The main legal point established in the judgment is that the Comprehensive Parcel Leasing Policy (CPLP) and the Railway Board's circulars have a binding effect on all zones of the Railways, and the actions of the Northern Railway must satisfy the test of non-arbitrariness under Article 14 of the Constitution.

S. Muralidhar, J.

1. The common issue in these eight petitions concerns the interpretation of Clause (E) in the Comprehensive Parcel Leasing Policy ('CPLP') of the Indian Railways for leasing of parcel space in the brake vans (SLRs) by passenger-carrying trains and leasing of Parcel Vans (VP/VPH/VPU) on round trip basis which was announced by the Railway Board on 28th March 2006 by the Freight Marketing Circular No. 12 of 2006 and became effective on 1st April 2006.

Relevant Clause of the CPLP and the Lease Agreement

2. Clause (E) of the CPLP provided for the extension of the lease in case of long term lease of three years. The extension could be for a period of two years at a lease rate 25% more than the lump sum leased freight rate. Clause (E) of the CPLP reads as under:

Clause (E): Extension of lease

1. Extension of lease is permissible only in case of long term lease of three years.

2. In case of long terms lease, on expiry of the contractual period, the same can be extended only once, by two more years at a lease rate of 25% more than the lump sum leased freight rate.

3. Such extension will be subject to satisfactory performance by the lease holder, without any penalty for overloading or violation of any provision of the contract.

4. In case of expiry of contract period and non-finalization of new contract due to administrative delays, temporary extension can be permitted by the CCM only once, for a period of three months.

3. Thereafter the Railway Board issued Freight Marketing Circular No. 40 of 2006 on 6th September 2006 circulating to the General Managers in all zones a copy of the specimen standard format of the agreement to be signed between the Railway Administration and the leaseholder for contracts of leasing of parcel space in the Brake Vans/Assistant Guard Cabin/Parcel Vans. Clause 20 of the said standard format agreement dealt with extension of leases and reads as under:

20.0. Extension of lease contract:

20.1. Extension of lease is permissible only in case of long term lease of 3 years wherein the same can be extended only once, by 2 more years at a lease rate of 25% more than the lump sum leased freight rate subject to satisfactory performance by the leaseholder, without any penalty for overloading or violation of any provision of the contract.

Background Facts

4. Each of the Petitioners in these cases was awarded contracts of lease of 4 tone FSLR space in passenger trains emanating from New Delhi or Delhi for a period of three years. Clause 18.1 in each of the lease agreements entered into with the Petitioners concerned extension of the lease and was identically worded as Clause 20.1 of the standard form lease contract extracted hereinabove. However, when the Petitioners sought extension of their leases in terms of Clause E of the CPLP and Clause 18.1 of the lease agreements, the Northern Railway granted extension of lease in four cases and that too not strictly in conformity with the CPLP and Clause 18.1. As regards M/s. Kishan Freight Forwarders [the Petitioner in W.P. (C) Nos. 7289 of 2010, 7290 of 2010, 7291 of 2010, 2041 and 2042 of 2011], extension of the lease was granted in respect of the 4 tone FSLR space in three passenger trains (Train Nos. 2394, 2820 and 2724) by a letter dated 19th October 2010 of the Divisional Railway Manager ('DRM'), Northern Railway "for a period of two years as stipulated in the policy or till finalization of fresh tender whichever is earlier." Likewise, in the case of Aurangzeb Chaudhary, [Petitioner in W.P. (C) Nos. 1923 and 1925 of 2011) similar conditional extension of the lease of a 4 tone FSLR space in Passenger Train No. 2497 was granted. However, M/s. Kishan Freight Forwarders was not granted extension in respect of the lease of FSLR space in Train Nos. 2392 and 2628. Aurangzeb Chaudhary was refused extension of the lease of 4 tone FSLR space in Train No. 4316 and P.N. Tiwari, the Petitioner in W.P. (C) No. 1201 of 2011 was refused extension of the lease of 4 tone FSLR