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2013 DIGILAW 664 (CAL)

UNION OF INDIA v. DBL ENTERPRISE

2013-09-10

ARUN MISHRA, JOYMALYA BAGCHI

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JUDGMENT As per Arun Mishra, C.J.: The appeal has been preferred by the appellants assailing the judgment and order dated 12.03.2013 passed by the Single Bench in W.P. No. 4724 (W) of 2013 setting aside the order passed on 16.01.2013. Direction has been issued to consider the case of the petitioner as provided in Circular No.12/06 passed by the Divisional Commercial manager/II. 2. The petitioner was granted a contract dated 29.12.2009 for leasing of parcel space in brake vans (front SLR 1st Compartment – 4 MT space in Train No. 3185, Ganga Sagar Express up from Sealdah to Jaynagar). Railways agreed to provide four tonnes parcel space to the leaseholder in 1st compartment of front brake van for transportation of parcel for a period of three years. Therefore, the agreement was to remain valid till 3.1.2013. 3. Clause 25 of the Agreement relates to extension of lease contract. Clause 25.1 provides that extension would be permissible in case of long term lease of three years on stipulated terms and conditions by enhancing the amount by 25%. 4. The petitioner prayed for extension on 27.11.2012. The Divisional Commercial Manager/II by letter dated 6.12.2012 rejected the prayer on the ground that as per guidelines of comprehensive parcel leasing policy the prayer could not be entertained. The order dated 6.12.2012 was successfully questioned in the writ petition filed by the writ petitioner, in which order was passed on 8.1.2013. The order dated 6.12.2012 was found to be unreasonable and direction was issued to the Divisional Commercial Manager to pass fresh reasoned order. 5. The Divisional Commercial Manager has passed the impugned order dated 16.1.2013 rejecting the prayer on the basis of guidelines contained in Circular No. 10/10 dated 27.7.2012. 6. The impugned order has been quashed by the Single Bench. Aggrieved thereby the intra-court appeal has been preferred by the appellants. 7. Admittedly, the agreement was executed in 2009. It was operative from 4.1.2010 to 3.1.2013. At the relevant time instructions contained in the Circular no. 12/06 was in vogue. 8. We have heard the learned counsel appearing on behalf of the parties. Mr. Banerjee, learned counsel appearing on behalf of the appellants submitted that earlier Circular of 12/06 cannot be said to be applicable in view of the fresh Circular no. 16/12 dated 27.7.2012. At the relevant time instructions contained in the Circular no. 12/06 was in vogue. 8. We have heard the learned counsel appearing on behalf of the parties. Mr. Banerjee, learned counsel appearing on behalf of the appellants submitted that earlier Circular of 12/06 cannot be said to be applicable in view of the fresh Circular no. 16/12 dated 27.7.2012. The learned counsel has further submitted that this Court has recently held in the case of Union of India & Ors. –vs- Esquire Express Courier Services & Anr. (G. A. 2080 of 2013) that extension cannot be claimed as a matter of right. Thus, the impugned order is bad in law. The learned counsel appearing on behalf of the respondent/writ petitioner has supported the order. He has submitted that Circular no. 12/06 is applicable which provided extension of lease. He has also relied upon the terms and conditions contained in clause 25 of the Agreement, which provided for extension in the case of three years long term lease. Thus, it was incumbent upon the respondents to have granted extension in terms of Circular no. 12/06 and the terms and conditions contained in the Agreement. It is clearly provided in the Circular no.16/12 dated 27.7.2012 that contracts which are in operation and agreement/contract has been signed prior to 1.6.2012, shall be governed by FM Circular no. 12/06. Thus, reliance as has been placed on the Circular no. 16/12 by the learned counsel appearing on behalf of the appellants, is misconceived and is not applicable. 9. After hearing the learned counsel for the parties, we are of the considered opinion that the appeal is liable to be dismissed for the various reasons. 10. Firstly, the Circular no. 16/12 dated 27.7.2012, which has been relied upon clearly mentions in paragraph 1(iii) that the contracts which are in operation and agreement/contract has been signed prior to 1.6.2012 shall be governed by FM Circular no. 12/06. There is no doubt about it as per Para 1(iv) that the zonal railways shall not extend/renew the contracts of existing leaseholders beyond the contractual period. However, this would not be applicable to the leases, which have been signed prior to 1.6.2012. The relevant provision of paragraphs 1(iii) and 1(iv) of Circular no. 12/06. There is no doubt about it as per Para 1(iv) that the zonal railways shall not extend/renew the contracts of existing leaseholders beyond the contractual period. However, this would not be applicable to the leases, which have been signed prior to 1.6.2012. The relevant provision of paragraphs 1(iii) and 1(iv) of Circular no. 16/12 dated 27.7.2012 read thus: “(iii) The contracts which are in operation and agreement/contract has been signed prior to 1.6.2012, shall be governed by FM Circular No.12 of 2006. Accordingly, Budgetary or any other increase in the tariff rates can not be made applicable during the currency of contractual period of leased traffic. (iv) The zonal railways shall not extend/renew the contracts of existing leaseholders beyond the contractual period. The zonal railways should initiate timely action and process for fresh tenders well before expiry of existing contracts to avoid extension of contracts.” 11. A bare reading of the aforesaid paragraphs clearly shows that reliance upon the Circular no.16/12 is misconceived and same is not applicable. The Agreement was singed prior to 1.6.2012. Thus, the submission that the railway shall not extend the contract of the existing leaseholders beyond the contractual period contained in paragraph (iv) is not applicable. The same would be applicable to a contract, which has been executed after 1.6.2012. 12. When we come to the Circular no.12/06 in paragraph 3 thereof, there is clear provision with respect to extension of lease. Relevant portion of paragraph 3 is quoted below: “3. These instructions will come into effect from 1.4.2006. Following provisions of this Comprehensive Leasing Policy will be applicable to existing leasing contracts also. i.(E) – Extension of Lease” In the Agreement also there is a provision of comprehensive parcel leasing policy, which was prevalent at the relevant time. In clause (E), it has been provided as follows : “(E) Extension of Lease: 1. Extension of lease is permissible only in case of long term lease of 3 years. 2. In case of Long Term Lease, on expiry of the contract period, the same can be extended only once, by 2 more years at a lease rate of 25% more than the lumpsum leased freight rate. 3. Such extension will be subject to satisfactory performance by the leaseholder, without any penalty for overloading or violation of any provision of the contract. 4. 3. Such extension will be subject to satisfactory performance by the leaseholder, without any penalty for overloading or violation of any provision of the contract. 4. In case of expiry of contract period and non-finalisation of new contract due to administrative delays, temporary extension can be permitted can be permitted by the CCM only once, for a period of 3 months.” 14. In Clause 25 of the Agreement in respect of extension to lease contract has been provided in clauses 25 and 25.1 which read thus: “25.0 Extension to Lease Contract. 25.1 Extension to lease is permissible only in case of long term lease of three years wherein the same can be extended only once by 2 (two) more years at a lease rate of 25% more than the lumpsum leased freight subject to satisfactory performance by the lease holders without any penalty for overloading or violation of any provision of the contract” 15. It is apparent from the aforesaid provisions that the rejection on the ground of extension is not permissible, is not sustainable. Extension has to be considered on the basis of satisfactory performance etc. by the leaseholder and on other aspects mentioned in clauses relating to extension. 16. The learned counsel appearing on behalf of the appellants has relied upon the decision of this Court in the case of Union of India & Ors. –vs- Esquire Express Courier Services & Anr. (supra) where we have observed that extension cannot be claimed as a matter of right. It is true that the aforesaid proposition cannot be disputed. However, extension cannot be denied arbitrarily on the basis that there is no provision for extension in the case. We find that the proposition laid down in the aforesaid decision is not applicable to the facts of the instant case. 17. Thus, we find no ground to interfere with the order passed by the Single Bench dismissing the writ petition. 18. Resultantly, the appeal being devoid of merit is hereby dismissed. Consequently, the application being C. A. N. 8841 of 2013 is also dismissed. There will be no order as to costs. 19. Three weeks’ time is granted to the appellants to comply with the order passed by the Single Bench. Joymalya Bagchi, J.: I agree.