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IN THE HIGH COURT OF JUDICATURE AT BOMBAY, AURANGABAD BENCH
NEERAJ P. DHOTE, R.G. AVACHAT, JJ.
EBIX Cash Pvt. Ltd - Petitioner
Versus
State of Maharashtra, Through Chief Secretary, Govt of Maharashtra and Ors. - Respondents
Writ Petition No.6707 Of 2024
Decided On : 22-07-2024
For the Petitioner: Mr. Shrirang B. Varma a/w. Mr. Viraj Parekh & Mr. Gautam Swaroop, Adv.
For the Respondents: Mr. A.R. Kale, Add. G.P.
Writ jurisdiction can address arbitrary actions in contractual matters, even with an arbitration clause present, emphasizing judicial review in public interest cases.
Headnote:(A) Constitution of India - Article 226 - Writ jurisdiction - The Petitioner challenged the termination of a contract for E-ticketing system by the Respondent ASCDCL, alleging mala fide actions and procedural violations. The Court examined the legality of the termination notice and the applicability of arbitration clauses. (Paras 1, 4, 7, 12)
(B) Contract Law - Termination of contract - The Court held that relief against the State in contractual matters can be sought under writ jurisdiction, especially when actions are arbitrary or unauthorized. The existence of an arbitration clause does not bar the High Court from entertaining a writ petition. (Paras 9, 10)
(C) Judicial Review - The Court emphasized that while disputes arising purely from contracts are generally not amenable to writ jurisdiction, judicial review is permissible when public interest is at stake. (Paras 9, 10)
Facts of the case:
The Petitioner, a Private Limited Company, was awarded a contract for an E-ticketing system in Aurangabad on 18.02.2020. The contract was terminated by ASCDCL on 13.06.2024, citing penalties and functionality issues with the provided machines. The Petitioner contended that the termination was without lawful excuse and violated the tender's termination procedure.
Findings of Court:
The Court found that the termination was within the contractual domain and that the arbitration clause survived the termination of the contract. The Writ Petition was dismissed as no case existed to entertain it.
Issues: The main issues included whether the termination of the contract was arbitrary and whether the writ jurisdiction could be invoked despite the existence of an arbitration clause.
Ratio Decidendi: The Court ruled that the termination was authorized under the contract, and the existence of an arbitration clause does not preclude the High Court from exercising its writ jurisdiction in appropriate cases.
Result: The Writ Petition is dismissed.
ORDER :
(Neeraj P. Dhote, J.)
The Petitioner, a Private Limited Company, has invoked the jurisdiction of this Court under Article 226 of the Constitution of India, taking exception to the termination notice dated 13.06.2024 by which the Contract for E-ticketing system for the city buses plied in Aurangabad city allotted to the Petitioner Company is terminated.
2. It is submitted by learned Advocate for the Petitioner that the Petitioner was awarded the contract for the aforesaid purpose on 18.02.2020, pursuant to tender process of 2019. The Petitioner implemented the contract as per the tender document and ‘Go Live Certificate’ was issued by the Respondent No.2 – Aurangabad Smart City Development Corporation Limited (ASCDCL) on 01.11.2021. The Petitioner was implementing the contract successfully for over a period of four (4) years. ASCDCL issued a new tender on 05.02.2024 for procurement of Electronic Ticket Issuing Machines (ETIM). On 08.02.2024 the Petitioner Company objected for allotment of the scope of the work relating to ETIM, as the same was colliding with the scope of work covered by the Petitioner’s contract.
3. It is further submitted that the scope of work in the tender process initiated in February, 2024 was overlapping the work which was being carried out by the Petitioner Company. The tender issued in February, 2024 was not a substitute tender for the Petitioner Company’s contract. The Petitioner Company would be put to loss due to the said new tender process. The act of ASCDCL was mala fide and covered by the principles of ‘doctrine of malice in law’ as the act of ASCDCL was without any lawful excuse.
4. It is further submitted that on 23.02.2024 the ASCDCL issued a show cause notice to the Petitioner Company for terminating the contract on the following two grounds:
(a) That, there were penalties levied upon the Petitioner Company for software being down and other reasons.
(b) That, the ETIM provided by the Petitioner Company had a functionality of printing a ‘Zero Value Ticket’ which caused revenue losses to the ASCDCL.
5. It is further submitted that, the Petitioner Company responded to the show cause notice in detail on 26.02.2024. The Petitioner Company categorically stated that the delay in any software related things was resolved within 30 (thirty) minutes and as such, there was no violation of contract conditions and thus the penalties levied upon the Petitioner Company was illegal and clarified that the functionality of printing ‘Zero Value Ticket’ was as per the specification provided in the tender document. The ASCDCL without there being any consideration or providing any reasons, terminated the contract allotted to the Petitioner Company by the impugned termination notice.
6. It is further submitted that in November-2023 the Petitioner had strongly objected to levy of penalties as the same were inappropriately imposed and the Petitioner Company provided complete data as to the software issues being resolved within thirty (30) minutes of any error and the same was being used effectively. The reason cited by the ASCDCL for terminating the contract was without any application of mind as the functionality of the ‘Zero’ value ticket was contemplated in the tender document itself. The Petitioner company was being punished for providing the ETIM’s, which was perfectly as per tender document, and the ASCDCL never raised any complaint from 2020 to 2024.
7. It is further submitted that the ASCDCL did not adhere to the termination procedure as laid down in the tender document. Clause 15.4.1 provides for issuance of preliminary notice to the service provider so as to rectify the defect and thereafter if the defects are not rectified, issue termination notice. As the ASCDCL has completely disregarded the procedure laid down for termination of contract in the tender document, the impugned notice is unsustainable and liable to be set aside.
8. It is further submitted that this Court can examine the action of the A
