M/S PATLIPUTRA ENTERTAINMENT PRIVATE LIMITED v. THE BIHAR STATE T

Judgment

5. The Bihar State Tourism Development Corporation Ltd. Beer Chand Patel Path, Patna - 800001 through its managing directors. The Managing Director, Bihar The Bihar State Tourism Development Corporation Ltd, Beer Chand Patel Path, Patna - 800001. The General Manager, The Bihar State Tourism Development Corporation Ltd, Beer Chand Patel Path, Patna - 800001. The Deputy General Manager (Finance and Accounts), The Bihar State Tourism Development Corporation Ltd, Beer Chand Patel Path, Patna - 800001. The Manager, Hotel and Lease, The Bihar State Tourism Development Corporation Ltd, Beer Chand Patel Path, Patna - 800001.

6. MKS Enterprises 101, Hariom Commercial Complex, New Dak Bunglow Road, Patna-1 through its Proprietor namely Sri Manoj Kumar Singh, S/o Late Ashok Kumar Singh. ... ... Respondent/s ====================================================== Appearance : For the Petitioner/s : Mr. Y.V. Giri, Sr. Advocate Mr. Kaushal Kumar, Advocate Ms. Shrishti Singh, Advocate For the BSTDC : Mrs. Anukriti Jaipuriyar, Advocate For the Pvt. Respondent/s: Mr. P.K. Shahi, Sr. Advocate Mr. Vikash Kumar, Advocate ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE HONOURABLE MR. JUSTICE PARTHA SARTHY CAV JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 Date : 22-12-2022 Primarily, the following questions arise for considera- tion of this Court. (i) Whether the present writ petition is maintainable in light of the arbitration clause 54 of the agreement entered into on 27.08.2019 between the petitioner and the respon- dent-Corporation? (ii) Contingent upon the above, whether the conduct of the petitioner, post filing of the present writ petition entitles him to have the possession of the Hotel in question re- stored to itself? (iii) As a result of the second NIT, what right, if any, towards the Hotel in question vests with respondent no.6? (iv) Whether the claim of the petitioner that the agreement entered into with the Corporation would begin from the date of signing of the agreement, is sustainable in law? SEQUENCE OF EVENTS

2. Petitioner M/s. Patliputra Entertainment Private Limited and its Director seeks setting aside of orders dated 01.04.2022 (Annexure-11, Page- 93) and 23.05.2022 (Annexure-10, Page-73) rejecting his request for reconsideration of cancellation of agreement dated 01.04.2022; grant of stay upon proceedings arising out of cancellation and consequential order Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 of blacklisting by respondent no.1 namely the Bihar State Tourism Development Corporation Limited (hereinafter referred to as the “Corporation”); continuation of the agreement dated 27.08.2019 (Annexure-5, Page-37) for the agreed period of ten years; calculation of rental of the leased property in question, i.e. Hotel Vishnu Vihar, Gaya (“Hotel”) from the date of agreement, in terms of Clause 37 thereof and Clause 6 of the Notice Inviting Tender dated 09.03.2018 (Annexure-1, Page-24) and not from 15.06.2018, i.e. the date of issue of LOI or

20.06.2018 the date of taking over possession of the “Hotel”; condonation of the rent to be paid in respect of the Hotel for the period of lockdown (Pandemic Covid-19) in the years 2020, 2021 and 2022; directing the respondents to address all disputes before a learned Arbitrator as according to clause 54 of the agreement (Page 44).

3. Petitioner No.1, namely M/s. Patliputra Entertainment Private Lim- ited is a Company and petitioner no.2 namely Sri Niranjan Kumar is its Di- rector.

4. Respondent-Corporation issued an advertisement inviting tenders on 09.03.2018 for running a Hotel (Annexure-1, Page-24).

5. Having undergone the tender process, a letter of award dated

04.04.20218 (Annexure- R/1, Page-156) was issued in favour of Hotel Patliputra Exotica a unit of the above stated Company, being the successful bidder, wherein it was asked to deposit (i) bid amount for the 1 st year, i.e. Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 Rs.81,25,000.00 plus G.S.T amounting to Rs.14,62,500.00; (ii) security de- posit equivalent to the amount of the licence fee, i.e. Rs.81,25,000.00; and (iii) submission of non-judicial Stamp of Rs.1,000/- for the purposes of ex- ecuting an agreement, post which, an order of allotment was to be issued followed by signing of an agreement.

6. Even though on 04.05.2018 petitioner deposited only part of the li- cence fee plus GST totalling to Rs.95,87,500.00 as acknowledged by letter dated 12.05.2018 of the Corporation (Annexure R/4, Page-159), yet the Hotel was allotted for a period of ten years vide allotment letter dated

15.06.2018 (Annexure-2, Page-31) with the condition for the petitioner to deposit licence fee and security amount. On the assurance of furnishing a bank guarantee lest, post dated cheques issued by the petitioner to be en- cashed are not honoured, possession of the Hotel was handed over on

20.06.2018 (Annexure-R/6, Page-161).

7. However, failure to furnish Bank Guarantee led to deposit of the post dated cheque, which was returned uncashed on 31.07.2018, which fact petitioner was informed of vide letter dated 09.08.2018 (Annexure-R/7, Page-162), affording three days’ time to deposit the required bank guaran- tee.

8. The petitioner partly deposited the security fee on 12.09.2018 (Rs.40,00,000/-) (Annexure-3, Page-32). Vide letter dated 21.01.2019 (An- nexure-R/8, Page-163), the Corporation followed upon the remaining

Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 amount reiterating the earlier demand dated 18.09.2018 for paying the bal- ance amount of Rs.41,25,000/-, also noting that despite passing of three months, the same had yet not been paid. Again vide letter dated 01.04.2019 (Annexure- R/8 series, Page-164) a reminder was sent to pay the remaining amount granting thirty days time, which was then deposited on 03.05.2019 (Annexure-3, Page-34). A reminder with respect to signing of the agree- ment was sent by the Corporation on 03.06.2019 (Annexure- R/8 series, Page-165). Further, reminders dated 08.07.2019 and 25.07.2019 regarding the licence fee for the second year payable on 25.06.2019 and yet pending signing of the agreement (Annexure- R/8 series, Page-166-167) were sent.

9. Resultantly, only with the persistent follow up by the Corporation, eventually the agreement was signed on 27.08.2019 (Annexure-5, Page- 37).

10. On 22.10.2019, another reminder with respect to the licence fee for the second year totalling to Rs.1,00,66,875/- was sent by the Corpora- tion (Annexure-R-10 series, Page-169) followed by letter dated 18.11.2019 which further gave thirty days’ time to pay the due amount and detailed the consequences upon failure to do so (Page-170).

11. In response, petitioner stated vide a letter dated 18.12.2019 that Rs.21,00,000/- stood deposited towards the dues for the second year lease rental fee and the remaining amount would be deposited by 15.01.2020 (Annexure-R/11, Page-171). A letter dated 01.06.2020 issued by the Addi- Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 tional Managing Director of the Corporation (Annexure-12 series, Page- 172) suggests that as on that date, Rs. 41,00,000/- towards the lease amount had been deposited by the petitioner and the said letter served as “last warning” for the remainder amount. Since petitioner did not respond to the above, which gave them 15 days time from the issuance of the letter to meet the dues, a cancellation order dated 11.11.2020 (Annexure R/12 se- ries, Page-173) was issued, revoking the contract as also black listing from participation in the works of the Corporation for a period of five years.

12. On 23.11.2020 (Annexure-8 series, Page-59), petitioner wrote to the Managing Director of the Corporation requesting accommodation (waiver) in payment of rental dues for the period of March, 2020 to August, 2020 in the light of the then ensuing global pandemic and the resultant lock down imposed, with an assurance of payment of rent “once situation comes back to normal”. Again, on 09.01.2021 (Annexure-8 series, Page-60), peti- tioner wrote, highlighting the impact of global pandemic, putting forth three fold request: (i) three months exemption, September to November 2018 as the Hotel started operation in December, 2018; (ii) waiver of rent from March to August, 2020 on account of COVID Lockdown; and (iii) significant reduction in rent as a consequence of the lasting impacts of COVID-19.

13. It is contended by the petitioner that the order dated 11.11.2020 (Annexure-R/12 series, Page-173) was never given effect to, i.e. he was al- Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 lowed to continue as an allottee of the Hotel in question. It is submitted that the same is evident from letter dated 16.01.2021 (Annexure-15, Page-99) by which the Corporation asked for the remainder amount as it stood then to be paid, which in effect, due to the above order not being made opera- tional, was ‘recall of the said order’.

14. Vide letter dated 05.03.2021 (Annexure-16, Page-100), petitioner’s request made vide letter dated 02.02.2021 (Annexure-8 series, Page-62), were considered and rejected stating that (i) no particular reason stood as- signed for availing the gestation period; (ii) the interest arising out of delay in payment of principal amount was waived by the State Government vide office order dated 31.12.2020 (Annexure-16A, Page-101) with the princi- pal amount remaining to be paid; and (iii) that in light of the provisions of the agreement, request for reduction in rent could not be acceded to. None- theless, vide another representation dated 05.10.2021 (Annexure-8 series Page-64), petitioner reiterated its three fold request.

15. On 23.11.2021 (Annexure-9 series, Page-66), the petitioner sent legal notice to the Corporation invoking the arbitration clause 54 of the agreement, further stating that under clause 8 of the tender notice, a gesta- tion period of three months “was also to be allowed” and that the petitioner “honestly believed” that the date of allotment would be reckoned from the date of agreement and not handing over possession and as such the lease period be determined accordingly. Further, that COVID-19 lockdown and Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 the prevalent situation adversely affected the businesses resulting to the non-payment of the amount for the subsequent period. Further Corpora- tion’s claim of payment to Rs. 3,04,99,928/- was exorbitant, accounting for the clauses in the agreement. Despite adversities petitioner is interested in running the Hotel and as such had paid a token amount Rs.25,00,000/-.

16. The Corporation responded vide communication dated 05.01.2022 (Annexure 18, Page 104) wherein petitioner’s claim regarding the agree- ment commencing from 27.08.2019 was refuted, referring to the date and time mentioned in the agreement. Also reminding the petitioner about the dishonouring of its cheque and the eventual deposit of the security amount only after repeated reminders and a delay of one year. Also, Corporation does not partake in profits and therefore, it cannot be asked to incur losses, be it for whatever reason. Clause 52 of the agreement presents a way out for those unwilling to continue by giving six months’ notice or paying six months’ allotment fee in advance. In respect of the “confusion” about the commencement of the agreement, it clarified that clause 53 of the agree- ment provides for a method for clarification before the Managing Director of the Corporation and the same does not constitute an arbitral issue to be referred to jurisdiction of the learned Arbitration under Clause 54 of the agreement.

17. Clause 53 and 54 of the agreement dated 27.08.2019 read as under:- Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 “53- ,djkjukek ds fufgr 'krksZa dh fdlh Hkh rjg dk LiVhdj.k@fu.kZ; fuxe ds izca/k dk gh vafre ,oa ekU; gksxkA funs’kd Translated as “53. Any type of explanation/decision of the conditions enshrined in the agreement shall be final and valid which is given by the Managing Director of the corporation.” “54- mHk;i{kksa esa fdlh Hkh rjg dk fookn gksus ij mldk fu"iknu mHk; i{kksa dh lgefr ls fu;qDr vkjfoVzsVj }kjk fd;k tk,xkA vkjfoVzs’ku dh izfdz;k vkjfoVzs’ku ,.M jh&dkUlhfy;s’ku(re-concillation),DV 1996 esa fufgr izko/kkuksa ds rgr laikfnr fd, tk,xsa tks nksuksa i{kksa dks ekU; gksxkA bl vkjfoVsz’ku dh izfdz;k iVuk esa gh laiUu dh tk,xhA” Translated as “54. Any dispute arisen between both the parties shall be disposed of by the arbitrator appointed with the consent of both the parties. The procedure of the arbitration shall be followed under the provisions enshrined in Arbitration and Reconciliation Act, 1996, which shall be acceptable to both the parties. The procedure of this arbitration shall be concluded in Patna itself.”

18. On 25.01.2022 (Annexure-19, Page-114), the Corporation once again reminded the petitioner of the dues payable granting fifteen days time to pay the amount totalling Rs.2,64,99,928.00 constituted by the fees for the third and fourth year which became due respectively on 25.06.2020 and

25.06.2021 and the sums arising therefrom. The petitioner did not respond thereto and consequently, vide order dated 01.04.2022 [Annexure-11, Page- 94], the agreement was cancelled and the petitioner blacklisted for a period of five years.

19. In rejecting the petitioner’s another representation dated

26.04.2022 (Annexure-12, Page-95), the Corporation vide order dated

23.05.2022 (Annexure-10, Page-73) observed that not only deposit of Rs.25,00,000/- was insufficient but post such amount more than Rs.2.5 Crores was outstanding. It is imperative for a commercial entity to receive Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 the amounts due to it in time, and so, such a request is denied. On the issue of waiver of interest, order dated 31.12.2020 (Annexure-16A, Page-101) is referred to by which though interest arising out of the delay in payment of licence fee was waived, but the principal amount remained payable. It clari- fied that in a meeting on 15.09.2021, the commercial nature of the Corpora- tion was highlighted and the waiver of rent was, therefore, not acceded to. Regarding the gestation period, previously petitioner never made a request for grant of gestation period and in any case Hotel was functional much prior thereto. With respect to the commencement of the lease period from the date of signing of agreement as requested, it is stated that the allotment order as well as the agreement were clear on the aspect that the lease period would commence from the date of issuance of allotment letter. Most impor- tantly, petitioner’s past conduct weighed in the rejection of request for re- call of the order dated 01.04.2022. And while not conceding to any of the request made vide letter dated 26.04.2022 (Annexure-12, Page-95), peti- tioner was once again reminded to pay the outstanding dues of the Corpora- tion, in the absence of which, process for attachment of property as accord- ing to clause 11 (ga), would be taken. PROCEEDINGS OF THE COURT

20. The present writ petition was filed on 25.06.2022. The reliefs claimed therein have been referred to in the earlier part of the judgment. Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022

21. An interlocutory application bearing no. I.A. No. 01 of 2022 was filed on 14.07.2022 to further lay challenge on the order of cancellation dated 01.04.2022 (Annexure-11, Page-93) and to quash subsequent notice inviting tender dated 15.06.2022 (Annexure-13, Page-97) pertaining to the Hotel in question. The same was allowed vide order dated 02.11.2022. Sig- nificantly, no interim order staying the process was passed.

22. Subsequently, taking note of the developments in the intervening period, another interlocutory application bearing I.A. No.02 of 2022 was filed on 02.08.2022 by M/s MKS Enterprises, who, as a result of the tender notice dated 15.06.2022 and its processes, stood allotted the Hotel in ques- tion, on 27.07.2022, post cancellation of the agreement of the Corporation with the petitioner. The said I.A. was allowed vide order dated 12.09.2022 wherein the Court noted that the applicant is a proper party to the present proceedings and declared as a successful bidder, had also deposited the bid amount which is north of Rs.1,00,00,000/- (Rupees One Crore), as such was added as a party-respondent no.6 to the present petition.

23. Vide order dated 02.08.2022, this Court taking note of the dispute regarding the exact amount to be paid, and payable by the petitioner as on date of determination of the agreement, i.e. 27.08.2019, noted that- “We are of the view that interest of justice only demands that the petitioner sits with the Managing Director of the respondent Corporation for working out the amount due and payable not only in terms of the agreement but also in terms of the policy uniformly adopted by the respondents in granting Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 benefit of waiver, be it in whatever form, with respect to the hotels situate in the State of Bihar. Shri Y.V. Giri, learned Senior Counsel states that as on date, petitioner is liable to pay a sum of Rs. 2,73,25,418.70/- which he is ready and willing to deposit in two equal instalments spread over a period of one month. On the other hand, Ms. Jaipuriyar, learned counsel for the respondents, states that the total amount due and payable is Rs.4,02,33,346.00/-. We notice that this amount also includes the licence fee for the entire period 2022-23, which may not have been payable as on the date of the determination of the agreement but nonetheless would be payable, should the parties arrive at a settlement in terms of the agreement. At this stage, Shri Y.V. Giri, learned senior counsel, states that the amount so determined for the period 2022-23 would be deposited within six months from the date of handing over of possession of the property to the petitioner. Petitioner shall make himself available in the office of the Managing Director of the Respondent Corporation on

04.08.2022 at 10:30 A.M. We are hopeful that the parties shall endeavour to arrive amicable settlement. However, we clarified that such an exercise shall be without prejudice to the respectable rights and contentions of all the parties.” (Emphasis supplied)

24. Pursuant to the above order, a meeting of the parties which in- cluded representatives of the petitioner, the respondent-Corporation and M/s MKS Enterprises was held on 06.08.2022 in the chambers of Manag- Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 ing Director of the Corporation. The minutes of the meeting are filed as (Annexure-20, Page-180) along with supplementary affidavit dated

02.09.2022. The following issues reflect as having been considered but without any conclusion of settlement. 1). Issue of calculating lease amount from the date of agreement; 2). COVID related waiver; 3). Calculation of interest in general (apart from COVID period); 4). Request regarding gesta- tion period; 5). Payment of all dues of the Corporation in two equal install- ments over a period of one month; 6). Request regarding the lease amount of year 2022-23; 7). Re-allotment of the Hotel in question to the petitioner, payment of licence fee for 2022-23 within six months of handing over of possession.

25. Without prejudice, the dues worked out, pursuant to the order dated 02.08.2022, by the respondent-corporation were communicated to the petitioner vide letter dated 10.08.2022 (Annexure-21, Page-185) to the amount of Rs.2,62,92,261/- which even though the petitioner submits is, on the higher side, but acceptable in the spirit of amicable settlement.

26. Vide order dated 08.09.2022, learned counsel appearing for the pe- titioner was directed to ascertain the willingness of the petitioner to deposit the amount as arrived at in the proceedings dated 06.08.2022 and meeting the difference in the amount of annual lease as per the bid submitted by the successful bidder. The petitioner’s willingness was conveyed to the Court as recorded in order dated 12.09.2022 as under:- Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 “Today, Shri Y.V.Giri, learned senior counsel for the petitioners, states that the petitioners are ready and willing to abide with the conditions contained in the aforesaid order. As such, petitioners are directed to deposit a sum of Rs.2,62,92,261/- on or before 19.09.2022. Also, prior thereto, petitioners shall furnish an undertaking to this Court of making good the difference of the amount of annual lease equivalent to the amount submitted by the successful bidder. Needless to add, such deposit amount furnishing of an undertaking is only without prejudice to the respective rights and contentions of the parties.” (Emphasis supplied)

27. On 19.09.2022, petitioner filed supplementary affidavit by which it is stated that an Online transfer of Rs.2,30,92,261/- and Rs.32,00,000/- vide cheque dated 19.09.2022 was made. In support of the same, petitioner annexed RTGS Slip (Page 223-225).

28. In response, vide supplementary counter affidavit dated

27.09.2022, respondent-corporation submitted that the cheque for Rs.32,00,000/- was dishonoured due to insufficiency of fund, hence, pay- ment to be made falls short of said amount (Annexure-R/13, Page-242).

29. In the 4th supplementary affidavit dated 28.09.2022, petitioner has tried to explain the reason for the dishonour of the cheque, being inadver- tence and the said amount deposited via NEFT on 27.09.2022 (page-233) in favour of the Corporation which stands accepted. Further, bona fides of the company cannot be questioned as entire amount stands deposited and the respondent-Corporation’s raising frivolous issues appears to be at the Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 behest of third party. The petitioner is ready and willing to make good the difference between the lease amount upon which the Hotel is allotted to him and subsequently vide NIT dated 15.06.2022 to respondent no.6, namely M/s MKS Enterprises, with the lease period extended for twenty years as opposed to ten years under the original agreement entered into with the Corporation.

30. The respondent-Corporation has, in turn, explained its unwilling- ness for petitioner’s tainted image and poor financial capability and lack of good faith. There can be no guarantee that similar defaults not to be re- peated in future. Further, respondent no.6 has not only paid the amounts due in full, but allotment letter stands issued with the agreement yet to be executed and, therefore, no claim can be made by the petitioner.

31. Reproduction of the operative part of the minutes dated

06.08.2022 would be beneficial, appreciating that despite endeavours, par- ties were not ad idem on continuance of the contract, hence adjudication on merits. “The BSTDC had gone ahead with the due process of leasing out the said property and after following the due process, the prop- erty has been allotted to the successful bidder MKS Enterprises. The new bidder has already deposited the required Licence fees for the year 2022-23 and has shown his bonafide intent as against the repeated default exhibited by the petitioner. The new allottee has quoted an annual licence fee of Rs. 1.15 Cr. (One Crore Fifteen Lac) + GST for the next 20 years with an yearly increment of 5% Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 which is far more than the annual licence fee committed and de- faulted by the petitioner, which was mere 81.25 lac + GST at the time of allotment. Hence, if the contention of the petitioner regard- ing re-allotment of the property is accepted, it would not only tanta- mount to jeopardizing the rights of the new lessee but also lead to a major loss of public money that would otherwise accrue to the BSTDC in the next two decades. Moreover, any such decision or consent about re-allotment to the petitioner is not possible at the level of the BSTDC as the matter is sub judice. The meeting with the petitioner thus concluded. After this, the representative and Ld. Advocate of MKS Enterprises submitted a written representation and briefly put forth their request of not ter- minating their allotment order as they had already complied with the due process and had deposited the requisite amount in advance showing their bonafide intent, and that their right has been created which may not thus be abrogated. They tried to convince that there is no compelling reason to be biased against them in favour of the petitioner who has been in habitual default, even at the cost of gov- ernment revenue and their rights. It was clarified to them that it is beyond the administrative power of BSTDC to re-allot the property to ex-lessee. However, BSTDC is mindful of the fact that the matter is pending before the Hon’ble High Court and any decision which will be passed by the Hon’ble Court will be binding upon the par- ties. The meeting was then concluded.” (Emphasis supplied) Submissions on behalf of the petitioners

32. Shri Y.V. Giri, learned Senior Advocate appearing for the petition- ers has submitted that 1). the prevailing conditions of the COVID Pan- Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 demic-19 were not considered by the Corporation prior to termination of the agreement and issuance of order of blacklisting, so, the impugned or- ders are arbitrary and unreasonable; 2). During the period of the Pandemic, various relaxations and exemptions were granted to different sectors and in- dustries. Considering the fact that the sole business of the petitioner was running the Hotel, the non-grant of exemption from payment of rent is in violation of Article 14 and 19(1) (g) of the Constitution of India; 3). Im- pugned action is in violation of the principles of natural justice, as not only no opportunity was afforded but the orders passed are non-reasoned; 4). The Corporation is silent on methods of calculation of dues which has de- prived the petitioner of the opportunity to respond to the issues raised by the respondent-corporation; 5). An order of blacklisting is equal to a civil death as it activates prejudice at present but also taints the future of the or- ganization. Considering the ongoing restrictions, such a harsh penalty was not warranted apart from being disproportionate to the alleged infraction; 6). The subsequent allotment would result into irreparable loss to the peti- tioner; 7.) Pursuant to the orders of this Court, a meeting was held and the amount due to the respondent-corporation calculated. Despite, the peti- tioner’s belief that the amount so calculated is higher than what it ought to be, it stands deposited; 8). The petitioner is also ready to undertake the higher amount of lease payment as undertaken by respondent no.6 in terms Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 of NIT dated 15.06.2022 under which, then, the term of the agreement should be extended to twenty years.

33. Sri Y.V. Giri, learned Senior Advocate, refers to and relies upon the following judgments:- (i) Bihar Offset Printers Association v. Union of India1, para 54(i); (ii) M/s Magadh Sugar & Energy Ltd. V. State of Bi- har2, para 19, 23, & 24; (iii) Uttar Pradesh Power Transmis- sion Corporation Limited v. CG Power and Industrial Solu- tions Limited & Anr.3, Para 65, 67, 68 & 69; (iv) Maharash- tra Chess Assn. v. Union of India4; (v) State of Jharkhand v. CWE-SOMA Consortium5, para 13; (vi) Poonam v. State of U.P.6, para 48, 49, 50, 53; (vii) State of Kerala v. M.K. Jose 7, para 17; (viii) Gorkha Security Services v. Govt. (NCT of Delhi)8, Para 21, 22; (ix) Uttar Pradesh Avas Evam Vikas Parishad v. Om Prakash Sharma9, para 28 & 29; (x) Union of India v. Tantia Construction Pvt. Ltd.10, (xi) ORXY Fish- eries (P) Ltd. V. Union of India11, para 25, 26,27, 41, 42; paras 20, 21, 22, 33 and 34; (xii) Food Corporation of India v. SEIL Ltd.12; (xiii) Popcorn Entertainment v. City Indus- trial Development Corpn.13, para 21, 22, 23 & 47; (xiv) Ra- jasthan Housing Board & Anr. V. G.S. Investments & Anr.14, para 8 & 9; (xv) ABL International Limited v. Export Credit Guarantee Corpn. of India Ltd.15; (xvi) Harbanslal Sahnia v. Indian Oil Corpn. Ltd.16, para 4 & 7; (xvii) 1 (2022) 2 BLJ 595 CWJC No.762 of 2022 decided on 25.03.2022 2 2021 SCC OnLine SC 801 3 (2021) 6 SCC 15 4 (2020) 13 SCC 285 5 (2016) 14 SCC 172 6 (2016) 2 SCC 779 7 (2015) 9 SCC 433 8 (2014) 9 SCC 105 9 (2013) 5 SCC 182 10 (2011) 5 SCC 697 11 (2010) 13 SCC 427 12 (2008) 3 SCC 440 13 (2007) 9 SCC 593 14 (2007) 1 SCC 477 15 (2004) 3 SCC 553 16 (2003) 2 SCC 107 Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 Whirlpool Corpn. Registrar of Trade Marks v. Registrar of Trade Marks17. Submissions on behalf of the Corporation

34. Ms. Anukriti Jaipuriyar, learned counsel appearing for respondent- Corporation, made the following submissions:- 1). The Corporation, upon the petitioner not depositing the licence fee, security deposit or non-judicial stamp paper of Rs.1,000/-, took a sympa- thetic view and did not withdraw letter of award as per clause 3.1 and 3.2 of NIT and gave time to deposit the required amount. Even after reminder, only the licence fee was submitted. The post dated cheque submitted on

30.07.2018 even after seeking further time, stood dishonoured for non-fur- nishing of guarantee. On assurance of the petitioner’s letter dated

14.06.2018 (Annexure-4, Page-36), allotment letter was issued on

15.06.2018 (Annexure-2, Page-31) stipulating a condition that the period of allotment would begin from the date of its issuance which was never ob- jected to by the petitioner. The said condition was also included in the agreement dated 27.08.2019, duly signed by both the parties.

35. After the cheque was dishonoured followed by a false assurance of payment, the security amount was finally deposited after lapse of more than one year from letter of award dated 04.04.2018; 2). A general principle of equity is that no one should take benefit of own wrong. The petitioner be not permitted to count the period of licence from date of signing of agree- 17 (1998) 8 SCC 1 Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 ment; 3). The Corporation issued several reminders, taking a lenient view on payment of second year licence fee of which only part payment of Rs.21,00,000/- was made on 16.12.2019; 4). The gestation period as per clause 4.1 of the NIT was never demanded; 5). A show cause was issued dated 01.06.2020 and even a termination letter issued on 11.11.2020 (An- nexure R/12 series, Page-173) was not acted upon as petitioner sought re- vocation of the cancellation order in light of COVID-19; 6). The relaxation sought by the petitioner for the period COVID-19 lockdown was for the first time on 09.01.2021 (Annexure-8 series, Page-60) and subsequently on

02.02.2021 which was rejected vide letter dated 05.03.2021; 7). After the default to pay amount Rs.2,64,99,928/- within fifteen days as according to letter dated 25.01.2022 (Annexure-19, Page-114), the petitioner was black- listed for a period of five years vide order dated 01.04.2022 (Page- 94) and subsequent representation dated 26.04.2022 rejected vide a reasoned order dated 23.05.2022 (page-73); 8). The beautification of the property is a cost to be borne by the petitioner as per clause 13 of the agreement (Also clause 11 of the NIT) and the respondent-corporation cannot be held liable for the same; 9). No differential treatment can be given to the present petitioner as opposed to other licencees of the respondent-corporation as a general deci- sion to waive the interest already stands taken vide letter dated 31.12.2020 (Annexure-16A, Page-101); 10). Any dispute with respect to the terms of Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 the agreement are subject to clarifications as requested under clause 53 of the agreement and not arbitrable under clause 54.

36. She refers to and relies upon a decision of the Hon’ble Supreme Court in Silppi Constructions Contractors v. Union of India & anr.18 Submissions on behalf of respondent no.6 namely MKS Enterprises

37. Mr. P.K. Shahi, learned Senior Advocate made the following sub- missions:- (i) The present writ petition is not maintainable as the agreement contains clause 54 which is an arbitration clause. In the availability of ef- fective remedy, the exercise of extraordinary writ jurisdiction would not be appropriate; (ii). Four exceptions have been carved out by the Hon’ble Apex Court where in the presence of alternate remedy, a writ petition is maintainable. (a) for enforcement of fundamental rights; (b) violation of principles of natural justice; (c) orders/proceedings are entirely without ju- risdiction; and (d) that the vires of the legislation is challenged, which in the present case are not available; (iii) With respect to the investment to Rs.5,00,00,000/-, petitioner has not annexed any document to reflect the same; (iv). Petitioner is a defaulter in making payment and COVID has no relation to such default as it occurred right from the time of security de- posit. Petitioner is also defrauder of the Indian Bank who has taken re- course of law against them; (v) Petitioner is a habitual defaulter, not only to the present corporation but also to other Government Institutions. An inves- 18 (2020) 16 SCC 489 Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 tigation has been launched by the Enforcement Directorate under the Pre- vention of Money Laundering Act, 2002 and two properties have also been attached; (vi). The continuance of the licensing agreement would be against the public interest.

38. He refers to and relies upon the following judgments:- (i) South Eastern Coalfields Ltd. v. S. Kumar’s Associates AKM (JV)19; and (ii) Radha Krishan Industries v. State of Himachal Pradesh20. Relevant Provisions of the NIT/Agreement

39. It is apt, for proper adjudication of the lis, to reproduce certain clauses of the NIT dated 09.03.2018 (Annexure-1, Page-23-30). “3.12 The successful bidder shall be required to sign the Managment Agreement within 15 days of acceptance of Letter of Award. The successful bidder shall be liable to fulfil the following obligations as a precondition of signing of Management Agreement: (i) Payment of Management Fee shall have to be paid in ad- vance. Submission of requisite unconditional Bank Guarantee /FD/TDR equivalent to 1 year Management Fee and shall be renewed every year. (ii) Failing to fulfil the aforementioned obligations, the Letter of award shall stand withdrawn without any liability on BSTDCL and the EMD of such bidder shall stand forfeited.” “3.13 Bidders should note that: If they withdraw their Bid after their technical bid has been (i) accepted, or That the cancellation 01.04.2022 be re- called. the hotel was in a working condi- tion even prior to the petitioner’s taking over of its operations. That, in this regard, both the allot- ment letter as also the agreement between the parties were clear that the petitioner would without delay take possession of the Hotel in question and the time period of lease would commence from the date of issuance of letter of allot- ment and so, this request cannot be agreed to. That even after payment of Rs.25,00,000/- the outstanding amount of Rs.2.5 crores (approx.). Also that the licensee has never paid the licence fee on time and in view of such past conduct, extend- ing the term of agreement would not be agreeable as per law.

93. From the above, it is clear that each averment of the petitioner has been considered. Therefore, the order dated 23.05.2022 by no means can be termed as non-reasoned.

94. It is clear, that non consideration of the request letters, as averred, is in actuality, a disagreement with the decision arrived at. In that respect the Hon’ble Supreme Court has held, that disagreement cannot be a ground of interference [Afcons Infrastructure Ltd.36]. Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022

95. Citing a judgment of Hon’ble the Apex Court in Popcorn Enter- tainment13, the petitioner contends that the three circumstances as laid down therein, i.e. the order impugned is without jurisdiction; principles of natural justice have been violated; and, Article 14 of the Constitution of India have been offended. The contention as to Article 14 and natural jus- tice already stand answered in our opinion. So far as the impugned orders, being without jurisdiction and with intent to resile from a concluded con- tract, contrary to the express terms therein, this Court fails to appreciate how is it so. It is clear from the conduct of the Corporation that despite the indolent approach of the petitioner, numerous opportunities were granted over the years to pay the dues and one cancellation order, despite being issued was not acted upon, thereby, yet again granting the petitioner fur- ther opportunity to mend his ways and after no positive result could be seen from such stand of the Corporation towards the petitioner, the agree- ment was cancelled according to the terms and conditions agreed to by both the parties.

96. The petitioner in the present case has been termed by the respon- dent-corporation as also respondent no.6, a chronic defaulter. It is so. Hence, petitioner deserves no favourable equity. No proof of any invest- ments made on the property is on record. Indulgence to such a chronic de- faulter, would amount to ‘flogging a dead horse without any conceivable Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 result being expected’. [Haryana Financial Corporation v. Jagdamba Oil Mills,44 , Para 15].

97. Continuing with the discussion, henceforth we conjointly deal with the issue of blacklisting. Undisputedly, vide notice dated 25.01.2022 (Annexure-19, Page-114), petitioner was informed of such possible conse- quences. As such and rightly so, such plea is not raised. However, what is urged is the order of blacklisting being disproportionate and unwarranted.

98. The principles with respect to blacklisting have been noted by this Court in CWJC No.2625 of 2021 titled as M/s. Satyendra Kumar and Co. Const. Pvt. Ltd. v. The State of Bihar & Ors. decided on

21.04.2022. Para 12, summarizing principles is reproduced as under:- “ 12. The principles enunciated in the said decisions can be summarized as under:- (a) The effect of blacklisting is to exclude a person from entering into a lawful relationship with the government for a gainful purpose. (b) The power of the State and the Union under Article 298 of the Constitution extends to carrying on any form of trade, the acquisition, holding or disposal of property and entering into any related contracts. Such exercise of power may be with or without a law, on the books, subjected of course to Part III of the Constitution, including Article 14 and 21. (c) Public contracts are subject to equality of opportunity. The State's right to trade must be executed with due observance of equality. (d) An individual may choose to or not to deal with a particular person but the government does not have such Liberty. It cannot discriminate similarly situated person. (e) Blacklisting deprives a person of equality of opportunity in a public contract, disabling them from participating, in spite of eligibility. A person transacting business with the State possesses a legitimate expectation that any act done by the State will be backed by legality. (f) The ground of prejudice being caused to the petitioner on non issuance of Show cause, is as a 6/10 matter of practice, generally, not available to the State. (g) The issuance of show Cause Notice, unless otherwise warranted, must precede blacklisting. 44 (2002) 3 SCC 496 Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 (h) Blacklisting is not a simple event. It is followed by many civil consequences, or those of another nature. It is also termed “civil death.” (i) Given the stigmatic nature of an order of blacklisting it must be issued with great caution as it entirely precludes a person who has been blacklisted from the award of government contracts. (j) An order of blacklisting is open to be weighed on the scales of natural justice and the doctrine of proportionality. (k) An essential precondition for a duly issued order of blacklisting is a fair hearing on the Show Cause Notice issued.”

99. Since inception i.e. the grant of letter of award, petitioner’s de- faults have been a constant occurrence. There was a delay in payment of the licence fee of the first year which came to be paid two months after the award, the security deposit was made after lapse of more than one year and also after numerous reminders. For the payment of licence fees con- cerning subsequent years also repeated reminders were sent as is apparent from record and the various letters referred earlier and piecemeal pay- ments for dues outstanding for months altogether as also two dishonoured cheques have led to such a stand being taken by the Corporation.

100. It is only on the initiative of this Court that the payment of dues outstanding of the Corporation have been made and even therein, part payment after a cheque being dishonoured after the time period granted by the Court and without seeking leave.

101. In the light of the chronic default of the petitioner in payment of its dues, repeated reminders and even one cancellation order not being acted upon as also taking of the delayed pleas, the order of blacklisting, although of considerable negative consequent cannot be said to unwar- ranted. The payment of dues after the institution of this writ petition upon Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 the urging of the Court, which in any event were undisputedly payable, does not sweep under the rug, the past conduct of the petitioner. Annex- ure-21, Page 185 of the record speaks loud and clear that for each of the preceding four years were pending right up until the last of the payments having been made on 27.09.2022.

102. Hon’ble Apex Court in Haryana Financial Corporation v. Jagdamba Oil Mills,45 Para 8, observed that “while not insisting upon the borrower to honour the commitment undertaken by him, the Corporation alone cannot be shackled, hand and foot in the name of fairness.” In the present case, the petitioner has not, in any way, stood true to the commit- ments undertaken by him, having been declared the successful bidder for the Hotel Vishnu Vihar, Gaya. Simply because upon the urging of the Court, the petitioner has paid the amounts calculated, the Corporation can- not be expected to engage and deal with a Company which has repeatedly caused delays and issues in the name of fairness.

103. From the above, it is clear that the punishment of five years blacklisting the petitioner is not disproportionate.

104. In the legal notice dated 23.11.2021 (Annexure-9 series, Page- 66) given by the petitioner to the respondent-Corporation, under point 9, it is stated that in view of clause 37 of the agreement, the petitioner “hon- estly believed” that the allotment would be calculated from the date of signing of the agreement. 45 (2002) 3 SCC 496 Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022

105. It is submitted that not calculating the same from the date of signing of the agreement is in violation of the terms of the NIT.

106. Clause 4.6 of the NIT (Page-28) reads “The management Agree- ment is for a period of ten (10) years from the date of signing of the Agreement.”

107. Clause 3 of the allotment order dated 15.06.2018 (Annexure-2, Page-31) reads as under:- “3- vuqKfIr/kkjh vofyac lEifRr dk izHkkj izkIr dj ysxsa ,oa vkoaVu dh x.kuk] i= fuxZr dh frfFk ls izHkkoh gksxhA” Translated as “3. The licensee shall take over the charge of property at the earliest and the calculation of the allottment shall be effective w.e.f. the date of the issuance of the letter.”

108. Clause 1 of the agreement (page-38) reads as under:- “1- of.kZr ifjlEifRr dk lapkyu] tks fu;ekuqlkj O;olkf;d vk/kkj ij ;kf=;ksa@i;ZVdksa ds fy, 10 (nl) o"kksZa ds fy, vFkkZr fnukad&15-06-2018 ls 14-06-2028 rd vkoafVr fd;k x;k gSA” Translated as The operation of the said property, which has been allotted for 10 “1. years i.e. from 15-06-2018 to 14-06-2028 for the travellers/tourists on the commercial basis as per rules.” vkoaVu frfFk dh x.kuk] ,djkjukek esa of.kZr frfFk ls dh tk;sxh ,oa lkjh okafNr “37- jkf’k izkIr gksus ij mDr lEifRr dk izHkkj lapkyu gsrq lkSaik tk;sxkA” Translated as “37. The date of allottment shall be calculated from the date as mentioned in the agreement and after receipt of all the desirable amount, the charge of the said property shall be handed over for its use.” Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022

109. It is true that the NIT states that the management of the Hotel is handed over from the date of signing of the agreement. It is equally true that the allotment order states that the period of lease would begin from the date of issuance of the letter. Also, clause 1 of the agreement which has been signed by both the parties clearly mentions the time period for which the management of the Hotel stands handed over to the petitioner. Clause 37 which the petitioner relies on, in his legal notice dated

23.11.2021 (Annexure-9 Series, Page 66) itself says that the period of allotment will commence from the date mentioned in the agreement. In our considered view, the terms of the NIT stood modified vide subsequent agreement. Even otherwise as is held by Hon’ble the Supreme Court in Bharat Coking Coal Ltd.35 that minor deviations from the NIT cannot be a cause of interference of the Court and also keeping in view that it is after more than two years that the objection with respect to the date of signing of the agreement is taken, ignoring the fact that both parties signed the agreement which clearly stated the period, in view of this Court, petitioner has no right to have date of the agreement be construed not from the date of signing. If this plea is allowed, the respondent corporation would be harmed severely and undeservedly, resulting into wrongful gain to the petitioner, against whom, unrefutedly, proceedings under the provisions of the Prevention of Money Laundering Act, 2002 stands initiated. Equity Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 being dead against the petitioner, on all counts, basis of challenge to the impugned action stands repelled.

110. With the disposal of the representation vide order dated

23.05.2022, the saga of the present petitioner, save and except, as on date outstanding dues, was closed and a fresh NIT with respect to Hotel in question was issued on 15.06.2022. Respondent No.6 was the successful bidder and as has been submitted by the respondent- Corporation, has paid the amounts in full, with the allotment having been made.

111. It is contended by the petitioner that no right vests in respondent no.6 just because he was the highest bidder. Petitioner has referred to Ra- jasthan Housing Board14 wherein it is stated that the highest bidder in auction did not have any right to have the auction concluded in his favour till the time the Chairman of the Housing Board passed an order to that ef- fect. Further, reliance is placed on Uttar Pradesh Avas Evam Vikas Parishad9, wherein participation in a tender process accrues no other right except fair treatment and equality; and on CWE-SOMA Consortium5 wherein it is stated that the person issuing the tender has no obligation to accept any tender.

112. The contention of the petitioner that no right whatsoever has ac- crued in favour of respondent no.6 is in error. In contractual matters, a right accrues once a contract is concluded. A contract has been described by Hon’ble the Apex Court as a bilateral transaction between two or more Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 than two parties. Every contract has to pass through several stages begin- ning with the stage of negotiation during which the parties discuss and ne- gotiate proposals and counter-proposals as also the consideration resulting finally in the acceptance of the proposal. The proposal when accepted gives rise to an agreement. [Tarsem Singh v. Sukhminder Singh,46]

113. Here, there can be no doubt that an NIT was issued, the bidding process has been completed, the highest bidder declared, award letter is- sued and deposits made. Additionally, both Rajasthan Housing Board14 and CWE-SOMA Consortium5 cited by the petitioner themselves belie their contention. They both state “it is well settled that so long as the bid has not been accepted the highest bidder acquires no vested right to have the auction concluded in his favour.” In the present case, a letter of award has been issued by the respondent-corporation on 27.07.2022 and dues of the first year and also the security deposit have been duly made.

114. Sri P.K. Shahi, learned Senior Advocate, appearing for respon- dent no.6 has placed reliance on South Eastern Coalfields Ltd.19, wherein it is stated that whether a concluded contract has been arrived at inter se the parties is dependent on the terms and conditions of the parties and the conduct of the parties.

115. The conduct of the parties in the present case, i.e. issuing a fresh tender, entertaining and processing bids, short-listing respondent no.6, ac- cepting payment of licence fee as well as security deposit as also issuing a 46 (1998) 3 SCC 471 Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 letter of award make it crystal clear that the said respondent was a proper and necessary party to the instant lis. Accounting for the principle of lis pendens, we stop short of holding any concluded contract entered into be- tween the parties. CONCLUSION

116. Enforcing remedies under an arbitration clause and entertaining a writ are not always mutually exclusive. The petitioner has contended violation of principles of natural justice and has also challenged the validity of two orders passed by the respondent-Corporation, resulting in blacklisting of the petitioner-company. This Court has examined the grounds, generally upon which the existence of alternate remedy does not restrict the entertainment of a writ petition. Perusal of the record and a thoughtful consideration to the submissions made across the Bar, the following conclusions can be drawn.

117. That the orders passed by the respondent-corporation do not meet the threshold of arbitrariness and, therefore, are not violative of Article 14 of the Constitution of India. The decision taken by the Corporation to only waive the interest arising out of delayed payment, is not one for the Court to substitute with its own judgment and keeping in view the various factors, including the letter dated 31.12.2020 (Annexure- 16A, Page-101), it cannot be said that no reasonable man could have arrived at the conclusion challenged herein. Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022

118. It is borne from record that delay in payments has existed right from the inception of this contract. Repeated reminders were ignored and no course correction was made even after first order of cancellation was issued against the petitioner. Be it for whatever reason, the respondent- Corporation repeatedly excused the delays of the petitioner and granted time for payment. As noted earlier, dues from the past four years, in varying amounts were outstanding when upon the persuasion of the Court a final amount was calculated and paid. Conduct post institution of this writ petition cannot wash away the repeated defaults on part of the petitioner and neither is it that after such institution the conduct was flawless. Even here, a cheque for Rs.32,00,000/- was dishonoured and a delayed payment was made later. From an equity standpoint, allowing for the Corporation to be once again saddled with such a lessee would be against the demands of justice as the same would run squarely counter to the interest of the Corporation as a commercial entity.

119. Respondent no.6, namely MKS Enterprises, has acted as according to the NIT dated 15.06.2022 and was declared the successful bidder on 27.07.2022. Considering that no stay was granted, this action of the respondent-corporation cannot be questioned. In view of this Court, putting an imprimatur on the petitioner’s contentions would be incorrect as the concerned respondent has been issued Letter of Award on 27.07.2022 pursuant to which he has complied with all conditions and as has been Patna High Court CWJC No.9345 of 2022 dt. 22 -12-2022 submitted by it the formal inking of the contract and handing over the possession has been put on hold only because of the present petition. We cannot, by agreeing to this contention, validate the questionable conduct of the petitioner, to the detriment of an interested party who has provided no reason under which doing so could be justified.

120. The questions raised in this lis are thus answered.

121. It shall be open for either party to agitate the arbitration clause to vent any grievances, if the need to do so is felt.

122. No other points urged.

123. Costs easy.

124. Petition is dismissed in the above terms.

125. Interlocutory application(s), if any shall stand disposed of. (Sanjay Karol, CJ) Partha Sarthy, J. I agree. Sujit/Sunil/PKP (Partha Sarthy, J) AFR/NAFR CAV DATE Uploading Date Transmission Date AFR 14.11.2022 22.12.2022