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High Court Of Calcutta
Pranab Kumar Chattopadhyay
PROPART ADVERTISING SERVICES (P) LTD - Appellant
Versus
STATE OF WEST BENGAL - Respondent
W. P. 1302 (W) Of 2005
Decided On : 05/12/2005
PUBLIC WORKS - LICENSE - RENEWAL - ENHANCEMENT OF FEES - REASONABLENESS - DISCRIMINATION - ARBITRARINESS - CONTRACTUAL OBLIGATION - ENFORCEMENT - WRIT PETITION - MAINTAINABILITY: 1. Enhancement of license fees for renewing a license granted earlier to the petitioner is unreasonable, arbitrary, and discriminatory if different yardsticks are applied while renewing similar types of licenses of other advertising agencies. 2. The fixation of renewal fees under no circumstances can be arbitrary or discriminatory. 3. The basis of the license fee under the circular dated 3rd November 2002 is not applicable if the petitioners are obliged to maintain and beautify the Theme Park where the display boards of the petitioners are advertised, even though the beautification of the area has not been contemplated in the circular in question. 4. A writ petition under Article 226 of the Constitution of India is maintainable to enforce even a contractual obligation of the State or its instrumentality at the instance of any aggrieved party. 5. Article 14 of the Constitution of India is applicable even in the contractual field, and the State and its authorities, including instrumentalities of States, have to be just, fair, and reasonable in all their activities, including those in the field of contracts.
Fact of the Case:
The petitioner challenged the acts and actions of the State respondents regarding enhancing the annual licensee fee/rent as proposed by the respondent State government for displaying advertisements at the Theme Park upon renewing the earlier agreement.
Finding of the Court:
1. The sudden enhancement of the license fees for renewing the license granted earlier to the petitioner is not only unreasonable and arbitrary but also discriminatory. 2. The respondent authorities cannot fix the renewal fees at an extraordinary high rate to render the renewal clause of the original agreement invalid and/or inoperative. 3. The basis of the license fee under the circular dated 3rd November 2002 is not applicable in the facts of the present case. 4. A writ petition under Article 226 of the Constitution of India is maintainable to enforce even a contractual obligation of the State or its instrumentality at the instance of any aggrieved party. 5. Article 14 of the Constitution of India is applicable even in the contractual field, and the State and its authorities, including instrumentalities of States, have to be just, fair, and reasonable in all their activities, including those in the field of contracts.
Issues: 1. Whether the enhancement of license fees for renewing a license granted earlier to the petitioner is reasonable and non-discriminatory? 2. Whether the basis of the license fee under the circular dated 3rd November 2002 is applicable in the facts of the present case? 3. Whether a writ petition under Article 226 of the Constitution of India is maintainable to enforce even a contractual obligation of the State or its instrumentality at the instance of any aggrieved party? 4. Whether Article 14 of the Constitution of India is applicable even in the contractual field?
Ratio Decidendi: 1. The fixation of renewal fees under no circumstances can be arbitrary or discriminatory. 2. The basis of the license fee under the circular dated 3rd November 2002 is not applicable if the petitioners are obliged to maintain and beautify the Theme Park where the display boards of the petitioners are advertised, even though the beautification of the area has not been contemplated in the circular in question. 3. A writ petition under Article 226 of the Constitution of India is maintainable to enforce even a contractual obligation of the State or its instrumentality at the instance of any aggrieved party. 4. Article 14 of the Constitution of India is applicable even in the contractual field, and the State and its authorities, including instrumentalities of States, have to be just, fair, and reasonable in all their activities, including those in the field of contracts.
Final Decision: 1. The impugned Memos dated 8th November 2004 and 9th November 2004 are quashed. 2. The respondents are directed to renew the license agreement of the petitioner dated 23rd November 2001 for a further period of three years w. e. f. 15th November 2004 as agreed by the respondent authorities and mentioned in the impugned Memo dated 9th November 2004 either on the same financial terms or enhancing the renewal fees to a reasonable extent which should not be more than double the existing rate under any circumstances. 3. The respondents are further directed to adjust the amount already received from the petitioner in terms of the earlier order passed by this Court in this matter from the future renewal fees.
( 1 ) THE petitioners herein have challenged the acts and actions of the State respondents regarding enhancing of the annual licensee fee/rent as proposed by the respondent State government for displaying advertisement at Theme Park upon renewing the earlier agreement.
( 2 ) IT has been submitted on behalf of the petitioners that the government of West Bengal while renewing the license for putting up hoarding proposed exorbitant enhancement of the annual license fees. In the present case, undisputedly, the agreement provides for renewal but does not provide any guidelines for determination of annual fees/ rents to be charge during the period of renewal. Clause (1) of the Deed of Lease executed by the petitioner clearly provides for further renewal of the lease period. The respondent State Government has also agreed to grant renewal in the present case.
( 3 ) THE only question now to be decided is whether the Government is entitled to charge renewal fees at exorbitant rate.
( 4 ) THE facts of this case are briefly narrated hereinafter: in 2001, the per company participated in the tender process initiated by the PWD, Government of West Bengal for issuance of license for execution of work of beautification of Theme Park and its maintenance and display of advertisements on VIP Road (Nazrul Islam Avenue) at the connection of Jessore Road. Kolkata. On 23/11/2001 the Executive engineer, Barasat Highway Division No. 1. PW (Roads) Department, on behalf of the Governor, State of West Bengal entered into a license agreement for execution of work of beautification of Theme Park and its maintenance and display of advertisements on VIP Road (Nazrul islam Avenue) at the connection of Jessore Road, Kolkata for a period of three years, with effect from 15th November, 2001 to 14th November, 2004.
( 5 ) THE petitioner company made investments to the tune of Rs. 2. 25 crores for beautification and maintenance of the Them Park. By an office memo dated 4/7/2003, the petitioner company was granted the leave to use the space on the uppermost portion, i. e. 300 ft. x 20 ft. (total 6000 sq. ft. ).
( 6 ) THE petitioner company has been paying an annual rent of rs. 12,24,000/- for total display of 11,600 sq. ft. within which the petitioner company had to put up a huge advertisement display of West bengal Industrial Development Corporation, free of all costs and charges. In the month of August, 2004 the petitioner company was informed that the annual rent would be substantially increased at the time of renewal.
( 7 ) ACCORDINGLY, in the month of August-September, 2004, the petitioner company made applications for renewal before the PWD authorities and also before the Hon'ble Chief Minister and the Minister-in-Chage of the PWD. By a notice dated 8/11/2004 issued by the Executive engineer, Barasat Highway Division, PWD, the petitioner company was directed to remove the advertisement and hand over the Theme Park to the Assistant Engineer, Baguihati Highway Sub-Division on 15th november, 2004. In the said notice, it was stated that your petitioners had not applied for renewal of the said agreement, which is absolutely contrary to the facts.
( 8 ) BY an office memo dated 9/11/2004, the Chief Engineer (Roads)communicated to the petitioner company that the license agreement might be renewed for a period of three years and your petitioner would be required to pay an annual rent of Rs. 41,98,720. 00 for displaying advertisements in an area of 5600 sq. ft. to the Public Works department. The office memo dated 9/11/2004 implies that the petitioner company would be required to pay 7 times the current annual rent of half the total display area presently used by the petitioner company.
( 9 ) ON 21st October, 2003, the PWD has issued license in favour of "pioneer publicity corporation" for execution of work of beautification and maintenance of the verge road divider along with 5 Nos. of bus shelters, 3 Nos. of gantries, 32 Nos. of double
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