The court emphasized the importance of fair play and the right to a fair hearing before imposing penal consequences or termination of a contract.

JUDGMENT

Moushumi Bhattacharya, J. - The petitioner seeks a direction on the North Eastern Railway to withdraw a letter of termination dated 31st March, 2021 issued by the Senior Divisional Commercial Manager, being the respondent no. 4 herein. By the said impugned communication, the petitioner's security deposit of Rs.23,02,661/- was forfeited and the petitioner was restrained from taking part in the tender of the North Eastern Railway for the next two years. The impugned letter referred to Scenario-3 of a letter dated 3rd December, 2020 which provides for termination of the contract between the Railways and the Leaseholder (petitioner).

2. The petitioner emerged as the successful bidder for a tender for lease of 23 tonnes parcel space and a Lease Agreement was executed between the petitioner and the Railways for a period from 17th January, 2020 to 16th January, 2025. The operation of the trains was suspended by the Railways by reason of the Covid-19 pandemic. The petitioner thereafter declined to accept the offer of the Railways for a substitute train for limited operation. The petitioner invoked clause 23.1 of the Lease Agreement by a letter dated 6th February, 2021 with 60 days prior notice and the Railways issued the impugned communication of 31st March, 2021 under clause 23.2 of the Lease Agreement and terminated the contract.

3. According to learned counsel appearing for the petitioner, the petitioner's right to terminate the contract emanates from clause 23.1 of the Lease Agreement and the Railway Board Circular dated 3rd December, 2020 (Scenario-2 of the Circular). The petitioner sought refund of the security deposit under the said clause. The Railways however, without taking into account the petitioner's invocation, issued the impugned communication by applying Scenario-3 of the Circular and forfeited the security deposit of the petitioner. Counsel submits that the petitioner was blacklisted for two years without there being any provision for such under the relevant Agreement. It is submitted that the Lease Agreement pertained to a specific train i.e. Train No.13020/13019. It is also submitted that the petitioner is entitled to freight adjustment in the event of suspension of service and that the Railways are under a statutory obligation for guaranteed supply of Lease Space. Counsel submits that the petitioner has a right to approach the Writ Court and that the alternative remedy in the form of recourse to arbitration would not apply in the present case.

4. Learned counsel appearing for the respondent Railways submits that the facts of the present case do not give rise to a cause of action which would confer jurisdiction on this Court and that this Court should not interfere in the case of a determinable contract. Counsel relies on the clauses in the Agreement which entitle the respondent to forfeit the security deposit and that the contract was liable to be terminated since the petitioner (Leaseholder) failed to operate the contract continuously for 10 days without giving any notice. Counsel places emphasis on clause 23.2 of the Agreement under which the North Eastern Railway has right to terminate the contract as a punitive measure without giving any notice for breach of agreement. Counsel urges that the Railways suffered huge monetary loss by reason of the petitioner failing to start the work as would be evident from letters exchanged between the parties. It is also submitted that the Agreement contains an arbitration clause and the petitioner has an alternative remedy available to invoke.

5. Since a point of maintainability has been raised by the respondent Railways, this point is being dealt with first. The impugned letter of termination dated 31st March, 2021 was received by the petitioner in Howrah, within the jurisdiction of this Court. The entire cause of action of the writ petitioner arises from this letter of termination. The impugned letter not only terminated the Lease Agreement but also debarred the petition