 26 . Crux of the aforesaid decisions is that even in contractual matters a remedy in the nature of writ petition may be invoked and that the State (obviously, inclusive of Municipal Corporation) is bound to act fairly in consonance with Article 14 of the Constitution of India without arbitrariness and mala fides. 7. Shri N.S. Kale, learned senior counsel with Shri Shailendra Verma, Counsel contended that the petitioner was unable to perform his part under the sanitation contract. The work awarded to the petitioner was highly important in as much as it involved sanitation of the concerning area and failure on the part of the petitioner was likely to give rise to epidemic diseases. Petitioner's failure to execute work is reflected from the petitioner's own documents. Considering it, the contract was rightly terminated. The intervenors submitted various documents whose authenticity and relevancy has not been disputed by the petitioner. Consequently, the documents placed on record by the intervenors have also been taken into consideration by this Court. Such documents are plenty in number. On perusal of them, it is found that various complaints were made against the unsatisfactory work of the petitioner. They all go to show that the petitioner was not executing the work in satisfactory manner. Authors of these documents (complainant therein) were not having any grudge against the petitioner. No such specific case has been made out by the petitioner. An objection has been raised in the light of the Supreme Court decision in the case of State of Gujarat and Ors. v. Meghji Pethraj Shah Charitable Trust and Ors. (1994)3 SCC 552 that the writ petition in the light of termination of contract is not maintainable. Hon'ble Supreme Court in the said case observed: We are unable to see any substance in the argument that the termination of arrangement without observing the principle of natural justice (audi alteram partem) is void. The termination is not a quasi-judicial act by any stretch of imagination; hence it was not necessary to observe the principles of natural justice. It is not also an executive or administrative act to attract the duty to act fairly. The termination is not a quasi-judicial act by any stretch of imagination; hence it was not necessary to observe the principles of natural justice. It is not also an executive or administrative act to attract the duty to act fairly. It was - as has been repeatedly urged by Shri Ramaswamy a matter governed by a contract/agreement between the parties. If the matter is governed by a contract, the writ petition is not maintainable since it is a public law remedy and is not available in private law field, e.g., where the matter is governed by a non-statutory contract. Be that as it may, in view of our opinion on the main question, it is not necessary to pursue this reasoning further. 8. I am not impressed with the applicability of the aforesaid preposition in the present case because the dispute relates to sanitation contract and the Municipal Corporation is duty bound to make an arrangement for the same. A long drawn litigation in such disputes would definitely cause inconvenience and irreparable injury to the local residents. 9. A decision to terminate the contract involved herein is obviously an administrative decision and not a quasi-judicial one. Such a right would flow from the terms and conditions of the contract itself. Hon'ble Supreme Court of India in the case of M/s Radhakrishna Agarwal and Ors. v. State of Bihar and Ors. (1977)3 SCC 457 has held: When a contract is sought to be terminated by the Officers of the State, purporting to act under the terms of an agreement between parties, such action is not taken in purported exercise of a statutory power at all." It has been further held in paragraph-25 that: 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. When the Municipal Corporation entered into an agreement with the petitioner about management of sanitation, obviously the rights of the parties inter se are governed by terms of contract and not by statutory provisions. I may successfully refer on this point to the Supreme Court decision in the case of Bareilly Development Authority and Anr. v. Ajay Pal Singh and others, AIR 1989 SC 1076 . 10. I may successfully refer on this point to the Supreme Court decision in the case of Bareilly Development Authority and Anr. v. Ajay Pal Singh and others, AIR 1989 SC 1076 . 10. Shri Shekhar Sharma learned counsel mainly contended that the impugned order of termination has been passed without affording an opportunity. The petitioner was never apprised of its shortcomings either by the respondents or by the Committee constituted for the purpose of supervision. The petitioner could have been saddled with fine and the termination of contract having been ordered with ulterior motive is not sustainable in law. The petitioner was executing the contract in a satisfactory manner and the objection raised by the respondents were totally vague and arbitrary. No complaints with exactness were made available to the petitioner. The Municipal Corporation had no power to terminate the contract in the impugned manner. Relying upon the decisions rendered by Hon'ble Supreme Court in the cases of Noble Resources Ltd. v. State of Orissa and Anr. AIR 2006 SCW 5408 , Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. (2004)4 SCC 19 , State of U. P. and Anr. v. Johri Mai, (2004)4 SCC 714 , Asia Foundation and Construction Ltd. v. Trafalgar House Construction (I) Ltd. and Ors. (1997)1 SCC 738 it has been contended that the Municipal Corporation is under an obligation to act fairly and a power of judicial review is available with the Court to prevent arbitrariness or favouritism, moreso, when there are allegations about malice or ulterior motive. In the light of Tata Cellular v. Union of India, (1994)6 SCC 651 it has been further contended that decision making process in the matter of termination of contract may be scrutinised in exercise of powers of judicial review and the impugned decision being in contravention of Article 14 of the Constitution of India is liable to be quashed. Lastly, it has been contended that the impugned order having been made by the Municipal Commissioner himself, the right of appeal available to the petitioner under the contract is frustrated. Hence, the impugned order is not sustainable in law. 11. At this juncture it is necessary to refer to the relevant provisions of the contract. The agreements are contained in Annexure P-5 and P-6 of the writ petition. Hence, the impugned order is not sustainable in law. 11. At this juncture it is necessary to refer to the relevant provisions of the contract. The agreements are contained in Annexure P-5 and P-6 of the writ petition. Learned counsel for the petitioner referred to Clause 16 of Annexure P-6 which lays down that in case, if, an irregularity is found, the same would be informed in writing to the petitioner who after such receipt would take necessary steps. Clause 17 of Annexure P-6 empowers the respondents to make deduction of additional cost incurred by them in getting the work done in case, if, the work performed by the petitioner is not found either satisfactory or as per settled norms. Clause 20 empowers Respondent No. 1 to cancel the contract in case, if, the work of the petitioner is not satisfactory or in case of contravention of terms and conditions of the contract and further to get the work done at the cost and risk of the petitioner from outside agency. In such a case, the security amount would also be liable to be forfeited. Clause 27 provides a forum of appeal before Commissioner, Municipal Corporation against the recommendations of the Committee which is liable to be constituted for monitoring/supervising the work of the petitioner. 12. The contracts contained in Annexures P-5 and P-6 are not statutory contracts, but are in the nature of Commercial Contract. Municipal Corporation, Jabalpur having been established under the Municipal Corporation Act, 1956 is obviously expected and required to act in a fair manner and cannot be permitted to act in an illegal or arbitrary manner and ought not to be actuated by malice, mala fides or ulterior motives. 13. In the present case, it has been contended by the petitioner that the sanitation work was being performed satisfactorily in an efficient manner. This has been refuted by the respondent on oath. Various complaints were filed by different persons and the petitioner was also served with various notices with regard to unsatisfactory work of sanitation which is revealed in number of documents annexed to the return. In the report as well as notices issued from time to time objections were taken by the respondents that the contract of sanitation was not being executed effectively. In the inspection made on various occasions by the Corporators, Health Officer, Municipal Commissioner etc. In the report as well as notices issued from time to time objections were taken by the respondents that the contract of sanitation was not being executed effectively. In the inspection made on various occasions by the Corporators, Health Officer, Municipal Commissioner etc. various defects were found in the work of sanitation. Although, the petitioner has been throughout contending that the contract of sanitation was being properly performed, but the same having become disputed questions of fact cannot be investigated in writ jurisdiction. It can only be resolved by recording evidence. This, being so, this Court in exercise of the writ jurisdiction would not be able to give any finding about the same. 14. As regards, the power to terminate the contract, the same is found to be available with the Municipal Corporation by virtue of Clause-20. The contracts Annexures P-5 and P-6 were executed by the Commissioner of Municipal Corporation, Jabalpur who is found to have an authority to terminate the contract by virtue of Clause-20. 15. Contention of the petitioner is that the impugned order of termination is opposed to the principles of natural justice and having been passed without providing an opportunity of hearing, is bad in law. Except general allegations, the petitioner has failed to aver in a demonstrative manner specific instances about malice or mala fides. Hon'ble Supreme Court of India in the case of Union of India and Anr. v. W. N. Chadha, 1993 Supp (4) SCC 260 has held that: The application of audi alteram partem rule is excluded in the cases where nothing unfair can be inferred by not affording an opportunity to present and meet a case. This rule cannot be applied to defeat the ends of justice or to make the law "lifeless, absurd, stultifying and self-defeating or plainly contrary to the common sense of the situation" and this rule may be jettisoned in very exceptional circumstances where compulsive necessity so demands. In the present case, the dispute relates to sanitation contract in respect of the prime urban area of city of Jabalpur. The complaint was about nonperformance of the contract of sanitation which was giving rise to dirtiness and uncleanliness of the area resulting into spreading up of epidemic diseases. It was obviously causing great injury and inconvenience to the residents at large. 16. The complaint was about nonperformance of the contract of sanitation which was giving rise to dirtiness and uncleanliness of the area resulting into spreading up of epidemic diseases. It was obviously causing great injury and inconvenience to the residents at large. 16. As regards failure on the part of respondents to observe the rules of natural justice, observation of the Hon'ble Supreme Court in the case of S. N. Mukherjee v. Union of India, (1990)4 SCC 594 are much relevant. It has been observed: The object underlying the rules of natural justice "is to prevent miscarriage of justice" and secure "fair play in action". As pointed out earlier the requirement about recording of reasons for its decision by an administrative authority exercising quasi-judicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of fairness in the process of decision making. Keeping in view the expanding horizon of the principles of natural justice, we are of the opinion, that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities. The rules of natural justice are not embodied rules. The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the administrative authorities. Hon'ble Supreme Court has further held that: An exclusion of the rules of natural justice can also arise by necessary implication from the nature of the subject-matter, the scheme and the provisions of the enactment. The public interest underlying such a provision would outweigh the salutary purpose served by the requirement to record the reasons. The said requirement cannot, therefore, be insisted upon in such a case. 17. In view of the aforesaid, I observe that the principles of natural justice under strict sense are not applicable in the present case because of involvement of execution of sanitation contract which was provided for the benefit of the public at large and failure to perform the same would obviously be injurious to the public at large. Hon'ble Supreme Court further in the case of State of Maharashtra and Ors. v. Jalgaon Municipal Council and Ors. Hon'ble Supreme Court further in the case of State of Maharashtra and Ors. v. Jalgaon Municipal Council and Ors. (2003)9 SCC 731 has held: The caution of associating rules of natural justice with the flavour of flexibilities would not permit the Courts applying different standards of procedural justice in different cases depending on the whims or personal philosophy of the decision-maker. The basic principles remain the same; they are to be moulded in their application to suit the peculiar situations of a given case, for the variety and complexity of situations defies narration. That is flexibility. Some of the relevant factors which enter the judicial process of thinking for determining the extent of moulding the nature and scope of fair hearing and may reach to the extent of right to hearing being excluded are: (i) the nature of the subject-matter, and (ii) exceptional situations. Such exceptionality may be spelled out by (i) the need to take urgent action for safeguarding public health or safety or public interest, (ii) the absence of legitimate expectation, (iii) by refusal of remedies in discretion (iv) doctrine of pleasure such as the power to dismiss an employee at pleasure, and (v) express legislation. There is also a situation which Prof. Wade and Forsyth term as "dubious doctrine" that right to a fair hearing may stand excluded where the Court forms an opinion that a hearing would make no difference. Utter caution is needed before bringing the last exception into play. In the present case, it is obvious that the element of public health, safety and public interest are highly involved and it is the duty of the Court of law to safeguard them. 18. Considering the involvement of these elements, I am of the considered opinion that the notices served upon the petitioner were sufficient, and the termination of the contract is not vitiated due to the alleged violation of principles of natural justice. It is also not vitiated due to the alleged mala fides, arbitrariness, malice or ulterior motive. 19. This Court also records its satisfaction and expresses thanks to the learned senior advocate Mr. N.S. Kale for rising to his usual heights by confining his submissions to the issues involved in the petition without mixing up with them the interest of his clients. 20. In the result, the petition is without any merits and is hereby dismissed. However, without order as to costs. N.S. Kale for rising to his usual heights by confining his submissions to the issues involved in the petition without mixing up with them the interest of his clients. 20. In the result, the petition is without any merits and is hereby dismissed. However, without order as to costs. Petition dismissed.