Yespal Keval Singh Chandi and Another Vs. Union of India through General Manager Wester Railway and Others - Court Judgment

B.P. Colabawalla, J.

1. By these Petitions filed under Article 226 of the Constitution of India, the Petitioners have challenged the legality and validity of the order dated 28th July, 2015 passed by the Chief Operations Manager (Western Railway), under which the decision of the Divisional Authority cancelling/terminating the lease contracts of the Petitioners, with forfeiture of Security Deposit and cancellation of registration, as punitive measures, was confirmed. The Petitioners are further barred from applying for fresh registration for a period of five years.

2. Since the facts in both these Petitions and the point of law to be considered are more or less the same, both these Petitions are being disposed of by this common judgment.

3. The facts in Writ Petition (L) No.2322 of 2015 are as follows:-

(a) The Petitioner is engaged in the business of transport of goods/cargo including taking on lease from the Railways Train goods compartments i.e. SLR 4 ton Luggage Rack.

(b) Pursuant to a tender notice, the Petitioner and the Respondents entered into an âAgreement for Leasing of Parcel Space in Brake Van / Parcel Van/ Assistant Guard Cabinâ? dated 9th December, 2013. This agreement stipulates that w.e.f. 11st December 2013, the Railway administration would provide 04 (MSLR-IV) tonnes parcel space to the Petitioner (leaseholder) in Train No.12925 from BDTS to ASR for a period of three years. There were several other terms and conditions in the said agreement which inter alia provided for overloading and penalty, failure of the leaseholder to fulfill his obligation after having started loading, preparation of manifest, loading of heavy packages in Assistant Guard Cabin etc. Apart from the contract for this Train namely Train No.12925, the Petitioner and the Respondents have entered into agreements/contracts with reference to other Trains as well. It is the case of the Petitioner that he has been loading and unloading goods as per the said agreement and performed all his duties and actions as stipulated in the agreement.

(c) Since the Respondent Authorities found that there was overloading in some of the Trains, by a communication dated 10th January, 2015 the Divisional Railway Manager (Commercial), Mumbai Central, brought the aforesaid facts to the notice of the Petitioner and terminated all the contracts of the Petitioner and cancelled their registration with forfeiture of registration fees, as punitive measures. The Petitioner was further debarred from applying for a fresh registration for a period of 5 years.

(d) Being aggrieved by this decision, the Petitioner preferred an Appeal before the Chief Commercial Manager (Respondent No.2) without any success. Being aggrieved and dissatisfied by the termination letter dated 10th January, 2015 as well as the order in Appeal dated 18th February, 2015, the Petitioner then approached this Court by filing Writ Petition (L) No.978 of 2015. This Court by its order dated 25th June, 2015 set aside the order of the Appellate Authority and remanded the matter back for deciding the Appeal afresh. This was done on the ground that no personal hearing was given to the Petitioner. It was also ordered that since the Chief Commercial Manager is the Appellate Authority who has terminated the contract, any other officer of the same rank would decide the Appeal, after giving a personal hearing to the Petitioner.

(e) Pursuant thereto, the Appellate Authority after giving a personal hearing and examining the matter, gave a reasoned order dated 28th July, 2015 dismissing the Appeal of the Petitioner and upholding the termination of all contracts of the Petitioner. Being aggrieved by this order in Appeal, the Petitioner is before us.

4. The facts in Writ Petition (L) No.2283 of 2015 are as under:-

(a) Here also the Petitioner is the proprietary concern of one Lalit Sharma and is engaged in the business of transport of goods and cargo including taking on lease from the railways Train goods compartments i.e. Parcel Van. In the facts of this case, an agreement dated 23rd October, 2012 was entered into between the Petitioner and the Respondent for leasing parcel space in Parcel Van in Train No.12925/12926 Paschim Express Ex. BDTSASR-BDTS for a period of three years and on the terms and conditions, more particularly, set out therein (said agreement). Like in the case of the Petitioner in other case, here also there were other agreements/contracts that were entered into for other Trains.

(b) As there were infractions committed by the Petitioner, a show cause notice dated 18th February, 2015 was issued to the Petitioner, under which the Petitioner was called upon to explain why the contracts awarded to him should not be terminated along with forfeiture of the security deposit and cancellation of registration, and further, why he should not be debarred from applying for a fresh registration for a period of five years. This show cause notice was replied to by the Petitioner vide his letter dated 25th February, 2015. Thereafter, the Respondent by its communication dated 16th March, 2015, informed the Petitioner that since there were four defaults of overloading in Train No.12925/12926, as per the provisions of the said agreement, the contracts in relation to Train No.12925/12926 as well as Train No. 19019/19020 stood terminated alongwith forfeiture of security deposit. The Petitioner was further informed that his registration was cancelled and he was debarred from applying for a fresh registration for a period of 5 years.

(c) Being aggrieved by this termination letter, the Petitioner then approached this Court by preferring Writ Petition (L) No.808 of 2015. This Court, by its order dated 25^th June 2015, set aside the order of the Appellate Authority and remanded the matter back for deciding the Appeal afresh. This was done on the ground that no personal hearing was given to the Petitioner. It was also ordered that since the Chief Commercial Manager is the Appellate Authority, who has terminated the contract, any other officer of the same rank would decide the Appeal after giving a personal hearing to the Petitioner.

(d) Pursuant thereto, the Appellate Authority, after giving a hearing and examining the matter, gave a reasoned order dated 28th July, 2015 dismissing the Appeal and upholding the termination of the contracts of the Petitioner. Being aggrieved by this order in Appeal, the Petitioner is before us.

5. In this factual background the only argument canvassed before us by Ms Singhania, learned counsel appearing for the Petitioner in Writ Petition (L) No.2322 of 2015 and Mr Cama, learned counsel appearing for the Petitioner in Writ Petition (L) No.2283 of 2015, was that under the respective contracts entered into with their clients, the Respondents had no power to terminate all their contracts, cancel their registration and debar them from applying for fresh registration for a period of 5 years. According to the counsel, on interpreting various clauses of their respective contracts, in the facts of their respective cases, no such power could have been exercised by the Respondents. We must mention here that the clauses relied upon by Ms Singhania as well as Mr Cama were one and the same though in their respective contracts the clauses were numbered differently. Ms Singhania relied upon clauses 15.8 and 15.16 in her contract whereas Mr Cama relied upon clause 13.8 in the contract executed by his client. For the sake of convenience and as there is no dispute that these clauses are pari-materia, we shall refer to the clauses in the contract executed between the Petitioner and the Respondent in Writ Petition (L) No.2322 of 2015.

6. Both learned counsel, by placing reliance on Clauses 15.8 and 15.16 argued that if all contracts of the Petitioners were to be cancelled, and that too with the cancellation of their registration, then this could be done only under clause 15.16 of the contract that stipulates that before such action is taken there has to be a minimum of 8 violations in all in two separate contracts. Ms Singhania submitted that in her case there were totally seven violations in four contracts, and therefore, all the contracts of the Petitioner as well as their registration could not have been cancelled in view of the express provisions of clause 15.16. As far as Mr Cama's client is concerned, he submitted that in the facts of his case there were only four violations in respect of a single contract, and therefore, relying upon the very same clause, he submitted that the Respondents were in grave error in terminating all the contracts of his client as well as his registration. Both counsel submitted that in view thereof, the Appellate Authority that heard the Petitioners and passed the impugned order dated 28th July 2015, was in grave error in confirming the decision of the Divisional Authority of terminating all the contracts of the Petitioners, canceling their registration and further debarring them from applying for a fresh registration for a period of 5 years.

7. With the help of the learned counsel, we have perused the papers and proceedings in the Writ Petitions as well as the orders impugned therein. To understand the controversy that is canvassed before us, it would be appropriate to refer to some of the clauses of the contract. Clause 7 deals with failure of the leaseholder in fulfilling his obligations after having started loading. Paragraph 7.4 of the contract reads as under:-

â7.4.:If the registration of a leaseholder is cancelled as a punitive measure, either for reasons of repeated overloading or for repeated failure to start loading after award of contract, or for attempt to deliberately defraud railways or for repeated violation of any of the existing stipulations where cancellation of registration has been legislated as the penalty, then the entire registration fee would be forfeited. In addition to forfeiture of registration fee, all his existing leasing contracts being operated from that division would also be cancelled. However, contract can be cancelled/terminated by the Railways with the approval of tender accepting authority. In addition to cancellation, such a leaseholder would be debarred from fresh registration for a period of 5 years.â?

(emphasis supplied)

8. Clause 7.4 stipulates that if the registration of a leaseholder is cancelled as a punitive measure, either for reasons of repeated overloading or for repeated failure to start loading after award of contract or for attempt to deliberately defraud Railways etc, then, the entire registration fee can be forfeited and all existing lease contracts could also be cancelled. It further provides that in addition to such cancellation, the leaseholder could also be debarred from fresh registration for a period of five years.

9. Clause 15 of the contract deals with overloading and penalty. Clause 15.1 provides that in case the overloading is detected beyond the permissible carrying capacity, charges/penal punitive charges would be recovered from the leaseholder, as more particularly, set out in clauses 15.2 and 15.3 of the Contract. Thereafter, clause 15.4 reads as under:-

âClause 15.4:In addition to the above penalty Railway may terminate the contract and cancel the registration of the leaseholder in case of fourth default.â?

(emphasis supplied)

10. Therefore, in addition to the penalty contemplated in the Clauses 15.1 to 15.3 that may be imposed on the leaseholder, the Railway has the power to terminate the contract and cancel the registration of the leaseholder in case of fourth default.

11. Clause 15.16, and on which heavy reliance was placed by the learned counsel appearing for the Petitioners, reads as under:-

âClause 15.16: In case of cancellation of lease on account of overloading for two separate contracts (minimum of 8 violations in all), registration of the leaseholder would also be cancelled as mentioned in para 7.4â?

12. Relying upon the aforesaid clause, a distinction was sought to be made between clauses 15.4 and 15.16 respectively. It was the argument of the Petitioners that a registration could be cancelled only in cases where there was overloading in two separate contracts (with a minimum of 8 violations and all) and not otherwise. We find that this argument is contrary to the terms of the contract and is stated only to be rejected. Clause 15.4 reproduced above, clearly states that the Respondent may terminate the contract and cancel the registration of the leaseholder in case of fourth default. In the present case, admittedly, there are at least four instances of overloading by both the Petitioners, and therefore, under clause 15.4, the Respondent had the power to cancel the registration of the Petitioners. It would necessarily follow that once the registration is cancelled, all other subsisting contracts would have to be cancelled because without registration, the other contracts cannot be allowed to continue. This is for the simple reason that before any contract can be awarded to any party, it has to be registered with the Respondents. This position, very fairly, is also not disputed before us. We, therefore, find no substance in this argument.

13. In the alternative, it was submitted by Mr Cama that even assuming that registration could be cancelled under clause 15.4 of the contract, the Petitioners could not have been debarred from fresh registration for a period of five years. That power, according to the Petitioners, is found only in Clause 7.4. He sought to make this distinction by referring to the difference in the words used under Clause 15.4. and 15.16 respectively. He submitted that clause 15.16 specifically refers to cancellation âas mentioned in Clause 7.4â? whereas no such words appear in Clause 15.4. We are unable to agree with the aforesaid submission. A contract cannot be read as a statute and has to be read as a whole to understand the purport and import of the said contract as well as the rights and obligations mentioned therein. Clause 15.4 admittedly gives powers to the Respondents to cancel the registration of the leaseholder in case of fourth default. Clause 7.4 stipulates that in addition to cancellation of registration, such a leaseholder could be debarred from fresh registration for a period of five years. Merely because the words âas mentioned in para 7.4â? appearing in clause 15.16 are missing in clause 15.4, would not make any difference. Clause 7.4 gives a specific power to the Railway Authorities to debar a leaseholder for applying for fresh registration for a period of five years when he is guilty of repeated overloading and his registration, for that very reason, has been cancelled under the provisions of the contract. We, therefore, find no substance even in this argument. In any event, we do not find that in the present case, any fundamental right of the Petitioners have been infringed. It is now settled law that although a citizen has a fundamental right to carry on a trade or business, he has no fundamental right to insist upon the Government or any other individual for doing business with him. Any Government or an individual has got a right to enter into a contract with a particular person or to determine a person or persons with whom he or it will deal. [See (1997) 9 SCC 495, Paragraph 32]

14. On perusing the impugned orders, we find that a proper hearing was given to the Petitioners and after considering their objections, a detailed reasoned order has been passed by the Appellate Authority upholding the termination orders. We do not find that the orders of the Appellate Authority suffer from any perversity or patent illegality that would persuade us to exercise our extraordinary, equitable and discretionary jurisdiction under Article 226 of the Constitution of India and strike down the impugned orders. We must add here that it is now well settled that it is not sufficient that a party should come to this Court and make out a case that a particular order is invalid. In order to get relief from the Court in its equitable jurisdiction under Article 226 of the Constitution of India, not only must the party come with clean hands, not suppress any material facts and show utmost good faith, but he must also satisfy the Court that passing an order in his favour would do justice and that justice lies on his side. In this regard, it would be appropriate to refer to the observations of this Court in the case of The State of Bombay v/s Morarji Cooverji, (1958 (LXI) BLR 318)wherein (at page 332), it is stated thus:-

âBut it is not sufficient that a party should come to this Court and make out a case that a particular requisition order is not valid. In order to get that relief from the Court on a writ petition, not only must he come with clean hands, not only must he not suppress any material facts, not only must he show the utmost good faith, but he must also satisfy the Court that the making of the order will do justice and that justice lies on his side.â?

15. In the present case, admittedly, there have been violations of overloading by both the Petitioners. This fact is very fairly not disputed before us. It also cannot be seriously disputed that overloading weakens the strength of the springs of the Coach, due to which the Coach may break down and the Train may get derailed endangering the lives of the passengers. It is for this very reason that limits are put on the amount of cargo that can be loaded by the leaseholder. By overloading, the leaseholder, apart from breaching the terms of its contract, seriously puts at risk public safety and the safety of the operation of Trains and its passengers. In these peculiar circumstances, we do not think that justice lies on the side of the Petitioners for us to exercise our equitable jurisdiction and strike down the impugned orders passed by the Appellate Authority, and who, after hearing the Petitioners, has given a detailed reasoned order. We, therefore, decline to exercise our extraordinary equitable jurisdiction under Article 226 of the Constitution of India in favour of the Petitioners.

16. In view of the discussions earlier in this judgment, we find no merit in these Writ Petitions. They are accordingly dismissed. However, in the facts and circumstances of the case, we leave the parties to bear their own costs.