IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.9396 of 2010 M/S SRI SAI LOGISTICS, a proprietorship firm having its office near Commerce College, Rajendra Nagar, Patna-20 through its proprietor Sri Ravi Shankar son of late B.P. Sinha …. Petitioner Versus 1. THE UNION OF INDIA through the Director Freight Marketing, Ministry of Railways, (Railway Board), Rail Bhawan, New Delhi-110001. 2. The Director Freight Marketing, Ministry of Railways, (Railway Board), Rail Bhawan, New Delhi-110001. 3. The Chief Commercial Manager, East Central Railway, B-Block, Dighi, Hajipur, District-Vaishali (Bihar)….. Respondents. ----------- For the petitioner: Mr. Y.V. Giri, Senior Advocate Mr. Raju Gigi, Advocate For the Railways: Mr. Anil Singh, Advocate --------- 4. 9.7.2010 Heard learned counsel for the petitioner and learned counsel for the respondent Railways. The petitioner seeks quashing of the letter dated 25.2.2010 issued by the Chief Commercial Manager, East Central Railway (ECR) by which the request of the petitioner for extension of lease of parcel van in Train No.2387/2388 for two years has been rejected relying upon the Freight Market Circular No.03/2010 dated 9.2.2010. The facts of the case fall within a narrow compass are not in dispute. In terms of the tender floated by the E.C.R. for lease of parcel space in parcel vans by Train No.2387/2388 from Rajendra Nagar Terminal to Delhi Sarai Rohila and back the petitioner participated and on succeeding in the same, an agreement dated 2.3.2007 was entered into - 2 - between him and the Railway administration for lease of parcel space in parcel vans having carrying capacity of 25 tons by the said train for a period of three years. On the expiry of three years period, the petitioner was granted an extension for three months upon which he made a representation for the lease period to be extended by a period of two years in terms of paragraph E 1, 2 and 3 of Circular No.12/2006 dated 27.3.2006, but the same was rejected by the impugned order dated 25.2.2010 relying upon para E.4 of Circular No.03 of 2010 dated 9.2.2010. Learned counsel for the petitioner submits that the authorities of the Railways have acted contrary to the clarification issued by the Freight Marketing Circular No.06/2010 dated 18.3.2010 of the Government of India, Ministry of Railways ( Railway Board ). In paragraph No.2.1 therein it is stated that cases of existing contracts, which are in operation and agreement/contract signed before issue of Freight Marketing Circular No.03/2010, i.e., prior to 9.2.2010, shall be governed by the policy guidelines applicable before issue of Freight Marketing Circular No.03/2010. It is, thus, - 3 - submitted by learned counsel that the case of the petitioner being governed by the Freight Marketing Circular No.12/2006 dated 27.3.2006 prior to the issuance of Circular No.03/2010 dated 9.2.2010, it ought to be governed by paragraph No. E 1,2 and 3 of the earlier circular and the petitioner would be entitled to get extension for a period of two years on the enhancement at the rate of 25% above the previous lease rent. Learned counsel for the Railways, on the other hand, submits that in terms of the new Freight Marketing Circular No.03/2010 issued on 9.2.2010, paragraph Nos. E-1, E-2 and E-3 of the Freight Marketing Circular No.12/2006 dated 27.3.2006 have been deleted and thus the authorities floated a fresh tender for the period after expiry of contract and also granted him extension of three months from 2.3.2010 so as to settle the same with other parties. It is urged by learned counsel that Circular No.12/2006, which provided for extension of two years, clearly laid down that the long term lease of three years or more can be extended by a period of two more years and thus the said provision is not mandatory and is subject to an - 4 - agreement between both the parties and it is open to the Railways not to go for further extension. It is urged that in the present matter it was found that the parties concerned are willing to pay an amount of Rs. 1,25,000/- for the same lease whereas the petitioner was given the same lease for an amount of Rs. 68,778/-. It is thus alleged that the decision has been taken in the interest of the Railways and ought not to be interfered with. Learned counsel also relies upon a letter dated 14.10.2008 issued by the Railway Board, containing the minutes of the performance of the meeting on parcel service held on 25th and 26th August, 2008, in paragraph No.18 of which it has been laid down that the Zonal Railways must initiate action for calling tenders well in advance before expiry of contract to avoid extension and thus, it is contended that the extension for a period of two years was not at all mandatory nor expected to be granted in the normal course by the Railway Administration. An attempt has also been made to challenge the contention of the petitioner regarding satisfactory performance during the lease period, - 5 - without any penalty for over-loading or violation of any provision of the contract in terms of paragraph No. E 3. stating that the petitioner had once been found to have over-loaded to the extent of 309 K.G. for which a penalty of Rs.10,640/- was also imposed and collected by money receipt No.486565 dated 26.2.2009. I have considered the submissions of learned counsels for the parties. Paragraph No.(E) of Freight Marketing Circular No.12/2006 dated 27.3.2006 is in the following terms: “(E) Extension of Lease: 1. Extension of lease is permissible only in case of long term lease of three years. 2. In case of Long Term Lease, on expiry of the contract period, the same can be extended only once, by 2 more years at a lease rate of 25% more than the lumpsum leased freight rate. 3. Such extension will be subject to satisfactory performance by the lease holder, without any penalty for overloading or - 6 - violation of any provision of the contract. 4. In case of expiry of contract period and non-finalization of new contract due to administrative delays, temporary extension can be permitted by the CCM only once, for a period of three months. It is not in dispute that the lease of Parcel was granted to the petitioner on 2.3.2007 while Freight Marketing Circular No.12/2006 was in operation. It is true that by Circular No.06 of 2010 issued on 9.2.2010 Paragraph No. (E) 1,2 and 3 of the said Circular No.12/2006 have been deleted. The lease period of the petitioner expired soon thereafter on 2.3.2010. The petitioner was granted a temporary extension for a period of three months while the Railway authorities had proceeded to finalise a new contract. However, in the meantime, the Railway Administration itself rectified the anomaly in taking away vested right of the party in terms of the earlier Circular No.12/2006 dated 27.3.2006 - 7 - and modified the said decision by Freight Marketing Circular No.06/2010 dated 18.3.2010 clearly indicating that the existing contract shall be governed by the policy guidelines applicable before the issue of new Freight Marketing Circular No.03/2010 dated 9.2.2010. That being the position, it is evident that the case of the petitioner will have to be considered in terms of Circular No.12/2006 dated 27.3.2006. So far as the contention of learned counsel for the Railways that the extension is not mandatory but is subject to the sweet will of the authorities is concerned, this Court cannot accept any such contention. It is admitted by learned counsel for the Railways that no guidelines have been laid down as to in which cases the lease shall be extended by two more years and in which other cases it will not. That being the position, it is evident that the said provision grants a right to the long term lease holders having a lease of 3 years for the extension of the said lease for a further period of two years at a lease rate of 25% more than the lumpsum freight rate which would be automatic, subject only to satisfactory performance by the lease holder, - 8 - without any penalty for over-loading or violation of any provision of the contract. It is evident from the impugned letter dated 25.2.2010 that the request of the petitioner for extension for a period of two years in terms of paragraph E.1, 2 and 3 of Comprehensive Parcel Leasing Policy has been refused on the sole ground that it was not permissible under Circular No.06/2010 dated 9.2.2010, and not on account of unsatisfactory performance of the petitioner or a penalty of Rs. 10,640/- having been imposed upon it on 2.6.2009 for over-loading. As a matter of fact in clause 13 to 13.3 of the agreement entered into by the petitioner, the provision was made for over-loading and it was clearly provided therein that for an over-loading up to 3 % normal lumpsum leased freight for the excess weight only will be charged and there would be penalty only for over-loading above 3 %. The penalty was to be charged at different rates for such over-loading beyond limits prescribed. In the case of the petitioner the over-loading was found to the extent of 309 K.G., whereas the capacity allotted to the petitioner was of 18,309 K.G. and thus, the same would come to about 1.7 % excess of - 9 - the capacity and thus the amount of Rs.10,640/- was not levied as a penalty but only as a charge for excess weight. The same is also evident from the receipt, which has been brought on the record by the respondents that the money has not been charged as a penalty, rather the charge for an excess weight only. It is, thus, evident that there has been no penalty for over-loading by the petitioner and thus on the said ground, the extension of lease could not have been denied to it. In any case as is evident from the impugned order the ground for denial of extension as mentioned by the Railway authorities is not on account of any penalty for overloading and such plea also does not have any factual basis. So far as the reliance by learned counsel for the Railway on the letter dated 14.10.2008 is concerned, the same merely clarifies the decision that the provision for extension of lease in paragraph No. (E) is permissible only in case of long term lease whereas with respect to short term contract the Zonal Railway must initiate action well in advance before expiry of contract to avoid extension. The said clarification has not been issued with respect to long term lease but only - 10 - with respect to short term contract and the reliance by learned counsel for the Railway is misconceived. Thus, in the light of the aforesaid discussions, it is evident that in terms of Freight Marketing Circular No.12/2006 dated 27.3.2006 read with Circular No.06/2010 dated 18.3.2010, the petitioner was entitled to get extension of the lease contract for a further period of two years from 2.3.2010. The case of the petitioner is not at all covered by Freight Marketing Circular No.03/2010 dated 9.2.2010. The impugned order dated 25.2.2010 is thus contrary to the policy of the Railway in this regard as clearly expressed in the aforesaid two Circulars and it is, accordingly, quashed. In this regard, learned counsel for the petitioner has rightly referred to the grant of extension of lease for a period of two years by the other Railway Zone like Northern Railway in similar circumstances to other lease holders for which two letters dated 14.5.2010 have been brought on the record. The writ application is, accordingly, allowed and the authorities of the Eastern Railway are directed to extend the lease period of the - 11 - petitioner for a further period of two years from 2.3.2010 in terms of the Circular No.12/2006 dated 27.3.2006. VPS ( Ramesh Kumar Datta, J. )