G. M. Sugars And Energy Pvt. Ltd. v. State of Karnataka, Rep. By The Secretary, To The Government, Commerce and Industries Department
2018-04-25
B.M.SHYAM PRASAD, DINESH MAHESHWARI
body2018
DigiLaw.ai
JUDGMENT : B.M. Shyam Prasad, J. 1. The appellant, who is the petitioner in W.P.No.56686/2017, filed such writ petition seeking, inter alia, quashing of the ‘Letter/Order dated 13.10.2015’ (which is issued by the first respondent withdrawing certain terms in dispute between the appellant and the third respondent and the ‘Letter/Order dated 03.11.2015’ (which is issued by the second respondent requiring the appellant and the third respondent to file compliance report in terms of the first respondent’s said ‘Letter/Order dated 13.10.2015’). The Writ Court, by the impugned order dated 03.04.2017, while disposing of the writ petition, has left open to the petitioner to avail of the other remedies permissible in accordance with law. Hence this appeal. 2. Brief statements of the respective cases of the appellant and the respondents are as follows: The appellant’s case: The appellant asserts that the appellant and the third respondent entered into the lease deed dated 18.02.2008, and in terms of thereof, the appellant took on lease the third respondent’s sugar factory. The appellant also asserts, referring to clause 46 of the lease deed, that they agreed to share the amounts payable to the third respondent’s employees under Voluntarily Retirement Scheme (VRS) Settlement in the ratio of 30:70 with the appellant paying 30% and the third respondent paying 70% of such cost of VRS; and to appellant advancing to the third respondent its share of 70% of the cost of VRS settlement on the condition that the appellant shall deduct 50% of the lease rent towards such advance from the 5th year of the lease and that appellant shall not be entitled to any interest on the amount so advanced. It is alleged that the appellant agreed to advance to the third respondent only because the appellant was made to believe that the cost of the VRS scheme was marginal, but, after noticing that the cost of VRS Settlement was substantially higher than the projected cost, the appellant desired to renege on its assurance to advance to the third Respondent the 70% of the cost of the VRS Settlement.
The appellant further alleges that when there were demands by the farmers and the employees of the third respondent for payment in terms of the VRS settlement, a minister of the State Government of Karnataka called for a meeting on 4.8.2008; and in such meeting, the appellant accepted to advance to the third respondent its cost of VRS and the third respondent agreed to pay to the appellant interest at the rate of 10% per annum on the amount advanced by the appellant. The appellant also alleges that despite consensus as aforementioned, the third respondent was not willing to pay interest at the rate of 10%, but, after correspondences over a period of over four years, the first respondent, by its Communication dated 16.03.2013 informed the second respondent that the first respondent had agreed to the proposal that the appellant shall be entitled to charge interest at the agreed rate of 10% and called upon the second respondent to finalize the modalities in that regard between appellant and third respondent; and that accordingly, a series of meetings were held in the year 2013 and when the modalities were accepted by the appellant and third respondent, the second respondent, by its communication dated 28.03.2013, requested the first respondent for permission to incorporate the terms of such modalities in the lease deed by way of amendment. The appellant contends that modalities so accepted by the appellant and the third respondent were indeed given effect to, but later, the first respondent, in violation of the principles of natural justice, issued the impugned ‘Letter/Order’ dated 13.10.2015 withdrawing the earlier direction to finalise the modalities vide its communication dated 16.03.2013, and subsequently, the second respondent caused the next impugned ‘Letter/Order‘ dated 03.11.2015 to the appellant and third respondent to file a compliance report.
The first and second respondents’ case: These respondents, the authorities, contend that the lease deed dated 18.02.2008 executed between the appellant and the third respondent specifically stipulates that the appellant shall not be entitled to interest on the amount advanced to the third respondent towards cost of the VRS Settlement; that the first respondent, even after the communications as per Annexure-G and H, vide communication dated 22.09.2014, had clarified that the lease deed could be amended only if there was consensus between the appellant and third respondent and without burden on the state exchequer in any manner; that the lease deed, which was finalised after the same was brought before the Board of the third respondent and permitted by the first respondent, was not amended; and that because of its financial status, the third respondent never had acceded to pay any interest to the appellant.
The third respondents’ case: The third Respondent, while raising preliminary objections as regards the maintainability of the petition on the ground that dispute between the appellant and the third respondent arose out of contractual obligations under the lease deed dated 18.02.2008, contended that the appellant cannot rely on the minutes of the meeting on 04.08.2008 as the Managing Director of the third respondent, who attended the meeting on 04.08.2008, did not have the power or authority to decide on altering or amending the terms of the lease deed without bringing it before the Board; that the communication dated 16.03.2013, which was issued on the basis of the minutes of meeting on 04.08.2008, did not have any official status; that the minister who participated in the meeting on 04.08.2008 had no authority to decide on the matters which were essentially contractual; that the third respondent always emphasised by its different communications, which are adverted to in the objection statement, that the third respondent had not agreed to any terms or modalities which were at variance with the lease deed; that contractual obligations between the appellant and the third respondent could not be altered by way of government orders; and that because of the third respondent’s repeated communication, the first respondent had, by its letter dated 22.09.2014, clarified that the terms of the lease deed should be amended only if there was a mutual agreement between the appellant and the third respondent; and further that all payments made by the appellants were received by the third respondent without acquiescing or conceding to any agreement or modalities in that regard The Writ Court while considering the rival contentions, formulated the questions, viz., as to whether the proceedings of the meeting dated 04.8.2008 would create any right in favour of the appellant by overriding the express terms of the lease deed; and whether the impugned ‘Letters/Orders dated 13.10.2015 and 13.11.2015’ would fall foul of such alleged agreement recorded as proceedings of the meeting.
The Writ Court, after considering the material on record, has opined that the proceedings of the meeting dated 04.08.2008, which referred to the alleged agreement to pay interest at the rate of 10%, did not translate into an agreement overriding the express terms of the lease deed because it was signed only by a minister of the State Government of Karnataka and not by the third respondent; and that the appellant cannot claim any right because of the proceedings of the Meeting on 04.08.2008 and the subsequent modalities because such alleged agreement was not incorporated in the lease deed by way of an amendment thereto,. The Writ Court, while taking note of the fact that the impugned ‘Letters/Orders dated 13.10.2015 and 13.11.2015’ were by the first and second respondents, who were not parties to the lease deed, has also opined that the rights claimed by the appellant would be in the context of an alleged contract between the appellant and the third respondent, and therefore, issuance of any notice by the first respondent before causing the impugned ‘Letters/Orders dated 13.10.2015 and 13.11.2015’ would have only been a formality and failure to issue notice to show cause before issuing the impugned ‘Letters/Orders dated 13.10.2015 and 13.11.2015’ would not be in violation of any right of the appellant. The Writ Court on those grounds has held that the challenge to the impugned ‘Letters/Orders dated 13.10.2015 and 13.11.2015’ should fail; but has left open to the appellant all available remedies in accordance with law while observing that all contentions as regards the inter se dispute between the appellant and the third respondent in relation to the terms of the lease deed or the performance of the terms were being left open and that any observation made in the course of the impugned order shall not prejudice any of the parties.
The learned Senior Counsel, Sri Ravivarma Kumar, appearing for the appellant, pivoted his canvass before this Court on the contention that the impugned ‘Letters/Orders dated 13.10.2015 and 13.11.2015’ will have to be read independent of the lease deed; and he emphasized that the appellant, who was induced to accept the obligations to pay the third respondent’s cost of VRS settlement on the false assurance that the amount required to be paid will not be substantial, had refused to advance any amount to the third respondent, but the third respondent, instead of invoking the arbitration clause contained in the lease deed, approached the authorities viz., the first and the second respondents who intervened, and it is under their aegis the alleged modalities requiring the appellant to advance the third respondent’s cost of VRS settlement and payment of interest was agreed. The learned Senior Counsel further canvassed that, but for the directive issued by the first respondent as per communication dated 16.3.2013 (Annexure – G), as an administrative action, the appellant would not have agreed to advance the amount and the appellant could not have been compelled to advance the amount to the third respondent unless there was final adjudication in arbitration; and therefore, the impugned ‘Letters/Orders dated 13.10.2015 and 13.11.2015’ issued for withdrawal of all the modalities, especially after they are acted upon, would be in the realm of administrative action, amenable to judicial review under Article 226 of the Constitution of India. The learned counsel for the respondents, in response, drew the attention of this Court to Clause 46 of the lease deed with specific emphasis on the agreed term that the advance made by the appellant to the third respondent towards its cost of VRS Scheme shall not bear any interest, and reiterated their defence before the Writ Court The question that arises for consideration before this Court is, as to whether on the facts and in the circumstances of this case, the Writ Court has erred in refusing to exercise of its jurisdiction under Article 226 of the Constitution of India?
The submission of the learned senior counsel for the appellant as regards the significance of the Communication dated 16.03.2013 (Annexure – G) and the subsequent alleged modalities worked out by the second respondent as per the Communication dated 28.03.2013 (Annexure – H), as possible administrative actions, will have to be examined in the background of the undisputed facts and circumstances. There is no dispute that the minutes of the proceedings on 04.08.2008 were not signed by the third respondent and that the second respondent by its communication dated 28.03.2013 (Annexure – H) -which is after the first respondent’s communication dated 16.03.2013 (Annexure – G) -only requested for permission to amend the lease deed to incorporate the modalities allegedly accepted by the appellant and the third respondent for payment of interest; and there is also no dispute about the fact that pursuant to this communication dated 28.03.2013, no permission was accorded by the first respondent to amend the lease deed and no amendment was made to the lease deed incorporating the terms of the allegedly accepted modalities. Further, there is also no dispute that the first respondent, even before the issuance of the impugned ‘Letters/Orders dated 13.10.2015 and 13.11.2015’ categorically stated in its later communication dated 22.9.2014 that the alleged modalities could be incorporated in the Lease Deed only if both appellant and the third respondent were at consensus as regard such terms and without any burden on the exchequer. The aforementioned undisputed facts establish that the intervention by the first and the second respondents was only to facilitate conciliation between the appellant and the third respondents and subject to the condition that the lease deed was amended by mutual consensus by the appellant and the third respondent, without any burden on the exchequer. It is indubitable that these undisputed facts do not clothe the appellant with any right, statutory or otherwise, as against the first and second respondents so as to examine the validity or permissibility of the impugned ‘letters/orders dated 13.10.2015 and 13.11.2015’ in the writ proceedings. Therefore, the Writ Court has rightly concluded that the appellant could not have urged any cause against the impugned “Letters/Orders’ dated 13.10.2015 and 03.11.2015’ or the first and second respondents asserting that these impugned ‘Letters/Orders’ were issued in violation of the principles of natural justice.
Therefore, the Writ Court has rightly concluded that the appellant could not have urged any cause against the impugned “Letters/Orders’ dated 13.10.2015 and 03.11.2015’ or the first and second respondents asserting that these impugned ‘Letters/Orders’ were issued in violation of the principles of natural justice. Insofar as the appellant’s cause against the third respondent on the assertion that the minutes of the meeting on 4.8.2008, later Communications dated 16.03.2013 and 28.03.2013 (Annexures – G & H) and the appellant’s conduct in making the advance to the third respondent or deducting a portion of the interest from the Rentals payable constitute a right in favour of the appellant against the third respondent, such cause, being inter se between the appellant and the third respondent, will have to be examined by the appropriate forum as provided for in the lease deed dated 18.02.2008. It is only in the aforesaid circumstances the Writ Court was not persuaded to hold that any right was created in favour of the appellant with the issuance of communication dated 16.03.2013 and 28.03.2013 as per Annexures – G & H or the subsequent conduct; and that even if the appellant could otherwise assert any right or obligation, it will have to be adjudicated between the appellant and the third respondent in the proceeding provided for under the lease deed dated 18.02.2008. For the aforesaid reasons, this Court is not persuaded to hold that the Writ Court erred in refusing to exercise writ jurisdiction under Article 226 of the Constitution of India in this matter while leaving it open for the petitioner to avail of the other remedies in accordance with law. Consequently, while reiterating the liberty and exceptions to the parties as reserved in the order impugned, this appeal is dismissed. No costs. The pending interlocutory application also stands disposed of.