IN THE HIGH COURT OF DELHI AT NEW DELHI Writ Petition (Civil) No.11847/2009 Date of decision: 15th December, 2009 SOUTH DELHI DISTRTIBUTORS ..... Petitioner Through Ms. Richa Kapur, Adv. versus GOVT.OF NCT OF DELHI AND ANR. ..... Respondents Through Ms. Zubeda Begum, Adv. CORAM: HON'BLE MS. JUSTICE GITA MITTAL 1.Whether reporters of local papers may be allowed to see the Judgment? 2.To be referred to the Reporter or not? 3.Whether the judgment should be reported in the Digest? GITA MITTAL, J (Oral) 1. By this writ petition, the petitioner has assailed an order dated 9th September, 2009 issued under the signatures of the Additional Medical Superintendent, terminating its contract of allotment of premises/shop no.D-1, Casualty Area, GTB Complex, Shahdara, Delhi – 110 095 with effect from three months from the date of the issue of the communication and directing the petitioner to hand over possession thereof to the state Branch. 2. Factual Matrix There is no material dispute so far as the facts giving rise to the petition are concerned and the same to the extent necessary, are briefly noted hereafter. - 1 - 2.1 The petitioner had participated in an open tender and was successful in award of licence in the year 2002 for running a chemist shop in respect of the premises/shop no.D-1, Casualty Area, GTB Complex, Shahdara, Delhi – 110 095 for a period of three years. 2.2 The licence in favour of the petitioner was renewed for a further period of three years on terms and conditions set out in the licence deed dated 29th March, 2005. On expiry of this licence, a further renewal was granted to the petitioner and a fresh licence deed dated 20th February, 2008 came to be executed between the parties. As per the terms of this licence deed, the petitioner was permitted to continue with the running of the chemist shop in the same premises till expiry of the licence for a period of three years i.e. on 10th March, 2011. 2.3 The material terms of the licence deed relied upon by the parties relevant for the purposes of the present adjudication may be considered in extenso and read as follows:- “1. That the allotment of the shop shall initially be made for a period of a term of three years commencing from 11-03- 2008 and as such this licence deed shall be deemed to be effective from 11-03-2008 to 10-03-2011. It is further agreed that the present license may be renewed further by the licensor subject to satisfactory performance of the licensee and with 10% increase on year to year basis. In case the licensee desires to renew the license for another term, he may give the consent two months prior to the expiry of the license period. 2. That the licensee shall deposit the monthly license fee of Rs.1,24,344=00 (Rupees One Lac Twenty Four Thousand Three Hundred Forty Four only) in advance by 10th day in the beginning of every month by way of bank draft in favour of Medical Superintendent, Guru Teg Bahadur Hospital, Shahdara, Delhi Hereinafter called the Medical Superintendent if not paid in the stipulated period, a penalty of Rs.100=00 per day will be charged so long for a maximum period of 30 days. There after the Medical Superintendent will have absolute - 2 - power to forfeit the security deposit and to terminate the licence of the aforesaid shop. xxx xxx xxx 4. That the Medical Superintendent will have the absolute power to terminate the licence of the shop without assigning any reason whatsoever. xxx xxx xxx 13. That the rates agreed by the licensee for the articles sold will normally be not higher than the rates of such articles prevailing in the open market. 14. That the licensee shall be bound to sell the items only relating to his nature and style of business i.e. medicines/drugs, surgical items, implants and instruments and accessories, cosmetics and all other allied items for surgery purpose etc. xxx xxx xxx 25. That if the licensee wants to discontinue the license during the license period, he shall have to give two months prior notice with enough justification acceptable to the Medical Superintendent. xxx xxx xxx 30. That the licensor shall not grant any other license to any other person for the business of the same nature and style within the premises of Guru Teg Bahadur Hospital, Shahdara, Delhi. xxx xxx xxx 33. That all disputes and differences arising out or in any way concerning to this deed except those the decisions whereof or otherwise herein before provided here shall be referred to the Sole Arbitration of any person nominated by the Lt. Governor of N.C.T. Delhi or in case his designation is changed or his office is abolished in the sole Arbitration of any person nominated by the officer who for the time being is entrusted whether or not in addition to other function with the function of Lt. Governor of N.C.T. Delhi by whatever designation such officer may be called. There will be no objection to any such appointments that the arbitrator so appoints objections to Lt. Governor that he had to deal with the matter to which this deed relates and that in the course of his duties such as Government servant he had expressed views in all or any of - 3 - the matters in dispute or differences. The award of the Arbitrator so appointed shall be final and binding on the parties.” (Underlined supplied) 2.4 It has been urged at length by Ms. Richa Kapur, learned counsel for the petitioner that perusal of the licence deed would show that licence deed postulated penalty for failure to deposit the amount of licence fee as a consequence for the breach of licence. Clause 21 in this behalf reads as follows:- “21. That in the event of committing any breach of any terms and conditions of the licence herein on his part to be observed and performed, the Medical Superintendent with and without prejudice to the other rights of the Government shall be entitled to forfeit the security deposit or any part thereof on the expiration or early termination of the terms of this licence deed.” 2.5 The licence deed empowered the Medical Superintendent to forfeit the security deposit or any part thereof on expiration or early termination of the terms and conditions of the licence in the event of breach of any of the terms and conditions of the licence. It has further been pointed out that in terms of Clause 25, in the event that the licensee wants to discontinue the license during the license period, he is required to give two months prior notice with enough justification acceptable to the Medical Superintendent. 2.6. Clause 30 incorporates a prohibition on the respondents to grant any other licence for running the pharmacy business within the premises of the hospital during the currency of the petitioner's licence. 2.7 Learned counsel has contended that the petitioner is providing a yeoman's service at the Guru Teg Bahadur Hospital and that there is no other chemist shop in the premises to facilitate the thousands of patients. - 4 - 2.8 In view of the above, it is contended that the petitioner was taken by surprise on receipt of the communication dated 9th September, 2009 informing the petitioner that in exercise of power under Clause 4 of the licence deed made on 20th February, 2008, the respondent had terminated the contract of allotment of the shop of the petitioner with effect from three months from the date of issuance of the communication and required the petitioner to hand over the vacant possession to the state Branch. 3. The present writ petition has been filed assailing this decision dated 9th September, 2009. It is not disputed that the period of three months from the date of said letter expired on or about 9th December, 2009 and the petitioner continues to run the business in the said shop in terms of the order passed on 8th December, 2009 in the present writ petition. 4. Petitioner's Contentions 4.1. Based on the reading of the terms and conditions of the licence deed, it has been urged by Ms. Kapur, learned counsel for the petitioner that termination would be permissible only if there is a violation of any of the terms and that breach of the contract was essential before the termination of the licence could be terminated. It is urged that the impugned action was in violation of Article 14 of Constitution being arbitrary and unreasonable. 4.2 The petitioner's contention is that there was no complaint at all with regard to the performance of the petitioner. In this regard, the petitioner has placed reliance on a response dated 7th October, 2009 received by the petitioner in answer to a query raised under the Right to Information Act (`RTI Act' for brevity hereafter). The petitioner had specifically raised - 5 - a query as to whether any complaint had been received with regard to the petitioner's shop. The respondent's response was in the negative. 4.3 To support the entitlement to continue to run the business and to operate the licence for its full term, Ms. Kapur, learned counsel for the petitioner has also urged that the same is also in the financial interest of the respondent. 4.4 In this regard, learned counsel for the respondent has placed reliance on the noting dated 13th February, 2008 received from the respondent, again in answer to a query under the RTI Act. In this noting, the respondent had occasion to consider the petitioner's request for extension of the licence when the respondent had noticed as follows: “P.U.C. placed opposite in the file received from M/s The Pharmacy regarding extension of period for licence of Shop No.1(Chemist Shop) situated in shopping complex, near Casualty Block in G.T.B. Hospital. The present occupant M/s The Pharmacy has requested for extension of licence of Shop No.1 for an another term of three years i.e. 11.3.08 to 10.3.2011 and has offered increase of licence fee of Rs.1,13,982/- per month. The rate of licence fee would be enough and on the higher side in comparison of existing rate of licence fee in the vicinity of G.T.B. Hospital. The extension of term will also save the expenditure of advt. which will also cost Rs.70,000/- to 80,000/- approx. Hence the same will be beneficial to Govt. Revenue. In this regard, it is also submitted that as per agreement clause no.26 and 32 (placed at Flag `A’) worthy Medical Superintendent is competent to take decision in this regard. Submitted Please.” 4.5 The petitioner contends that Clause 4 confers draconian power on the respondents and that the same is the result of exercise of unilaterial and superior bargaining power of the respondent. Arbitrariness and unreasonableness in the action of the respondent in violation of the constitutional provisions and rights of the petitioner is asserted. It is - 6 - contended that the impugned order of termination in purported exercise of the power under Clause 4 is not sustainable on these grounds. It is urged that the impugned decision is neither in public interest nor in the financial interest of the respondents or the public at large. 5. Respondents Contentions 5.1 The respondents have contested the present writ petition both on ground of maintainability and on merits. It has been contended that the writ petition is not maintainable on the grounds of availability of an alternate efficacious remedy. It is urged that the licence deed contains Clause 33 which mandates that the petitioner is required to be relegated to appropriate proceedings for arbitration in terms of the licence. The other submission is that the respondents have the absolute power under Clause 4 of the licence deed to terminate the licence and the decision which has been taken in terms thereof, is not open to judicial review. It is also contended that the action of the respondent is in public interest and the challenge thereto not sustainable. 6. Availability of Alternate Remedy 6.1 I have heard learned counsel for the parties. Before dealing with the matter on the challenge on merits, it becomes necessary to deal with the preliminary objection raised by learned counsel for the respondent to the effect that the present petition would be barred on account of availability of an alternative effective and efficacious remedy to the petitioner under the contract. 6.2 In this behalf, the respondents have drawn my attention to an order dated 15th October, 2004 passed in OMP No.28/2003 which was filed by the petitioner. It appears that the petitioner was at that time working out - 7 - the terms of the extended licence. It has been pointed out that despite the currency of the petitioner's licence, the respondents were initiating steps for re-allotment of the shop by floating a tender. In this background, a petition was filed by the petitioner under Section 9 of the Arbitration & Conciliation Act. It was agreed in these proceedings that the respondent may initiate action for re-allotment of the shop w.e.f. 11th January, 2005 while the petitioner would be permitted to carry out its business for the terms of its licence. 6.3 It needs no elaboration that exclusion of writ jurisdiction on grounds of availability of an alternative remedy is really a rule of convenience. No absolute prohibition has been laid down nor can it be so urged. In the judgment reported at (2003) 2 SCC 107 (Para 7) entitled Harbanslal Sahnia Vs. Indian Oil Corporation, the Supreme Court has reiterated these principles and clearly stated that the exclusion is merely rule of discretion and convenience and not one of compulsion. In this case, the court had laid down the principle that in an appropriate case, despite availability of alternative remedy, the High Court may exercise writ jurisdiction in at least three contingencies:- “(i) where the writ petition seeks petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged.” 6.4 The petitioner has assailed the action of the respondent on all the above grounds though no challenge to the vires of the act is laid. It has been urged at some length that the petitioner's licence has been - 8 - terminated without any notice at all, despite two extensions in the past and that this business is the bread and butter of the petitioner. 6.5 Learned counsel for the petitioner has been at pains to argue that the termination is based on no relevant reasons and is absolutely arbitrary and unfair. 6.6 The circumstances in which the petitioner filed the OMP No.28/2003 are materially different from those leading to the filing of the present petition. Merely because the petitioner had invoked the remedy under the Arbitration & Conciliation Act, 1996 would not by itself preclude the petitioner from bringing and maintaining the present writ petition. 6.7 It is further to be noted that as per the impugned order dated 9th September, 2009, the order comes into force within three months thereof which period has ended. In this background, relegation of the petitioner at this stage to the remedy by arbitration shall not be efficacious as well. 6.8 In this background, I am not inclined to accept the objection so far as the maintainability of the writ petition on ground of availability of alternative remedy of arbitration is concerned. 7. Challenge to the order of termination 7.1 So far as the decision against the petitioner is concerned, Ms. Richa Kapur, learned counsel for the petitioner has painstakingly drawn my attention to the reasons for the same. It is contended that the decision is arbitrary and unreasonable and that it has no nexus to the purpose sought to be achieved. Learned counsel has submitted that the decision is not in public interest and is predicated solely on an apprehension of the respondent that allotment of space to the Jan Aushadhi outlet would result in violation of Clause 30 of the licence to the petitioner. - 9 - 7.2 It has been urged that the action of the respondent has to be tested on the touchstone of the Article 14 of the Constitution of India. Reliance is placed on the pronouncement of the Apex Court reported at (1979) 3 SCC 489 R.D. Shetty Vs. International Airport Authority & 2008 (8) SCALE 284 Jagmohan Singh Vs. State of Punjab (para 15). Reliance is also placed on (2004) 2 SCC 130 Teri Oat Estates (P) Ltd. Vs. U.T., Chandigarh & Ors. & (2004) 3 SCC 553 ABL International Ltd. & Anr. Vs. Export Credit Guarantee Corporation of India Ltd. & Ors. 7.3 It is an admitted position that no reason has been assigned in the order dated 9th September, 2009 for the termination of the licence. Before me, it is urged that the respondents have exercised power under Clause 4 of the licence deed which confers absolute and exclusive power on the Medical Superintendent to terminate licence without any reasons. 7.4 Learned counsel for the petitioner has submitted that in these circumstances, the order of termination and the action of the respondent has to be tested having regard to the concerns and considerations which arose before th e respondent prior to the passing of the impugned order. 7.5 The instant case is concerned with the termination of the contract to run a chemist shop in a government hospital. It is an admitted position that the hospital is one of the largest in Delhi. According to the petitioner, it is an approximately 1200 bedded hospital and caters to almost 6000 patients in the out patient departments (OPDs) in various specialties. 7.6 The respondents have submitted that they are bound to work the schemes and policies of the Government of India so far as the health - 10 - issues are concerned. 7.7 The action taken is sought to be justified on ground of public interest inasmuch as the respondent contended that they are working in the scheme of Government of India to make available quality medicine at affordable price as against average branded medicines at market price. 7.8 Ms. Zubeda Begum, learned counsel for the respondent has handed over a copy of the brochure published by the Department of Pharmaceutical of the Ministry of Chemicals & Fertilizers of the Government of India setting out the purpose of the Jan Aushadhi Campaign. It has been observed thereunder that over the years, India has developed a strong capability in producing quality branded and generic medicines in most of the therapeutic categories, evolving from a mere Rs.1500 crores industry in 1980 to a more than 68,000 crores industry in 2008. However, although these medicines are reasonably priced, as compared to the prices of their equivalent medicines in most other countries, yet a large population of poor people in the country, find it difficult to afford the more expensive branded category of medicines. Steps taken towards this include price control of Scheduled Drugs through the National Pharmaceutical Pricing Authority( NPPA); price regulation of Non-Scheduled Drugs; uniform VAT of 4% on medicines & reduction in excise duty from 16% to 4%. 7.9 However, Government was still not satisfied with the above regulatory and financial steps for ensuring greater availability of medicines at affordable prices to all, specially for the poorer masses and therefore, the Government has launched a country wide Jan Aushadhi Campaign. - 11 - The notified key objectives of the Jan Aushadhi Campaign are:- “(i) Makes quality the hallmark of medicine availability in the country, by ensuring access to quality medicines through the CPSU supplies and through GMP Complaint manufacturers in the private sector. (ii) Despite constraints of budget in the Central and State Governments, extend coverage of quality generic medicines in order to reduce and thereby redefine the unit cost of treatment per person. For example branded Diclofenac tablets are available at the average market rate of Rs.36.70 for a pack of 10 tablets. Jan Aushadhi Stores would be sell this at Rs.3.50 which is less than 10% of the market price of the branded category. Thus with the same cost 10 times more persons could be treated with same efficacy and cure. (iii) Creates a demand for generic medicines. By All for All by improving access to better health care through low treatment costs and easy availability wherever needed in All therapeutic categories.” 7.10 The respondents have explained that a communication dated 11th of February, 2009 was received by the hospital from the Health & Family Welfare Department of the Government of NCT of Delhi forwarding the proposal of the Government of India in its order dated 2nd November, 2008 and December, 2008 with regard to opening of Generic Drug Stores “Jan Aushadhi” in Delhi. Comments of the Medical Superintendent on this were called for. 7.11 The respondents have placed reliance on further communications dated 20th August, 2009 and 28th August, 2009 addressed by the Central Government to the Secretary of the Government of NCT of Delhi with regard to the working of the Jan Aushadhi campaign. The Government of India had communicated that the outlets would be open in hospital premises which would be managed by the Kendriya Bhandar of the Govt. of India. It was stated that the locations of these outlets have been - 12 - finalised by the Government of India not only at the GTB hospital but at other hospitals including the Lok Nayak Jai Prakash Hospital and the Dr. Bhimrao Ambedkar Hospital, Rohini. 7.12 Ms. Begum, learned counsel for the respondent has contended that as per the communication dated 20th August, 2009, the scheme of the Central Government was that it would “provide a one time assistance of Rs.2,00,000/- as furnishing and establishment costs and further Rs.50,000/- as one time start up costs to the NGO for setting up the Jan Aushadhi (`JAS' for brevity). The programme was postulated to be a self- sustaining business model not depending on Government subsidy for assistance and that it would be run in a campaign mode on the principle of “Not for profits but with minimal profit”. Learned counsel has placed the copy of the brochure which has been published by the Government of India in this behalf on record. 7.13 The Government of India addressed a letter dated 28th of August, 2009 to the Chief Secretary of the Government of NCT of Delhi that the Kendriya Bhandar in consultation with the two hospitals including the GTB Hospital, Shahdara had identified places for opening the Jan Aushadhi stores. A request was made to instruct the authorities to allot these shops to the Kendriya Bhandar immediately so that the stores can be inaugurated by the Chief Minister. 7.14 It appears that at the same time when the respondent received the communication dated 11th February, 2009 from the Govt. of NCT of Delhi, the respondent considered the aspects with regard to the petitioner’s shop. On 13th February, 2009, the following noting was recorded on the respondent’s file:- - 13 - “May kindly see the PUC placed opposite on the bill at 1/C to 3/C received from Kendriya Bhandar, wherein it has been requested to give permission to the said institution to open a Pharmacy/Chemist shop on the complex of GTB Hospital. It has also been stressed upon that Kendriya Bhandar will offer genuine and superior quantity of medicine at reasonable prices. In this context, it is also worth mentioning that at present one Chemist shop i.e. The Pharmacy is running within Hospital complex and contract has been awarded to the said firm till 10/03/2001. As per the term and condition of the contract Agreement, the licenser shall not grant any other license to any other person for the business of the same nature and style within the premises of GTB Hospital. It is agreed to we may submit the file before Worthy Medical Superintendent for his consideration in the light of the above.”