*THE HON’BLE SRI JUSTICE V.ESWARAIAH AND *THE HON’BLE SRI JUSTICE G.V.SEETHAPATHY +W.A.NO.705 and 797 OF 1999 %05-12-2008 W.A.NO.705 OF 1999 Between: # 1. THE COMMISSIONER, MUNICIPAL CORPORATION OF HYDERABAD, TANK BUND, HYDERABAD 2. THE ADDITIONAL COMMISSIONER (ENFORCEMENT), ADVERTISEMENT SECTION, MCH, HYDERABAD …Appellants And $ M/S UNI-ADS PRIVATE LTD. …Respondent W.A.NO.797 OF 1999 # 1. THE COMMISSIONER, MUNICIPAL CORPORATION OF HYDERABAD, TANK BUND, HYDERABAD 2. THE ADDITIONAL COMMISSIONER (ENFORCEMENT), ADVERTISEMENT SECTION, MCH, HYDERABAD …Appellants And $ M/S UNI-ADS PRIVATE LTD. …Respondent !Counsel for the Appellants: SRI R.RAMACHANRA REDDY. ^Counsel for the Respondents: SRI N.RAVI PRASAD <Gist: >Head Note: ?Cases referred: 2008(5) SCJ 1040 THE HON’BLE SRI JUSTICE V.ESWARAIAH AND THE HON’BLE SRI JUSTICE G.V.SEETHAPATHY WRIT APPEAL Nos.705 AND 797 OF 1999 COMMON JUDGMENT: (Per the Hon’ble Sri Justice G.V.Seethapathy) These two writ appeals are directed against the common order dated 26.03.1999 in WP Nos.21781 and 31868 of 1998, wherein, both the writ petitions were allowed. 2. WP No.21781 of 1998 was filed by the respondents herein seeking Writ of Mandamus declaring the action of the appellants herein in not approving the pro-forma agreement submitted by the respondents to commence contract for a period of three years and in not furnishing the letter of authorization to enable the respondents herein to fix advertisements and in not marking and handing over the poles (4,500) to enable them to display the advertisements as illegal, arbitrary and unconstitutional. 3. WP No.31868 of 1998 was filed for declaring the action of the appellants herein in issuing the impugned proceedings in No.3642/Advt./A3/95-98 dated 21.07.1998 demanding an amount of Rs.1,86,93,500/- as arbitrary, illegal and unreasonable and for setting aside the other proceedings and consequential direction to the appellants herein to extend the lease period for advertising on 4,500 electrical poles beyond 30.06.1998 by adjusting the payment already made by the respondents herein in a sum of Rs.37,95,500/-. 4. The parties are referred hereinafter for the sake of convenience as they are arrayed in the writ petitions. 5. According to the petitioner, an advertisement agency, the 2nd respondent issued a tender notice by way of publication in newspaper on 29.03.1985 for the purpose of advertisement by Kiosks lamps in twin cities of Hyderabad and Secunderabad and other important towns to augment their resources and in pursuance thereof, the petitioner applied for the contract after receiving tender conditions. The important conditions of the tender notification are as follows: 1. The successful tenders should enter into an agreement with the competent authority, before starting display of the advertisements. 2. The successful tenderers before entering into such agreement with the M.C.H. should pay Rs.1,00,000/- towards E.M.D. along with the amount to the extent of 1/3rd of the lease amount within 7 days from the date of allotment. 3. The successful tenderer within 7 days on receipt of communication of acceptance of his tender should pay the lease amount one month in advance and then afterwards pay before 5th of every month. Otherwise, penal interest @ 12% will be recovered. 4. After this, the lessee should pay advertisement tax in lumpsum on 4,500 poles within 30 days from the date of receipt of intimation from M.C.H. and regularly on yearly basis, failing which interest @ 12% p.a. towards late payment will be recovered. Some of the tender conditions are: 1. The lease period will be for three years from the date of issue of order, subject to renewal every year not exceeding three years; 2. The successful tenderer shall have a right to fix the poster plates to the electric poles at his own cost. Size of the plates should not exceed 2 x 3 feet with Zinc sheet of 1/6th gauge. 3. The tenderer shall have to pay a minimum sum of Rs.13,61,250/- as lease amount per annum or more as quoted by the highest tenderer for the right to use the plates fixed to the electric poles. It is further averred that the petitioner is the highest tenderer for lease amount of Rs.56,93,000/- per year. Accepting the same, an intimation was sent on 05.05.1995 requiring the petitioner to pay security deposit and remit 1/3rd lease amount and also enter into an agreement with the first respondent. Accordingly, the petitioner deposited Rs.1,00,000/- towards security deposit and Rs.18,98,000/- being 1/3rd of the lease amount. Basing on the draft agreement furnished by the respondents, the petitioner engrossed an agreement on the stamp paper duly signed by the Chairman-cum-Managing Director and handed over the same to the 2nd respondent personally on 26.06.1995 for approval. Thus the petitioner had performed what all they have to do for entering into the agreement. The petitioner complained that the respondents have not intimated the acceptance of the agreement and they have also not mentioned the commencement of the period of the agreement and the electric poles [4,500] are also not entrusted to the petitioner for putting advertisements and they have also not furnished authorisation to the petitioner to enable them to approach the business people and seek advertisements to be displayed on the electric poles. The petitioner alleged that due to variety of reasons including planting of trees, construction of flyovers and bridges many poles were removed and the exposure of the poles also became less. Hence, the petitioner could put up advertisements only on 2,052 poles. The petitioner addressed many letters to the respondents seeking intimation of acceptance of the proposed agreement and to identify and hand over 4,500 poles, but there was no response from the respondents and hence the lease period did not commence to operate. However, the respondents have been insisting on the petitioner to pay monthly instalments and the petitioner paid for over six months. The petitioner sustained huge loss on account of unilateral conduct on the part of the respondents. For want of authorization from the respondents, the petitioner could not secure advertisements from many big companies. The 2nd respondent gave a notice to the petitioner on 21.07.1998 demanding payment of Rs.1,86,93,500/- Demand for differential lease amount and display fees is unsustainable. Even the lease amount has to be paid in proportion to the number of poles (2,052) made available as against 4,500 poles, originally fixed upon. The petitioner, therefore, prayed for issue of Writ of Mandamus declaring the action of the respondents in not approving the agreement etc. as illegal and arbitrary and for consequential direction to the respondents to approve the agreement and demark 4,500 poles by issuing letter of authorization for commencement of the contract and also to direct the respondents not to take any hasty action by cancelling the contract. 6. The respondents filed a counter contending in brief as follows: It is true that a notification dated 28.03.1995 was issued by the Corporation to lease out 4,500 electric poles situate in twin cities subject to the tender conditions. Accordingly, the petitioner submitted an application with quotation for Rs.56,93,000/- per year towards lease amount. The petitioner, being the highest bidder, his application was considered and 4,500 new electric poles were allotted for advertisement for a period of three years, subject to renewal every year vide allotment letter dated 05.05.1995. The total lease period is only three years, commencing from the date of issuing of order dated 05.05.1995. The petitioner paid only security deposit of Rs.1,00,000/- and commenced the advertisement unauthorisedly on the poles. More than 4,500 new electric poles were handed over to the petitioner along with the tender schedule and tender conditions. The petitioner has utilized all the poles for advertisement purpose and also some poles, which are not listed. The petitioner has already commenced the advertisement by exhibition of panels on the electric poles by earning lakhs of rupees, without paying advertisement fee. It is false that due to non-execution of the agreement and for want of authorization letter, the petitioner was not able to approach the business people for advertisement, as the petitioner has in fact made use of more than 4,500 electric poles without payment of the advertisement fee and lease amount and in gross violation of the tender conditions. On the request of the petitioner only, the lease amount was reduced to Rs.3,16,250/- per month to suit the convenience of the petitioner. But the petitioner did not pay even the monthly instalments. The petitioner has been utilizing the poles even after the expiry of the lease period unauthorisedly. As the petitioner failed to pay the lease amount and the advertisement fee, totaling to Rs.1,86,93,000/- for the period of three years in spite of demands and issuing several notices, the notice dated 21.7.1998 was issued by the respondents. The allegations made by the petitioner are in the nature of civil dispute and seeking redressal of the same by invoking extraordinary jurisdiction of this court under Article 226 of the Constitution of India, is unsustainable. The petitioner had suppressed the material facts and did not approach the Court with clean hands. The petitioner is, therefore, not entitled for any reliefs. 7. The petitioner filed W.P.No.31868 of 1998 seeking writ of Mandamus declaring the action of the respondents in issuing the impugned proceedings dated 21.7.1998 demanding payment of Rs.1,86,93,500/- as arbitrary and illegal and for setting aside the said proceedings and consequently directing the respondents to extend the lease period beyond 30.06.1998 by adjusting the payment already paid by the petitioner i.e., Rs.3,16,250/-. The second writ petition was filed on the ground that the demand notice dated 21.07.1998 issued by the respondents was not specifically challenged in the earlier writ petition. The respondents filed counter defending their action in issuing the impugned notice dated 21.07.1998 demanding payment of Rs.1,86,93,500/- towards arrears of lease amount and advertisement fee. The averments in the affidavit filed in support of the writ petition as also counter-affidavit filed by the respondents in the second writ petition are similar to those of the earlier writ petition. 8. Upon considering the contentions of both the parties, the learned Single Judge held as follows: “Even in the case of contracts, the power of judicial review can be invoked by the aggrieved party on the touch stone of Article 14 of the Constitution of India. But, in the present case, there is no such contract at all existing between the State and the individual. No statutory provision under the Act has been brought to the notice of this Court for exercising such a power. It is always open for this court to see whether any such agreement or contract was executed between the State and if any liability arises out of the said contract, the legality or otherwise of the liability cannot be gone into under Article 226 of the Constitution of India. However, if any acts are committed during the observation of the contract attracting Article 14 it is always open for this Court to scrutinize them and grant appropriate relief. But, in the instant case, there was no such contract at all. Therefore, the respondents have no power to demand any amounts on the pretext of violation of terms of lease”. 9. Accordingly, the learned Single Judge held that the impugned order dated 21.07.1998 is wholly illegal and without jurisdiction and quashed the same giving liberty to the respondents to recover the damages in a civil proceedings before appropriate Court in respect of the poles that were utilized by the petitioner for some period. The learned Single Judge further invoked the doctrine of promissory estoppel in favour of the petitioner and held that the respondents are bound by the same and directed the respondents to full-fill the promise as held out in their letter dated 05.05.1995 and execute lease deed for a period of three years as per the terms in the tender notification dated 28.03.1995 within a period of four weeks from the date of the order, duly adjusting the amount already paid. Accordingly, both the writ petitions were allowed. 10. Aggrieved by the same, the Municipal Corporation, Hyderabad, filed the present writ appeals. 11. Learned counsel for the appellant-Corporation would contend that the writ petition itself is not maintainable for enforcing the contractual obligations and the direction to the appellant-Corporation to execute the lease deed for a period of three years is unsustainable. He would submit that the petitioner displayed the advertisements for full term of three years without making payment of lease amount and advertisement fee, and execution of the lease deed afresh after expiry of three years period is unwarranted, especially when the petitioner has violated the tender conditions. He would further contend that the issue involves number of disputed questions of fact, which can be decided only in a full-fledged trial before the appropriate forum, but not in proceedings under Article 226 of the Constitution of India. Learned counsel for the appellant-Corporation would further contend that the equity does not lie in favour of the petitioner, who even failed to pay the admitted fees, having utilized the electric poles and failed to fulfill the obligations on their part and ignoring the same, the learned Single Judge erred in directing execution of the fresh lease deed, even after expiry of the original period of three years. 12. Learned counsel for the respondents-petitioners, on the other hand, would seek to justify the order of the learned Single Judge on the ground that the petitioners have fulfilled the terms of the agreement and it was only the respondents who failed to perform their part. 13. The admitted facts may be stated thus: The petitioner, which is an advertising agency, approached the Government and offered to display advertisement by setting up kiosks on lampposts in the twin cities of Hyderabad and Secunderabad. The second respondent published a notice inviting tenders for leasing out 4500 electric poles on 28-03-1995 for the purpose of advertisement for a period of three yeas. The petitioner became the highest tenderer quoting Rs.56,93,000/- per annum as lease amount. The respondents sent a communication dated 05-05-1995 conveying the acceptance of the petitioner’s tender and asking the petitioner to pay the security deposit of Rs.1 lakh and also 1/3rd of the lease amount within 7 days and enter into an agreement as contemplated in tender conditions. The petitioner paid the security deposit of Rs.1 lakh and also commenced advertising on the electric poles. The agreement, as contemplated under the tender conditions, has not been executed. 14. Barring the above few admitted facts, the averments in the affidavits filed in support of the writ petitions and the counter-affidavits filed by the respondents reveal that the rest are all disputed facts. According to the petitioner, the lease period of three years would commence only on execution of regular lease agreement, whereas the respondents would contend that the three-year period of lease commenced from the date of conveying of acceptance of the tender i.e., from 5-5-1995. According to the petitioner, the lease was renewable by another three years on the same terms and the total lease period thus comes to six years, whereas the respondents would contend that it was renewable only on yearly basis and the lease period is limited to three years from 5-5- 1995. The petitioner claims that it has remitted Rs.18,98,000/- towards 1/3rd of the lease amount, which is again disputed by the respondents, according to whom at the request of the petitioner, the amount was permitted to be paid by monthly instalments of Rs.3,16,250/-, but even then the petitioner failed to pay any instalment. According to the petitioner, it utilized about 2052 poles and could not make use of all the 4500 electric poles for variety of reasons which included the overgrowth of trees around them and less exposure, whereas the respondents alleged that the petitioner had made use of not only the entire 4500 electric poles originally listed but also fixed up the advertisement kiosks even in prohibited areas, contrary to the tender conditions. The respondents issued a notice dated 21-07-1998 complaining that the petitioner failed to pay the lease amount of Rs.1,86,93,500/- and advertisement fees for the period from 1-7-1995 to 30-6-1998 in spite of issuing several notices and reminders and also opportunity of personal hearing on 09-03-1998 and demanded payment of balance lease amount of Rs.1,32,93,500/- and advertisement fees of Rs.54,00,000/-, totalling to Rs.1,86,93,500/-. According to the respondents, as against the amount of Rs.1,70,79,000/- of lease amount only a sum of Rs.37,95,500/- was paid leaving a balance of Rs.1,32,93,500/- towards lease amount. The petitioner disputes the same and also contends that no separate advertisement fee is payable. 15. Thus, as seen from the pleadings of both sides, several disputed questions of fact have been raised by both parties. Needless to state, that such disputed questions of fact can be resolved only on evidence that may be let in by both parties in the course of a full- fledged civil proceeding. Admittedly, there is no regular agreement entered into between the parties as contemplated in the tender conditions. According to the respondents, even without entering into an agreement and even without making the payments as per the tender conditions, the petitioner had utilized all the 4500 electric poles originally identified and also more number of poles in prohibited areas for advertisement purpose unauthorisedly which contention is seriously disputed by the petitioner, according to whom, the lease period would commence only after a regular agreement is entered into. However, it is not disputed that even without entering into a regular agreement and based on the letter dated 5-5-1995 of the respondents conveying the acceptance of the tender, the petitioner did, in fact, make use of some electric poles and also made some payments. The number of electrical poles made use of by the petitioner and the amount paid by it are subject matters of dispute. The fact, however, remains that even in the absence of a regular agreement, the petitioner has done advertisement business on the electric poles and put into effect the decision of the respondents to accept the tender of the petitioner. The question as to whether or not the communication dated 5-5-1995 by the respondents amounts to a concluded contract, having regard to the fact that the terms of the contract have already been decided upon and put into operation or whether a regular agreement as contemplated in the tender conditions alone would reflect a concluded contract between the parties, is again a disputed question of fact, which can be decided in a regular civil proceeding, having regard to the intention of the parties and their conduct. It is well settled that such contentious issues involving disputed questions of fact cannot be decided in a proceeding under Article 226 of the Constitution of India. The question as to whether or not the petitioner had violated the tender conditions as alleged by the respondents and whether or not it is liable to pay the amounts demanded by the respondents, are matters which can be decided only in a regular civil proceeding. The averments in the affidavits filed by the petitioner and the counter-affidavits filed by the respondents disclose a commercial dispute of civil nature arising out of certain contractual obligations, each party complaining violation of the terms by the other. The learned Single Judge while observing that in KUMARI SHRILEKHA VIDYARTHI V. STATE OF U.P (1991(1) SCC 212), the Supreme Court had categorically held that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be limited and in doubtful cases, the parties may be relegated to the adjudication of their rights by resorting to remedies provided for adjudication of purely contractual disputes, however held that when a challenge is made on the ground of violation of Article 14 alleging arbitrariness and unfair and unreasonableness, even though dispute falls within the domain of the contractual obligation, it would not relieve the State of its obligations to comply with the basic requirements of Article 14. In the present case, there is absolutely no challenge to the impugned notice dated 21-07-1998 issued by the respondents on the ground of Article 14. The respondents issued the said notice demanding certain amounts, which according to them, are due and complaining certain violations of the terms and conditions of the tender on the part of the petitioner. Simply because the petitioner is questioning the correctness of the amount claimed by the respondents, it cannot be said that the issuance of the said demand notice is in abuse of the authority or vitiated by any unreasonableness or arbitrariness. After referring to the decision of the Apex Court, the learned Single Judge observed that the proposition is very clear that even in the case of contracts, the power of judicial review can be invoked by the aggrieved party on the touchstone of Article 14 of the Constitution of India, but in the present case, there is no such contract existing between the State and the individual. It is to be noted that though regular agreement, as contemplated under the terms and conditions of the tender, was not executed, the essential terms of the contract have already been agreed upon and put into effect also. In L.I.C OF INDIA V. CONSUMER EDUCATION & RESEARCH CENTRE (AIR 1995 SC 1811) referred to in the impugned judgment, it was held by the Apex Court that while exercising the power under Article 226, Court would be circumspect to adjudicate the disputes arising out of the contract depending on the facts and circumstances in a given case and the distinction between the public law remedy and private law field cannot be demarcated with precision and each case has to be examined on its own facts and circumstances to find out the nature of the controversy. The question as to whether or not there was a concluded contract from which the rights and obligations have already started flowing, is a matter in controversy. The finding of the learned Single Judge that there was no contract at all and the respondents have no power to demand any amounts on the pretext of violation of terms and conditions of lease, is unsustainable. As the said contentious questions of fact can be decided only after necessary evidence is adduced by both sides in a regular civil proceeding, but not in a proceeding under Article 226, the quashing of the demand notice dated 21-07-1998 on the ground that it is illegal and without jurisdiction is equally unsustainable, as the power of the respondents to demand the amounts which according to them are due as per the tender conditions, cannot be said to be without jurisdiction. Just as the respondents-public authorities are expected to act fairly and reasonably in the matter of contractual obligations where public law element is present, they are equally expected to safeguard the public interest and prevent loss to public exchequer by recovering the amounts due. The issuance of the demand notice dated 21-07-1998 cannot, therefore, be faulted on the ground that it offends Article 14 of the Constitution, especially when there is no such challenge. While quashing the impugned notice dated 21-07-1998, the learned Single Judge, however, gave liberty to the respondents to recover the damages in a civil proceeding before the appropriate court on the ground that it is the case of the petitioner as well as the Corporation that some poles were utilized for some period. Equally, it is always open to the petitioner also to approach Civil Court and seek appropriate remedies to vindicate their rights. It is well settled that when equally efficacious and alternative remedy is available, resort to proceedings under Article 226 of the Constitution of India invoking the extraordinary jurisdiction of this Court, is untenable. 16. The learned Single Judge next considered the question as to whether the respondent can be directed to enter into an agreement and applying the principles of ‘promissory estoppel’, directed the respondents to execute the lease deed for a period of three years, as per the terms of the tender notification dated 28-03-1995. The petitioner had not raised the plea of promissory estoppel in the earlier writ petition viz., W.P.No.21781 of 1998 in which the proceedings dated 21-07-1998 were not