The court upheld that discretion in contract renewal must be exercised transparently, requiring justification from DMRC for refusal to extend the license agreement.

JUDGMENT

Prathiba M. Singh, J. (Oral)--This hearing has been done through Video Conferencing.

2. The present petition has been preferred against the Delhi Metro Rail Corporation Limited (hereinafter, "DMRC") in respect of license agreement dated 24th January, 2011 by which the Petitioner was awarded the license for installing display guide maps, including train timings, fare structure and other vital information. The said agreement was preceded by the letter of acceptance dated 11th May, 2020, which, according to the Petitioner, is an integral part of the contract.

3. The clause in the contract relating to the period of the license agreement, reads as under:

"Clause 14. That the Agreement provided herein shall terminate at the end of the period agreed to herein i.e. ten years reckoned from the day, 90 days after the date of issuance of letter of acceptance by DMRC, except that the agreement may also be terminated earlier in accordance with the terms of this Deed.

"DMRC, at its sole discretion may extend the duration of the agreement for another term of five years or any other period beyond the period agreed upon in the agreement, on terms and conditions mutually agreed between the parties by entering into a separate supplemental license agreement."

For resolving various issues related to energy supply, the clauses identical to those included in the relevant POWER SUPPLY COMPANY agreement for such supplies would become part of this agreement. "

4. A dispute has arisen because the initial tenure period has elapsed and the Petitioner had sought extension of 5 years, which, according to it, ought to have been granted. However, the DMRC's case is that it was solely within its discretion to extend or not to extend the agreement by a further period of five years.

5. Mr. Ashish Mohan, ld. counsel appearing for the Petitioner, relies upon the acceptance letter, which provides that the initial term of the contract is for 10 years, which shall be extended for a further period of 5 years. He relies upon the various terms in the contract to also show that the only ground on which the contract would have to be terminated, would be on the basis of performance or lack of utility. It is submitted that the Petitioner, having successfully performed the contract, the contract would have to be renewed and the discretion is only insofar as any other further term for which the contract ought to be extended.

6. On behalf of the DMRC, Mr. Sood, ld. Counsel submits that the clause is clear that it is at the discretion of the DMRC as to whether the contract is to be extended or not. In any event, the DMCRC has not found any utility for these guide maps, owing to the change in technology and some other arrangements, which are being discussed with the local municipal bodies.

7. The Court has heard ld. counsels for the parties and perused the record. A perusal of the license agreement shows that there is a conciliation/arbitration clause in the agreement, which reads as under:

"16. Except where otherwise provided for in the agreement, all questions and disputes arising between the parties pertaining or relating to the agreement directly or indirectly connected with the agreement shall in the first place be referred to a sole conciliator appointed by MD/Director/GM/Chief Engineer of DMRC or any other nominee appointed by him as the case may be. There will be no objection if the sole conciliator so appointed is an official of DMRC of the rank of deputy and above. The conciliator shall make the settlement agreement after the parties reach agreement and s