IN THE HIGH COURT OF JUDICATURE AT PATNA Letters Patent Appeal No.1058 of 2011 In Civil Writ Jurisdiction Case No. 9945 of 2010 With Interlocutory Application no. 4856 of 2011 ====================================================== 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 Parwez Ahmad Siddiqui, son of Razi Ahmad Siddiqui. .... .... Appellant-Appellant Versus 1. The Union of India through the Secretary, Ministry of Railway, New Delhi. 2. East Central Railway Hajipur, through its General Manager. 3. Chief Commercial Manager, East Central Railway, Hajipur (A Block Dighi at Hajipur). 4. Divisional Railway Manager, East Central Railway, Hajipur. 5. Additional Chief Commercial Manager, East Central Railway, Hajipur. 6. Executive Director, Freight Marketing Railway Board, New Delhi. 7. Senior Divisional Commercial Manager, Danapur. 8. Deputy Chief Commercial Manager Marketing, Hajipur. 9. The Chief Parcel Supervisor, S.C.R. Rajendra Nagar, Tribunal Patna. 10. Railway Board, through the Secretary, Ministry of Railways, New Delhi. 11. Godrej and Boyce Mfg. Co. Ltd, through its Branch Manager, Jeevandeep, Exhibition Road, Patna-800001. .... .... Respondent/s ====================================================== Appearance : For the Appellant : Mr. Y.V.Giri, Sr. Advocate. Mr. Sanjee Ranjan, Advocate. For the Railway : Mr. N.K.Agrawal, Sr. Advocate. Mr. Arvind Ujjwal, Advocate. For the respondent no. 11: Mr. Syed Arshad Alam Mr. Anjum Perveen Mr. Gautam Kumar Yadav, Advocates. ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE BIRENDRA PRASAD VERMA ORAL ORDER (Per: HONOURABLE THE CHIEF JUSTICE) 2 25-07-2011 Feeling aggrieved by the judgment and order dated 15th July 2011 passed by the learned single Judge in above C.W.J.C. No. 9945 of 2010, the writ petitioner M/s Scorpion Patna High Court LPA No.1058 of 2011 (2) dt.25-07-2011 2 Express Pvt. Ltd. has preferred this Appeal under Clause 10 of the Letters Patent. The appellant is a lessee of the respondent –East Central Railway, Hajipur (hereinafter referred to as ‘the Railway’) of parcel space in Train No. 3201/3202 between Rajendranagar Terminal, Patna and Lokmanya Tilak Terminal, Mumbai. The lease agreement was made on 8th March 2007 for a period of three years from 29th March 2007 to 28th March 2010. Before the expiry of the lease agreement, the appellant had approached the Railway for extension of the lease agreement for a period of two years in accordance with Paragraph 18.1 of the lease agreement. The said request was rejected by the Railway on 3rd/4th March 2010 on the ground of a new freight Marketing Circular No. 03 of 2010 dated 9th February 2010. On expiry of the period of three years under communication dated 25th March 2010 issued by the Railway, the said contract/lease was extended for a period of three months up to 28th June 2010. The communication expressly referred to the tender process initiated under tender notice dated 19th January 2010 and postponement of the said tender process. Feeling aggrieved, after availing the benefit of extension of lease agreement for three months, the appellant approached this court under Article 226 of the Constitution in above C.W.J.C. No. 9945 of 2010 for enforcement of its right to extension of lease agreement by two years under Paragraph 18.1 of the lease agreement. Paragraph 18.1 of the lease agreement provides for extension of lease agreement in respect of long term lease of three years only once by two more years at a lease rate of 25% more than the lumpsum leased freight rate subject to satisfactory Patna High Court LPA No.1058 of 2011 (2) dt.25-07-2011 3 performance by the leaseholder, without any penalty for overloading or violation of any provision of the contract. According to the appellant, the said Paragraph is ordinarily honoured by the Railway in respect of the lease of parcel space on its passenger trains. The appellant was also entitled to similar benefit of extension. The reason for refusal due to change in the lease policy under new freight Marketing Circular No. 3 of 2010 was not sustainable as the said new freight Marketing Circular No. 3 of 2010 did not affect the aforesaid paragraph 18.1 of the lease agreement. The petition was contested by the Railway. According to the Railway, the extension of lease agreement was not a matter of course, but it was at the discretion of the Railway. In case of the appellant there was an incidence of overloading and consequent penalty. The performance of the appellant, therefore, was not satisfactory and that the Railway had invited fresh tender. The writ petition was also contested by the respondent-Godrej and Boyce Mfg. Co. Ltd.(hereinafter referred to as ‘the Company’). In answer to the tender notice the Company had submitted its offer. The said offer being higher was accepted on 22nd June 2010. The appellant, without disclosing the factum of the tender notice and the Company being successful in the tender process, filed the writ petition on 29th June 2010. The appellant neither disclosed the factum of the said tender nor impleaded the Company as party respondent. The learned single Judge, having considered the terms and conditions of the lease agreement and the arguments advanced by the learned advocates, took notice of the incidence of overloading and also the incidence of overloading on the freight Patna High Court LPA No.1058 of 2011 (2) dt.25-07-2011 4 parcel space contract on Rajdhani Express. Considering the performance of the appellant, the learned single Judge upheld the action of the Railway in inviting fresh tender and rejected the claim of the appellant. Therefore, the present Appeal. Learned counsel Mr. Y.V.Giri has appeared for the appellant. He has submitted that the appellant’s request for renewal of the lease agreement in accordance with Paragraph 18.1 of the lease agreement was rejected on account of new freight Marketing Circular No. 3 of 2010, which evidently did not apply in the case of the appellant. The Railway had improved its defence by filing counter affidavit and referring to the incidence of overloading and consequent penalty imposed upon the appellant. He has relied upon the judgment of the Hon’ble Supreme Court in the matter of Mohinder Singh Gill and Another Vs. The Chief Election Commissioner and Others [AIR 1978 SC 851] particularly paragraph 8 thereof. He has submitted that no fresh ground can be made out in the counter affidavit. The order has to be justified on the grounds stated in the order. He has also submitted that in case of other contracts the Railway did renew the lease agreement for parcel space for further period of two years in accordance with Paragraph 18.1 of the lease agreement. Mr. Giri has taken us through the aforesaid record. He has also relied upon the judgment of the Hon’ble Supreme Court in the matter of S.J.S. Business Enterprises (P) Ltd. Vs. State of Bihar & Others [2004(7) SCC 166] particularly Paragraph 13 thereof. The Appeal is contested by the learned advocates Mr. N.K.Agrawal appearing for the Railway and Mr. Syed Arshad Alam appearing for the Company. Mr. Alam has relied upon the judgment in the matter Patna High Court LPA No.1058 of 2011 (2) dt.25-07-2011 5 of Raunaq International Ltd. Vs. I.V.R. Construction Ltd. and Others [AIR 1999 SC 393]. Paragraph 18 of the lease agreement deals with extension of lease contract. Paragraph 18.1 reads as under: “Extension of lease is permissible only in case of long term lease of 3 years wherein the same can be extended only once, by 2 more years at a lease rate of 25 % more than the lumpsum leased freight rate subject to satisfactory performance by the leaseholder, without any penalty for overloading or violation of any provision of the contract.” From perusal of the aforesaid Paragraph 18.1 it is evident that the Railway has reserved its discretion for extension of the lease agreement for a period not more than two years at a lease rate of 25% more, if the performance of the leaseholder is found to be satisfactory. The said Paragraph does not confer a right to extension of the lease agreement upon the leaseholder. Besides as recorded hereinabove, the performance of the appellant cannot be said to be satisfactory. It may also be noted that the tender notice was issued by the Railway as early as on 19th January 2010. The appellant did participate in the said tender process. The appellant also availed of the benefit of extension of three months of lease period granted on 25th March 2010. The appellant having availed of the benefit of three months’ extension; having participated in the tender process and having lost in the tender process cannot be permitted to assert the right to extension of lease agreement in accordance with Paragraph 18.1 of the lease agreement. Patna High Court LPA No.1058 of 2011 (2) dt.25-07-2011 6 For the aforesaid reason, we dismiss the Appeal as well as interlocutory application. We are informed by the learned counsel Mr. Giri that in view of the interim order made by the learned single Judge pending the petition, the appellant has continued to enjoy the lease of the parcel van till the date. The appellant has also been paying rent at the rate of 25% more as envisaged by the aforesaid Paragraph 18.1 of the lease agreement. As the appellant has lost in the writ petition as well as in the present Appeal; as he has enjoyed the extended period of lease agreement under the order of this court, the appellant is bound to indemnify the Railway for loss of revenue suffered by it on account of continuance of the appellant’s lease agreement under the order of this court. In other words, the appellant will pay the difference in freight rate paid by it and the one offered by the respondent- Godrej and Boyce Mfg. Co. Ltd. Sujit Kumar Sharma/- (R.M. Doshit, CJ) (Birendra Prasad Verma, J)