The Divisional Railway Manager (Commercial), East Central Railway, Dhanbad v. M/S L. Ethirajulu

Patna High Court LPA No.219 of 2012 (5) dt.23-10-2013

3. The Divisional Railway Manager (Commercial), East Central Railway, Dhanbad.

4. The Senior Divisional Commercial Manager, Dhanbad Division, East Central Railway, Dhanbad. .... ....Respondents - Appellants Versus M/S L. Ethirajulu, 11/20, Nanniyan Street, Wall Tax Road, Chennai- 600003, Abid through its Attorney Shri N. Prasad Rao, son of Shri Sivunnaidu, resident 58-30-55/1, Sakethapuram, Nad Post, Vishakhapatnam - 09, Andhra Pradesh. .... ....Writ Petitioner- Respondent ====================================================== Appearance : (In LPA No.219 of 2012) For the Appellants : Mr. Anil Kumar Sinha, Advocate For the Respondent : Mr. Sanjay Singh, Advocate (In LPA No.568 of 2012) For the Appellants : Mr. Anil Kumar Sinha, Advocate For the Respondent : Mr. Sumeet Kumar Singh, Advocate ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE HONOURABLE MR. JUSTICE ASHWANI KUMAR SINGH ORAL ORDER (Per: HONOURABLE THE CHIEF JUSTICE) 5 23-10-2013 These two Appeals under Clause 10 of the Letters Patent have been preferred by the respondent-East Central Railway (hereinafter referred to as ‘the Railway’) against the common judgment and order dated 24th November 2011 passed by the learned single Judge in CWJC Nos.9856 of 2011 and 10173 of

2011. The writ petitioners M/s S. B. Air Cargo, Vishakhapatnam and M/s L. Ethirajulu, Chennai are Patna High Court LPA No.219 of 2012 (5) dt.23-10-2013 transporters. In 2008 both the writ petitioners were granted lease of cargo space between Dhanbad and Alleppy on Train No.3351 for a period of three years. The lease period of M/s. S. B. Air Cargo expired in September 2011 and the lease period of M/s L. Ethirajulu expired in July 2011. Since the expiry of the said lease period, the Railway issued the tender notice for lease of the cargo space on the said Train No.3351. Both the writ petitioners did participate in the auction process. However, the petitioners approached this Court under Article 226 of the Constitution in above CWJC Nos.9856 of 2011 and 10173 of 2011 for enforcement of paragraph 20.1 of the lease agreement and for extension of the lease period by two years. According to the writ petitioners, paragraph 20.1 of the lease agreement empowers the Railway to extend the lease period for a further period of two years on satisfactory performance of the lessee. In case of the writ petitioners, they had recorded satisfactory performance during the lease period. The petitioners, therefore, had a right to extension of lease period as envisaged in paragraph 20.1 of the lease agreement. The Railway contested the writ petitions. According to the Railway, the extension of the lease period is a matter of discretion vested in the Railway and the lessee cannot claim extension of lease period as a matter of right. Further, according to the Railway, both the writ petitioners had suffered penalty during the contract period for violation of terms of the contract. Their performance cannot be said to be satisfactory. The petitioners were, therefore, not entitled to the extension as envisaged by paragraph 20.1 of the lease agreement. The learned single Judge having considered the Patna High Court LPA No.219 of 2012 (5) dt.23-10-2013 pleadings and the materials on record has held that the writ petitioners could not have been penalized; and that the alleged loading on non-loading days cannot be termed as breach of the terms of the contract. The learned single Judge has also noted that the wrong committed by some other lessee namely M/s Balaji Train Cargo Services, Jamshedpur has been wrongly passed on to the writ petitioner M/s S. B. Air Cargo, Vishakhapatnam; and that it has wrongly been denied the extension of the lease agreement in terms of paragraph 20.1 thereof. Consequently, the learned single Judge has allowed the writ petitions. The tender notice dated 1st June 2011 with respect to cargo space on Dhanbad Alleppy Express has been quashed. The Railway has been directed, “to issue the required orders within fifteen days from today extending the period of lease of the petitioners of both the cases for a further period of two years from the date the said orders of extension are issued by the authorities.” Feeling aggrieved the Railway has preferred these Appeals. Learned advocate Mr. Anil Kumar Sinha has appeared for the appellant-Railway. He has taken us through the terms and conditions of lease agreement, particularly paragraph 20.1 thereof. The said paragraph 20.1 reads as under: “20.1. Extension of lease permissible only in case of long term lease of 3 years wherein the same can be extended only once, by 2 more years at a lease rate of 25% more than the lumpsum leased freight rate subject to satisfactory performance by the leaseholder, without any penalty for overloading or violation of any provision of the contract.” Patna High Court LPA No.219 of 2012 (5) dt.23-10-2013 Mr. Anil Kumar Sinha has submitted that the above referred paragraph 20.1 empowers the Railway to extend the lease agreement by two years at the rate 25% more than the leased freight rate. However, it does not confer a right to extension of lease upon the lessee. He has further submitted that the aforesaid discretion is circumscribed by two conditions precedent; (i) the performance of the lessee over the contract period of three years shall be satisfactory; and (ii) the lessee should not have suffered penalty for overloading or for violation of any provision of the contract. He has submitted that in the present cases both the writ petitioners had suffered penalty during the subsistence of the lease. In view of such conduct of the writ petitioners, their performance can not be termed as satisfactory. The Railway could not have exercised its discretion to extend the period of lease in case of the petitioners. Mr. Sinha has also relied upon the averments made in the counter affidavit to submit that now the scheme has been altered and that the Railway had decided to grant fresh lease by public auction. In the submission of Mr. Sinha, in absence of a vested right to extension of the lease period, the writ petitions ought to have been dismissed. Mr. Sinha has submitted that the learned single Judge has erred in sitting in appeal over the order of penalty by holding that the wrong done by some other lessee, namely Sri Balaji Train Cargo Services, Jamshedpur, petitioners M/s S. B. Air Cargo and M/s L. Ethirajulu are being penalized. He has submitted that the learned single Judge ought not to have issued a mandamus against the Railway to grant extension of lease to the writ petitioners in terms of paragraph

20.1 of the lease agreement. At the best, this Court exercising Patna High Court LPA No.219 of 2012 (5) dt.23-10-2013 power of judicial review, could have directed the Railway to reconsider the matter. In support of his submission, Mr. Sinha has relied upon the judgment of this Court in the matter of M/s Scorpion Express Pvt. Ltd. vs. The Union of India & Ors. (Letters Patent Appeal No.1058 of 2011 arising from CWJC No.9945 of 2010, decided on 25th July 2011). He has submitted that a similar claim made in the said writ petition has been rejected by this Court. He has also relied upon the judgment of the Supreme Court in the matter of M/s Master Marine Services Pvt. Ltd. vs. Metcalfe & Hodgkinson Pvt. Ltd. & Anr., { 2005(3) PLJR (SC) 97}. The Appeals are contested by the respondents-writ petitioners. Learned advocate Mr. Sanjay Singh has appeared for the writ petitioner in CWJC No.9856 of 2011 and learned advocate Mr. Sumeet Kumar Singh has appeared for the writ petitioner in CWJC No.10173 of 2011. Both the learned advocates have taken us through the terms and conditions of the lease agreement and their pleadings. The learned advocates have tried to explain the meaning of the terms and conditions of the contract and the conduct of the writ petitioners. In the submission of the learned advocates, under the lease agreement, a complete machinery for compensation in case of overloading or loading on non-loading days is provided. Once the Railway has a right to recover compensation, the question of penalty does not arise. They further submitted that the concerned orders are not the orders of penalty. Neither the writ petitioners were ever issued notices or were informed about the penalty imposed upon them. The writ petitioners, therefore, cannot be denied the extension of lease period in terms of paragraph 20.1 of the lease agreement. Patna High Court LPA No.219 of 2012 (5) dt.23-10-2013 The above referred paragraph 20.1 empowers the Railway to extend the lease agreement for two years at the enhanced rate of 25% more than the lumpsum leased freight rate. It is, however, not an absolute discretion vested in the Railway. As recorded hereinabove, unless the two conditions mentioned therein are fulfilled, the discretion cannot be exercised in favour of the lessee. Besides, we agree with Mr. Anil Kumar Sinha that the said paragraph 20.1 of the lease agreement does not confer right to extension of the lease period upon the lessee which can be enforced in the Court of Law. Further, as mentioned in the counter affidavit supported by the documents, both the writ petitioners have indeed suffered penalty during the period of contract. In view of the penalty suffered by the writ petitioners, the action of the Railway in not extending the lease period by two years is in consonance with the above referred paragraph 20.1 of the lease agreement. Both the learned advocates Mr. Sanjay Singh and Mr. Sumeet Kumar Singh have made their best efforts to convince this Court that the writ petitioners could not have been penalized nor were they ever penalized. We are not satisfied on the point. Both the learned advocates concede that the writ petitioners have not specifically denied the allegation of penalty imposed upon them. In absence of specific denial and in view of the supporting documents, we have to accept the statements made by the Railway that the writ petitioners indeed suffered penalty during the subsistence of the lease agreement. We may well record that this Court exercising the power of judicial review conferred by Article 226 of the Constitution will not go beyond the factum of penalty to decide Patna High Court LPA No.219 of 2012 (5) dt.23-10-2013 whether or not the order of penalty was justified. This Court cannot sit in appeal over the orders of penalty. Besides, none of the petitioners has challenged the orders of penalty. In our opinion, the learned single Judge has erred in not referring to the penalty orders made against the writ petitioners at all; in holding that the writ petitioners are made to suffer on account of wrong committed by one another M/s Balaji Train Cargo Services, Jamshedpur. There is nothing on record to suggest that the penalty referred to by the Railway was in respect of M/s Balaji Train Cargo Services, Jamshedpur. On the contrary, the orders and communications placed on record clearly refer to M/s S. B. Air Cargo, Vishakhapatnam. Further, at the best, this Court in exercise of power of judicial review could have directed the Railway to reconsider the request of the writ petitioners for extension of the lease period. In no circumstances, this Court could have issued a mandamus to extend the lease period by two years as has been done by the learned single Judge. these Appeals are allowed. The impugned common judgment and order dated 24th the aforesaid reasons, For November 2011 passed by the learned single Judge in CWJC Nos.9856 of 2011 and 10173 of 2011 is set aside. CWJC Nos.9856 of 2011 and 10173 of 2011 are dismissed. Interlocutory Applications are disposed of. (R.M. Doshit, CJ) (Ashwani Kumar Singh, J) Sunil/-