The exercise of powers of a State instrumentality emanating from the terms of the contract cannot be placed beyond the purview of judicial scrutiny, and non-arbitrariness is an essential concomitant of the rule of law.

K. N. Bhattacharjee, Sr. Advocate and R. Debnath, For Petitioner; S. Deb, Sr. Advocate S. Lodh, For Respondents.

Judgement

The petitioner has preferred this writ petition for issue of an appropriate writ calling upon the respondents not to deduct any amount from the BILL on account of demurrage charges without compliance of the relevant provisions of the agreement.

2. This Court vide order dated 4-2-2000 passed in Civ. Misc. Appl. No. 19 of 2000 directed the respondents as an interim measure not to deduct the amount of Rs. 7,74,216/- from the petitioners BILL until further orders. Thereafter, on 18-2-2000, an order was passed by this Court directing the respondents not to deduct the demurrage charges from the petitioners Bills. This Misc. case along with Civ. Misc. Appl. 59 of 2000 filed for interim direction are also being deposed (disposed) of along with the main petition.

3. Sri K.N. Bhattacharjee, learned senior Counsel for the petitioner has submitted that the petitioner entered into a contract with the respondent No.1, namely Food Corporation of India for transporation of food grains from Churaibari and Lharmanagar to Agartala for a period of one year and that the contract provides for deduction of demurrage charges from the bill of the contractor if such demurrage is occasioned by the negligence of the contractor, and the decision in this regard that may be taken by the senior Regional Manager, shall be the final. Sri Bhattacharjee has continued that in violation of the terms the Corporation have been indulging in deduction of demurrage charges on the recommendation of the officers other than the senior Regional Manager. According to him, such deduction is not permissible under the terms of the contract unless the senior Regional Manager gives his decision as the negligence of the contractor. Clause -XII (a) providing for such term for deduction reads as follows :-

"XII LIABILITY OF CONTRACTORS FOR LOSSES ETC. SUFFERED BY CORPORATION.

(a) The contractors shall be liable for all cost, damages, demurrages, wharfages, for failure of wagons, registration fees, charges and expenses suffered or incurred by the Corporation due to the contractors negligence and unworkman like performances of any services under this contract, or breach of any terms thereof or their failure to carry out the work with a view to avoid incurrence of demurrages etc. and for all damages or losses occasioned to the Corporation or in particulars to any property or plant belonging to the Corporation due to any act whether negligence or otherwise of the Contractors themselves or other employees. The decision of the Sr. Regional Manager regarding such failure of the contractors and their liability for the losses, etc. suffered by Corporation shall be final and binding on the contractors."

4. It would appear from the terms of the contract that the submission made by the learned senior Counsel is true to the spirit of the terms of contract reproduced above. Mr. S. Deb, learned senior Counsel for the Corporation relying on the statements made in the counter-affidavit filed in the misc. case submitted that the payment after deduction of demurrage charges has been proposed to be made as an abundant precaution so as to adjust the amount at the time of final payment of the bills. According to him, the payment sought to be made being interim in nature and the provision of clause-XII cannot be invoked at this stage.

5. I have perused the terms of the contract. No where it is provided for any interim payment on deduction of demurrage charge before the liability of the contractor is ascertained by the senior Regional Manager as per terms of Clause-XII. Therefore, such deduction on the face of it appears to be in violation of the terms embodied in Clause-XII. The argument that the deductions are proposed to be made from the interim payments to raise sufficient security to liquidate the demurrage charges that may be eventually raised by the railway authorities. But the pleadi

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