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PATNA HIGH COURT
S.Roy and S.N.Jha JJ.
Usha Brecco Ltd.And Others
Versus
State Of Bihar
Civil Writ Jurisdiction Case No. 2828 of 1991 ;
Decided On : APRIL 24, 1992
WRIT PETITION - MAINTAINABILITY - NON-STATUTORY CONTRACTUAL AGREEMENT - BREACH OF CONTRACT - ARBITRATION CLAUSE - CATEGORY (III) - WRIT PETITION NOT MAINTAINABLE: 1. Where a dispute arises out of a non-statutory and purely contractual agreement, and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State, the writ petition is not maintainable. (Category (iii) as enumerated in Radha Krishna Agarwal V/s. State of Bihar) 2. If the case of the petitioner falls under category (iii), the writ petition is not maintainable, even if the case is covered by Article 14 of the Constitution. 3. If the grounds on which possession of the rope way was taken and the notice terminating the agreement was issued were referrable to the agreement, Article 14 of the Constitution is not attracted. 4. A prerogative power of the Court cannot be invoked as the grounds on which the Corporation has acted are referrable to the agreement.
Fact of the Case:
Petitioners, a company and its director and shareholder, challenged the Corporation's actions of taking possession of an aerial rope way and issuing a notice terminating an agreement. The petitioners claimed that they had fulfilled all terms and conditions of the agreement and that the Corporation's actions were illegal, arbitrary, and mala fide. The Corporation argued that the writ petition was not maintainable as the rights and liabilities of the parties were governed by a non-statutory contractual agreement and that the dispute should be settled through arbitration as per the agreement.
Finding of the Court:
1. The writ petition was not maintainable as the case fell under category (iii) as enumerated in Radha Krishna Agarwal V/s. State of Bihar, where a dispute arises out of a non-statutory and purely contractual agreement, and the rights and liabilities of the parties are governed by the terms of the contract. 2. Even if the case was covered by Article 14 of the Constitution, the writ petition was not maintainable as the grounds on which possession of the rope way was taken and the notice terminating the agreement was issued were referrable to the agreement. 3. The Corporation's actions were not arbitrary or mala fide as the petitioners were not heard before possession was taken or the notice was issued because the agreement provided for settlement of disputes through arbitration.
Issues: 1. Whether the writ petition was maintainable in light of the non-statutory and purely contractual nature of the agreement between the parties. 2. Whether the Corporation's actions of taking possession of the rope way and issuing a notice terminating the agreement were illegal, arbitrary, and mala fide.
Ratio Decidendi: 1. The maintainability of a writ petition challenging a breach of contract depends on the nature of the contract and the rights and liabilities of the parties. If the contract is non-statutory and purely contractual, and the rights and liabilities of the parties are governed by the terms of the contract, the writ petition is not maintainable. 2. The grounds on which possession of the rope way was taken and the notice terminating the agreement was issued were referrable to the agreement, and therefore, Article 14 of the Constitution was not attracted. 3. The Corporation's actions were not arbitrary or mala fide as the petitioners were not heard before possession was taken or the notice was issued because the agreement provided for settlement of disputes through arbitration.
Final Decision: The writ petition was dismissed as it was not maintainable. The Court also directed the Corporation to refund the amount deposited by the petitioners within two months, failing which it would be liable to pay interest at the rate of 12% per annum.
S.Roy, J.
1. Petitioner No. 1 is a Company (Company for short) incorporated under the Indian Companies Act. Petitioner No. 2 is one of its Director and petitioner No. 3 is one of its share holder. They have prayed for quashing Annexure 13, letter written by respondent No. 2, Bihar State Tourism Development Corporation Limited, the (Corporation for short) to the Company on 8-4-1991 by which the Company was informed that as it has failed to pay all outgoing liabilities, which included payment of arrears of electricity dues under Clause 5(a) of the agreement (Annexure 4), the Corporation on 8-4-1991 took possession of the aerial rope way at Rajgir along with connected sheds, buildings and other accessories and for, appropriate order not to interfere with Companys possession.
2. During the pendency of the writ petition by letter dated 15-4-1991 the Corporation gave notice under Clause 13(a) of Annexure 4 to the effect that Annexure 4 would stand revoked terminated on the last date of month completing three months notice, i.e., at the end of July, 1991.
3. On 9-11-1984 the Company entered into an agreement with the Corporation for operating aerial rope way at Rajgir, which belongs to the Corporation, copy of the agreement is Annexure 1 to the writ petition. It was stipulated in Annexure 1 that the Corporation gave to the Company the work of repair and maintenance and right of operation of the old rope way at Rajgir on annual rental for a period of two years and for installation of new rope way by the Company on self-finance basis on annual rental for a period of thirty years from the expiry of the two years period. The Company was required to install a four passenger cabin type new rope way at the existing site on a self-finance Scheme within a period of two years from the expiry of the two years period. The date of the agreement. One of the covenants of Annexure 1 (the agreement) i.e. Clause 5 (a) stipulated that the Company would bear and discharge all taxes, dues, outgoings burdens whatsoever imposed or charged upon or in respect of the said old or new aerial rope way. Any taxes, dues, outgoings, liabilities payable for a period prior to the agreement would be paid by the Corporation. As the Company could not install a new rope way of four passengers cabin type, the parties entered into a fresh agreement on 17-2-1987, copy whereof is Annnexure 3 to this writ petition. The recital and the covenants in Annexure 3 are same as of Annexure 1, except with regard to the annual rental. In Annexure 1, the Company was required to pay annual of Rs. 2.25 lakhs for using the old rope way. It was increased in Annexure 3 to Rs. 2,475 lakhs. There was also a change in one of the covenants, i.e., Clause 5(a) wherein it was stipulated that any taxes, dues outgoings, liabilities payable for the period prior to this agreement, would be paid by the Company.
4. As installation of four passengers cabin type new rope way was found not economically viable, the Company gave a proposal to renovate the old rope way by replacing the old chairs with new type of single seater semi enclosed gandolas as well as a shed for tourists and make other changes fifteen years commencing from 3rd May, 1989 and terminating on 2nd May, like the replacement of the existing accessories and providing amentities. The corporation accepted this proposal and resolved to extend the agreement as contained in Annexure-3 for a period of 2004. The parties entered into a fresh agreement on 3rd May, 1989, copy whereof is Annexure (sic).
5. It was, inter alia, agreed by between the parties that the Company would complete the renovation work of the existing rope way within one year from the date of Annexure-4. For the purpose of renovation the the Company would undertake and do all major and minor repairs, bear operational charges, obtain risk insurance, replace old gear box, motor, panel and generating set as and when these warrant replacement. It was further agreed that the Comp
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