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Madhya Pradesh High Court · body

2009 DIGILAW 1189 (MP)

Shivendra Singh v. State of M. P.

2009-10-09

K.K.LAHOTI, P.K.JAISWAL

body2009
ORDER Jaiswal, J. -- 1. Challenge in this writ petition is the order dated 27.8.2009 (Annexure P-19) passed by respondent No.2, whereby right to sell the fishes for the remaining period of contract is given to the respondent No.4. In the writ petition, the petitioner is seeking following reliefs: (i) A writ in the appropriate nature may kindly be issued to quash order dated 27.8.2009, contained in Annexure P-19, issued by respondent No.2; (ii) That a writ in the nature of mandamus may also be issued directing the respondents No.2 and 3 to permit the petitioner to execute the contract in terms of Annexure P-1 as he is doing since the date of execution of the said agreement uptill now; (iii) Any other relief flowing from the facts and circumstances of the case may please be awarded along with the costs of the proceedings to meet the larger interest of justice. 2. The factual position in a nutshell is as follows: 3. The respondent No.2 had invited tenders for fisheries rights from Ban Sagar Dam for the period of 5 years commencing from 2006-07 to 2010-11. The petitioner being the highest bidder, his bid was accepted and agreement to this effect was entered between the petitioner and respondent No.2 vide Annexure P-1 on 24.1.2007. 4. By the said agreement, the petitioner was entrusted with thee rights to sell the fishes of the Ban Sagar Dam for a period of five years with effect from 24.1.2007 to 15.6.2011. As per clause (1) of the agreement, at the time of submission of tender, the petitioner had submitted a bank draft of Rs.6.00 lacs and thereafter when the contract was awarded to him, on 24.1.2007 he submitted a demand draft ofRs.6.60 lacs. As perterms and conditions of the agreement, the petitioner was to deposit Rs.25.20 lacs for the year 2006-07, Rs.56.28 lacs for the year 2007-08, Rs.61.32 lacs for the year 2008-09, Rs.68.04 lacs for the year 2009-2010 and Rs.74.76 lacs for the year 2010-11. As per clause (3) of the agreement, the petitioner was required to deposit the security deposit, 25% of the annual value of the contract. 5. On 21.2.2007 the petitioner entered into an agreement with respondent No.4 and formed a joint venture-cum-partnership with him that they would do the business in the name and style of M/s. Ma Kali Enterprises. As per clause (3) of the agreement, the petitioner was required to deposit the security deposit, 25% of the annual value of the contract. 5. On 21.2.2007 the petitioner entered into an agreement with respondent No.4 and formed a joint venture-cum-partnership with him that they would do the business in the name and style of M/s. Ma Kali Enterprises. They also executed a partnership deed on 21.2.2007 (Annexure P-2). As per clause (2) the partnership shall commence on the 27th day of January 2007 and shall continue for a period of the terms and conditions of the contract dated 24.1.2007. As per clause (3) the capital of the firm shall be contributed by both the partners in an equal proportion and if during the continuation of contract any further capital is needed by the firm, both the partners shall contribute on such terms and conditions and in such shares as they may mutually agree upon. As per clause (7) every partner and his authorized representative shall have the right of access to the books of account maintained by the firm as also the right of either inspecting them or copying the whole or any portion of such books of account. As per clause (10) every partner shall have a right to take part in the conduct of the business. As per clause (11) every partner shall be entitled to 50% of the profits of the firm and shall also bear the loss, if any, in the same proportion. Clause 16 deals with the dispute and differences, if arises, between the partners. This clause provides a mode for settlement of disputes between the partners offim1, through arbitration which reads as under: "16. Any dispute or difference of opinion that may arise between the partners or their legal representatives or heirs with regard to this partnership agreement or to any other matter relating to the firm shall be referred to two arbitrators by common agreement of the partners. Where the arbitrators are themselves divided in opinion, the matter may further be referred to any umpire chosen by the said arbitrator. The decision of the arbitrator or umpire shall be final and binding on all the partners." 6. Where the arbitrators are themselves divided in opinion, the matter may further be referred to any umpire chosen by the said arbitrator. The decision of the arbitrator or umpire shall be final and binding on all the partners." 6. After executing a partnership deed, the petitioner submitted an application before the respondent No.2 on 12.3.2007 (Annexure R-1) seeking permission to permit him to execute the contract along with respondent No.4 Abhay Kumar Shaw with whom the petitioner executed a joint venture/partnership deed on 21.2.2007, in the name and style of M/s. Ma Kali Enterprises and said change be incorporated in the contract agreement. The respondent No.2 had accorded permission for the said change in the contract with the condition that all terms and conditions as stipulated in the contract agreement (Annexure P-l) shall be applicable to them. The respondent No.2 had further clarified that no further change in the structure of the firm shall, however, be permitted and passed an order on 5.4.2007 (Annexure R-2). 7. Thereafter on 5.4.2007 a supplementary agreement was executed by the respondent No.2 with the petitioner and his partner i.e. respondent No.4 vide Annexure R-3. 8. As per terms of the contract (Annexure P-1), an amount of Rs.56,07,000/- was required to be deposited as Bank Guarantee towards security. A joint Bank Guarantee was furnished by the petitioner along with respondent No.4 to the extent of Rs. 35 lacs to the Federation. The rest of the Bank Guarantee of Rs.21 lacs was to be submitted by the end of December, 2008. The petitioner was also called upon by the respondent No.2 Federation that if the Bank Guarantee of Rs. 56,07,000/- is not furnished afresh, the agreement would be cancelled. He was also called upon to furnish the Bank Guarantee of remaining amount within the stipulated period. It is also submitted that the respondent No.4, partner of the petitioner, stopped taking any interest in the matter. The petitioner on 20.6.2008 and 22.8.2008 wrote a letter asking him to submit the Bank Guarantee of Rs.56,07,000/- failing which the partnership would be terminated. Thereafter the petitioner sent a fax message on (Annexure P6) reiterating the same grievances and requested the respondent No.4 to furnish the bank guarantee of Rs.21.07 lacs. The petitioner on 20.6.2008 and 22.8.2008 wrote a letter asking him to submit the Bank Guarantee of Rs.56,07,000/- failing which the partnership would be terminated. Thereafter the petitioner sent a fax message on (Annexure P6) reiterating the same grievances and requested the respondent No.4 to furnish the bank guarantee of Rs.21.07 lacs. It is also pointed out that if the bank guarantee is not furnished within the stipulated period, the contract would be cancelled and the petitioner will have to incur huge loss. The petitioner also wrote a letter to the respondent No.2 Federation pointing out the above facts and also requested the said authority to issue necessary instructions so that he may submit the said Bank Guarantee and continue with the contract. On 5.1.2009, he received a letter (Annexur P-7) from the respondent No.2 Federation wherein it has been pointed out that the petitioner and his partner had furnished a Bank Guarantee of Rs.45.00 lacs in their individual name whereas they have to furnish the bank guarante of Rs.56.07 lacs in the name of firm and directed them to furnish a fresh Bank Guarantee ofRs.56.071acs in the name of M/s. Ma Kali Enterprises and if the same is not furnished within a period of 15 days, the action will be taken against the petitioner and respondent No.4. On receiving this letter, a legal notice was issued by the petitioner to the respondent No.4 and pointed out that if the Bank Guarantee is not furnished, the agreement dated 24.1.2007 would be cancelled and the Bank Guarantee of Rs.45,00,000/- already furnished would be forfeited. It is also pointed out by the petitioner that in spite of notice dated 5.1.2009 necessary Bank Guarantee towards security deposit amounting to Rs.56,07,000/- has not been furnished due to inaction on your part and in that event the agreement may be cancelled by the Federation and, therefore, the petitioner has no option but to cancel the partnership deed with immediate effect as period of six months has expired from notice dated 20.6.2008 and 22.8.2008. 9. On 28.1.2009 respondent No.2 Federation wrote a letter to M/s. Kali Enterprises stating therein that despite the repeated demands the bank guarantee is not being furnished. 9. On 28.1.2009 respondent No.2 Federation wrote a letter to M/s. Kali Enterprises stating therein that despite the repeated demands the bank guarantee is not being furnished. It is also stated that the respondent No.2 Federation is not concerned with the inter se dispute between the petitioner and respondent No.4 i.e. partners of petitioner firm M/s. Ma Kali Enterprises and contended that the Federation is concerned with the fisheries right which was awarded to them and wants that the work be done strictly as per terms and conditions of the contract. The security deposit in the shape of bank guarantee has not been furnished within a period of 30 days and thus they have violated the terms and conditions of the contract and granted a last opportunity to furnish the bank guarantee so that the contract may not be terminated, else the security deposit held by the respondent No.2 Federation would be forfeited and agreement would be terminated to. The respondent No.4 served a legal notice to the petitioner vide Annexure P-10 dated 17.3.2009 and stated that there is a gross violation of the partnership agreement as the petitioner is not allowing the constituted attorney of respondent No.4 to participate in the business nor he is permitting him to inspect the accounts book as per terms and conditions of the partnership deed and further stated that in such circumstances there is a dispute and difference between the petitioner and the respondent No.4 in running the partnership business and invoked clause 16 of the partnership deed (Annexure P-2) and suggested the name of two arbitrators and requested the petitioner to accord his consent for the appointment of proposed arbitrators. The petitioner immediately submitted his reply through registered AD on 18.4.2009 and intimated that both the proposed arbitrators are close friends of respondent No.4 and had a discussion with regard to the dispute with the petitioner and, therefore, he refused to accept the name of the above two proposed arbitrators and requested to suggest two new names failing which he will appoint two arbitrators to get the dispute decided in terms of clause (16) of the partnership deed. 11. 11. The respondent No.2 Federation who had earlier entered into an agreement with the petitioner for production of fishing in the reservoir of Bank Sagar Dam district Shahdol and later on at the request of petitioner permitted the change and constitution of partnership firm in the name and style of M/s. Ma Kali Enterprises, vide order dated 5.4.2007 and on the basis of the affidavit furnished by the petitioner and respondent No.4 jointly, passed an order and executed an agreement to the effect that the contract of fishing rights shall be deemed to be executed between M/s. Ma Kali Enterprises and respondent No.2 and modified the earlier contract and amended the agreement by holding that the agreement was deemed to have been executed by the petitioner and respondent No.4. It vide letter dated 13.7.2009 directed both the partners to appear before the Managing Director of the Federation on 21.7.2009 for settlement of their inter se dispute. On 21.7.2009 in absence of respondent No.4 the matter was adjourned to 3.8.2009 and thereafter for 17.8.2009. The respondent No.4 was not willing to remain present on 17.8.2009 and permitted his attorney to attend the meeting and on that day no meeting was held because the petitioner was not willing to sit with the attorney of respondent No.4. 12. Prior to 17.8.2009 the petitioner was called upon by the Federation vide letter No.235 dated 1.8.2009 to deposit the lease amount for the period 2009-2010, difference of security amount, the amount of arrears of seed and the rent of boats, etc. etc. amounting to Rs.27,77,010/-. On 11.8.2009 the petitioner alone deposited the said amount and sought permission to start the work so that the fishing operations may be done through the societies and wrote a letter to this effect which is evident from Annexure P-15 and P-16. 13. As per the agreement, the fishing is to be done through fishermen of the registered cooperative societies and for that tripartite agreement was executed by the petitioner with the registered fishing society i.e. Mrignayani Fishermen Cooperative Society through its President and also by the Regional Manager of the Federation on 13.8.2009 (Annexure P-17) for a period commencing from 16.8.2009 to 15.6.2010. As per terms and conditions of the said agreement the petitioner has to pay the necessary charges to the Fishermen Cooperative Society @ R.17/- per kg. As per terms and conditions of the said agreement the petitioner has to pay the necessary charges to the Fishermen Cooperative Society @ R.17/- per kg. after completion of necessary formalities as required under the terms of agreement dated 24.1.2007 (Annexure P-1), the work order was issued to the petitioner on 16.8.2009 vide Annexure P-18. After the receipt of work order, the petitioner started the work as per terms and conditions of the contract. 14. The petitioner after depositing the amount of Rs.27, 77,010/- had entered into an agreement with the registered Fishing Society. The said agreement was tripartite signed by the petitioner, President of Mrignayani Fishermen Cooperative Society and Regional Manager of the respondent No.2 Federation. The aforesaid action has not been challenged by the respondent No.4 by taking appropriate proceedings and the same has attained a finality. Thereafter all of a sudden, without any notice to the petitioner, the respondent No.2 issued an order dated 27.8.2009 by which he took a decision that the right to sell the fishes of the remaining period is given to respondent No.4. It is this action which is impugned in the writ petition. 15. In view of the fact that once the petitioner was permitted to carry out the contract w.e.f. 16.8.2009 vide Annexure P-18 which was never challenged by the respondent No.4, there was no question of awarding the contract for remaining period to respondent No.4. The said order has been challenged on the ground that the Federation is not concerned with the inter se dispute between the petitioner and respondent No.4 and was not having any right to take a decision to award contract for the remaining period in favour of respondent No.4 when there was no breach of any terms and conditions of the contract. It is also contended that the petitioner furnished the bank guarantee of Rs.21 lacs after cancelling the partnership deed with respondent No.4 and thereafter deposited a huge amount of Rs.27,77,010/- and the learned authority accepted these changes and permitted the petitioner to carry out the contract for the remaining period and issued an order to this effect on 16.8.2009 and thereafter all of a sudden at the instance of Minister, respondent No.2 Federation had taken a decision to award the contract for the remaining period in favour of respondent No.4 which is arbitrary. The said action of respondent No.4 which is at the behest of the Minister is arbitrary, unjust and per se illegal because the petitioner is neither a defaulter nor has committed any breach of the terms and conditions of the contract and the powers exercised by respondent No.2 is apparently in violation of Article 14 of the Constitution of India. 16. The respondents No.2 and 3 filed their return and made the following admissions in para 3, 6, 8 and 11 of the return which reads thus: "3. Iris adn1itted fact that the petitioner was successful bidder in respect of NIT issued by the answering respondents for the purpose of sale of fish from Ban Sagar Dam for the period from 2006-07 to 2010-2011. At that stage the petitioner himself volunteered to execute the contract as sole contractor, hence the answering respondent had duly executed the contract agreement (Annexure P-1) with the petitioner alone. It was only after having successfully obtained the contract that the petitioner found himself to be unable to deposit the requisite of security, Bank Guarantee, regular instalments against the cost of fish and also amounts to be deposited by the Contractor under different heads like fish seed stocking etc. Hence, thy petitioner himself had submitted an application before the Managing Director of the answering respondent on 12.3.2007 seeking permission to execute the contract with one Abhay Kumar Shaw, another partner having share capital of 50%. The name of the partnership firm was disclosed by the petitioner himself as M/s. Ma Kali Enterprises having its registered office at 34, Lake Road, Kolkata and Branch Office at Village Kuan, Tahsil Beohari, District Shahdol. Copy of the letter of request dated 12.3.2007 sent by the petitioner to the answering respondents is being annexed herewith as Annexure R-1. 6. That, at the time of agreement the petitioner had deposited Rs.6.30 lacs as annual Security Deposit and also an amount ofRs.6.30 lacs as against the first instalment of first year of the contract.