DATE OF JUDGEMENT:
15thMarch 2021(Reserved) & 9th April 2021 (Delivered)
JUDGES:
Justice Sanjeev Sachdeva
PARTIES:
MEP Infrastructure Developers Pvt. Ltd............ (Petitioner)
South Delhi Municipal Corporation& Others. ........... (Respondent)
COUNSEL:
Senior Advocate Abhishek Manu Singhvi, senior advocate Mukul Rohatgi, advocate Rishabh Jain, advocate Sushant Kumar Sarkar. ............ (For Petitioner)
Senior Advocate Harish Salve, Additional Solicitor General Sanjay Jain, advocate Garima Prasad. ............. (For South Delhi Municipal Corporation)
SUBJECT
The Petitioner filed a writ petition before the Delhi High Court to invalidate the termination orders passed by the South Delhi Municipal Corporation and allow the petitioners to continue collecting toll taxes.
AN OVERVIEW
1.In the present case, an agreement for ECC collection and tax toll collection was signed between South Delhi Municipal Corporation and MEP Infrastructure Developers Private Limited.
2. As per the contract, the developers were authorized to collect ECC & toll tax at 124 toll plaza from specific commercial vehicles. The contract even allowed the petitioner to collect penalties from such commercial vehicles who tried to evade toll tax by using free lanes.
3. The petitioner tried communicating via letter to inform that the commercial vehicles are using free lanes to evade toll tax and the petitioner’s incapacity to deploy officers on free lanes to collect toll tax from such commercial vehicle and hence there was a leakage in collecting penalties and toll taxes.
4. A letter concerning the same was issued to the petitioner stating that the developers should collect taxes only from the toll allocated and not from any other lanes also the petitioner was instructed to maintain the flow of the traffic to avoid excessive traffic jam. As there was a strike by the All India Motor Transport Congress, the petitioner as per the contract agreement claimed for a set-off of Rupees 5.96 crores as a force majeure event.
5. Due to default on part of the developers ( i.e. the petitioner ), the municipal corporation issued a letter of termination and issued a notice inviting new tenders. The petitioner requested the commissioner of the municipal corporation to appoint an independent adjudicator. However, the commissioner did not pay heed and thus the petitioner filed a writ petition before the high courtto invalidate the order of termination and allowing the concerned developers to collect toll tax also to appoint an independent arbitrator among other things.
IMPORTANT PROVISIONS
Constitution of India
• Article 14 – The State ensures Equality before Law and Equal Protection of Law.
• Article 226 –Allows a High Court to issue any writs, direction or orders to any authority.
ISSUES
The major issue framed by the Delhi High Court:
1. Whether the court, in this case, should invoke extraordinary writ jurisdiction under Article 226 of the Constitution?
ANALYSIS OF THE JUDGEMENT
1. The counsel representing the petitioner contended that the petitioner couldn’t pay deposits due to the ‘Force Majeure’ event as there was a gross reduction in traffic volume. Further, they submitted that the South Delhi Municipal Corporation had inaccurately issued a letter of termination on 16th March 2020 under a misconception that the order dated 2nd March 2020 has been violated. They argued that once the State becomes a party to the contract, then the State is under an obligation to act fairly, reasonably and in a just manner as it is a prerequisite of Article 14 of the Indian Constitution. As in this case, the respondent State acted in contravention of Article 14, a writ court can issue proper directions to set straight the arbitrary action of the Respondent.
2. The senior advocates representing the respondents raised objections regarding the maintainability of the writ petition. The counsel submitted that the disputes put forward is contractual in nature and thesame is governed by the terms of the agreement between the parties.It was argued on behalf of the respondent that the contention put forward by the petitioner, that force majeure clauses shall apply is simply wrong. Furthermore, a judicial review petition cannot be used as a tool for resolving contractual disputes in a contract arising out of a Force Majeure clause. It was also asserted that the defence of force majeure is a contractual dispute concerningthe performance of obligations under a contract.
3. The court looking into the merits of the case heavily relied upon the case of Essar Commissioner v. Isaac Peter (1994) 4 SCC 104 said that exercising its powers under Article 226 of the Indian Constitution, this court will not look into the contractual dispute and observed that the petitioner was unable to make out a case against, the South Delhi Municipal Corporation (i.e. the respondent) that their action was arbitrary or violative of Article 14 of the Indian Constitution or discriminatory. Though the senior counsel of the petitioners relied on the Supreme Court case of Karnataka State Forest Industries Corporation v. Indian Rocks, however, this could not be brought within the parameters to warrant the exercise of powers under Article 226 of the Indian Constitution.
4. The High Court said that the respondent i.e. the Municipal Corporation has merely acted within the 4 corners of the agreement and has exercised its rights to enforce the obligations assignedto the developersunder the contract. While on the other hand, to enforce the rights under the contract agreement under the terms of the Contract Act, the petitioner can enforce the same before the civil forum.
5. The court said that the objection raised by the municipal corporation that the petitioner could not invoke extraordinary writ jurisdiction under Article 226 of the Indian Constitution is sustainable. Hence, the court held that the writ petition is not maintainable. The court while dismissing the petition said that the parties should resolve their dispute by approaching an appropriate civil court by instituting civil proceedings and enforce their respective rights accordingly. The interim order was withdrawn and the writ petition was thus dismissed.
CONCLUSION
It is clear by the court's decision which states that,in contracts that are freely entered into with a State, there is no need to invoke the doctrine of reasonableness or the doctrine of fairness against a party (State) to alter or add to the terms and conditions of a contractbecause of the mere fact that it happens to be a State.
