2001 Supreme(SC) 1208

2001(6) Supreme 673
SUPREME COURT OF INDIA
(From Calcutta High Court)
S. Rajendra Babu & Doraiswamy Raju, JJ.
State of West Bengal etc. -Appellants
versus
M.R. Mondal and Anr. -Respondents
Civil Appeal No. 6123 of 2001
(Arising out of SLP (C) No. 3716 of 2001)
With
Civil Appeal No. 6124 of 2001
(Arising out of SLP (C) No. 13473 of 2001)
Decided on 3-9-2001
Counsel for the Parties :
For the Appellants : Harish N. Salve, Solicitor General and Mukul Rohatgi, Additional Solicitor General, Bikash Ranjan Bhattacharjee, Sr. Advocate, Avijit Bhattacharjee, Atanu Saikia, V.B. Joshi, Ravi Kimi, Jananrdan, M.V. Kini and Ms. Leela Pujari Advocates.
For the Respondents : P.K. Dass, U.B. Mookerjee, Sr. Advocates, Abijeet Chatterjee, Parijat Sinha, Kishore Dutta, Manas Dass Gupta and Mrs. Sarla Chandra Advocates.

IMPORTANT POINT
In the facts and circumstances of this case not only the order of the Division Bench of the Calcutta High Court dated 20.11.2000 is liable to be set aside, but consequential direction should be issued to retrieve the situation. Appeals is thus allowed on the terms indicated in the judgment.

Headnote:National Highways Act, 1956-Section 5-National Highways Authority of India Act, 1988-Section 11-The National Highways (Fees for the use of National Highway Section and Permanent Bridge Public Funded Project) Rules, 1997-Rules 5 to 8 and 9-Govt. contract relating to right to collect the toll on Durgapur Expressway-Given to 1st respondent contractor for one year-Extended for 30 years with effect from 16-12-96 despite non-payment of toll collections as per terms-High Court granting injunction-Whether correct? (No) -Appeal allowed subject to certain terms.

       Held : Heard the learned Senior Counsel for the appellants as well as the respondents. On an overall consideration of the indisputable facts on record and the submissions made on either side, we are unable to persuade ourselves to appreciate or approve the manner of approach adopted, the method of consideration undertaken and statements on some abstract principles of law, unmindful of the stage of the proceedings and the serious as well as irretrievable public detriment that is bound to result from the conclusions arrived at and directions issued on a perfunctory understanding of the rights of parties, the statutory provisions of the Act, Rules and Regulations governing the issue. The observations of the learned Judges of the Division Bench on the question of existence of prima facie case to justify or warrant the grant of the prohibitory as well as mandatory directions of the nature issued in the case, in our view, suffer from serious self-contradictions, apart from impermissibility of several assumptions made in this regard on the basis of perfunctory and inchoate materials which could not provide any basis in law for such claims. All relevant materials also do not seem to have been adverted to in their proper and legal perspective and the conclusions arrived at appears to have arrived at throwing to winds the elementary and basic principles of law pertaining to the creation of contractual relationship between the parties. The judgment under challenge also seems to be oblivious to the obvious facts emanating from records that those materials relied upon for the plaintiff-contractor do not, in law, constitute any or sufficient basis of evidence, which could establish even if not rebutted by evidence adduced on the other side, the plaintiff s case for an extended term in law. The fact that substantial mischief or injury is likely to be necessarily caused by the grant of the order, under challenge, unlike in the case of refusal of the relief, and that the grant would lead to irreparable loss and damage to the interest of the State as well as public interest, seems to have been completely lost sight of notwithstanding the serious violations of the conditions and terms of the contract between parties. The learned Judges of the Division Bench of the High Court ought to have seen that there can be no legal impediment for the Department to make preparations ahead of the period of expiry of the one year contract given in favour of the plaintiff to facilitate the entrustment of the task of collecting the toll in question for the period subsequent thereto, to a newly selected contractor at competitive rates. The Division Bench further overlooked the vital legal proposition that the Memorandum dated 11.3.1998 of the Joint Secretary cannot, per see, have the legal consequence of bringing into existence an extended period of contract and that too for 30 years though said to be renewable periodically every three years. On a proper consideration of the Memorandum dated 11.3.1998, which was also stated to have been never communicated to the plaintiff, and the subsequent Memorandum dated 24.8.1999 of the very Joint Secretary, who issued the earlier Memo, that Memorandum dated 11.3.1998 contained only certain proposals and not any final orders of extension or renewal of the contract as assumed in the judgment under challenge. Paragraph 15 of the Memorandum dated 11.3.1998, which has been relied upon as the basis for claiming an extended period of contact, itself has been misconstrued out of context though by itself, it cannot have the effect of bringing into existence such an extended term of contract to warrant or justify the grant of the directions of the nature in the present case. Even assuming for consideration without accepting that paragraph 15 of the Memorandum dated 11.3.1998 had any effect, it can by no stretch of imagination be construed to bring into existence ipso facto an extended period of contract beyond the one year period for which alone the contract had been given to the plaintiff in this case. An order passed but retained in file without being communicated to the plaintiff can have no force or authority whatsoever and the same has no valid existence in the eye of law or claim to have come into operation and effect. No reliance can be placed on the same to even assert a claim based on its contents. If its utility depended upon a decision to be taken on the performance of the plaintiff by the Competent Authority, neither the authority could be compelled to take a decision nor any concrete rights could be said to have been acquired by the plaintiff, to warrant the grant of the type of directions given in this case. It is really surprising that the discretionary power to grant injunction, be it of prohibitory or mandatory nature, has been availed of to bring into existence and force upon the State a new contract, which could never have been the intention of the State itself. The relevant and vital facts apparent on record and the stark realities of the case go to show that the plaintiff has been entrusted with the contract for collecting the toll in question only for a period of one year from 13.12.1997 and that as per the provisions of law notice supra, such collection by the Executing Agency departmentally or through franchisee as in this case, is to be for and on behalf of the Central Government and the amounts have to be remitted to the Central Government, which only is the beneficiary of such collection. When the statutory rules provided for collection through franchisee and the selection of the contractor only through public auction under the instructions for specific periods as the Central Government may issue, at competitive rates and in this case such grant was made on behalf of the Central Government for one year initially, there can be no extension granted in law by the Executing Agency without the prior instructions or approval of the Central Government. It would be futile for anyone to claim or for Courts to countenance any claim that without reference to the Central Government on whose behalf the State Government was acting as Executing Agency could under the pretext of a proposed extension proceed to extend the same for 30 years with a provision for periodical review of three years unmindful of the financial interest of the Central Government and the ultimate loss that may result to the public exchequer. The mere fact that if departmentally the collection is made by the Executing Agency it can be in perpetuity in the sense that as long as the Executing Agency is continuing to be the Agency, a person like the plaintiff, who has ben entrusted for the task only for one year, cannot seek umbrage under clause (11) of the Rule. Unlike contracts entered into in exercise of the executive power of the State wherein terms can be stipulated and settled at the will and pleasure of the State, a franchise or contract envisaged for the collection of toll in question is limited and circumscribed by the provisions of the Fee Collection Rules, 1997 and what could be only the subject-matter of an auction, selection and grant on the basis of competitive rates of the bid cannot be the subject of whim and fancy of any authority, particularly when public interest and public exchequer of the Central Government is and will be at stake. Thus, without the concurrence of the Central Government, which also has to be necessarily inconformity with the statutory rules governing the same, there cannot be any extension granted in favour of the plaintiff and the High Court could not have directed the doing of a thing not permissible in or contrary to the statutory rules. It is now an indisputable fact on record that the Central Government has issued a statutory Notification dated 4.2.1999 published in the Government of India Gazette of even date, in exercise of its powers under Section 11 of NHAI Act entrusting the Highways including the stretches in question, to the National Highways Authority of India and that with the said Notification, the status of the State Government as Executing Agency has come to an end, though the plaintiff, first respondent herein, seeks to place reliance upon Section 12(1)(a) of the National Highways Act. In our view, the said provision will have no relevance or application to the case on hand. The transitional provision in the form of transfer of assets and liabilities of the Central Government to the authority, would take in only subsisting rights already acquired or obligations and liabilities incurred as on the date of publication of the Notification and that too in accordance with law and not in derogation of law. So far as the case on hand is concerned, the plaintiff could not legitimately claim to have acquired any rights by virtue of the Memorandum dated 11.3.1998 which has no force or sanctity in law and the Central Government or the NHAI cannot be said to have incurred any obligation or liability thereby, stepping into the shoes of the State Government which acted as an Executing Agency for the period commencing from 4.2.1999. We are unable to appreciate as to how the Division Bench, in the teeth of concrete and clinching material that from the inception of the contract the first respondent plaintiff had been playing foul and has been devising methods and ways to avoid his responsibilities and has been shown to be guilty of serious lapses in depositing regularly the amounts due, could have been given any protection by issuing directions of the nature under challenge in these appeals. The obvious impracticalities involved in the appointment of an Advocate-Receiver to supervise such a stupendous task of the nature in question seems to have also been overlooked and escaped the attention of the Court and no serious thought seems to have been also bestowed upon the materials brought to its notice even about the inability of the Advocate-Receiver to effectively function to safeguard the financial interest of the public exchequer. (Paras 14, 15, 16, 17, 18)

       Held consequently : For the reasons stated above, we are of the view that the judgments under challenge have not only the effect of conferring an undue, undeserved and unjustified benefits and rights on the plaintiff, first respondent herein, but also have the consequence of doing grave injustice to public interest and great loss to public Revenue. We are also of the view that not only the order of the Division Bench dated 20.11.2000 is liable to be set aside, but consequential direction should be issued to retrieve the situation before any further irreparable damage is caused to the public exchequer. Consequently, we order:-

        1. The order dated 20.11.2000 of the Division Bench is hereby set aside and that of the learned Trial Judge is restored.

        2. The Advocate-Receiver appointed by the High Court shall stand discharged forthwith and he shall cease to function as such from the day the authorities of the NHAI directly assume supervision and control of the Highway and the collection of toll in question, under intimation to the Receiver.

        3. The authorities of the NHAI, who has jurisdiction and control over the stretch of the Highways pursuant to the notification, are hereby authorized and permitted to assume the right to collect and regulate/control the collection of toll by serving a letter to that extent on the Advocate-Receiver and on such service, the Advocate-Receiver shall stand discharged for all purposes, except for rendering accounts to the collections already made to the authorities of the NHAI. If there is any dispute in this regard, it shall be worked out by obtaining appropriate directions from the Calcutta High Court, which appointed the Receiver.

       Consequently, the appeals shall stand allowed on the above terms. No costs. (Paras 19 and 20)