THE HON'BLE MS JUSTICE G.ROHINI WRIT PETITION No. 13554 OF 2010 Date: 21.07.2010 Between: M/s. USM Business Systems Pvt. Ltd., ..... PETITIONER AND The Greater Hyderabad Municipal Corporation, Rep. by its Commissioner, C.C.Buildings, Tank Bund Road, Hyderabad .....RESPONDENT The Court made the following:- THE HON'BLE MS JUSTICE G.ROHINI WRIT PETITION No.13554 of 2010 O R D E R : The respondent-Greater Hyderabad Municipal Corporation issued notification dated 05.12.2008 inviting tenders for outsourcing the collection of advertisement fee on Neon/Glow Sigh Boards/Own Boards attached to the shops, establishments, offices etc. The petitioner-Company emerged as the successful bidder for a period of three years namely 2008-2009, 2009-2010 and 2010-2011 in all the 5 zones of the respondent-Corporation. By proceedings dated 24.12.2008 the respondent accorded permission to the petitioner- Company to collect advertisement fee and accordingly an agreement of authorisation dated 07.03.2009 was entered into between the Corporation and the petitioner-Company. In terms of the same, the respondent-Corporation published in the newspapers dated 22.05.2009 informing the public about the authorisation granted to the petitioner. While so, 329 writ petitions filed by different business organisations challenging the authority of the Corporation in awarding the collection of advertisement fee to a private agency were allowed by this Court by a common order dated 21.12.2009 holding as under: “ (a) The advertisement fee levied by the Corporation is in the form of a tax referable to Section 197 of the Act and it could not have been levied without specific authority and in accordance with the prescribed procedure; (b) the notices impugned in the writ petitions do not accord with Sections 169, 633 and other relevant provisions of the Act, and they are accordingly set aside; and (c) the Corporation is entitled to insist on the permissions being obtained for erection and display of advertisements, subject, however, to the exceptions covered by the proviso of sub- section (1) of Section 421 of the Act; and to stipulate fee therefore, commensurate with the service of regulatory activity and in its discretion to levy tax, under Section 197 (f), duly following the prescribed procedure.” In view of the said decision, the petitioner made a representation requesting the respondent-Corporation to see that the contract in its favour was worked out. Having considered the same, the respondent- Corporation constituted a committee to examine the following options: “i. To serve Demand Notices under the Logo and Signature of the GHMC Delegated Officer being a statutory function as is to be followed under Section 634 of HMC Act 1955. ii. To collect the Cheques/DDs etc., in the name of the Commissioner, GHMC and deposit in the Municipal Fund being a statutory function as is to be followed under Section 170 of HMC Act 1955. iii. To use the services of M/s USM Business Systems Pvt.Ltd. man power and personnel for (i & ii) to serve the notices and collect the cheques/DDs on behalf of the GHMC as they are totally well versed with the totography of GHMC limits and having all the details such as size of the board, type of display and the amount payable by each individual Brand Name Companies, Banks, Shops and Establishments which authorize the Commissioner, GHMC to entrust such work under Section 629 of HMC Act 1955.” Having considered all the relevant factors the committee by proceedings dated 29.03.2010 recommended to consider appointment of the petitioner to engage required number of personnel as fixed by Greater Hyderabad Municipal Corporation (for short ‘the Corporation’) for each of 18 circles to measure the boards, issue demand notices with the facsimile signature of the Corporation official and collect cheques/DDs in favour of the Commissioner, Greater Hyderabad Municipal Corporation under the overall control, supervision and monitoring of the Corporation officials so as to continue the contract up to the allotted period 2010-2011. The petitioner states that further steps are yet to be taken by the respondent-Corporation in terms of the recommendations made by the committee. In the meanwhile, the impugned proceedings dated 20.05.2010 came to be passed cancelling the allotment dated 24.12.2008 made in favour of the petitioner forthwith. Aggrieved by the same, the present writ petition is filed. I have heard the learned counsel for the petitioner as well as the learned standing counsel appearing for the respondent-Corporation. The learned counsel for the petitioner while pointing out that even by the date of the tender notice dated 05.12.2008 various cases were filed in the Courts challenging the authority of the Corporation to outsource the collection of fee, vehemently contended that the Corporation had deliberately suppressed the said fact in the tender notification. It is contended that the Corporation had played mischief and fraud on all the tenderers particularly the petitioner and therefore on that ground itself the impugned action of the respondent is liable to be declared as arbitrary and illegal. It is also contended that having constituted a committee for consideration of the consequences of the order passed by this Court in W.P.23354 of 2009 and batch, particularly to use the services of the petitioner-company’s manpower and personnel, there is absolutely no justifiable reason to ignore the recommendations made by the committee to continue the petitioner up to the allotted period 2010-2011. It is also vehemently contended by the learned counsel for the petitioner that the impugned cancellation without issuing the 60 days notice as provided under condition No. 9.3.1 (a) of the contract is arbitrary and illegal. In the counter affidavit filed on behalf of the respondent- Corporation it is pleaded that the petitioner being a party to the batch of writ petitions was very well aware of the earlier litigation on the subject and therefore it was not open to the petitioner to contend that the Corporation had played fraud. It is alleged that the petitioner committed default in making the payments in accordance with the terms and conditions agreed upon. The petitioner also failed to submit the bank guarantees within the stipulated time. It is further alleged that the petitioner had wilfully indulged in collection of advertisement fee without waiting for the final decision of this Court in the batch of writ petitions and in spite of the several opportunities granted the petitioner did not pay the said amounts to the Corporation. It is alleged that the petitioner had collected the advertisement fee in spite of the judgment of this Court and that a sum of Rs.1252.20 lakhs for the year 2009- 2010 and proportionate amount of Rs.210.43 lakhs for the year 2010- 2011 was due from the petitioner. Thus, it is contended that the impugned order was rightly issued cancelling the petitioner’s allotment dated 24.12.2008. The learned standing counsel appearing for the Corporation while reiterating the contents of the counter affidavit further contended that the writ petition itself is not maintainable in view of condition No.13.3 of the agreement which provides that all disputes arising out of the agreement shall be referred to the arbitration in accordance with the procedure prescribed in Arbitration and conciliation Act, 1996. While pointing out that the bid document itself contained a specific provision with regard to the pending legal cases the learned standing counsel further contended that the petitioner’s allegation that the Corporation had played fraud against the bidders was without any basis. So far as the objection raised by the respondent as to the maintainability of the writ petition is concerned, as held in ABL International Limited and another vs. Export Credit Guarantee Corporation of India Limited and others [1], a writ petition even if arises out of a contractual obligation is maintainable and the relief cannot be refused, in all cases as a matter of rule. Particularly where the matter does not involve disputed facts or any controversy as to the interpretation of clauses, there cannot be any objection as to the maintainability of the writ petition merely on the ground that the dispute arises out of a contract. As could be seen from the facts narrated above, the matter does not involve any disputed questions of fact much less there is any controversy as to the interpretation of clauses. In the circumstances, the contention that the writ petition itself is not maintainable is untenable. Coming to the merits of the case the petitioner was admittedly a party to the earlier batch of writ petitions which was pending by the date of the tender notice dated 05.12.2008. Hence, the petitioner’s allegation that the Corporation while issuing the tender notice had suppressed the pending cases and thus played fraud on the bidders is unfounded. Consequently, the petitioner’s contention that the allotment of the work in favour of the petitioner itself was vitiated by fraud cannot be accepted. However, I find force in the contention that the impugned cancellation was in violation of condition No.9.3.1 (a) of the contract, which reads as under: “9.3.1 Termination for Agency Event of Default a) without prejudice to any other right or remedy which GHMC may have in respect thereof under this Agreement, upon the occurrence of an Agency Event of Default as specified in Art.9.1, GHMC shall be entitled to terminate this Agreement by issuing a Termination Notice to the Agency, duly signed by the competent authority of the GHMC, provided that before issuing the Termination Notice, GHMC shall by a notice in writing inform the Agency of its intention to issue the Termination Notice (the “preliminary Notice”) for a minimum period of 60 days. In case the underlying breach/default is not cured within a period of 60 (sixty) days from the date of the Preliminary Notice (Cure Period) GHMC shall be entitled, to terminate this Agreement by issuing the Termination Notice, which should be duly received by the Agency, impound the Performance Guarantee and forfeit the Security Deposit.” “Agency Event of Default” has been defined under clause 9.1 and it is apparent that the impugned order of cancellation was passed alleging occurance of agency event of default. In the circumstances, even if the Corporation was of the opinion that the petitioner’s allotment was liable to be cancelled on the grounds of alleged default in payment of amounts and the collection of advertisement fee in disobedience to the order of this Court, the petitioner is entitled to a preliminary notice as mentioned under clause 9.3.1. The specific allegation of the petitioner that the impugned cancellation was in violation of condition No.9.3.1 (a) has not been answered and nothing could be placed before this Court to show that such preliminary notice was issued to the petitioner before passing the impugned order. Failure of the Corporation to issue such preliminary notice, particularly in the light of the undisputed fact that a decision is yet to be taken on the basis of the recommendations of the Committee, dated 29.03.2010, undoubtedly caused prejudice to the petitioner and therefore on that ground alone the impugned order is liable to be set aside. Accordingly, the impugned order is hereby set aside and the Writ Petition is disposed of leaving it open to the Corporation to pass a fresh order, if necessary in accordance with law. No costs. ​ ____________ Date: 21.07.2010 G. ROHINI, J Ivd [1] 2004(3) SCC 553