Interpretation of Sub-Lease Agreement (SLA) clauses and legal status of bid documents in ownership dispute over leased wagons

JUDGMENT

Manoj Kumar Ohri, J. By way of present petitions filed under Article 226 of the Constitution of India, the petitioners seek setting aside of orders dated 04.01.2019 passed by respondent No.1, whereby their representations dated 18.09.2018 were rejected. Additionally, the petitioners have sought directions for return of wagons as well as for payment of the user charges/rentals after expiry of the primary lease period. As common contentions have been raised in both the petitions, the same are taken up together for consideration and disposal.

2. The facts in a nutshell are that in the year 1994-95, the Indian Railways/respondent, while exploring alternate sources of funding, had floated an NIT for procuring 4000 wagons on Built-Own-Lease Transfer (BOLT) Scheme.

For the purposes of the present case, it is noteworthy that a Letter of Intent dated 18.03.1996 was issued by the respondent(s) in favour of one Cimmco Birla Ltd. (now known as Cimmco Ltd. and hereafter, referred to as "Cimmco") for procurement of 1200 wagons, out of which 1000 were BOXN wagons and 200 were BCNA wagons. Admittedly, Cimmco manufactured and supplied 1200 wagons to respondent(s) on lease under financing from four financial institutions, namely IDBI, SBI, SBI Cap and Development Credit Bank (DCB). The financial institutions and Cimmco entered into four Principal Lease Agreements (PLAs) and in turn, Cimmco entered into four Sub-Lease Agreements (SLAs) with the respondent(s). The primary period of lease was ten years with an option of entering into a secondary lease.

3. While the petitioner-M/s Real Apt Solutions claims to be successor-in-interest of DCB on the strength of submission that it had purchased 107 wagons on 22.05.2009, the petitioner-M/s Shatabdi Sales Pvt. Ltd. claims to be successor-in-interest of SBI Cap, having purchased 206 wagons on 27.11.2009. Statedly, the sale transactions were entered into after the above two financial institutions cancelled the lease with Cimmco. It is the case of the petitioners that after the expiry of the primary lease period, both the financial institutions duly conveyed their unwillingness to extend the primary lease period by entering into a secondary lease vide letters dated 03.11.2008 and 07.12.2009/15.02.2010 respectively. Reportedly, the respondent(s) were also informed that the petitioners would be entitled to recover the secondary period lease rentals as well as to take possession of the wagons in question.

4. Aggrieved with the fact that the respondent(s) illegally retained possession of the wagons beyond the primary lease period without payment of any lease rentals, writ petitions being W.P.(C) 8143/2014 and W.P.(C) 4805/2015 came to be filed by the present petitioners. The said petitions were disposed of vide orders dated 06.09.2018 thereby granting liberty to the petitioners to make a representation to respondent No.2. The petitioners filed their respective representations but the same came to be rejected by the respondent(s) vide separate impugned orders, both dated 04.01.2019.

5. Mr. P.D. Gupta, learned Senior Counsel, while appearing for the petitioners, submitted that while the petitioners purchased 107 and 206 wagons respectively, the remaining 887 wagons were purchased by one Titagarh Capital Pvt. Ltd. from IDBI and SBI Leasing. He contended that on the expiry of primary lease period and in absence of extension of secondary lease, the act of respondent(s) in retaining the wagons is illegal. He further submitted that admittedly, the respondent(s) have not paid any lease rentals after the expiry of ten-year primary lease period. It was also submitted that after receiving communication regarding sale of wagons in favour of the petitioners by DCB and SBI Cap, the respondents raised no protest.

Learned Senior Counsel further drew the attention of the Court to the terms of the PLAs and SLAs especially clause 18.2 to contend that the provisions of SLAs superseded the provisions of bids documents an