2005 Supreme(All) 544

ALLAHABAD HIGH COURT
B.S. Chauhan and Dilip Gupta, JJ.
A.H.Wheeler
Versus
Union of India
Civil Misc. Writ Petition 475 of 2005
Decided On : 23 March 2005
Civil Misc. Writ Petition 475 Of 2005

A change in policy is arbitrary and unreasonable if it is not supported by any rational basis, is not in the public interest, or is discriminatory.

Headnote:

BOOKSTALL POLICY - RAILWAYS - RENEWAL OF LICENCE - LEGITIMATE EXPECTATION - CHANGE IN POLICY - JUDICIAL REVIEW - ARBITRARINESS - REASONABLENESS - PUBLIC INTEREST - ARTICLE 14. The petitioners, A. H. Wheelers and Company Pvt. Ltd., United and its shareholder have sought the quashing of the Commercial Circular No. 38 of 2004 dated 12. 10. 2004 issued by the Executive director (Candt) Railway Board containing the revised Book Stall Policy-2004 and a direction to the respondents to renew the licence of the petitioner No. 1 in accordance with the provisions of the Commercial Circular No. 19 of 2004 dated 1 1. 6. 2004.

Fact of the Case:

A. H. Wheelers have been operating the Bookstalls on the Railway Stations since 1877 and undoubtedly are the oldest in this field. In 1938 a partnership was constituted to run this business but subsequently on 31. 10. 1953 the firm A. H. Wheeler was incorporated as a Joint Stock company under the Companies Act, 1913. Initially permission had been granted to it for carrying on business of selling books on the Railway Stations but later on formal agreements were entered into between A. M. Wheelers and the Railways throughout the country. It, therefore, transpires that for the past more than 25 years A. H. Wheelers has been engaged in the business of setting up and maintaining bookstalls at various Railway stations of the country. Prior to 1960 it had a monopoly in operating the bookstalls in all the Railway Divisions except Southern railway and part of the South Central Railway but the position was reviewed by the Ministry of railways in the year 1961 and the sole selling rights of bookstalls was restricted to particular railway stations. Subsequently the sole selling rights of M/s A. H. Wheelers and Co. was restricted to only those stations where it had bookstalls prior to 1. 1. 1976 meaning thereby that the number of bookstalls was frozen and allotments were to be made to other categories like un-employed graduates and philanthropic organisations. The tenure of the agreements was initially for five years, which was renewed from time to time, but from 1967 onwards the tenure was increased to nine years and the last agreement, which was executed in the year 1994, expired on 31. 12. 2002. In accordance with the prevalent practice, under which the petitioner firm applied for renewal of the contract before its expiry, an application dated 5. 9. 2002 was submitted for renewal of the contract which was to expire on 31. 12. 2002 and as per the practice and procedure, the Railway board sent a letter dated 8. 11. 2002 to the General Managers of the different Zonal Railways requiring them to submit reports on the performance of the petitioner. Favourable reports were submitted by the Zonal Railways to the Railway Board recommending for renewal of the contract and even though the period of the contract expired on 31. 12. 2002, the petitioner firm was permitted to operate the various bookstalls at all the 258 Railway stations upon payment of royalty for the years 2003 and 2004. This fact is evident from the communications dated 28. 5. 2003, 19. 2. 2004 and 26. 2. 2004 sent by the Railways in connection with the renewal of bookstall contract wherein it has been mentioned that in consultation with the Finance department of the Board, the matter was examined and the dues outstanding against the petitioner firm could be accepted. However, the payment to be received was to be provisional in nature and the final amount was to be determined after the Bookstall Policy was finalised. The petitioner deposited the royalty and was also informed that the formal contract would be executed only upon receipt of the necessary instructions from the Railway Board.

Finding of the Court:

The court held that the change in policy was arbitrary and unreasonable and quashed the Circular dated 12. 10. 2004. The court also directed the respondents to consider the claim of the petitioner firm for renewal of the licence under the provisions of the Circular dated 11. 6. 2004.

Issues: 1. Whether the petitioner firm had a legitimate expectation of renewal of its licence under the Bookstall Policy of 11. 6. 2004? 2. Whether the change in policy was arbitrary and unreasonable? 3. Whether the Circular dated 12. 10. 2004 should be quashed?

Ratio Decidendi: 1. The court held that the petitioner firm had a legitimate expectation of renewal of its licence under the Bookstall Policy of 11. 6. 2004. The court relied on the following factors: * The petitioner firm had been operating bookstalls on the Railway stations for over 125 years. * The petitioner firm had a satisfactory performance record. * The Zonal Railways had recommended renewal of the petitioner firm's licence. * The Railways had permitted the petitioner firm to continue operating the bookstalls even after the expiry of the contract period. 2. The court held that the change in policy was arbitrary and unreasonable. The court relied on the following factors: * The change in policy was not supported by any rational basis. * The change in policy was not in the public interest. * The change in policy was discriminatory against the petitioner firm. 3. The court held that the Circular dated 12. 10. 2004 should be quashed.

Final Decision: The court quashed the Circular dated 12. 10. 2004 and directed the respondents to consider the claim of the petitioner firm for renewal of the licence under the provisions of the Circular dated 11. 6. 2004.