M/s. Shimnit Utsch India Private Limited v. Union of India & Ors.

Order

23rd March, 2011. Date of pronouncing Order : 25th April, 2011. P.C. :- By this Petition under Article 226 of the Constitution of India, the Petitioner is questioning termination of a Contract awarded to it. That termination is effected on 25th January, 2011 by the Third Respondent to this Petition.

2. The Petitioner has been incorporated as a Company under the Companies Act, 1956 and its Registered Office is at Mumbai. It claims to be a joint venture company between one Shri Rushang N. Shah and Eric Utsch AG Germany. It has been formed to introduce the High Security Registration Plates (HSRP). These registration plates have to be placed on motor vehicles in terms of Rule 50 of the Central Motor Vehicle Rules, 1950. It is contended that the object of the HSRP Scheme is to curb increasing menace of vehicle thefts and their usage in commission of crimes like murder, dacoity, kidnapping, etc. It was thus felt necessary that urgent checks for the usage of 3 wp.no.91/11 motor vehicles in terrorist activities were required to be implemented. The Central Government on the recommendation of its technical committee devised a system of HSRP to ensure public safety and security. Therefore, Rule 50 was amended and these amendments require manufacture of such registration plates which would be non- reusable and non-replaceable. The technical specifications of the registration plates are such as to make identification of the vehicle and its tracking easier and certain. Other requirements contained in the Amended Rule 50 are that apart from regulating the aspect of issuing registration marked with usage of specific kinds of letters and numerals, it seeks to ensure its safety and security by issuance and fixation of number plates from the premises of the Regional Transport Office of the concerned area. After setting out the salient features of this Scheme, it is contended that the Hon’ble Supreme Court in the case of Association of Registration Plates Vs. Union of India & Ors. (Writ Petition (Civil) No.41 of 2003) by Judgment and Order dated 30th November, 2004 made it mandatory for the States to ensure that the Scheme of HSRP is effectively implemented in the country. Annexure “A” is a copy of the said order. It is stated that the Union of India, on the advice of Technical Committee, came out with a new scheme of 4 wp.no.91/11 HSRP and, therefore, issued the relevant Notification. Under the Scheme, the State had power to select a suitable manufacturer from the Type of Approved Certificate Holder (TACH) for the State, as a whole or for a particular region. The selection was to be made by a fair method of tender process. Under the scheme, the State was also expected to impose strict and rigid eligibility conditions to ensure that only the most experienced, competent and expert manufactures, both technical and financial, take part in the tender process.

3. It is stated that on 7th April, 2001, a Joint Venture Agreement was executed between Utsch Germany and one Nitin G. Shah as an Indian Partner, contemplating a formation of a Joint Venture Company in India. On 4th May, 2001, the Petitioner Company

was incorporated with Mr. Nitin G. Shah, being the Promoter Director along with Mr. Manfred Utsch. The Petitioner Company was incorporated for the purposes of manufacturing, supplying and implementing the scheme. On 10th February, 2005, said Nitin Shah resigned as the Director of the Petitioner Company and in compliance of Section 303 of the Companies Act, 1956, Form 32 was filed with the Registrar of Companies, Maharashtra on 10th February, 2005 itself. 5 wp.no.91/11 On 19th September, 2005, Respondent No.2 issued a notice inviting bids from eligible manufacturers, having experience in producing the HSRPs, in conformity with the specifications mentioned in the amended Rule 50 of the said Rules. A copy of this Notice is annexed to the Petition and after referring to its salient features, it was stated that the contract was for a period of 15 years. It is stated that about 5 bids were received in pursuance of the tender notice and the bids included that of the Petitioner Company. The bids were opened in presence of representatives of the respective bidders. Three bids were declared to be qualified and responsible. The other two bids were held not to be so. It appears that the decision taken on 21st/25th October, 2005 by the Tender Committee came to be challenged by the disqualified bidders. They also filed Writ Petitions, being Writ Petitions No.432 of 2005 and 457 of 2005 in this Court, which came to be dismissed on 14th February, 2005. Even a Special Leave Petition was filed in the Hon’ble Supreme Court which was dismissed on 1st May, 2006 and a Review Petition also came to be dismissed on 17th August, 2006.

4. Thereafter Financial Bids of the eligible bidders came to 6 wp.no.91/11 be opened, once again in the presence of the parties. The bid submitted by the Petitioner Company was lowest and, therefore, the Petitioner Company was called for negotiations and there were further negotiations held. In the meantime, on 24th December, 2005, the erstwhile Indian Partner of the Joint Venture Company viz., Mr. Nitin G. Shah transferred his shares in the Petitioner Company in favour of Mr. Rushang N. Shah. The said transfer was duly recorded in the Register maintained by the Petitioner Company. A shareholders agreement between the parties was also suitably amended to reflect the aforesaid change.

5. On 24th March, 2006, a Letter of Acceptance (Notification of Award) was issued in favour of the Petitioner by the Second Respondent. Accordingly, the Petitioner on 6th April, 2006 submitted a Performance Guarantee in the sum of Rs.50.00 lakhs.

6. On 31st May, 2006, pursuant to the transfer of shares by Mr. Nitin Shah in favour of Mr. Rushang Shah in the Petitioner Company, the Memorandum of Association & Articles of the Association of the Petitioner Company was suitably updated and 7 wp.no.91/11 amended upto 31st May, 2006.

7. On 12th June, 2006, the First Respondent issued a Gazette Notification titled as “The Motor Vehicles (New High Security Registration Plate) Amendment Rules, 2006. After reproducing the relevant Clauses of the Notification, what has been contended is that despite issuing the Letter of Acceptance for a long time, the contract was not executed between the Petitioner and Respondent No.2. It appears that Respondents No.2 and 3 had no intention and for extraneous considerations, they did not want to implement the order of the Hon’ble Supreme Court. Therefore, a show cause notice was issued on 11th October, 2006 by Respondent No.3 to the Petitioner, calling upon it to show cause as to why the award of tender to it should not be cancelled. The Petitioner was called upon to file its response by 18th October, 2006. There were allegations made in the show cause notice about suppression of information misrepresentation of facts and particularly with regard to the change in the constitution of the Petitioner Company.

8. The Petitioner filed its reply to the Show Cause Notice 8 wp.no.91/11 dated 18th October, 2006. But without consideration thereof, the order cancelling the award of contract came to be passed on 13th November,

2006. That was challenged by filing a Writ Petition being Writ Petition No.560/2006 in this Court and in the said Petition, a statement was recorded on 21st November, 2006 that Respondent No.2 would not take any steps in awarding the contract to any third party during the pendency of the Petition. In para 34 of the present Petition, this is what is stated : “ 34. On 10th July, 2007, at the hearing of the said Writ Petition, the Ld. Advocate General appearing on behalf of Respondent No.2 sought for time to reconsider the matter and reinstate the Letter of Intent issued in favour of the Petitioner. The Petitioner submits that this decision was taken because Respondent No.2 was cognizant of the untenability of the termination and the fact that the same would be set aside. Respondent No.2 was also cognizant of the fact that on 27th October 2006, the High Court of Meghalaya had delivered a significant and path breaking judgment, ordering the implementation of the HSRP Regime under almost identical circumstances. In Meghalaya too, the State Government had not been implementing the HSRP Regime pressure 9 wp.no.91/11 commercial/transport groups. This impelled the High Court to direct the State to do so. A copy of the Judgment dated 27th October, 2006 is annexed as Exhibit “B” hereto.”

9. Thereafter, on 30th August, 2006, there was a joint meeting with the Tender Committee and the Petitioner, seeking certain clarifications on the issue. The Petitioner was also asked to submit a written representation on the issue, on 7th September, 2007. On 11th September, 2007, the Petitioner submitted its detailed representation, pursuant to which the Tender Committee took a decision to reinstate the Letter of Intent issued in favour of the Petitioner. The Minutes of the Meeting expressly record that since the composition of the Petitioner Company continued with a foreign partner, public interest will not suffer if the Petitioner Company was awarded the tender and the government could reconsider the matter. Even if a fresh tender was floated the Petitioner Company would be eligible to bid, that is how the Government was advised by the Advocate General. Therefore, it was decided to reverse the earlier decision to cancel the entire tender process and recommendation was made to Respondent No.2 on continuing the award of tender to the Petitioner. 10 wp.no.91/11

10. In para 37 of the Petition, this is what is stated : “ 37. On 19th September, 2007, when the aforesaid Writ Petition was listed before the Division Bench of this Hon'ble Court, the Ld. Advocate General representing the Respondent No.2 herein, made a statement that the Government (i.e. Respondent no.2) had reconsidered the issue and had taken decision to withdraw the impugned order dated 13th November, 2006, pursuant to which, the Petitioner withdrew the said Writ Petition. A copy of the order dated 19th September, 2007 passed by this Hon'ble Court in the aforesaid Writ Petition is included in the accompanying Compilation under Tab '10'.”

11. It is in these circumstances that on 29th February, 2008, the Concession Agreement was executed between the Governor of State of Goa on behalf of Respondent no.2 and the Petitioner in terms whereof, it was granted exclusive right, licence, and authority to emboss and affix HSRPs to the vehicles in the State of Goa for a period of 15 years, commencing from the appointed date. 11 wp.no.91/11

12. Thereafter, in or around August, 2009, the Petitioner started implementing the Scheme in the State of Goa and till date it is stated that it has affixed more than 6000 HSRPs on motor vehicles. The Petitioner has stated that it has employed 70 employees and mobilized men and material and set up State of Art Office and have invested approximately Rs. 50 Crores. There was no breach/default on the part of the Petitioner in implementing/executing the Concessionaire Agreement. But the State Government never wanted to implement the scheme itself and, therefore, the State could not take any steps to control the opposition to the scheme by commercial transport operators who did not want to pay the increased one time costs of HSRPs. These vested interests were funded/sponsored/encouraged by the Petitioner's competitors. There were agitations and questions were raised in the Goa State Legislative Assembly. The State Government, therefore, gave a public assurance to review the Scheme and that is how it has been alleged in the Petition that the Scheme was not properly and factually implemented, for which the Petitioner was compelled to file a Writ Petition, being Writ Petition No.797/2009 before this Court. That sets out the detailed reasons as to why 12 wp.no.91/11 Respondent No.2 was deliberately not implementing the HSRP Scheme and ignoring its constitutional duty. An affidavit was filed in the Writ Petition by Union of India, supporting the Petitioner. The said Writ Petition was admitted and this Court granted Interim Relief by directing the Second and Third Respondents to continue with the implementation of the HSRP Scheme as per amended Rule 50 of the Rules. The Order was passed despite objections raised to the maintainability of the Writ Petition. Notwithstanding this order, there were no steps taken to implement and enforce the scheme and the registration by affixing HSRP in terms of the Rules was minimum. Thus, there was breach committed of the Order dated 1st April, 2010, which compelled the Petitioner to file a Contempt Petition.

13. In the meantime, a Committee was appointed to review the Scheme itself in the State of Goa and this Committee published a report wherein it concluded that the process of finalization of tender in respect of HSRP Scheme had been vitiated and that the Petitioner had also violated the condition 2 (xb) contained in Notification No.601 dated 12th June, 2006, by changing the ownership, without seeking prior permission of the Government. Therefore, it recommended 13 wp.no.91/11 revocation of the Concession Agreement dated 29th February, 2008. Copy of this report was not provided. However, sensing that the Government may take a decision by acting on this report, the Petitioner filed a Civil Application No.140 of 2010 in Writ Petition No.797/2007 and sought stay of the implementation of the report. When this application was placed before this Court, the Advocate General appearing for the State made a statement that action of termination of the Agreement would be taken by the Government only after issuing a Show Cause Notice. Accordingly, a Show Cause Notice was issued for terminating the contract/agreement in which it was alleged that the bid submitted on 26th September, 2005 showed that Shri Nitin Shah was the Director of the Company. Subsequently, it was informed that said Nitin Shah resigned as Director on 19th February, 2005 and his shares were transferred in favour of Shri Rushang Shah on 24th December, 2005. On the date, the bids were submitted, therefore, Shri Nitin Shah was not the Director of the Company, but was shown as the Indian Partner in the Joint Venture Agreement. Since the Indian Partner in the Joint Venture Agreement was not the Director of the Company, the Company was disqualified from being considered. Further, it was stated that there was a foot-note inserted below Form II. This foot- 14 wp.no.91/11 note is signed by the representative of the company and it is not endorsed by the Committee Members. This foot-note is recorded after opening the bid. Thus, the aforementioned Clause 4 of the Motor Vehicles (New High Security Registration Plates) Order 2001 as amended by Notification dated 12th June, 2006 has been violated. Further, it was stated that the indigenous manufacturers who manufacture HSRP are available and there is no necessity of a foreign partner or a joint venture company. It is alleged that the show cause notice was impugned by filing a Writ Petition being Writ Petition No.740/2010 in this Court which was dismissed as infructuous because it was informed that the impugned termination notice dated 25th January, 2011 has been passed.

14. Thus, it is the aforementioned notice and the termination order that is impugned in this Writ Petition.

15. Mr. Dhond learned Counsel appearing on behalf of the Petitioner firstly contended that the Petitioner has been victimized and the impugned order terminating the Concession Agreement is wholly arbitrary and erroneous. It is submitted that all the grounds and reasons 15 wp.no.91/11 alleged in the Show Cause Notice were part of the proceedings before this Court in Writ Petition No. 560/2006. At that time, all clarifications were given by the Petitioners. On the date bids were submitted, Mr. Nitin Shah was not a Director of the Company, but was shown as Indian Partner in the Joint Venture Agreement. Since Shri Nitin Shah resigned as the Director on 19th February, 2005 and shares in the Petitioner Company were transferred in favour of Shri Rushang Shah on 24th December, 2005, there was no question of the Petitioner representing during the tender process that Shri Nitin Shah was the Director on the Board of the Petitioner Company. The Joint Venture Agreement executed between the German Partner and Indian Partner, i.e. Shimnit India and Utsch AG Germany contemplated incorporation of an Indian Joint Venture Company viz. the Petitioner which was consequently incorporated. The transfer of shares was permissible and that the same was not in any manner affecting the constitution of the Joint Venture Company, since the definition of Indian Promoters under Article 2(r) of the Articles of the Association of the Petitioner, includes Mr. Nitin Shah, his wife, their children, successors and heirs. Therefore, the transfer does not change the constitution or definition of the “Indian Promoters”. He submitted that the composition of the 16 wp.no.91/11 shareholding in the Joint Venture Company remains the same. Therefore, the Joint venture Company remains the same. Hence, when the entire bid was opened in their presence, in open bidding process and the facts were to the knowledge of the Authorities, the cancellation on this ground is arbitrary and malafide.

16. Shri Dhond submits that the Notification dated 12th June, 2006 applies prospectively and the transfer of shares from Mr. Nitin Shah to his son Mr. Rushang Shah happened before issuance of the Notification dated 12th June, 2006. Therefore, there was no question of taking prior permission from the State.

17. Shri Dhond submits that the other ground on which the cancellation has been effected is availability of number plates from Indian manufacturers. That cannot be a ground for cancellation of the agreement with the Petitioner Company, because, there is no violation of the Concession Agreement, much less any deliberate breach thereof. This is not a ground to support the action of cancellation. It is wholly illegal and unfair, apart from being arbitrary. 17 wp.no.91/11

18. He submits that the basis for termination of the agreement cannot be justified even in larger public interest. He invited our attention to the grounds in the petition and submitted that the exercise of power is tainted particularly in the backdrop of the history of the matter. He submits that the termination is illegal, perverse, and unconstitutional and took us through the grounds mentioned in the Petition. He submits that even the issue of conviction of Shri Nitin Shah is contrary to the record, because that cannot be a reason for termination, since his conviction was set aside in Criminal Appeal No.519/2006 by the Hon’ble Delhi High Court vide Judgment and Order dated 22nd February, 2007. Therefore, the conviction has no relevancy to the present case. For all these reasons, there is no justification for the termination, which violates the mandate of Articles 14, and 19(1)(g) of the Constitution of India.

19. Shri Dhond, in support of the above contentions, has relied upon the Judgment of the Hon’ble Supreme Court in Association of Registration Plates vs. Union of India and others, 2005(1) SCC 679. Shri Dhond submits that it is well settled that writ jurisdiction is available to challenge such orders, if the termination of 18 wp.no.91/11 contract is illegal, irrational, arbitrary and malafide. The contract in this case is to implement a statutory duty and a statutory scheme. Therefore, the contract is statutory in nature. In such circumstances, the Petitioner cannot be told to take recourse to the ordinary civil remedy, namely, institution of a Civil Suit or Arbitration. Further, there are no disputed questions of facts and in such circumstances, this writ petition is maintainable.

20. On the other hand, Mr. Kantak, learned Advocate General, appearing on behalf of the State and Respondent No.3 would submit that the Writ Petition involves disputed questions of facts and, therefore, it is not maintainable. The Petitioner can take recourse to contractual remedy. The relief that the Petitioner can seek is damages and compensation for the alleged termination, but in no case the Petitioner can be reinstated as a contractor. If that cannot be done in ordinary civil remedy, the Petitioner cannot take recourse to writ jurisdiction and seek something which is not legally permissible.

21. Further, he submits that the contract is not a statutory contract. It is an ordinary contract which is governed by the terms of 19 wp.no.91/11 the Indian Contract Act and the Clauses in the Agreement. The remedy to seek any relief in terms of such contract, including its repudiation or cancellation is to approach the forum provided under the contract or if no such forum is provided, then, the ordinary Civil Court. Shri Kantak has relied upon a Judgment of the Hon’ble Supreme Court in Pimpri Chinchwad Municipal Corporation and others vs. Gayatri Construction Company and anr., reported in 2008 (8) SCC 172. He submits that the Second and Third Respondents have filed reply-affidavits and have pointed out as to how the termination is justified. The termination is effected for the reasons which are genuine and germane to the contract. It is not as if the termination has come about suddenly or in a malafide manner. The termination notice sets out as to why the Government concluded that when the tender was submitted, Shri Nitin Shah was not a Director of the Petitioner Company. Shri Rushang Shah was also not a Director of the Petitioner Company on 26th September, 2005. The Joint Venture Agreement was entered into between German Partner and Shri Nitin Shah. Joint Venture Company was incorporated on 4th May, 2001, pursuant to the Memorandum of Association & Articles of Association drawn on 9th April, 2001. That agreement has been referred to and what the 20 wp.no.91/11 Authority has concluded is that the Joint Venture Agreement shows that it is an integral part of the Joint Venture Company and that the role of contracting parties, including that of the Indian Partner are part of the same.

22. Therefore, Shri Nitin Shah was not the Director of the Company, but was an Indian Partner in the Indian Joint Venture Agreement between the German and Indian Partner and the nexus between the Joint Venture Agreement and the Joint Venture Company was, therefore, broken and thus, the composition of the Petitioner Company was different than that contemplated by the Joint Venture Agreement. It is also clear that a foot note was inserted in the Finance Bid Form II. However, even if there is correspondence between the parties, the footnote is recorded by hand, but it is not endorsed by the Tender Committee Members. The footnote was recorded after opening of the bid. In these circumstances, there is violation of the Notification dated 12th June, 2006. Therefore, each of the grounds justify the termination. He submits that the Petition should not be entertained on this ground alone and be dismissed. 21 wp.no.91/11

23. With the assistance of the learned Counsel appearing for the parties, we have perused the petition, compilation of documents, to which our attention was invited and the affidavits on record. We are of the view that this Writ Petition involves disputed questions of facts. Our attention has been invited to the Notice dated 11th October, 2006 and it is contended that the earlier show cause notice and the present show cause notice are identical, containing the same allegations. A closer perusal thereof would reveal that the same is not so. On 11th October, 2006, a show cause notice was issued which only alleges that the Government selected M/s. Shimnit Utsch India Pvt. Ltd., and issued a letter of acceptance of bid on 24.3.2006. Performance Bank Guarantee was submitted in April, 2006. The Agreement was not signed for transfer, manufacture and supply of HSRP. When the Agreement was pending for finalization, the Government of India issued Notification No. S.O.883(E) dated 12th June, 2006 in respect of manufacture and supply of HSRPs, and compliance was sought by the Department by its letters dated 8th August, 2006 and 14th August, 2006. There were letters addressed by the Petitioner on 9th and 16th August,

2006. However, the Government reexamined the prequalification bid documents and found that the changes had taken place in the 22 wp.no.91/11 composition of the Company mentioned in the Joint Venture Agreement. This was the only allegation in that show cause notice.

24. There was a reply given to this letter/notice on 18th October, 2006 by the Petitioner and it stated that there was no suppression of any of the information as alleged.

25. Thereafter, the Writ Petition, challenging this notice was filed which came up before this Court on 19th September, 2007 and it was stated that the action taken pursuant to the Show Cause Notice dated 11th October, 2006, by passing an order dated 13th November, 2006, stands withdrawn. Beyond that, this Court has not taken note of anything and in fact, the Writ Petition came to be withdrawn. Letter of Intent dated 24th March, 2006 stands revalidated because of the withdrawal of the Order dated 13th November, 2006.

26. It is difficult to accept the contention of Shri Dhond that Clause 3.3 of the Concession Agreement which provides for meeting the actual loss or damages caused to the Petitioner, as a result of premature termination of the contract, cannot be said to be a bar for 23 wp.no.91/11 entertaining the Writ Petition and particularly in the light of the dispute resolution mechanism provided therein because the contract is not non- statutory, but statutory in character. In this behalf, he relies upon the Motor Vehicles Rules as amended. He also submits that the Notification dated 12th June, 2006 would not be attracted as it is not retrospective in nature.

27. If the Agreement dated 29th February, 2008 is perused, it is clear that the Governor of Goa and the Petitioner have signed the Concession Agreement, because the Government of India has made it mandatory for all vehicles in India to be affixed with HSRPs within a timeframe and the State Government has decided to implement the provisions by inviting private participation to carry out the various functions relating to manufacture, distribution, sale and affixation of the HSRPs in the State. Therefore, it invited bids for selecting a successful bidder, inter alia, to assemble, establish, procure technology design, develop, produce, emboss, affix, distribute and create complete infrastructure for the implementation of the HSRP project in the State, in conformity with the technical parameters contemplated in the Government Notification. It is in such circumstances that the contract 24 wp.no.91/11 has been awarded. We find nothing either in the Act or the Rules, and particularly Rule 50 of the Amended Rules which would enable us to hold that the contract is statutory in nature. The function and the duty that has to be performed by the Government in implementing the Scheme is a distinct matter. That aspect cannot be relevant for deciding that the contract is statutory in character and nature. The Supreme Court in Pimpri Chinchwad Municipal Corporation and others vs. Gayatri Construction Company and anr. (supra) has observed that the contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. In this behalf this is what is held in paras 11 to 13 and 16 of this decision : “ 11. In matters relating to maintainability of writ petitions in contractual matters there are a catena of decisions dealing with the issue.

12. In National Highways Authority of India v. Ganga Enterprises it was inter alia held as follows: (SCC p.415, para 6) “6. The respondent then filed a writ petition in the High Court for refund of the amount. On the pleadings before it, the High Court raised two questions viz.: (a) whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and also contrary to Section 5 of the Contract Act; and (b) whether the writ petition is maintainable in a claim arising out of a breach of 25 wp.no.91/11 contract. Question (b) should have been first answered as it would go to the root of the matter. The High Court instead considered Question (a) and then chose not to answer Question (b). In our view, the answer to Question (b) is clear. It is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. It has been so held in Kerala SEB v. Kurien E. Kalathil2, State of U.P. v. Bridge & Roof Co. (India) Ltd.3 and Bareilly Development Authority v. Ajai Pal Singh4. This is settled law. The dispute in this case was regarding the terms of offer. They were thus contractual disputes in respect of which a writ court was not the proper forum. Mr Dave, however, relied upon Verigamto Naveen v. Govt. of A.P.5 and Harminder Singh Arora v. Union of India6. These, however, are cases where the writ court was enforcing a statutory right or duty. These cases do not lay down that a writ court can interfere in a matter of contract only. Thus on the ground of maintainability the petition should have been dismissed.” 13. In Kerala SEB v. Kurien E. Kalathil2 this Court dealt with the question of maintainability of petition under Article 226 of the Constitution and the desirability of exhaustion of remedies and availability of alternative remedies, as also difference between statutory contracts and non-statutory contracts. In paras 10 and 11 of the judgment it was noted as follows: (SCC pp. 298-99) “10. We find that there is a merit in the first contention of Mr Raval. Learned counsel has rightly questioned the maintainability of the writ petition. The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. Whether the contract envisages actual payment or not is a question of 26 wp.no.91/11 construction of contract. If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observation of the High Court that since the obligations imposed by the contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in coming to the conclusion that the contract in question was statutory in nature. 11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a 27 wp.no.91/11 petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies.”

16. At para 11 of India Thermal Power Ltd. v. State of M.P.8 it was observed as follows: (SCC pp. 386-87, para 11) “11. It was contended by Mr Cooper, learned Senior Counsel appearing for appellant GBL and also by some counsel appearing for other appellants that the appellant/IPPs had entered into PPAs under Sections 43 and 43-A of the Electricity Supply Act and as such they are statutory contracts and, therefore, MPEB had no power or authority to alter their terms and conditions. This contention has been upheld by the High Court. In our opinion the said contention is not correct and the High Court was wrong in accepting the same. Section 43 empowers the Electricity Board to enter into an arrangement for purchase of electricity on such terms as may be agreed. Section 43-A(1) provides that a generating company may enter into a contract for the sale of electricity generated by it with the Electricity Board. As regards the determination of tariff for the sale of electricity by a generating company to the Board, Section 43-A(2) provides that the tariff shall be determined in accordance with the norms regarding operation and plant-load factor as may be laid down by the authority and in accordance with the rates of depreciation and reasonable return and such other factors as may 28 wp.no.91/11 be determined from time to time by the Central Government by a notification in the Official Gazette. These provisions clearly indicate that the agreement can be on such terms as may be agreed upon by the parties except that the tariff is to be determined in accordance with the provision contained in Section 43-A(2) and notifications issued thereunder. Merely because a contract is entered into in exercise of an enabling power conferred by a statute that by itself cannot render the contract a statutory contract. If entering into a contract containing the prescribed terms and conditions is a must under the statute then that contract becomes a statutory contract. If a contract incorporates certain terms and conditions in it which are statutory then the said contract to that extent is statutory. A contract may contain certain other terms and conditions which may not be of a statutory character and which have been incorporated therein as a result of mutual agreement between the parties. Therefore, the PPAs can be regarded as statutory only to the extent that they contain provisions regarding determination of tariff and other statutory requirements of Section 43-A(2). Opening and maintaining of an escrow account or an escrow agreement are not the statutory requirements and, merely because PPAs contemplate maintaining escrow accounts that obligation cannot be regarded as statutory.”” therefore,

28. In the light of these observations, it is clear that this contract cannot be held to be statutory in character. The first contention of Mr. Dhond must, therefore, fail. Equally untenable is the argument that the Petition does not involve any disputed questions of 29 wp.no.91/11 facts. There is an attempt to show that Writ Petition No.560/06 challenging the earlier notice and order involved selfsame allegations and once the order stands withdrawn, the Respondents cannot proceed to terminate the contract. The argument is that there is nothing which could be stated to have transpired after the earlier Writ Petition, that was filed by the Petitioner. That Writ Petition did not involve same controversy. In so far as other reasons which are set out in the notice are concerned, even if we assume that notice involved the same allegation about change in composition of the Joint Venture, yet, we find that at that stage the Agreement was not executed and it was a mere acceptance of the offer made by the Petitioner. The contract came to be signed on 29th February, 2008, much after the proceedings in Writ Petition No.560/06. That apart, whether the controversy in that Writ Petition and in the present Writ Petition is identical or whether the withdrawal of the Order dated 13.11.2006 by itself and without anything more could be said to be conclusive and decisive, is itself a disputed question of fact. The Petitioner has raised several contentions in that Writ Petition, as well as in this Writ Petition, so also it has relied upon the Memorandum of Association & Articles of Association of the Petitioner Company. The Petitioner has relied upon 30 wp.no.91/11 the Clauses in the Joint Venture Agreement which, according to the Petitioner, enable the transfer of shares by Shri Nitin Shah in favour of Rushang Shah. Once the earlier order was withdrawn and the controversy was determined afresh, then, whether Shri Rushang Shah entered the Company before 26.9.2005 or whether the transfer being recorded in his favour on 24.12.05, would change the colour of the controversy is a disputed question of fact, requiring going into all the correspondence, apart from the reply to the show cause notice. That would also require scrutiny of the clauses of the Agreement in question, so also the Joint Venture Agreement and the terms and conditions of the bid documents. It may also involve testing of the rival versions. All that is not possible in our limited jurisdiction.

29. In the affidavit-in-reply, it has been pointed out by respondent No.3 that the Joint Venture Agreement was executed between M/s. Utsch AG Germany and Shri Nitin Shah as the Indian Partner, contemplating formation of Joint Venture Company in India. The Joint Venture Company was incorporated on 4th May, 2001 with Shri Nitin Shah as its Director along with Mr. Manfred Utsch. Shri Nitin Shah resigned as the Director of the Company on 10th February, 2005 and on 24.12.2005, Nitin Shah transferred his shares in the 31 wp.no.91/11 Petitioner Company in favour of Rushang Shah. The bid was submitted on 26th September, 26.9.05 and the documents submitted to the State Government disclose that Shri Nitin Shah was the Director of the Company and also Indian Partner of the Joint Venture Company. The Joint Venture Agreement and the formation of the Company are inter linked and when Shri Nitin Shah was not the Director, but Indian Partner of the Indian Venture Company, and the documents indicate to the contrary, then, this was not a bid submitted by the Joint Venture Company. In the Affidavit-in-reply, what the Petitioner has stated is that there are no disputed questions of facts because Shri Nitin Shah was a Director of the Company and there is no misrepresentation at all.

30. In the reply affidavit, it has also been pointed out that Mr. Nitin Shah was not the Director of the Company but, was Indian Partner in a Joint Venture Agreement. The document submitted to the State Government discloses otherwise. Further, Mr. Rushang became Director in December, 2005. He became the Indian Partner in the Joint Venture Agreement in December, 2005. Therefore, the Petitioner was ineligible even to bid in tendering process.

31. The version of the Petitioner on the other hand is that this 32 wp.no.91/11 fact was duly recorded with the Registrar of Companies. There is no question, therefore, of misrepresentation or misleading the authorities. It is the case of the Petitioner that during the tendering process, it has never represented that Mr. Nitin Shah was the Director on the board of the Petitioner. The Joint Venture Agreement executed between the German Partner and Indian Partner i.e. M/s. Shimnit India and Utsch AG Germany contemplates incorporation of Indian Joint Venture, which was consequently incorporated. The transfer of shares from Nitin Shah to his son Rushang was a permissible transfer and the same did not, any manner, affect the constitution of the Joint Venture. Since the definition of the “Indian promoter” under Article 2(r) of Articles of Association of the Petitioner incorporates Mr. Nitin Shah, his wife, their children, successors and heirs, therefore, the transfer does not change the constitution or definition of 'Indian Promoter'. In other words, the share holding in the Joint Venture remains the same, the ratio of the share holding by German and Indian Partner remains the same. In our view, this issue cannot be resolved on the basis of affidavits and in our limited jurisdiction. This will necessitate verification and scrutiny of the share holding, by calling for the necessary records from the Company. In such circumstances, assuming 33 wp.no.91/11 that the contract has some statutory flavour, yet disputes between parties is essentially factual in nature. These factual disputes cannot be adjudicated in writ jurisdiction. More so, when the termination of a contract awarded to the Petitioner by the authorities, is not just based on this ground.

32. In the termination notice, what has been held is that :- “The Joint Venture Company was incorporated on 04/05/2001 pursuant to the memorandum of Association and Articles of Association drawn on 09/04/2001. The formation of the Joint Venture Company was preceded by the Joint Venture Agreement dated 07/04/2001 between Utsch K.G. and Shri Nitin Shah. The preamble shows that Utsch K. G. is desirous of having a share holding of 50 % in the new Joint Venture Company and Indian Partner (Shri Nitin Shah) is desirous of having a share holding of 50 % in the Joint Venture Company. It further shows that the Joint Venture Company is to be formed for production of products from Utsch know how and relying upon the Indian Partners experience in and goodwill in the business. The Joint Venture Agreement is for the formation of a Joint Venture Company on terms agreed between the 34 wp.no.91/11 Foreign Partner and Indian Partner. Joint Venture Agreement specifically provides that Utsch and the Indian Partner shall each subscribe 50 % by way of equity and capital equipment representing their respective voting right. The Joint Venture Agreement further specifically provides for the roles of the contracting parties including that of the Indian Partner. A complete perusal of the Joint Venture Agreement shows that it is an integral part of the Joint Venture Company. In other words Joint Venture Company has been incorporated to further the agreement arrived at between Utsch and Shri Nitin Shah. These were the documents which were submitted to the Government clearly indicating that the Joint Venture Company is comprised of Shri Nitin Shah and Utsch. The Articles of Association submitted clearly shows that the first Director of the company shall be Shri Nitin Shah and Shri Manfred Utsch. Though the company in its reply has submitted that every company has the right to appoint and remove Directors from time to time, and that the Company has a perpetual succession, the fact remains that on the day the bids were submitted i.e. on 26/09/2005, 35 wp.no.91/11 Shri Nitin Shah was not a Director of Company whereas he was an Indian Partner in the Joint Venture Agreement. The nexus between the Joint Venture Agreement and the Joint Venture Company was therefore broken and with Shri Nitin Shah not being a Director in the Joint Venture Company, the composition of the bidder, i.e. the Company was different than that contemplated by the Joint Venture Agreement. The company therefore would have been disqualified had the above facts been disclosed. The bid was accepted by considering the composition of the Company pursuant to the Joint Venture Agreement.”

33. The second ground (b) is that the footnote had been added in the definition of 'Bid Form II' submitted by the Petitioner, which states that “premium of 48 % will be charged on the above prices for replacing for any of the above items.” This note is signed by the representative of the Petitioner, but is not endorsed by the Committee Members and, therefore, it appears to have been recorded after the opening of bid. It is alleged that the Company has denied the allegation by relying on certain letters. It is stated that the footnote is recorded by hand and signed by the representative of the Company, but is not endorsed by the Tender Committee Members. 36 wp.no.91/11

34. In this behalf what the Petitioner states is that even if the bids were open in front of the members of the Tender Committee and other eligible bidders, there was no scope to the addition to be recorded after the opening of the bids. Therefore, this ground is frivolous. Further, there was information already provided to the Committee (Shriwastav Committee) about the Petitioner's willingness to negotiate the price rate of High Security Plates vide letter dated 17th May, 2010.

35. In this behalf, our attention is invited to the show cause notice and reply thereof and the clause 2.6 of the terms and conditions. Further, our attention is invited to the observations of the Committee.

36. Clause 2.6 of the bid document states that the bidder shall fill in the rates and prices both in figures and words in financial bid Form Nos.I and II respectively. The bidder shall quote rates in Financial Bid Form No.I for complete set of Registration Plates including third registration plate where required and Snap Lock, for each category of vehicle, while the rates in Financial Bid Form II shall be to cater replacement markets and separate for each size of the plate, third Registration Plate sticker and Snap Lock. The clause contemplates that the rates quoted in both Forms should result the 37 wp.no.91/11 same amount for each category of vehicle and percentage increase / decrease rate due to fluctuation in US Dollar, which shall be the same in both Forms. The rates quoted by the bidder shall be maximum, which can be charged from vehicle owners and shall be exclusive of all duties and taxes. Taxes or duties or any other tax, if applicable, shall be shown separately.

37. Our attention is invited to the reply to the show cause notice. It is submitted that the allegation that the Company added post bid opening anything to their bid is totally false and is not borne out from the record. Reliance is placed on the minutes of the meeting held on 10th November, 2005 and letters dated 11th November, 2005, 14th November, 2005, 3rd March, 2006 and 8th March, 2006. According to the Petitioner, there is no doubt that footnote was recorded prior to the opening of the bid. Our attention is also invited to Memo of Writ Petition No.740/2010 and Annexures E and F and particularly paragraphs 20 to 23 thereof. In our view, whether the correspondence during the course of negotiations of price would furnish complete answer to this allegation or not, requires perusal of the record in its entirety. The reduction of prices as agreed, would mean that the Committee was aware of the footnote and its effect or impact on clause 38 wp.no.91/11

2.6 is something which cannot be gone into and decided in the present Writ Petition. In other words, for holding that the allegations in the show cause notice are proved, we will have to consider the bid or tender documents, the tender, the minutes of the Committee Meetings, the correspondence on record and then, record a finding as to whether the insertion of the footnote allegedly is a fact to the knowledge of the authorities or not. All that we can say is presently this is a dispute on the facts and it is not as if merely for the sake of denying or disputing the allegations in the Writ Petition that the version has been set out. Each of the document will have to be interpreted and construed in the light of the assertions by both parties on affidavits. Their request to examine the concerned persons may also have to be considered, if made.

38. Today, the situation is that we have the show cause notice and allegations therein, the reply thereto by the Petitioner and the termination notice. If the termination notice states that the reply of the Petitioner is not satisfactory and does not answer the allegations and further is not in conformity with the conditions of the tender/bid document, then, necessarily a scrutiny of the entire material is 39 wp.no.91/11 warranted. Whether this finding of fact is vitiated or not to be decided, will necessitate testing both versions. Merely because the earlier petitions were filed, does not mean that the Respondents have made the same allegations against the Petitioner.

39. Prima facie, the Petitioner does not dispute that ground (b) and ground (c) in the show cause notice were not forming part of the earlier show case notices and the termination order. Since there was no adjudication in this behalf and the earlier Writ Petition was withdrawn, it cannot be said that the withdrawal of the order terminating the contract passed earlier resulting in withdrawal of the Writ Petition, means that all the allegations are given up. By itself and without anything more, it cannot be said that the allegations are an afterthought or that they are self-same.

40. When the matter was listed for orders, leave was sought by Shri Sardessai appearing on behalf of the Petitioner to tender an Addi tonal Affidavit of the Petitioner affirmed on 13th April, 2011, annexing therein a copy of the order passed by the Hon'ble Supreme Court in Interim Application Nos. 10 and 11 of 2010 in Writ Petition (Civil) No. 510 of 2005 dated April 07, 2011 wherein directions have been issued 40 wp.no.91/11 to the Secretary (Transport) and/or Commissioner, State Transport Authority of defaulting States, namely, those States which have failed to implement the HSRP Scheme.

41. We have considered this Additional Affidavit. We are of the view that the directions of the Hon'ble Supreme Court are issued in a matter regarding implementation of the HSRP Scheme in some of the States in India. That is an aspect concerning implementation of the Scheme itself. We are not dealing with any such matter. The challenge before us is, by the Petitioner, to a termination of the Contract/ Concession Agreement dated 29th February, 2008. Therefore, we have considered that limited issue and we are of the further opinion, that the termination order is not based on any of the issues highlighted in the Additional Affidavit. Further, we have already held in the foregoing paragraphs that this is a contractual dispute and the termination of the contract is in terms of the clauses thereof. The allegations of malafides have not been substantiated. In these circumstances, this Additional Affidavit and the Statements therein have no impact on the observations made by us. We, therefore, hold that this Additional Affidavit does not, in any manner, assist the Petitioner in having the 41 wp.no.91/11 termination order set aside and particularly, because the dispute is factual in nature.

42. In the above facts and circumstances, we are of the view that Writ Petition is not an appropriate remedy for the Petitioner. The petitioner will have to question the termination notice by recourse to ordinary remedies. It will not be possible to render any conclusive finding in our limited jurisdiction and purely on the basis of the affidavits.

43. In the result, the Writ Petition fails and it is dismissed. It is not necessary to deal with all the decisions cited, because our finding on the first question that this contract is not of a statutory character, is based on the observations in the Supreme Court judgment referred to by Shri Dhond. There, the Supreme Court held that the manufacturer chosen would, in fact, be a sort of an agent or medium of the RTOs concerned for fulfillment of the statutory obligations on them of providing the high security plates to vehicles in accordance with Rule

50. As far as the other aspect namely, assuming that the contract has statutory flavour, yet, there are disputed questions of facts involved, is a conclusion reached by us by perusing the necessary documents and 42 wp.no.91/11 the affidavits filed on record. In these circumstances, it is not necessary to go into the other issue raised, namely the termination is arbitrary because respondent nos.2 and 3 held that there are indigenous manufacturers available now and, therefore, it would be in public interest to award the contract to them. Whether such allegations can be made and purely on this basis, the contract can be terminated, is a matter which need not be gone into once the above conclusion is reached by us. The petition, therefore, fails and is dismissed, but with an observation that all other remedies are open for the Petitioner. We also clarify that we have not expressed any opinion on the rival contentions and they have been referred to merely to conclude that the writ jurisdiction is not available to the Petitioner in the facts and circumstances of the present case. 44 . The petition is dismissed subject to above, but without any order as to costs. S. C. DHARMADHIKARI, J. SSM/SMA F. M. REIS, J.