CIVIL WRIT PETITION NO. 5926 OF 2008 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. DATE OF DECISION: August 4th , 2009. Parties Name Vikas Gupta and another ..PETITIONERS VERSUS State of Punjab and others ...RESPONDENTS CORAM: HON'BLE MR. JUSTICE JASBIR SINGH PRESENT: Mr. J.S. Thind, Advocate, for the petitioners. Mr. Anil Sharma, Addl. A.G., Punjab; Mr. J.S. Ahluwalia, Advocate, for respondents No. 2 and 3. JASBIR SINGH, J. (oral) Order. This order will dispose of three Civil Writ Petitions bearing Nos. 5926, 15506 and 19119, all of the year 2008, as common question of law and facts is involved in all these cases. For facility of dictating judgment, facts are being taken from C.W.P. No. 5926 of 2008. By filing this writ petition, the petitioners pray that a writ of certiorari be issued to quash order dated February 5, 2008,(P-8), passed by respondent No. 2, vide which 'guarantee period', to hire godowns of the CIVIL WRIT PETITION NO. 5926 OF 2008 -2- petitioners was curtailed from 10 years to 7 years. Further prayer is to issue writ of mandamus directing the respondents to make payment of rent, regularly for a guarantee period of ten years, from the date when possession of the godowns was taken by respondent No. 2, till its expiry, i.e., January 30, 2011. Briefly, it is case of the petitioners that in the year 2000, respondent No. 1 framed a scheme for the purpose of storage of food grains. Private parties were invited to construct the godown, for the purpose of hiring the same, by Punjab State Ware Housing Corporation. As per schemes, the godowns were to be further hired by Food Corporation of India. Initially, guarantee period for hiring the storage godowns was fixed as 7 years. However, subsequent thereto, it was increased to 10 years. The petitioners along with their co-sharers entered into an agreement with respondent No. 2 to provide storage godowns, after construction, as provided under the Scheme. As per agreement dated December 18, 2000, (P-3), petitioners were to construct godowns of the capacity of 10,000 metric tonnes at Dhuri. Construction was to be undertaken as per the guidelines issued by Food Corporation of India and Ware-Housing Corporation. Lease period was fixed as 10 years under a guarantee of payment of rent regularly. The possession of the godowns was delivered to respondent No. 2 in the month of January, 2001. Lease deed was also entered into between the petitioners and respondent No. 2 on January 25, 2002 (P-12). In the rent deed, it was specifically stated that respondent No. 2 undertakes guarantee to pay the rent, at agreed rate for a period of ten years from the date of occupation irrespective of utilisation of the godowns. Guarantee period was to come to an end on January 31, 2011. It is case of CIVIL WRIT PETITION NO. 5926 OF 2008 -3- the petitioners that every thing was going on smoothly when suddenly they received the impugned notice asking them to take vacant possession of the godowns from the date of expiry of the guarantee period, i.e., January 30, 2008, failing which respondent No. 2 shall not be liable for any compensation. It is averment of the petitioners that before expiry of the guarantee period of ten years, it is not open to respondent No. 2 to curtail that period without giving any notice and getting response from them. Upon notice, reply has been filed. On facts, there is not much dispute except re: period of guarantee whether it is seven years or ten years. Further it has been stated that the godowns were hired for further transfer to Food Corporation of India. By letter dated February 19, 2008, Food Corporation of India decided to dehire the godowns owned by the petitioners and in view of that impugned notice was issued. To defeat rights of the petitioners, a technical objection of existence of arbitration clause in the lease agreement has also been propagated. Heard counsel for the parties. It is not in dispute that initially guarantee period to hire the godowns was fixed as 7 years. However, subsequent thereto, vide order dated June 27, 2001 (P-4), it was increased to 10 years, in which it is specifically mentioned that the decision taken has the approval of Council of Ministers. In agreement deed dated December 18, 2000 (P3), to construct the godowns, it has also been mentioned that the guarantee period regarding hiring of godowns is 10 years. Relevant provisions of the agreement read thus: “1. The party agrees to construct a godown of the capacity of 10000 MT.s at Dhuri strictly in accordance with the FCI/CWC CIVIL WRIT PETITION NO. 5926 OF 2008 -4- specifications and site plan which is annexed herewith, as per terms and conditions of the Corporation for the storage of foodgrains / fertilizers etc. and lease out the same to the Corporation completion before 31.1.2001 under 10(ten) years guarantee. 3. The Corporation will calculate effective capacity as per formula of the Corporation for the same and fix the rent of the godown on the basis of Rs. 2.28 per Sq. Ft. per month on the said capacity. All the taxes shall be paid by the party itself. As and when FCI revises its rates to PSWC, the rates of rent agreed to with PSWC shall be proportionately revised by the Corporation automatically from the same date. 4. The Corporation agrees to make payment of rent of the party to the authorized bank of the party for a period of 10(ten) years from the date of actual possession on request of the party/ Bank.” The possession of the godowns was delivered to respondent No. 2 in the month of January, 2001. Thereafter, petitioners and respondent No. 2 signed the rent deed, regarding renting out of the godowns in question. In the rent deed also, it was provided as under: “(vi) Pb. State Warehousing Corporation undertakes guarantee to pay the rent rate as agreed to in para 4(i) above for a period of 10 (Ten) years (guarantee period) from the date of occupation irrespective of the utilization of godown(s). (vii)The guarantee period of these Godowns will be 31.1.2011. CIVIL WRIT PETITION NO. 5926 OF 2008 -5- (viii)The guarantee period after 30.1.2011 may be deducted from the guarantee of the godowns as per H.O. instructions. (ix)The godowns shall not be taken on Guarantee if the same are not taken by the FCI as per H.O. instructions issued vide No. 9208-22 dt. 29.5.2001.” In view of facts, mentioned above, this Court is of the view that the guarantee was to hire the godowns for a period of ten years. It is coming out from the records that respondent No. 2 hired the godowns to transfer those godowns further to Food Corporation of India. Rate of rent was also to be fixed by the Food Corporation of India which fact is evident from the terms and conditions of the lease agreement and the rent deed. It is also correct that ten years' guarantee period was fixed under sanction of the State Government. If that is so, it was incumbent for the authority issuing notice P-8 to look into all the facts, mentioned above, and only then take a final decision regarding dehiring godowns of the petitioner. Before passing order Annexure P-8, admittedly, no opportunity of hearing was granted to the petitioners. As per averment made by respondent No. 2, order dated February 5, 2008 (P-2), was issued in consonance with the letter dated February 19, 2008 (R-3), by Food Corporation of India. From perusal of contents of the letter, mentioned above, it is not coming out that it was desired by the Food Corporation of India, not to hire godowns owned by the petitioners. The letter was issued regarding hiring and dehiring those godowns where guarantee period of 7 years was going to expire in the year 2008. It is further mentioned that existing terms and conditions for hiring will continue and in case there is any different view, the case may be CIVIL WRIT PETITION NO. 5926 OF 2008 -6- referred to the Food Corporation of India. Districtwise capacity for rehiring was also mentioned in the letter, mentioned above. In view of facts of this case, as mentioned above, it was not desirable for respondent No. 2 to pass order dated February 5, 2008 (P-8) without giving show cause notice to the petitioners. Above said order having been passed contrary to the principles of natural justice cannot be sustained. In view of above, these writ petitions are disposed of directing Managing Director of respondent No. 2 to give an opportunity of hearing to the petitioners and only then pass a final order regarding dehiring of the godowns owned by them. Policy statement issued vide letter dated June 27, 2001 (P-4) and terms and conditions of the agreement deed dated December 18, 2000 (P-3) and deed dated January 25, 2002 (P-12) be kept in mind. Needful be done within a period of three weeks from the date of receipt of copy of this order. Petitioners are directed to appear before the Managing Director of respondent No. 2 on August 17, 2009, along with copy of the order, passed by this Court. August 4th , 2009 ( Jasbir Singh ) DKC Judge