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IN THE HIGH COURT OF DELHI
Sanjeev Sachdeva, J.
MEP Infrastructure Developers Ltd. - Appellant
Versus
South Delhi Municipal Corporation - Respondent
W.P.(C) 2241 of 2020 & CM Appl. 7822 of 2020, CM Appl. 11092 of 2020, CM Appl. 6420 of 2021 and CM Appl. 7038 of 2021
Decided On : 09-04-2021




Parties to a contract must adhere to its terms despite unforeseen circumstances like force majeure, and disputes arising from such a contract should be resolved through contractual mechanisms, not judicial review.

Headnote:(A) Delhi Municipal Corporation Act, 1957 - Section 113(2)(g) - Enforcement of contract - Contract for toll tax and ECC collection was awarded to Petitioner by SDMC; disputes arose over remittances and penalties due to force majeure from COVID-19 pandemic and subsequent contract breach allegations. (Paras 1, 4-6, 60-67)

(B) Administrative law - The distinction between contractual disputes and administrative action - Courts exercise discretion under Article 226 primarily for questions of public interest, not for contractual interpretation. (Paras 82-109)

Facts of the case:
The Petitioner was awarded a contract for toll tax collection, faced penalties, and was terminated after alleging failure to collect due to varying traffic and COVID-19 impacts. The contract terms deemed these liabilities non-negotiable. (Paras 1, 60-66)

Findings of Court:
The Respondent acted within contractual rights and rejection of Petitioner’s claims was justified; contractual obligations were binding and enforceable. (Paras 109-110)

Issues: Whether the contract's penalty provisions were valid and the impact of force majeure on liabilities. (Paras 4-6, 41, 81-84)

Ratio Decidendi: The court emphasized that the contracting party must accept all terms agreed upon; mere financial impracticality does not warrant altering binding obligations of a voluntarily entered contract. (Paras 82-85, 109)

Result: Writ Petition dismissed; all interim relief vacated.

JUDGMENT

Sanjeev Sachdeva, J. Consequent to a bidding process, Petitioner was awarded a Contract by the South Delhi Municipal Corporation (hereinafter referred to the SDMC), for collection of Toll Tax & Environment Compensation Charge (ECC for short) from specified commercial Vehicles at the 124 toll plazas/posts/barriers bordering Delhi.

2. Petitioner has filed the subject Petition inter alia impugning, order dated 31.01.2020, passed by the Commissioner SDMC rejecting its representation; the demand notice dated 14.02.2020 issued by the Respondent Corporation demanding the weekly remittances envisaged by the Contract agreement along with penalty @ 0.1% per day; termination notice dated 16.03.2020; consequent notice inviting tender dated 28.04.2020 and the encashment of its bank guarantees.

3. Subject Writ Petition was filed on 19.02.2020. Petition was subsequently amended because of subsequent events.

PRAYERS IN THE WRIT PETITION

4. Petitioner by the amended Petition dated 18.05.2020 seeks the following reliefs:

    "a. Issue of a writ of mandamus or any other appropriate writ and appoint an independent Adjudicator to adjudicate the claims of the Petitioner;

    b. Issue a declaratory writ to the effect that clause 16 of the agreement which provides for adjudication mechanism has been left unworkable on account of actions and inactions of the SDMC Commissioner;

    c. Issue a writ of certiorari and quash the order dated 31.01.2020 passed by the Commissioner SDMC.

    d. Quash the Impugned Notice dated 14.02.2020 issues consequent to the impugned Order.

    e. During the pendency of the writ petition, stay the Impugned Notice dated 14.02.2020;

    f. Issuance a suitable writ, order and direction declaring that in the guise of section 113 (2) (g) of the Delhi Municipal Corporation Act, 1957 the Petitioner cannot be compelled to pay to the Respondent no.1 more than the actual amount collected towards toll tax from commercial vehicles entering the NCT, Delhi;

    g. Issue a writ in the nature of mandamus directing the Respondents to make a fresh assessment as to the circumstances affecting toll collection taking into account the circumstances highlighted by the Petitioner and reassess and redetermine the annual/weekly amount payable by the Petitioner to the SDMC towards toll tax;

    h. Issue a writ in the nature of mandamus directing the Respondents to take into consideration the change in circumstances make suitable downward revision in the weekly/annual remittance commensurate with the reduction in toll tax paying commercial vehicles and taking into account the tax leakages on account of free lanes;

    i. Issue a writ in the nature of certiorari quashing the demand of 0.1 % per day that is 36.5% per annum in the demand letter dated 18.11.2019 as being in terrorem and inequitable.

    iA. Be pleased to quash the letter of termination dated 16.03.2020 issued by the Respondent to the Petitioner.

    iB. Be pleased to quash the NIT dated 28.04.2020 issued by the Respondent consequent to the notice of termination dated 16.03.2020.

    iC. During the pendency of this Writ Petition, pass ad interim order directing the Respondent to keep in abeyance the Termination Notice dated 16.03.2020 as well as NIT dated 28.04.2020 for fresh bidding for collection of tax, till the final disposal of the instant writ petition.

    j. To issue a Writ order or direction in the nature of CERTIORARI and quash the Termination Notice dated 16.03.2020 and subsequent extension of termination date issued by the Respondent as being illegal.

    k. To issue a Writ order or direction in the nature of CERTIORARI and quash the NIT dated 27.04.2020 issued by the Respondent consequent to the notice of termination dated 16.03.2020.

    l. During the pendency of this Writ Petition, pass ad interim order directing the Respondent to keep in abeyance the Termination Notice dated 16.03.2020 and subsequent extension of termination date as well as NIT dated 27.04.2020 for fresh bidding for collection of tax, till the final d

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