Judgment · High Court · 2012

#2. The learned counsel for the parties having agreed, considering t he nature of the adjudication essential to resolve the pother expeditiously, the writ proceedings as well has been taken up for final disposal.

#3. We have heard Mr P Pathak, Senior Advocate assisted by Mr B Chak raborty, Advocate for the appellant/ writ petitioner and Mr D Saikia, learned Ad ditional Advocate General, Assam for the respondents.

#4. The factual preface available from the rival pleadings would be necessary to facilitate an appropriate determination of the issues involved. The appellant (also referred to as the writ petitioner in the narration to follow) has claimed to be a company registered under the Companies Act, 1956 and is repr esented by its Managing Director, Bijoyananda Choudhury. The respondent Corporat ion is a Government company admitting of permeating control of the State Governm ent over the management and conduct of its affairs. The Pobitora Wildlife Sanctu ary which is situated in the Morigaon District of the State of Assam has graduat ed itself with time to be a global tourist destination. The respondent Corporati on with a view to offer comfortable accommodation thereat had established a tour ist lodge near the sanctuary named (cid:28)Prashanti Lodge (cid:29) which due to compelling adm inistrative exigencies had to be in occupation of the Army for long. According t o the appellant, having been selected through a tender process it was assigned t he lease to run the lodge by the respondent Corporation on the mutually agreed t erms and conditions. However, in view of the prolonged occupation of the lodge b y the Army it warranted extensive repairs and renovations to make it befitting a nd suitable to house the visiting tourists and as agreed with the Corporation, i t invested approximately Rs. 5 Lakhs to that effect. This was in and around the year 2006. The appellant has further pleaded that by that time a second unit of the lodge was constructed within the same premises and was made operational wit h effect from 10.1.2009, the management whereof was also entrusted to it, amongs t others, on the condition of payment of rent at the rate of Rs. 20,500/- per mo nth. It also, as required, deposited an amount of Rs. 1 Lakh as security and had to make appreciable investments for drawing electricity to the new unit.

#5. According to the appellant, it made all possible endeavours towa rds development, maintenance and upkeep of both the units to the satisfaction of all concerned. That the sanctuary remains open for the tourists from 1st Novemb er to 30th April every year i.e. for six months and that for the rest of the per iod remains closed has been underlined as well. Referring to a written agreement dated 29.11.2010 between it and the respondent Corporation, the appellant has a sserted that in view of its satisfactory performance it was entitled to an exten sion of the term of lease (which was otherwise going to expire on 31.1.2012) by a further period of two years on the same terms and conditions. This legitimate expectation on its part, it is pleaded, was not only founded on its satisfactory performance, but also due to lack of any expression of dissatisfaction with reg ard thereto by the Corporation at any point of time during the relevant period. As to the contrary, belying such legitimate expectation the respondent Corporati on by the impugned letter/ order 4/11.1.2012 required it to hand over the projec t to it (Corporation) on 1.2.2012, it approached this Court seeking its remedial intervention under Article 226 of the Constitution of India.

#6. In its additional pleadings supplementing the averments original ly made, the appellant hinted at some verbal understanding between the parties t hat the period of lease would be for a period of five years pleading that the re fusal of extension of the term expiring on 31.1.2012 was contrary thereto. That meanwhile the appellant had paid the rent upto the month of February, 2012 has a lso been mentioned. The respondent Corporation in its affidavit affirmed by its Mana 7. ging Director while admitting that the appellant had invested an amount of Rs. 2 .4 Lakhs towards repairs and renovations of the old unit and that the monthly re nt had been cumulatively (for both units) fixed at Rs. 20,500/- and further that the appellant had deposits Rs. 1 Lakh as security deposit, however, has asserti vely pleaded against the claim of satisfactory performance in maintaining the tw o units so as to entitle it (appellant) to any extension as contemplated under t he agreement dated 29.11.2010. It referred in particular to a written complaint dated 23.6.2010 of the Regional Director, Tourism, Government of India addressed to its Managing Director strongly expressing her views about the shabby mainten ance and inconvenience (cid:28)noticed/ suffered by her (cid:29) at the tourist lodge. Accordin g to it, this was duly brought to the notice of the appellant with a request to attend to the issues of complain and improve the level of maintenance and manage ment of the tourist lodge so that no inconvenience is faced by any tourist in fu ture. According to the respondent Corporation, though the appellant was required by it to improve the quality of the maintenance and administration of the touri st lodge from time to time, the same remained far from satisfactory. The respond ent Corporation, therefore, has maintained that due to unsatisfactory performa nce of the appellant, it was not bound under the contract to grant extension to it as contemplated therein and, thus, it having been decided by its (Corporation ) Board of Directors in its meeting held on 14.12.2011 to run the lodge on its o wn, the impugned decision was taken and communicated accordingly.

#8. In the above backdrop of competing pleadings, Mr Pathak has emph atically urged that in the face of satisfactory performance of the appellant, th e respondent Corporation was obliged under the contract to grant further extensi on of two years to the term beyond 31.1.2012. The agreement dated 29.11.2010 emb odying the contract being binding on the parties, refusal of extension has been arbitrary, in violation thereof and militative of its legitimate expectation in law, thus, rendering it unconstitutional, he urged. The learned senior counsel h as dismissed the relevance of the complaint dated 23.6.2010 qua the impugned dec ision contending that not only in absence of any prior intimation the visit as r eferred to therein was unexpected and inexplicable, the grievance having been at tended to immediately thereafter with a written intimation to the officer concer ned, it could by no means have been made a ground to adjudge the performance of the appellant. As for all practical purposes on the date of such complaint there was no agreement in writing or a subsisting contract in law between the parties entrusting the responsibility of management of the tourist lodge to the appella nt, it (appellant) in no view of the matter could have been held responsible for the lapses, if any, as mentioned in the complaint dated 23.6.2010. According to Mr Pathak, this complaint in fact was directed against the respondent Corporati on which is being conveniently shifted to the appellant and acted upon to oust i t so as to admit some other agency of its choice on collateral considerations. R eferring to the huge investments made meanwhile by the appellant and the entrust ment of the maintenance and management of the tourist lodge in recognition of th e appellant’s experience in the line, the learned senior counsel has underlined that no complaint whatsoever has ever been received by it vis-à-vis its perform ance during the relevant period and, thus, the plea to the contrary is clearly a nd afterthought. While insisting that the appellant’s plea is reinforced by abse nce of any reference of unsatisfactory performance in the impugned letter, Mr Pa thak on instructions has submitted that it (appellant) is still in charge of the tourist lodge and that appropriate directions ought to be issued to the respond ent Corporation to grant it the extension as envisaged by the contract. To rein force his assertions, Mr Pathak placed reliance on the decision of the Apex Cour t in State of U.P. & Ors. -vs- Lalji Tandon, (2004) 1 SCC 1. Responding to the above, the learned Addl. Advocate General has 9. insistently urged that the official records would reveal that the appellant’s pe rformance had been unsatisfactory for which its attention had been drawn by the Corporation from time to time, but to no avail. Not only did the appellant’s Man aging Director unreasonably delayed the execution of the agreement, the origina l term of contract having been fixed for a period of three years with effect fro m 1.2.2009, it cannot in law claim any right for extension thereof in the face o f sub-standard services rendered by it during the relevant period. The learned Addl. Advocate General while pointing out that though the appellant had in fact been entrusted with the management of the lodge since 2005 there were numerous c omplaints and that it having failed to improve the quality of its performance in spite of several opportunities granted, has urged that the impugned decision in this background cannot be faulted with at all. According to Mr Saikia, the compl aint having been lodged by none other than the Regional Director of Tourism, Gov ernment of India, the same can neither be ignored nor trivialized as sought to b e endeavoured by the appellant. Mr Sakia argued that whereas in terms of Clause 12 of the agreement the appellant was under an obligation to hand over the posse ssion of the tourist lodge without any reservation, it has acted to the contrary in holding on thereto by force. According to the learned Addl. Advocate General , the appellant in the attendant facts and circumstances has no right to claim e xtension of the term of the contract and, thus, the challenge ought to be dismis sed in limine. The relevant official records have been laid for our perusal.

#10. The pleaded projections and the arguments based thereon have rec eived our due consideration. The facts available would demonstrate the appellant ’s association with the tourist lodge has been from much prior to the formal exe cution of the written agreement on 29.11.2010. That it had for all intents and p urposes been involved, along with the Corporation, in the repairs and renovation works thereof after being vacated by the Army and that in connection therewith had made financial investments is also apparent from the official records laid w ith us. The records reveal observations of the authorities of the Corporation ex hibiting deficiencies time and again in the maintenance and upkeep of the lodge including the furniture and fixtures for which necessary suggestions had been of fered to effect all round improvement thereof. The records also reveal that in t he year 2007 though the respondent Corporation had decided to initiate a tender process for inducting another lessee by way of replacement of the appellant, it called off that move to offer an opportunity to it (appellant) to respond to its (Corporation) suggestions and measures to usher in all round upliftment of the lodge. The appellant though not very quick in its reflexes in response, the resp ondent Corporation, as the records reveal, decided to continue with the entrustm ent of the tourist lodge with it for a period of three years from 1.11.2008 as i nitially decided. To complete the formalities and finalise the terms and conditi ons of the agreement it took quite some time for the parties and eventually the agreement was executed on 29.11.2010.

#11. That the tourist lodge on essential aspects needed further atten tion had in the meantime been hinted at by the respondent Corporation at times i s also borne out by the records. The clause prescribing the term of the lease an d the stipulation for extension thereof subject to satisfactory performance of t he appellants, the records demonstrate, was a conscious incorporation. The aspec t of extension as the term drew near, the records divulge, was duly examined and with the observation that the lessee had not managed the lodge satisfactorily, the issue was placed before the Board of Directors of the Corporation with the s uggestion that the same be run departmentally and logistics be worked out in con nection therewith. The Board of Directors in its meeting held on 14.12.2011 appr oved the said proposal with the observation that the performance under the new a rrangement in all respects be reviewed in regular intervals authorizing the Mana ging Director of the Corporation to take appropriate action as warranted. The co mplaint dated 23.6.2010 of the Regional Director, Ministry of Tourism, Governmen t of India was duly taken note of in coming to the ultimate conclusion as above. The letter dated 4/11th January, 2012 of the Managing Director of the Corporati on addressed to the Managing Director of the appellant Company was issued therea fter requesting him to hand over the project along with its (Corporation) proper ties to the Tourist Information Officer, ATDC on 1.2.2012 on the expiry of the c ontract period on 31.1.2012 so as to enable the unit to be run departmentally. N oticeably, the letter did not mention as such the reason for the decision as is otherwise, as indicated hereinabove, a part of the records.

#12. 40 thereof are extracted hereinbelow for ready reference: The relevant clauses of the agreement, namely, Clause-1, 29 and (cid:28)1. That the period of contract will be initially for 3 years w.e.f 1-2-2009 wit h provision for extension by 2(Two) years on the same terms and conditions subje ct to satisfactory performance by the 2nd party during the period of contract i n all respect. & & & & & & & & & & & & & & & & & & & & & & & & & & & &.. & & & & & & & & & & & & & & & & & & & & & & & &.. 29. That on expiry of the term of contract or premature termination the 2nd part y will hand over both the units and its properties peacefully to the 1st party and clear all dues. & & & & & & & & & & & & & & & & & & & & & & & & & & &. & & & & & & & & & & & & & & & & & & & & & & & & & & &.. That in case the 2nd party commits breach of any of the terms and condit 40. ions, the 1st party will issue a written intimation to rectify such breach withi n such time as may be fixed by the 1st party. In case the 2nd party fails to com ply with the warning, then the same shall result into termination of this agreem ent or such other action as may be deemed fit and proper by the 1st party. (cid:29).

#13. As would be obvious from Clase-1 of the agreement, the initial p eriod of the contract was for a period of 3 years with effect from 1.2.2009, thu s, expiring on 31.1.2012. The provision for extension by 2 years on the same ter ms and conditions, it is apparent is not in absolute terms but subject to satisf actory performance by the lessee during the period of contract in all respects. Whereas Clause-40 authorised the respondent Corporation to terminate the agreeme nt on the breach of any of the terms and conditions by the lessee in the conting encies as referred to therein, under Clause-29 on the expiry of the term of the contract or premature termination thereof, the lessee was obliged to hand over t he units and the properties in connection therewith peacefully to the Corporatio n and clear all dues.

#14. Assuredly, the parties having executed the agreement with the ab ove terms and conditions, amongst others, engrafted therein, they are irrefutabl y bound thereby. The present is not a case of premature termination of the contr act, the term whereof had been allowed to run and lapse on 31.1.2012. Having reg ard to the covenant for extension, we are afraid no right in the absolute is con ferred on the lessee to claim the same irrespective of the quality of its perfo rmance during the period of contract in all respects. The grant of extension as Clause-1 in unmistakable term would convey, was made subject to satisfactory per formance by the lessee during the period of contract in all respects. Though thi s agreement had been executed on 29.11.2010 much after the complaint had been lo dged by the Regional Director, Ministry of Tourism, Govt. of India on 23.6.2010, it is visibly within the period of the contract contemplated by the agreement. The appellant having accepted the terms and conditions of the agreement without any demur, its plea that the alleged deficiencies and lapses as referred to ther ein are wholly inconsequential to judge the level of its performance qua its rig ht of obtaining extension does not appeal to us. Not only in our estimate the co mplaint lodged by a high dignitary of the Ministry of Tourism, Govt. of India as made cannot be lightly disregarded, it is a matter of record that the Managing Director of the appellant Company in his letter dated 14.7.2011 to her had apol ogized for the inconveniences faced by her at the lodge and had assured to take all remedial and corrective steps to efface the shortcomings noticed. For reaso ns best known to the Managing Director of the appellant, no other explanation or clarification was offered indicating prima facie the correctness of the deficie ncies, lapses and omissions complained about. On an overall and comprehensive survey of the official records, 15. the pleadings available and the documents appended thereto, we are left unpersua ded in the exercise of our review jurisdiction to interfere with the impugned de cision. Not only, to reiterate, the provision for extension of the term of the c ontract does not in our understanding confer an unassailable right on the appell ant to demand the same, it being contingent on its satisfactory performance, we are unable to conclude on the basis of the materials available that the responde nt Corporation had been either unmindful of the clause of extension or had mecha nically decided not to extend the period of contract qua the appellant. The issu e, as the official records would reveal, had been adequately dealt with in detai ls before being laid before the Board of Directors which took an unanimous decis ion on 14.12.2011 to recall the lodge and run it departmentally by making approp riate arrangements therefor. The assessment of the respondent Corporation as a w hole on the quality of the performance of the appellant had been made, as the re cords reveal, from time to time and on more than one occasion reservations were expressed in connection therewith. The office notes would demonstrate that from time to time the attention of the Managing Director of the appellant Company had been drawn to the observations vis-à-vis the performance bearing on the managem ent and maintenance of the tourist lodge. Having regard to the element of value judgment of the respondent Corporation qua the performance of the appellant, on a cumulative consideration of the materials on record, we are of the view that t he impugned decision cannot be repudiated to be wholly illogical and in violatio n of the agreement, more particularly, the provision for extension as contained therein. The decision in State of U.P. & Ors. -vs- Lalji Tandon (supra) i 16. s of no avail to the appellant. Not only a distinction therein had been made bet ween renewal and extension of lease, in the face of the express rider subject to which the extension was to be granted in the instant case, we are unable to len d our concurrence to the plea that the extension or otherwise of the original pe riod of contract was to be an unilateral act of the appellant under all circumst ances. The impugned decision being a plausible one, in the exercise of the writ jurisdiction of this Court, it would be wholly inexpedient, in the above factual premise, to substitute the same by one different in absence of any overwhelming material to the contrary.

#17. d are dismissed. No costs. The writ petition as well as the writ appeal, therefore, fail an