IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No 657 of 2009 M/s Scorpion Express Pvt Ltd having its Regd office at Ashok Cinema Building, Budh Marg, Patna through its Branch Incharge and Constituted Attorney Shri Pravez Ahmad Siddiqui, son of Razi Ahmad Siddiqui - Petitioner Versus 1 The Union of India through the Secretary, Ministry of Railways, New Delhi 2 East Central Railway, Hazipur through its General Manager 3 Chief Commercial Manager, East Central Railway, Hazipur (A-Block Didhi at Hazipur) 4 Divisional Railway Manager, East Central Railway, Hazipur 5 Additional Chief Commercial Manager, Marketing ECR, Hazipur 6 Executive Director, Freight Marketing, Railway Board, New Delhi 7 Senior Divisional Commercial Manager, East Central Railway, Danapur 8 Deputy Chief Commercial Manager, Marketing, East Central Railway, Hazipur 9 The Chief Parcel Supervisor SCR, East Central Railway, Rajendra Nagar Terminal, Patna - Respondents *** For the petitioner : M/s Kali Das Chatterji, Amlesh Kr Verma & Sanjiv Sharan, Advocates For the respondents : M/s N K Agrawal, Sr Advocate & Sunil Kr Ravi, Advocate *** 4 26.03.2009 The petitioner is aggrieved by letter dated 28.11.2008 (Annexure-2) of the Additional Chief Commercial Manager, East Central Railway, Hajipur (respondent No 5) communicating that as per the decision of the competent authority of the East Central Railways, Clause 6.4 of the agreement with the petitioner in respect of leasing of parcel van was being deleted and consequently petitioner prays that the said clause be declared to continue to be operative as a part of agreement binding the parties and monies realized by the Railways as a consequence of its unilateral decision be ordered to be refunded and/or adjusted against future liabilities. 2 Railways have appeared and filed an exhaustive counter affidavit and with consent of parties, the matter was heard at length for final disposal of the writ petition at this stage itself. The facts are not in dispute. Railways invited tenders for leasing out space in parcel vans attached to passenger trains on round trip basis with a view to increase space utilization and thereby increase revenue. In pursuance to the said scheme, on 03.11.2006, tenders were floated by the East Central Railways in respect of leasing out space in one parcel van on round trip basis attached to Train No 3201/3202 between Rajendra Nagar Terminal, Patna to Lokmanya Tilak Terminus, Mumbai. Petitioner, being the sole bidder after negotiation, was awarded the said lease contract and an agreement was entered into and signed by the parties on 08.03.2007 (Annexure-1). The work order, to commence the lease, was issued on 12.03.2007. The contract was for a period of three years wherein the charges for single trip was fixed at Rs 43,500/- and for round trip, Rs 87,000/-. The agreement contained a clause in respect of leave to lease holder wherein he could get remission in the leased money. This is contained in Clause 6 and its sub-clauses upto Clause 6.4 and reads as follows : 6.0 Grant of leave to leaseholder 6.1 The provisions of leave shall be made applicable only to leasing contracts which have been leased out for Long Term or Medium Term basis or Short Term basis at the rate of maximum of 1 (one) day’s leave per month (for 30 days operation) in case of weekly/bi-weekly trains, the leave would be granted at the rate of 1 day for 30 trips of the train. 6.2 This leave can be availed by the leaseholder as per his choice of national holidays like 15th August, 3 26th January, 2nd October or regional festivals such as Holi, Diwali, Bihu, Pongal etc. In all such cases, adjustment in lumpsum leased freight will be allowed for subsequent/future loading by the same leaseholder at the station itself. Leave can be accumulated and be availed of at one time also. At the end of each year, accumulated leave would lapse, and balance leave at the start of next year will start from zero. 6.3 Leaseholder can also avail of 1 day non-loading per week by depositing 15% of the lumpsum leased freight rate. However, such notice of non- loading must be given at the station, at least 48 hrs before the departure of the train. 6.4 In addition to above leave, the lease holder can also avail more number of days of non-loading by depositing 30% of the lumpsum leased freight rate. However, such notice of additional days of non-loading must be given at the station, at least 48 hrs before the departure of the train. (include this para, if applicable, otherwise this para should be deleted.) All of a sudden, on 28.11.2008, (Annexure-2), the impugned communication, was received whereby the Railway unilaterally decided to delete Clause 6.4 of the aforesaid agreement. The said clause gave certain additional leave to the leaseholder on depositing 30% of the lump sum leased freight rate. The petitioner immediately protested that an agreement duly entered into between the parties could not be unilaterally altered and, as such, the action of the Railways was wrong and the clause be restored. Reference, in this connection, may be made to Clause 25.2 of the agreement wherein it is specifically provided that amendment and alteration in the agreement can be made with mutual consent of both parties. During pendency of the writ petition, the 4 clause, having been unilaterally deleted by the Railways, petitioner was not allowed to avail of this additional leave from liability to pay full lease money and was forced to deposit lease money ignoring the privilege in favour of the petitioner. It is these actions that are impugned. In the counter affidavit, which is exhaustive, it is admitted that pursuant to freight marketing policy of the Railways, Railways issued Circular No 12 of 2006 on 28.03.2006, copy whereof is Annexure-R/1 to the counter affidavit. Under the said policy circular, grant of leave to leaseholder is in paragraph (Z) and Clause 6.4 of the present agreement corresponds to Clause Z-9 of the policy document. It appears that the policy was reviewed and another circular being Circular No 36 of 2006 by the Railway Board dated 17.08.2006 was issued under which paragraph Z-9 was deleted which is to be found in Annexure-R/2 to the counter affidavit. This was followed by freight marketing Circular No 40 of 2006 dated 06.09.2006 and is contained in Annexure- R/3 to the counter affidavit. This Circular No 40 of 2006 then prescribed the standard format of agreement to be signed between Railway administration and leaseholders for contracts of leasing of parcel space, inter alia, in parcel vans and had been vetted by the Finance and Legal Directorates of the Ministry of Railways. To the said circular is the specimen format and if one refers to it, Clause 6.4, which is equal to Clause Z-9 of the policy statement, has been retained with a remark “include this para, if applicable, otherwise this para should be deleted.” After this format was circulated, Railways, as noted above, 5 invited tenders including the one, with which we are concerned, on 03.11.2006. As noted above, the petitioner having responded to the tender, his tender was under consideration and petitioner was required to give certain undertakings which the petitioner gave on 09.02.2007 by his letter addressed to the Tender Committee of East Central Railway, Hajipur which is contained in Annexure-R/5 of the counter affidavit. In the said letter of the petitioner, petitioner undertook to abide by modification/correction of tender condition as per Circular No 40 of 2006 which, as stated above, was the circular by which standard format of agreement was prescribed and which contained Clause 6.4 as well. It appears thereafter the Railway Board, in its review meeting held on 25th and 26th of August 2008, decided and issued clarifications. One of them related to a query raised by East Central Railway with regard to Clause 6.4 and Circular No 40 of 2006. The review clarification was that the corresponding paragraphs Z-9 having been deleted, the Zonal Railways are required to make necessary changes in agreement as per policy. It is said that it is pursuant to the said decision of the review meeting that the impugned letter dated 28.11.2008 was issued. On behalf of petitioner, Mr K D Chatterji, learned Advocate submits that once parties have entered into a written agreement then the terms of agreement cannot be altered except by mutual consent unless there is anything in the agreement providing otherwise. He submits that to the contrary in the agreement, there is a specific clause being Clause 25.2 which clearly provides that the terms and conditions of the agreement cannot be altered except by mutual consent. Thus, when the 6 parties, with their eyes open, entered into the contract aforesaid and having taken a letter from petitioner to abide by Circular No 40 of 2006 (prescribing the standard format), parties were bound by the terms of the standard format and Clause 6.4 thereof could not be deleted unilaterally by the Railways. He further submitted that the standard form itself was circulated by the Railways retaining Clause 6.4 and giving an option to delete the same as and when applicable giving an option to delete which itself made it clear that it was not absolutely deleted even otherwise. In view of this, unilaterally Railways could not take away a right and a privilege conferred on petitioner under the agreement. To the contrary, Shri N K Agarwal, learned Senior Counsel submits that though the general policy was to grant additional leave from payment to file lease money, a subsequent review provided for deletion of the said clause. Petitioner had agreed to abide by Circular No 40 of 2006, and, as such, could not complain about deletion of the said clause after the agreement had been signed as between the parties. The intention of Railways, from the beginning, was not to provide for a contingency as contemplated in Clause 6.4 and this prior intention had to be read into subsequent written agreement so as to delete the said Clause 6.4 from the agreement after it had been signed by parties. Railway had the authority to unilaterally delete the same in furtherance of its intention, as evinced earlier. Having heard the parties at length, in my opinion, the writ petition must succeed. The reasons are simple and straightforward. First, it is well settled law that once parties reduce the terms of an 7 agreement to writing to form a contract then it is the terms, as incorporated in the contract, that binds the parties and nothing which happened prior to contract being signed can be looked into. Otherwise the contracts would become uncertain and lead to frequent disputes as to what was intended and what was contracted. Secondly, another equally well settled principle is that a contract, being a bilateral act of parties, cannot be unilaterally altered and that too to the detriment of one of the parties by other because for the simple reason that the other party had not agreed to the deleted form of contract. Here, even though Mr Agarwal for the Railways is correct that the policy stood modified still when the standard format was prescribed after the change of policy, it did not wholly delete Clause 6.4. It made it optional as per the noting immediately after Clause 6.4 itself. It is not in dispute that Railways had the authority to delete the said clause but that authority had to be exercised when the contract was being entered into in fact and undisputedly contract was entered into with the said clause. Once the contract was so entered into then the contract could not be altered to the prejudice of either of the parties unilaterally. This restriction on the power to amend the terms of contract has been explicitly provided in Clause 25.2 of the contract itself. Railways could not take advantage of its dominating position and unilaterally ignoring Clause 25.2, delete the Clause 6.4. Such an action on part of the Railways is not only dehors the contractual obligations but is contrary to the specific provision of the contract itself and is against the law. It is, thus, per se arbitrary. 8 In fairness to learned counsel for the Railways, I must notice his last submission. He submits that in the agreement, there is a provision for arbitration and the petitioner should be asked to resort to the said provision and this Court should not interfere in writ jurisdiction. In my view, the argument requires to be noticed only to be rejected. The reason is simple. As found above, the action of the Railways was dehors the contract itself. It is not a dispute that arises from the contract. Railways exercised power to delete a clause from the contract notwithstanding clear restriction on the right in terms of Clause 25.2 thereof. Secondly, the decision to delete the clause was taken at the higher level in the Railways itself and arbitration is of no help as there are no disputes to be resolved except resolution of the power of a contracting party based on terms which are terms and facts which are not in dispute. In view of the facts not being in dispute and it being a matter of mere interpretation of the agreement and the powers of the respective parties thereunder, in view of the judgment of the Apex Court in the case of ABL International Limited & Another –Versus- Export Credit Guarantee Corporation of India Limited & Others since reported in (2004) 3 Supreme Court Cases 553 as also in the case of Food Corporation of India & Another –Versus- SEIL Limited & Others (2008) 3 Supreme Court Cases 440, the objection cannot be sustained. One must not forget that Railways is State within the meaning of Article-12 of the Constitution of India for the purposes of Part-III of the Constitution of India and is, as such, bound by the principles 9 enshrined in Article-14 of the Constitution of India which, inter alia, provides for fairness and reasonableness in all its actions including in contractual matters. Railways are not exempt from ordinary law of the land. The agreement, once reduced to writing, binds both the parties and parties are bound by the contractual obligations contained therein and no party has right to relieve itself of its contractual obligations much less unilaterally in the manner in which it has been done in the present case. Thus found, the action of the Railways cannot be accepted as valid in law. It is dehors the contract, contrary to the contract and is violative of Article-14 of the Constitution of India being grossly arbitrary. The impugned letter dated 28.11.2008 informing the petitioner about deletion of Clause 6.4 cannot, thus, be sustained and is, accordingly, quashed. The consequence thereof is that Railways would be bound by Clause 6.4 of the contract with the petitioner for the full term of the contract till it is mutually agreed otherwise. Consequently, any money realized by the Railways, treating Clause 6.4 as deleted and not a part of the contract would be liable to be refunded and/or adjusted against future liability of petitioner under the contract. The writ petition is, thus, allowed. M.E.H./ (Navaniti Prasad Singh)