IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
ARUP KUMAR GOSWAMI, DEEPAK KUMAR TIWARI, JJ.
M/s Moon Caterers – Petitioner
Versus
State of Chhattisgarh – Respondent
WP (C) No. 3326 of 2022
Decided On : 03-11-2022
Constitution of India, 1950 - Article 226, 12 - CG Municipal Corporation Act, 1956 - Section 257 – Indian Penal Code, 1860 - Section 269 - Code of Criminal Procedure, 1973 - Section 107, 116(3) and Section 151 - Terminated Licence Agreement - Breach of Terms of Condition - Questioned propriety and correctness of impugned letter issued by respondent No. 2 whereby respondent authority has terminated Licence Agreement and forfeited performance bank guarantee - Held, In K. Sreedhara Reddy vs. Conservator of Forests, their Lordships of Supreme Court have held that where contravention and breach of terms of condition is serious or grave, action of termination can be ordered but if breach is inconsequential, contract may continue and a lighter penalty may be imposed - Considering all attending facts and circumstances of case and allegations, exercise of power to terminate license agreement and reasons assigned in impugned letter, Court is of opinion that exercise was not done in a rational and equitable manner - Action of termination is too harsh and disproportionate to allegations levelled against petitioner - So, Respondent No. 2 was not justified in terminating license agreement on grounds and reasons mentioned in impugned letter - For foregoing, impugned letter whereby Respondent No2 has terminated license agreement is hereby quashed - Petition allowed.
ORDER :
1. By this Writ Petition filed under Article 226 of the Constitution of India the petitioner has questioned the propriety and correctness of the impugned letter dated 15.7.2022 issued by respondent No. 2 whereby the respondent authority has terminated the Licence Agreement executed on 6th July, 2021 between the petitioner and Raipur Smart City Limited (for short ‘RSCL’) and forfeited the performance bank guarantee amounting to Rs. 7,56,000/- and the petitioner was directed to pay the balance license fee of Rs. 2,97,345/-.
2. Facts of the case are that respondent No. 2 invited proposals by its request dated 17.12.2020 for selection of bidders to design, development, implementation, operation and maintenance of Smart Parking Management at Multi Level Car Parking (MLCP) located at EAC Colony in Raipur on annual liense fee basis. The petitioner is having vast experience in the field of Car/Motor Cycle Parking Management in Chhattisgarh. The petitioner is successfully operating many other parking spots at different area of Raipur. The petitioner has participated in the process and on the basis of documents submitted by the petitioner as also looking to his experience, the petitioner was declared L-1 and subsequently, the petitioner was declared as successful bidder for the said project.
3. An agreement was executed between the parties on 6.7.2021. The period of said license was Five Years, as agreed by the parties, which was to be extendable for another term of 5 years at the sole discretion of the competent authority. The annual license fee fixed by the respondent authority is Rs. 15,11,926/-. The said License fee was to be paid in two installments i.e. the first installment to be paid within 30 days of issuance of LoA and before the agreement is signed and the second installment to be paid before completion of 15 days of three months from the effective date. The petitioner has duly submitted TDR dated 21.5.2021 for a value equivalent to six months of quoted annual license fee of the highest bidder i.e. Rs. 7,56,000/- towards performance security. On fulfilling the conditions enumerated in the agreement and after payment of first installment, the work order was issued to the petitioner on 13.9.2021 to operate maintenance of Smart Parking Management at Multi Level Car Parking.
4. It is stated that the Collector has failed to pay the parking fee to the petitioner for the vehicles parked under the passes issued by him to the employees of Collectorate, Police, Zila Panchayat and the employees of other departments. Since the Collector has issued 800 such passes for the employees, he is under an obligation to pay parking fee on their behalf, however, he failed to pay the fee. So, the petitioner moved a representation to the Collector on 25.11.2021, which has not been decided so far. It is also stated that respondent No. 2 has not paid the Electricity Bill, which was due with the CSPDCL of the period when the Multi Level Parking was under construction. The petitioner has duly apprised the respondent No. 2 about payment of electricity bill of Rs. 5,01,686/- failing which the electricity connection would be disconnected, however, till date the respondent authority has not paid the electricity bill. It is further stated that the petitioner has been regularly submitting demand draft for payment of installment and the GST, which has not been presented by them in the Bank, which has resulted in expiry of the period. The petitioner moved a representation informing the authorities about the delay, however, the respondent authorities have failed to take note of it and maligned the image of the petitioner as defaulter.
5. It is further stated that in spite of above difficulties being faced by the petitioner, all of a sudden, the respondent No. 2 issued the impugned letter whereby the respondent authority has terminated the License Agreement
K. Sreedhara Reddy vs. Conservator of Forests
Kerala SEB vs. Kurien E. Kalathil
National Highways Authority of India vs. Ganga Enterprises
Pimpri Chinchwad Municipal Corporation vs. Gayatri Construction Co. (2008) 8 SCC 172
Radhakrishna Agarwal vs. State of Bihar
State of Bihar vs. Jain Plastics and Chemicals Ltd. (2002) 1 SCC 216
The court held that the termination of a license by a public authority is not arbitrary or discriminatory if it is done in accordance with the terms of the license agreement and is necessary to achie....
The termination of a license agreement is valid if it is in accordance with the terms and conditions of the agreement, and the public interest outweighs the personal interest of the licensee.
The court reinforced that the existence of an arbitration clause limits the scope for judicial intervention in contractual disputes involving the state.
The court affirmed that disputes arising from contractual agreements lacking statutory characteristics are to be resolved through arbitration, and the invocation of performance guarantees is valid wh....
Writ petitions in contractual disputes are generally not maintainable if they involve disputed questions of fact.
Corporation must evolve a mechanism for testing of veracity and validity of order passed by lowest or lower authority/officer by higher authority/officer with adherence of norms of Natural Justice.
The court established that a party can terminate a contract without notice if the other party fails to comply with payment obligations over consecutive periods as stipulated in the agreement.
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