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2022 DIGILAW 481 (CHH)

Moon Caterers v. State of Chhattisgarh

2022-11-03

ARUP KUMAR GOSWAMI, DEEPAK KUMAR TIWARI

body2022
ORDER : 1. By this Writ Petition filed under Article 226 of the Constitution of India the petitioner has questioned the propriety and correctness of the impugned letter dated 15.7.2022 issued by respondent No. 2 whereby the respondent authority has terminated the Licence Agreement executed on 6th July, 2021 between the petitioner and Raipur Smart City Limited (for short ‘RSCL’) and forfeited the performance bank guarantee amounting to Rs. 7,56,000/- and the petitioner was directed to pay the balance license fee of Rs. 2,97,345/-. 2. Facts of the case are that respondent No. 2 invited proposals by its request dated 17.12.2020 for selection of bidders to design, development, implementation, operation and maintenance of Smart Parking Management at Multi Level Car Parking (MLCP) located at EAC Colony in Raipur on annual liense fee basis. The petitioner is having vast experience in the field of Car/Motor Cycle Parking Management in Chhattisgarh. The petitioner is successfully operating many other parking spots at different area of Raipur. The petitioner has participated in the process and on the basis of documents submitted by the petitioner as also looking to his experience, the petitioner was declared L-1 and subsequently, the petitioner was declared as successful bidder for the said project. 3. An agreement was executed between the parties on 6.7.2021. The period of said license was Five Years, as agreed by the parties, which was to be extendable for another term of 5 years at the sole discretion of the competent authority. The annual license fee fixed by the respondent authority is Rs. 15,11,926/-. The said License fee was to be paid in two installments i.e. the first installment to be paid within 30 days of issuance of LoA and before the agreement is signed and the second installment to be paid before completion of 15 days of three months from the effective date. The petitioner has duly submitted TDR dated 21.5.2021 for a value equivalent to six months of quoted annual license fee of the highest bidder i.e. Rs. 7,56,000/- towards performance security. On fulfilling the conditions enumerated in the agreement and after payment of first installment, the work order was issued to the petitioner on 13.9.2021 to operate maintenance of Smart Parking Management at Multi Level Car Parking. 4. 7,56,000/- towards performance security. On fulfilling the conditions enumerated in the agreement and after payment of first installment, the work order was issued to the petitioner on 13.9.2021 to operate maintenance of Smart Parking Management at Multi Level Car Parking. 4. It is stated that the Collector has failed to pay the parking fee to the petitioner for the vehicles parked under the passes issued by him to the employees of Collectorate, Police, Zila Panchayat and the employees of other departments. Since the Collector has issued 800 such passes for the employees, he is under an obligation to pay parking fee on their behalf, however, he failed to pay the fee. So, the petitioner moved a representation to the Collector on 25.11.2021, which has not been decided so far. It is also stated that respondent No. 2 has not paid the Electricity Bill, which was due with the CSPDCL of the period when the Multi Level Parking was under construction. The petitioner has duly apprised the respondent No. 2 about payment of electricity bill of Rs. 5,01,686/- failing which the electricity connection would be disconnected, however, till date the respondent authority has not paid the electricity bill. It is further stated that the petitioner has been regularly submitting demand draft for payment of installment and the GST, which has not been presented by them in the Bank, which has resulted in expiry of the period. The petitioner moved a representation informing the authorities about the delay, however, the respondent authorities have failed to take note of it and maligned the image of the petitioner as defaulter. 5. It is further stated that in spite of above difficulties being faced by the petitioner, all of a sudden, the respondent No. 2 issued the impugned letter whereby the respondent authority has terminated the License Agreement executed on 6th July, 2021 between the petitioner and the Raipur Smart City Limited on the ground of inappropriate use of parking premises as also the fact that the Istgasa No. 190/193/22 was registered on 10.7.2022 in pursuance of the complaint made regarding causing of nuisance in the public area within the premises of MLCP located at EAC colony in Raipur. 6. Learned counsel for the petitioner would submit that the respondent authorities have violated the principle of natural justice and no opportunity of hearing was accorded to the petitioner before issuance of the impugned termination letter. 6. Learned counsel for the petitioner would submit that the respondent authorities have violated the principle of natural justice and no opportunity of hearing was accorded to the petitioner before issuance of the impugned termination letter. The conduct of the respondent authority is arbitrary, irrational and unjust. The Istgasa No. 190/193/22 registered on 10.7.2022 mentioned in the impugned letter is only for maintenance of peace and the same is under investigation. It is stated that the reasons assigned and the clauses invoked in the impugned order for terminating the License Agreement are contrary to each other. Hence the petitioner prays to quash the impugned letter dated 15.7.2022, and also seeks a direction to the respondent authorities to permit him to complete the work order for the term specified in the agreement, as also for refund of an amount of Rs. 7,56,000/- (Performance Bank Guarantee), which was forfeited by the respondent authority by the impugned letter. 7. The respondent No. 2 in his reply has submitted that the agreement itself contains Article-6 which relates to Dispute Resolution and which disentitles the petitioner to raise the instant dispute directly before the High Court. Thus the instant petition deserves to be dismissed summarily on this count alone. As regards the contention of the petitioner that one incident of goat slaughter had taken place outside the premises, it was submitted that the petitioner is trying to impress that only the constructed area is covered under the license agreement and, therefore, the alleged activity was outside the leased premises. The stand taken by the petitioner is incorrect inasmuch as the area leased out to the petitioner under the agreement is the constructed area, which is a multi level parking as well as the surrounding open areas which are meant for parking of two wheeler and also comprises of surrounding roads. A Pen Drive and photograph have been filed to demonstrate that a goat was not only being slaughtered in the open parking area but also a goat was tied inside the constructed multi level parking area. The illegal activity of the petitioner triggered a law and order situation and the local police also took cognizance of the matter. Two Istgasas were registered on 10.7.2022 and 11.7.2022. The illegal activity of the petitioner triggered a law and order situation and the local police also took cognizance of the matter. Two Istgasas were registered on 10.7.2022 and 11.7.2022. In furtherance of these Istgasas, a letter was also addressed by the local police on 12.7.2022 informing the entire incident and that the petitioner and two other persons have been lodged in jail. After the action of police authorities, the District Administration and the authorities of Municipal Corporation also swung into action and a team of six Senior Officers visited the place of occurrence and prepared the joint report on 10.7.2022 itself. It is pleaded that the slaughter was done well within the premises under the control of the petitioner. 8. The stand taken by the petitioner that the persons involved were not related to him has been denied by the respondent No. 2 on submission that firstly the petitioner himself was engaged in the alleged act and secondly two other persons were also the associates of the petitioner. The attendance register and the documents of the staff/associates of the petitioner was to be maintained by the petitioner, which was not produced by him. The petitioner is solely responsible for the illegal activities carried out in the premises, for which impugned action has been taken. The act done by the petitioner is against the terms and conditions stipulated in the agreement and the same would amount to an offence under Section 257 of the CG Municipal Corporation Act, 1956, as well as Section 269 of the IPC. The impugned letter terminating the agreement and forfeiting the performance bank guarantee has been issued in a just and legal manner, strictly adhering to various clauses mentioned in the agreement. The amount sought from the petitioner in the impugned letter has also been duly calculated and demanded, as the petitioner had failed to pay the amount even after 30 days from the due date of last payment due and this action is fortified by the terms of agreement. The petitioner is in the habit of not maintaining the premises in a proper condition and also used to collect extra amount from the general public. The issue raised by the petitioner qua the electricity bill was settled much earlier and the issue concerning GST was also duly resolved much earlier. In view of the above submissions, the present Writ Petition deserves to be dismissed. The issue raised by the petitioner qua the electricity bill was settled much earlier and the issue concerning GST was also duly resolved much earlier. In view of the above submissions, the present Writ Petition deserves to be dismissed. 9. Rejoinder has also been filed on behalf of the petitioner denying the allegations levelled by respondent No. 2 in his reply. As regards Article-6, which provides for resolution of dispute, it is stated that jurisdiction under Article 226 is a valuable constitutional safeguard against an arbitrary exercise of power by the State or a misuse of authority. It is well settled that jurisdiction under Article 226 cannot be ousted only on the basis that the dispute pertains to a contract matter. As per the petitioner, none of the clauses mentioned in the agreement has been violated, therefore, the License Agreement could not have been terminated. The map prepared by respondent No. 2 is an afterthought and the same was not a part of the agreement. The petitioner was not allotted the area where the goat slaughter took place. The activity of slaughter was not carried out within the area specified for parking, rather it was in an open area and the same is not under the control of the petitioner. Though the map indicates that particular area has been allotted for two wheeler parking, however, when the petitioner was handed over the premises by respondent No. 2, no map was supplied to him and hence, the petitioner is not using the area shown for two wheeler parking. In Istgasa also, incident is said to have taken place in an area adjacent to the MLCP in an open area. The submission that the goat was slaughtered in the specified area for parking which has been handed over to the petitioner by way of agreement has been denied. Respondent No. 2 has placed photographs and Pen Drive on record in support of his contention, however, the source of the photograph and Video is not disclosed. Respondent No. 2 has no evidence to show that it was the area which was given for two wheeler parking. The petitioner submits that the area was an open area, adjacent to the area meant for multi level parking. Respondent No. 2 has no evidence to show that it was the area which was given for two wheeler parking. The petitioner submits that the area was an open area, adjacent to the area meant for multi level parking. Two persons against whom the allegation has been made that they have used the premises for slaughter of goat have been restrained to work within the limit of MLCP. The petitioner was not involved in slaughter of goat or any other activity which may cause nuisance. The other allegations levelled by respondent No. 2 have been denied by the petitioner. It is further averred that in the agreement, clause 3.16 provides for penalty for violation, which also provides for an amount of penalty to be imposed per instance for use of parking space as also for other than parking purposes. So, the arbitrary action of termination of license agreement is not just and proper. 10. In the additional reply by respondent No. 2, it is submitted that penalty clause is contained under clause-3.16 and the termination clause is contained under clause 5.1. Both the clauses are separate and distinct and can be exercised independently. It is further averred that inflicting penalty is independent from the act of termination and in fact, can be done additionally and “Termination” is contemplated in clause-3.16 at S. No. 12 in the Table mentioned below and the same is optional: Variations Amount of penalty to be imposed per instance xxx xxx xxx xxx xxx xxx 12. Use of parking space for other than parking purposes (e) First instance of complaint for any variation during the License Period - 2% of the Annual License Fee. (f) Second instance of complaint for any variation during the License Period 4% of the Annual License Fee: (a) Third instance of complaint for any variation during the License Period 10% of the Annual License Fee and/or Termination of Agreement without any notice. The map of the location was part of the request for proposal and the entire area of 5264 square meter comprising in the MLCP was handed over to the petitioner. 11. We have heard learned counsel for the parties at length and perused the record with utmost circumspection. 12. Shri Sumesh Bajaj, learned counsel for respondent No. 2 has raised the issue that the instant dispute is purely a commercial transaction under a nonstatutory contract. 11. We have heard learned counsel for the parties at length and perused the record with utmost circumspection. 12. Shri Sumesh Bajaj, learned counsel for respondent No. 2 has raised the issue that the instant dispute is purely a commercial transaction under a nonstatutory contract. So, the public law remedy would not be available to the petitioner. He has relied on the judgment in the matter of Pimpri Chinchwad Municipal Corporation vs. Gayatri Construction Co. (2008) 8 SCC 172 in which difference between statutory contracts and non-statutory contracts has been dealt with. In the said matter, Para-11 of the judgment in the matter of Kerala SEB vs. Kurien E. Kalathil, (2000) 6 SCC 293 has been referred which reads thus: “11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies.” 13. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies.” 13. In Radhakrishna Agarwal vs. State of Bihar, (1977) 3 SCC 457 , it was held in Para-11 that if facts are disputed and require assessment of evidence, it is not a fit case for invoking writ jurisdiction. The said Para reads thus: “11. In the cases before us the contracts do not contain any statutory terms or obligations and no statutory power or obligation which could attract the application of Article 14 of the Constitution is involved here. Even in cases where the question is of choice or consideration of competing claims before an entry into the field of contract facts have to be investigated and found before the question of a violation of Article 14 could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by talking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. Such proceedings are summary proceedings reserved for extraordinary cases where the exceptional and what are described as, perhaps not quite accurately “prerogative” powers of the Court are invoked. We are certain that the cases before us are not such in which powers under Article 226 of the Constitution could be invoked.” 14. He would further place reliance on a judgment in the matter of M/s. Utkal Highways and Others vs. State of Chhattisgarh and Another, AIR 2006 Chh. 29 in which in Para 17 the following was observed: “17. In view of the above decisions of the Hon'ble Apex Court, it is settled law that writ petition under Article 226 of the Constitution of India is not maintainable in cases of non-statutory, purely contractual matters and where rights and liabilities of the parties are governed by the terms of the contract, and the party complains about breach of such contract by the State. The contract between the parties is a contract in the realm of private law and not a statutory contract. The contract between the parties is a contract in the realm of private law and not a statutory contract. The writ petition lies only where the State or its instrument alities act in exercise of a statutory power under certain Act or Rules framed there under.” 15. In the matter of National Highways Authority of India vs. Ganga Enterprises, (2003) 7 SCC 410 , while allowing the appeal, the Hon’ble Supreme Court has observed that the bank guarantee was enforced because the bid was withdrawn within 120 days. Therefore, it could not be said that the invocation of the bank guarantee was against the terms of the bank guarantee. If it was in terms of the bank guarantee, one fails to understand as to how the High Court could say that the guarantee could not have been invoked. If the guarantee was rightly invoked, there was no question of directing refund as has been done by the High Court. 16. In Food Corporation of India vs. Jagannath Dutta, 1993 Supp. (3) SCC 635, a policy decision was taken at the level of the Zonal Manager to abolish the storage agencies and the said decision was approved by the Head Office of the FCI. So, the Hon’ble Supreme Court held that the view taken by the High Court was not justified in reaching the conclusion that there was no policy decision by the FCI. 17. In State of Bihar vs. Jain Plastics and Chemicals Ltd. (2002) 1 SCC 216 , it was observed that writ is not the remedy for enforcing contractual obligations. It is to be reiterated that writ petition under Article 226 is not the proper proceedings for adjudicating such disputes. Under the law, it was open to the respondent to approach the court of competent jurisdiction for appropriate relief for breach of contract. It is settled law that when an alternative and equally efficacious remedy is open to the litigant, he should pursue that remedy and should not invoke the writ jurisdiction of the High Court. Equally, the existence of alternative remedy does not affect the jurisdiction of the Court to issue writ, but ordinarily that would be a good ground in refusing to exercise the discretion under Article 226. 18. Lastly, Shri Bajaj, learned counsel for respondent No. 2 would submit that the contract in question was signed after the approval of Cabinet was obtained. Equally, the existence of alternative remedy does not affect the jurisdiction of the Court to issue writ, but ordinarily that would be a good ground in refusing to exercise the discretion under Article 226. 18. Lastly, Shri Bajaj, learned counsel for respondent No. 2 would submit that the contract in question was signed after the approval of Cabinet was obtained. Therefore, element of public law was not involved. In this respect, the Hon’ble Supreme Court in the matter of Joshi Technologies International Inc. vs. Union of India and Others, AIR 2015 SC (Supp.) 1889 has observed thus in Para-71: “71. As pointed out earlier as well, the contract in question was signed after the approval of Cabinet was obtained. In the said contract, there was no clause pertaining to Section 42 of the Act. The appellant is presumed to have knowledge of the legal provision, namely, in the absence of such a clause, special allowances under Section 42 would (be) impermissible. Still it signed the contract without such a clause, with open eyes. No doubt, the appellant claimed these deductions in its income tax returns and it was even allowed these deductions by the Income Tax Authorities. Further, no doubt, on this premise, it shared the profits with the Government as well. However, this conduct of the appellant or even the respondents, was outside the scope of the contract and that by itself may not give any right to the appellant to claim a relief in the nature of Mandamus to direct the Government to incorporate such a clause in the contract, in the face of the specific provisions in the contract to the contrary as noted above, particularly, Article 32 thereof. It was purely a contractual matter with no element of public law involved thereunder.” 19. Shri Vinay Pandey, learned counsel for the Petitioner submitted that it is well settled that if the state instrumentality violates its constitutional mandate under Article 14 to act fairly and reasonably, writ by invoking the powers under Article 226 of the Constitution would lie. He would place reliance on Paras 38 to 41 of the judgment delivered by the Hon’ble Supreme Court in the case of Unitech Limited and Others vs. Telangana State Industrial Infrastructure Corporation and Others, 2021 SCC Online SC 99, which are referred as under: “38. He would place reliance on Paras 38 to 41 of the judgment delivered by the Hon’ble Supreme Court in the case of Unitech Limited and Others vs. Telangana State Industrial Infrastructure Corporation and Others, 2021 SCC Online SC 99, which are referred as under: “38. Much of the ground which was sought to be canvassed in the course of the pleadings is now subsumed in the submissions which have been urged before this Court on behalf of the State of Telangana and TSIIC. As we have noted earlier, during the course of the hearing, learned Senior Counsel appearing on behalf of the State of Telangana and TSIIC informed the Court that the entitlement of Unitech to seek a refund is not questioned nor is the availability of the land for carrying out the project being placed in issue. Learned Senior Counsel also did not agitate the ground that a remedy for the recovery of moneys arising out a contractual matter cannot be availed of under Article 226 of the Constitution. However, to clear the ground, it is necessary to postulate that recourse to the jurisdiction under Article 226 of the Constitution is not excluded altogether in a contractual matter. A public law remedy is available for enforcing legal rights subject to well-settled parameters. 39. A two judge Bench of this Court in ABL International Ltd. vs. Export Credit Guarantee Corporation of India [ABL International] analyzed a long line of precedent of this Court to conclude that writs under Article 226 are maintainable for asserting contractual rights against the state, or its instrumentalities, as defined under Article 12 of the Indian Constitution. Speaking through Justice N. Santosh Hegde, the Court held: “27.........the following legal principles emerge as to the maintainability of a writ petition: (a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. (b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. (c) A writ petition involving a consequential relief of monetary claim is also maintainable.” 40. This exposition has been followed by this Court, and has been adopted by three-judge Bench decisions of this Court in State of U.P. vs. Sudhir Kumar and Popatrao Vynkatrao Patil vs. State of Maharashtra. (c) A writ petition involving a consequential relief of monetary claim is also maintainable.” 40. This exposition has been followed by this Court, and has been adopted by three-judge Bench decisions of this Court in State of U.P. vs. Sudhir Kumar and Popatrao Vynkatrao Patil vs. State of Maharashtra. The decision in ABL International, cautions that the plenary power under Article 226 must be used with circumspection when other remedies have been provided by the contract. But as a statement of principle, the jurisdiction under Article 226 is not excluded in contractual matters. Article 23.1 of the Development Agreement in the present case mandates the parties to resolve their disputes through an arbitration. However, the presence of an arbitration clause within a contract between a state instrumentality and a private party has not acted as an absolute bar to availing remedies under Article 226.11 If the state instrumentality violates its constitutional mandate under Article 14 to act fairly and reasonably, relief under the plenary powers of the Article 226 of the Constitution would lie. This principle was recognized in ABL International: “28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. [See Whirlpool Corporation vs. Registrar of Trade Marks, (1998) 8 SCC 1 ]. And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction.” (Emphasis supplied) 41. Therefore, while exercising its jurisdiction under Article 226, the Court is entitled to enquire into whether the action of the State or its instrumentalities is arbitrary or unfair and in consequence, in violation of Article 14. Therefore, while exercising its jurisdiction under Article 226, the Court is entitled to enquire into whether the action of the State or its instrumentalities is arbitrary or unfair and in consequence, in violation of Article 14. The jurisdiction under Article 226 is a valuable constitutional safeguard against an arbitrary exercise of state power or a misuse of authority. In determining as to whether the jurisdiction should be exercised in a contractual dispute, the Court must, undoubtedly eschew, disputed questions of fact which would depend upon an evidentiary determination requiring a trial. But equally, it is well-settled that the jurisdiction under Article 226 cannot be ousted only on the basis that the dispute pertains to the contractual arena. This is for the simple reason that the State and its instrumentalities are not exempt from the duty to act fairly merely because in their business dealings they have entered into the realm of contract. Similarly, the presence of an arbitration clause does oust the jurisdiction under Article 226 in all cases though, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked. The jurisdiction under Article 226 was rightly invoked by the Single Judge and the Division Bench of the Andhra Pradesh in this case, when the foundational representation of the contract has failed. TSIIC, a state instrumentality, has not just reneged on its contractual obligation, but hoarded the refund of the principal and interest on the consideration that was paid by Unitech over a decade ago. It does not dispute the entitlement of Unitech to the refund of its principal.” 20. In Tata Cellular vs. Union of India, (1994) 6 SCC 651 , it was held that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. In Para-77, the following was observed: “77. The duty of the court is to confine itself to the question of legality. Its concern should be: 1. Whether a decision-making authority exceeded its powers? 2. Committed an error of law. 3. Committed a breach of the rules of natural justice. 4. Reached a decision which no reasonable tribunal would have reached. 5. Abused its powers. The duty of the court is to confine itself to the question of legality. Its concern should be: 1. Whether a decision-making authority exceeded its powers? 2. Committed an error of law. 3. Committed a breach of the rules of natural justice. 4. Reached a decision which no reasonable tribunal would have reached. 5. Abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, Wednesbury unreasonableness. (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. vs. Secretary of State for the Home Department, ex Brind, (1991) 1 AC 696, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, consider whether something has gone wrong of a nature and degree which requires its intervention.” 21. In the light of principles laid down in the aforesaid decisions, if we examine the factual matrix of the present case, we find that in the licence agreement dated 06.07.2021, in Clause 3.16, Penalty for violations is stipulated, according to which, the License shall be liable to pay such penalty as authority may inflict for complaints against the licensee which in the opinion of the authority are bonafide and substantiated. Without prejudice to the other remedial, which may be available under the agreement, the licensee shall be liable to pay at the sole discretion of the authority a suitable penalty to be decided depending on the discrepancy noticed and as described in the agreement for any action in contravention of any of the clause of this agreement. Without prejudice to the other remedial, which may be available under the agreement, the licensee shall be liable to pay at the sole discretion of the authority a suitable penalty to be decided depending on the discrepancy noticed and as described in the agreement for any action in contravention of any of the clause of this agreement. The relevant variations 12 and 13 read as under: Variations Amount of penalty to be imposed per instance xxx xxx xxx xxx xxx xxx 12. Use of parking space for other than parking purposes. (e) First instance of complaint for any variation during the License Period - 2% of the Annual License Fee. 13. Criminal activity in parking area. (f) Second instance of complaint for any variation during the License Period 4% of the Annual License Fee (a) Third instance of complaint for any variation during the License Period 10% of the Annual License Fee and/or Termination of Agreement without any notice. 22. The competent authority by invoking Clause Nos. 5.1.1 (h), (i), and 5.1.3 terminated the license agreement w.e.f. 14.08.2022 by impugned letter dated 15.07.2022. The said Clauses read as under: “5.1 Termination 5.1.1 xxx xxx xxx (h) If the Licensee fails to pay any of the instalment of the Annual License Fee for a period of maximum up to 30 days. (i) The Licensee using or permitting or causing the use of the project for purposes other than for the as prescribed in the RFP and this Agreement. 5.1.3 In case of breach of any of the conditions mentioned herein the contract shall be liable to be terminated summarily without assigning any reasons and the decision of the Authority in this regard will be final and binding on the Licensee. In that event, the performance License Agreement for Selection of Agency for “Design, Development, Implementation, Operation and Maintenance of Smart Parking Management” at MLCP located at EAC Colony in Raipur, on Annual License fee basis guarantee of the Licensee shall be forfeited. No abatement in license fee will be given to the Licensee.” 23. In that event, the performance License Agreement for Selection of Agency for “Design, Development, Implementation, Operation and Maintenance of Smart Parking Management” at MLCP located at EAC Colony in Raipur, on Annual License fee basis guarantee of the Licensee shall be forfeited. No abatement in license fee will be given to the Licensee.” 23. In the light of arguments advanced by learned counsel for the parties, if we examine the facts of the case, it is apparent that respondent No. 2 has issued the “Work Order” on 13.09.2021 in favour of the Petitioner being successful bidder in pursuance of Tender No. 70115, dated 17.12.2020 and by the impugned letter dated 15.07.2022 highlighting inappropriate use of parking premises and Termination of the Licence Agreement for the “Design, Development, Implementation, Operation and Maintenance of Smart Parking Management” at MLCP located at EAC Colony in Raipur, on Annual Licence fee basis, terminated the License Agreement. The competent authority has mentioned the grounds in the impugned letter that one Istghasha (complaint) No. 190/193/22 was registered at Police Station Civil Line, Raipur, against Deepak Gandhi and Chhotu Jagat, stating that on 10.07.2022 at 14.10 hours they were not only slaughtering a goat in the Public premises of MLCP, but also causing nuisance to the general public. So, as a preventive measure, the said persons were arrested under Section 107, 116(3) and Section 151 of the Code of Criminal Procedure. The Petitioner has annexed another Istghasha (complaint) No. 191/194/2022 with the petition, which was registered against him on 11.07.2022, for an incident which took place on 11.07.2022 when the general public made a protest against the incident which took place on 10.7.2022. As the petitioner was raising dispute and disturbing the general public at the place adjacent to MLCP on 10.7.2022, peace in the locality could be affected, so preventive measure was taken under Section 107, 116(3) and Section 151 of the Code of Criminal Procedure. The Petitioner has also drawn attention of the Court to the fact that in the 2nd Istghasha dated 11.07.2022, the place has been mentioned as area adjacent to MLCP, which is an open area. The petitioner has made a submission that he was not involved in slaughter of goat and the two persons against whom the allegation has been leveled were restrained to work within the limits of the MLCP. The petitioner has made a submission that he was not involved in slaughter of goat and the two persons against whom the allegation has been leveled were restrained to work within the limits of the MLCP. The Petitioner, in his reply filed before the Executive Magistrate in the Istghasha case, has taken a specific defence that on the date of incident he was celebrating the ‘Bakrid Festival’ and was not involved in any such criminal activity. 24. In the terms of agreement dated 06.07.2021, the penalties for violations (Clause 3.16) and Termination (Clause 5) are given separately, and the act of termination can be done additionally. In the present matter, though by the impugned letter, Clause No. 5.1.1 (h) has also been invoked, but the petitioner has filed copy of the demand draft specifically asserting that he has regularly paid 3 instalments as per the schedule prescribed and the respondent authority has illegally invoked the clause no. 5.1.1 (h) of the agreement. Taking into consideration the entire agreement and the alleged incident for which the competent authority has terminated the licence agreement, though for any criminal activity in the parking area, or use of parking space for other than parking purposes, it can be held that the authority is competent to inflict penalty. Though the authority may also take extreme step of termination, but action of the competent authority would always be subjected to judicial review, and wherever the action of the State or its instrumentality is found to be arbitrary and unreasonable as also against the constitutional mandate of Article 14 or for other valid and legitimate reasons, this Court may exercise the Writ jurisdiction. 25. In K. Sreedhara Reddy vs. Conservator of Forests, (1976) 1 SCC 107 , their Lordships of the Supreme Court have held that where the contravention and breach of the terms of the condition is serious or grave, the action of termination can be ordered but if the breach is inconsequential, the contract may continue and a lighter penalty may be imposed and observed in Para 8 and 10, which read as under: “8. There are two types of penalties which we may conveniently designate as “major” and “minor” in the contemplation of the Forest Rules. Rule 29 deals with the major penalties while Rule 31 relates to minor penalties. There are two types of penalties which we may conveniently designate as “major” and “minor” in the contemplation of the Forest Rules. Rule 29 deals with the major penalties while Rule 31 relates to minor penalties. Where the breach of the conditions of the contract committed by the forest contractor is serious, the contract itself is to be terminated and a substantial penalty is to be imposed which “shall not exceed one-quarter of the total consideration paid by the contractor.” If the breach is of lesser significance, then the authority may not propose to terminate the contract on account thereof but may recover a portion of the “whole penalty provided for in Rule 29” not exceeding Rs. 100. In short, if the contravention is grave, the contract is cancelled and a heavy penalty imposed but if the breach is inconsequential the contract continues but a lighter penalty is imposed..........” 10. We think that the true meaning of Rules 29 and 30, read together, is that the forest authorities must move from stage to stage in the following manner. Once they detect a breach, they must investigate to understand and estimate the nature and degree of damage caused by the breach. If it is serious, they must proceed to ascertain the sum to be fixed as penalty. In doing this, a reasonable opportunity must be given to the affected party. After that the penalty shall be quantified and the contract shall be terminated, in the event of the authorities coming to the decision that the breach is grave enough for that drastic step. Once the contract is terminated, the last procedure is realisation which can in no case be before the termination of the contract. The realisation of the penalty may be in one or other of the ways set out for recovery under Rule 30. Of course, if the breach is of a venial nature. Rule 31 is attracted, the contract is continued and only a small portion of the penalty envisaged in Rule 29 is collected.” (Emphasis supplied) 26. In view of the aforesaid discussion and considering all the attending facts and circumstances of the case and the allegations, the exercise of power to terminate the license agreement and the reasons assigned in the impugned letter, we are of the opinion that the exercise was not done in a rational and equitable manner. In view of the aforesaid discussion and considering all the attending facts and circumstances of the case and the allegations, the exercise of power to terminate the license agreement and the reasons assigned in the impugned letter, we are of the opinion that the exercise was not done in a rational and equitable manner. The action of termination is too harsh and disproportionate to the allegations levelled against the petitioner. So, Respondent No. 2 was not justified in terminating the license agreement on the grounds and the reasons mentioned in the impugned letter. 27. For the foregoing, the impugned letter dated 15.07.2022, whereby the Respondent No2 has terminated the license agreement for the “Design, Development, Implementation, Operation and Maintenance of Smart Parking Management” at MLCP located at EAC Colony in Raipur, on Annual Licence fee basis, is hereby quashed. 28. Resultantly, the Writ Petition is allowed. No costs.