IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) NO. 389/2009 and CM No. 12519/2009 Kama! Kishore versus Reserved on Date of decision : September 16, 2009 : October 13, 2009 Appellant Through : Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. Mr. Manjit Singh Ahluwalia for Mangalam Jan Kalyan Samiti. Municipal Corporation of Delhi and Another Respondents Through : Mr. H.S. Phoolka, Sr. Advocate, with Ms. Mini Pushkama,Advocate, for the respondent-MCD. CORAM: HON'BLE MR. JUSTICE MUKUL MUDGAL HON'BLE MS. JUSTICE REVA KHETRAPAL 1. Whether the 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? % JUDGMENT 13-10-2009 MUKUL MUDGAL.J. For orders see, FAO(OS) No. 387/2009. October 13, 2009 sk (MUKUL MUDGAL) JUDGE t-- (REVA KHETRAPAL) JUDGE Digitally Signed By:AMULYA Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) NO. 387/2009 and CM No. 12513/2009 Reserved on : September 16, 2009 Date of decision : October 13, 2009 Dr. Mukherjee Nagar Resident Welfare Club Appellant Through : .Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. versus Municipal Corporationof Delhi and Another Respondents Through : Mr. H.S. Phoolka, Sr. Advocate, with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS) NO. 399/2009 and CM No. 12829/2009 K.L. Arora Appellant Through : Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.L Choudhary, Advocates. versus FAO(OS) No. 387/2009 and connected matters Page 1 of15 MunicipalCorporationofDelhiand Another Respondents Through : Mr. H.S. Phoolka,Sr. Advocate,with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS)NO. 386/2009and CM No. 12510/2009 Bharat Mahana Through Appellant Mr.V.P. Singh, Sr. Advocateand Mr. RajuRamachandran,Sr.Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg,Mr. Mohit Garg,Mr. M.I. Choudhary, Advocates. versus MunicipalCorporationofDelhiand Another Respondents Through : Mr. H.S. Phoolka,Sr. Advocate,with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS)NO. 388/2009and CM No. 12516/2009 Kamal Kishore versus Appellant Through : Mr.V.P.Singh,Sr. Advocateand Mr. Raju Raniachandran,Sr.Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg,Mr. Mohit Garg,Mr. M.I. Choudhary, Advocates. Mr. Manjit Singh Ahluwalia for MangalamJan Kalyan Samiti. FAO(OS) No. 387/2009 and connected matters Pase 2 of 15 MunicipalCorporationofDelhiand Another Respondents Through : Mr. H.S. Phoolka, Sr. Advocate, with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS) NO. 389/2009 and CM No. 12519/2009 Kamal Kishore versus Appellant Through : Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. Mr. Manjit Singh Ahluwalia for Mangalam Jan Kalyan Samiti. MunicipalCorporationof DelhiandAnother Respondents Through : Mr. H.S. Phoolka, Sr. Advocate, with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS) NO. 390/2009 and CM No. 12527/2009 Veena Verma versus Appellant Through : Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. FAO(OS) No. 387/2009 and connected matters Page 3 of15 ^ V .p, ^ I- • • I • •• MunicipalCorporationofDelhiand Another Respondents Through : Mr. H.S. Phoolka, Sr. Advocate, with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS) NO. 394/2009 and CM No. 12731-12732/2009 RavinderKumarDua Appellant Through : Mr.V.P. Singh, Sr. Advocateand Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta,Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. versus MunicipalCorporationofDelhiand Another Respondents Through : Mr. H.S. Phoolka,Sr. Advocate,with Ms. Mini Pushkama,Advocate, for the respondent-MCD. CORAM: HON'BLE MR. JUSTICE MUKUL MUDGAL HON'BLE MS. JUSTICE REVA KHETRAPAL 1. Whetherthe Reportersof localpapers / may be allowedto see thejudgment? 2. To be referredto the Reporteror not? n/ 3. Whetherthejudgmentshouldbe ^ reported in the Digest? % JUDGMENT 13-10-2009 MUKUL MUDGAL.J. 1. By this judgment we proposeto disposeof a batch of connectedfirst appealsagainstcommonorderdated25'^ August,2009passedby the learned FAO(OS)No. 387/2009and connected matters Page 4 of15 w SingleJudge of this court disposingofthe petitionsunder Section9ofthe Arbitrationand ConciliationAct, 1996 (for short 'the Act') filed by the appellants herein. 2. The petitioners had entered into licences with the MCD, the respondentherein,to use communityhalls,belongingto the respondentfora periodof five years each, subjectto terms and conditionscontainedin their |g: licenseswhich were executedin August-September, 2004 have smce then, either expired or are going to expire shortly. The petitionershad, on the basis of the renewal clause containedin the Licence Deed requestedthe respondentto renew the licencefor afurtherperiodof five years which requestwas turned down. Aggrievedby the said decision ofthe respondents,the petitionersapproachedthe learnedSingleJudge with a petition under Section 9 of the Act. 3. The relevantnecessaryclausesarisingfor considerationin this appeal are as under: - "1. That in considerationof the payment of Rs.1,27,278/-as securitydepositreceivedvide ReceiptNo dated Inthe form of adjusted from EMD, being equivalent to six months licencefee quoted by the licenseefor due and properperformance of these presents and also willingness of the licensee to pay Rs.21,213/-only per mensem for . The licensorsgrants unto the licenseeand authorizesitto use the said CommunityHall as detailed here above subject to the conditions hereinafter appearingfor a periodof five years commencingfrom the date of FAO(OS)No. 387/2009andconnectedmatters Pase5of15 thesepresentsrenewablefor anothertermoffive years,ten yearsin all from the date of entermg mto the licenseedeed for the first time in the year 2003. (a) In the default to pay the license fee of Rs.21 213/- ner monthas agreedtogetherbeforethe lO"^ day ofthe monthto which it relates the licensee shall pay interestwhich will form part of Licence@24% per annumon the arrearsofthe LicenceFee fi-om the first day ofthe month i.e. from the month in respectof which the defaultmpaymenttakesplacetill the priorto the effectivedate ofdeterminationoflicense. In case the licensefee remainsunpaid tor three months, the license will be cancelled. The interest@ 7 72% per month over and above the existing License fee, and interestdue before the effectivedate ofdeterminationofLicense fee, and interestdue before the effectivedate ofdeterminationof Licenseshallbe payableby the Licenseetill the dateofpayment. The Commissioner,MCD may, however, on receipt of requestand clearanceofall the dues mentionedabove, restorethe licenseon the existinglicensefee or on such conditionas may be fixedbythe Commissionerathisabsolutediscretion. (b) Ifthe licensefee herebyreservedor any partthereofshallat any time be in arrearsorremainunpaidafter the due date or if the licenseeat any time fails or neglectsto performor observeany of the terms and conditionsand covenantshereincontainedand onhis part to be observed and performed and in any such case the Corporationmay, without prejudiceto its other rights, giving 30 days' notice, in writing,to the licenseedeterminethe license and re-enter upon the said premisesor in part thereof The Licensee shall upon such determinationpeacefully stop use of the said premises without any right to compensation whatsoever and thereupon this license shall be absolutely determined without prejudice to any antecedents breach of terms and conditions and covenantson the partoflicensee. The licenseshallstandipso facto terminatedwithoutany rightto compensation. (c) Remissionin licensefee onany extraneousconditionsshall not considered by the Licensor 35. That the licensor shall have the right to terminate the licence after giving one month's notice without assigning any reasons thereof FAO(OS) No. 387/2009 and connected matters Paee 6 of15 37. Thatin case ofany disputearisingbetweenthe licensorand the licenseein respectofthe interpretationor performanceofany terms or conditionsof this licence,the same shall be referredto the solearbitrationoftheCommissioner,MCD whosedecisionthereon shall be final and bindingon both the parties. The licenseeshall .not objectto the Commissioner,MCD acting as sole arbitratoron the ground that he had dealt with the case or has at some stage expressed opinion in any matter connected therewith." 4. The learned Single Judge held that the renewal clause ofthe licence deed was not solelydependenton the exerciseofmere optionofrenewalby the licence,but also requiredthe consentofthe licensor. The learnedSingle Judge also found that the clause35 ofthe LicenceDeed conferredupon the licensorthe rightto terminatethe licenceby givingone month'spriornotice withoutassigningany reason therefor.The learnedSingle Judge, therefore, primafacie,foundthattherewas no obligationupon the respondentto renew the licence for another period of five years and therefore the interim injunctionsoughtfor couldnot be granted. 5. The order of the learned Single Judge has been assailed by the appellantmainly on two grounds:- a. That on accountofthe money spent by the appellantsin development of the said communitycentres and the renewal clause, they have a legitimate expectationthat the licence shall be renewed for a further period of five years. FAO(OS)No. 387/2009and connectedmatters Pase 7of15 b. Thatthe decisionnot to renewthe licenceshas beentakenwithoutany basisand withoutgivingthem any opportunityofbeingheard. 6. Elaboratingthe above grounds, Mr. V.P. Singh, the learned senior counsel for the appellant also strenuously urged that the license itself providedthat it has been grantedfor a periodof five years extendablefor a further period of five years. The extensionwas natural, unless there was violationof the terms and conditionsof the license. No such violationhad ever been brought to the notice of the appellant-licenseeby the respondents—licensorand, therefore, the action of the respondents in unilaterallycancellingthe licensewithouthearingthe appellantor providing any opportunitywhatsoeverto the appellantto presenttheircase for renewal was in utter violationof the well establishedprinciplesof naturaljustice. The breaches,if any (now soughtto be urged),ofthe agreementwere never broughtto the noticeofthe appellantnor as amatteroffact the respondents were basing their case on any breach ofthe agreementby the appellant. Thoughtherewere no groundswiththe respondentsnot to renewthe license, neverthelessthe impugnedorderhad been passed. Bookingshad been made upto February, 2010, regardingwhich the documentshad been placed on record. Such bookings were On-line bookings made by the respondents FAO(OS)No. 387/2009and connectedmatters Pase 8 of15 i-S*y ' si ... themselvesas was evidentfrom the documentson record. The learnedsenior counsel also invited our attention to the minutes of the meeting of the MunicipalCorporationand in particularto ProposalNo.982, which read as under: "Copy ofsittingofMunicipalCorporation/SamitiBody for proposalno./issueno.982dated12.2.09. Proposal No.66: Followingproposal were made by Shri Anesh Kumar Jain and Parvesh Vahi and supported bv Sh. VijenderGupta. Proposal No.982: Because Corporationfor the marriageand other functions constructthe communitycentres and provide them to thepeople on rent. Becausesome of the communitycentreshave been handedover to the contractorsfor their upkeepingand running. Becausethe contractorsofsuch communitycentres are working as per their whims and wishes due to which people are requiredtopay higherrate. Because the period of lease of these community centresofgivingto the contractorsare expiringor likely to expire in near future. Therefore, in order to save the people from the exploitationof the contractors, their license may not be renewed. Therefore,this samitiofthe Corporationsolemnly resolved that those communitycentres which have been given on the license to the contractortheir licensemay . FAO(OS)No. 387/2009andconnectedmatters Pase 9of15 ,-c •. •Si notbe renewedafterexpiryoftheperiod. Proposalispassedwithfullconsent sd/- Superintendent OfficeofSecretary MunicipalCorporationofDelhi" 7. Interpretingthe word 'renewable'in Clause1ofthe LicenseDeed,Mr. Raju Ramchandransubmittedthat the word 'renewable'must be interpreted in the light of the precedingclause whereunderthe licenseehad given its willmgness"to make adequatearrangementsfor developing,managing and operatinga CommunityHall". He contendedthat the doctrine of legitimateexpectationwas attractedin the instant case as the investments made by the appellants were with the obvious legitimate expectationof renewal of the LicenseDeed. Not only the respondentsfailed to renew the LicenseDeed, no individualcommunicationwas sent by the respondentsto the appellantrefusingto renew the licensenor was any cause made out for cancellationofthe license. Until and unlessthe right ofthe appellantwas adjudicatedupon by the AdjudicatoryForum under the arbitrationclause (Clause37 ofthe agreement),the appellantinthe circumstancesdeservedto be protected,more so, as the CommunityHalls had been booked well in advance for weddings and other functions. FAO(OS) No. 387/2009 and connected matters Pase 10 of 15 •r- : . 1 8. During the course of the arguments,the learned Senior Counsel Sh. V.P. Singh,appearingon behalfof some of the appellants,submittedthat the decision taken by the Standing Committee not to renew any of the nine licencesin questionwastakenwithoutany materialor complaintsagainstthe appellantsbeing placed before the said Committeeand requestedthis Court to summon the record of the Standing Committee.. 9. The learned counsel for the respondent was consequently asked to place the relevant records pertaining to the decision of the Standing Committee before this Court. The learned counsel for the respondent took us through the records which showed several complaints against the appellants and show cause notices issued to the appellants consequent thereto. It was also pointed by the counsel for the respondent that the appellants had raised permanentstructures even though they were specifically directed not to raise such structures, which was also a contractual term and they cannot have any legitimate claim to be considered for renewal on that basis. 10. It was contended by the learned Senior Counsel for the respondent, Sh. Phoolka, that the respondent has taken the policy decision not to renew the contracts upon their expiry in the normal course of 5 years in view of the complaints against the appellants. 11. Prima facie, we are satisfied that the decision not to renew the licence FAO(OS) No. 387/2009 and connected matters Paee 11 of 15 is based on the relevant material placed before the deciding authority. We are also satisfied that the decision seems to have been taken keeping in view the numerous complaints made against the appellants. The doctrine of legitimateexpectationis only an aspect of Article 14 of the Constitution which does not give rise to an enforceableright but only provides that the action taken by the authority while dealing with the citizens is not arbitrary. The doctrine of legitimate expectation must yield, wherever required, to larger public interest in appropriatecases. Reference in this regard can be made to the judgment of the Hon'ble Supreme Court in the case of Sethi Auto Service Station and Another vs. Delhi Development Authority and Ors. (2009) 1 Supreme Court Cases 180 wherein it was held as under: - "32. An examination of the afore-noted few decisions shows that the golden thread running through all these decisions is that a case for applicabilityof the doctrineof legitimateexpectation,now accepted in the subjective sense as part of our legal jurisprudence, arises when an administrative body by reason of a representation or by past practice or conduct aroused an expectation which it would be within its powers to fulfill unless some overriding public interest comes in the way. However, a person who bases his claim on the doctrine of legitimate expectation, in the first instance, has to satisfy that he has relied on the said representation and the denial of that expectation has worked to his detriment. The Court could interfere only if the decision taken by the authority was found to be arbitrary, unreasonable or in gross abuse of power or in violation of principles of natural justice and not taken in public interest. But a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. 33. It is well settled that the concept of legitimate expectation has no role to play where the State action is as a public policy or in the public interest unless the action taken amounts to an abuse of FAO(OS) No. 387/2009 and connected matters Pase 12 of15 .1 : . "-k power. The court must not usurp the discretion of the public authoritywhich is empoweredto take the decisionsunder law and the court is expectedto apply an objectivestandardwhich leavesto the decidingauthoritythe full range of choicewhich the legislature is presumedto have intended.Even in a case where the decisionis left entirelyto the discretionof the decidingauthoritywithout any suchlegalboundsand if the decisionis takenfairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectationmight be affected. Therefore,a legitimateexpectationcan at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. [Vide Hindustan Development Corporation (supra)]" In the light of the materialplacedbeforeus it cannotat this stage be stated that the action not to renew the licences for another term of 5 years is so arbitraryor unreasonableso as to be coveredby the positionof law laid down in the abovejudgment. However,this is subjectto the decisionof the Arbitrator in case recourse to arbitration is taken. 12. Even otherwise, raising of permanent structures which was otherwise notpermissibleunderthe licencecarmotbe saidto give riseto any legitimate expectation. Prima facie, we are satisfied,thereforethat not to renew the licence was a policy decision which cannot be termed as arbitrary and unreasonable. In matters affecting policy requiring technical expertise, Court would leave the matters for decision of those who are qualified to address the issue, unless such action is arbitrary, irrational and unconstitutional. In this regard, reference can also be made to Federation of Railway Officers FAO(OS) No. 387/2009 and connected matters Pase 13 of15 • ' • - i' 0 AssociationandOrs. ver,m Um„„ ninnAIR2003SC1344. 13. The Counselfor the Appellantstatedthat as per the arbitrationclause all appellantswouldpresenttheircasejointlybeforethe arbitratorand would not take more than halfan hour to do so, which will be set out in aclaim petitionnot exceeding3pages with only 3citations. We directthat in case recourseto arbitrationis taken by the appellantas per the arbitrationclause, the MCD would also follow the above time table to enable an expeditious award within 30 days of the submissionof the statementof claim. The counsel for the appellantsubmittedthat several advance bookings for the venueshad been made by the licencees. The respondents'counselstatedthat such bookings will be honoured. 14. In this view of the matter, we are not inclined to interfere with the learnedSingleJudge'sorderdecliningto grantthe interimreliefofinjunction prayed for by the appellants. However, in case the arbitration is invoked as per the conditions set out in para 10 above and the Arbitrator decides in favour of the appellants herein to hold that licenses were liable to be renewed, the respondents shall reinstate their licenses within one week of the passingof the award. We also make it clearthat since we were told by the counselfor the MCD that the bookingsalreadymade shall be honoured,the appellantswould be permittedto supply services only to such pre-booked FAO(OS) No. 387/2009 and connected matters Pase 14 of15 events at the rates fixed by the respondents. However, such rendering of services shall not be construed to confer any other right on the appellant, save and except, any right which may accrue to them in case the Arbitrator holds in their favour. Needless to say that the observations made hereinabove, being only prima facie, shall not be binding or otherwise on the Arbitrator who shall be at liberty to take his own view depending on the record of the case. 15. In light of the above, there is no infirmity in the impugned judgment of the learned Single Judge. Consequently, there is no merit in the appeals. The same are dismissed. Parties to bear their own costs. October 13, 2009 sk FAQ (OS) No. 387/2009 and connected matters (MUKUL MUDGAL) JUDGE (REVA KHETRAPAL) JUDGE PaselS of 15