IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD WEDNESDAY, THE SECOND DAY OF DECEMBER TWO THOUSAND AND NINE PRESENT THE HON'BLE MRS JUSTICE T.MEENA KUMARI and THE HON'BLE MR JUSTICE C.V.NAGARJUNA REDDY WRIT APPEAL NO : 1414 of 2002 (Writ Appeal under Clause 15 of the Letters Patent against the Order dated 31/07/2002 in WP NO : 10251 OF 2002 on the file of the High Court.) Between: K.Prabhakar S/o.K.Chinnayya R/o.M.L.S.Point, Devarakadra Mahaboobnagar District ..... APPELLANT AND 1 The Joint Collector & E.O.E.D A.P.State Civil Supplies Corporatioan Ltd Mahaboobnagar, Mahaboobnagar District 2 The District Manager A.P.State Civil Supplies Corporation Ltd Mahaboobnagar, Mahaboobnagar District 3 The A.P.State Civil Supplies Corporation Ltd Head Office at Civil Supplies Bhavan 6-3-655/1A,Somajiguda,Hyderabad Rep.by its Vice Chairman & Managing Directors .....RESPONDENTS Counsel for the Appellant: MR.RAJANIKANTH JWALA Counsel for the Respondents: MR.N.SUBBA REDDY MR.T.S.PRAVEEN KUMAR The Division Bench of this Court made the following : (Judgment follows 2nd page) THE HON'BLE MRS JUSTICE T.MEENA KUMARI A N D THE HON'BLE MR JUSTICE C.V.NAGARJUNA REDDY WRIT APPEAL NO : 1414 of 2002 J U D G M E N T : (Per the Hon’ble Smt. Justice T. Meena Kumari) The writ appeal is filed against the order dated 31-7-2002 passed by the learned single Judge in WP.No. 10251 of 2002, whereby he dismissed the writ petition holding that contractual or commercial activities of statutory body need not necessarily raise issues to the public law and any dispute arising from such activities must be settled according to the principles of law of contract and the interpretation and implementation of a clause in a contract cannot be a subject matter of writ petition. The learned Judge also gave liberty to the parties either to invoke the arbitration clause provided in the contract or approach the competent civil court, if there is any violation in the terms and conditions of the contract. Aggrieved thereby, the present writ appeal is filed. 2. The writ petition was filed questioning the impugned proceedings of the first respondent in his Proceedings No. P. Admn 56 (2)/02 dated 29-5-2002 terminating the contract and forfeiting the security deposits as illegal, arbitrary and without any authority and consequently to direct the respondents to continue the petitioner as stage-II contract, MLS.Point, Devarakadra and further direct them to pay the bills as usual for transportation of food grains. 3. The main contention of the appellant is that the first respondent has no jurisdiction whatsoever in issuing the impugned order dated 29- 05-2002 terminating the appellant as stage-II contractor, MLS point, Devarakadra and contrary to the condition No.7 of the agreement dated 31-05-2001 and is a nullity and rescinded the termination order. 4. Clause No. 7 of the agreement gives the power to the Vice- Chairman and Managing Director of the A.P.State Civil Supplies Corporation Limited to terminate the contract without prejudice to any other rights or remedies under the contract and to get the work done for un-expired period of the contract at the risk and cost of the contractor and to claim from the contractor any resultant loss sustained or costs incurred. In the present case on hand, the first respondent issued the impugned proceedings against the appellant for the reason that he being the contractor had diverted the rice to blackmarket in collusion with the Fair Price Shop Dealers, Rice Millers of Devarakadra, with 120 quintals of rice which is meant for Food for Work Scheme and it is also one of the allegation that the receipts of Fair Price Shop Dealers at Devarakadra and Rekulampally which were furnished by the contractor appears to have created without supply of any rice to escape from liability. The appellant was given 24 hours time to furnish the explanation from the date of receipt of the impugned notice. The impugned notice was issued on 23-5-2002 and the first respondent – Joint Collector passed impugned proceedings on 29-5-2002 on the ground that no explanation has been received from the appellant herein and also forfeited the deposit. 5. The learned single Judge having held that that the dispute arose under the contract and the interpretation and implementation of a clause in a contract cannot be a subject matter of the writ petition. 6. Mr. Rajnikanth Jawala, the learned counsel appearing for the appellant has strenuously contended that clause 7 of the agreement does not give power to the first respondent – Joint Collector to issue impugned proceedings for terminating the contract and it is the Vice Chairman and Managing Director of A.P. State Civil Supplies Corporation Limited, who is empowered under clause 7 of the agreement can terminate the contract for violation of the conditions. Therefore, the first respondent – Joint Collector has no jurisdiction either to terminate the contract or forfeit the deposit of the appellant. 7. Mr. N. Subba Reddy, the learned Senior Counsel contended that even if the first respondent – Joint Collector has terminated the contract, the power is vested with the Vice Chairman and Managing Director. The first respondent – Joint Collector after corresponding with the Vice-Chairman and Managing Director for ratification of his action and has passed the impugned proceedings against the appellant. 8. But however, on a perusal of the clause 7 of the agreement goes to show that there is no such power vested with the first respondent – Joint Collector and it is for the Vice Chairman and Managing Director to take action either for termination of the contract or forfeit the deposit. Clause 7 of the agreement does not empowers the first respondent – Joint Collector to seek ratification of his action from the Vice Chairman and Managing Director of the Corporation. The first respondent – Joint Collector after corresponding with the Vice Chairman and Managing Director of the Corporation sought ratification of his action does not cure the legal infirmity. 9. Clause No.7 of the agreement reads as hereunder: 7 (a) In the event of the contractor being adjusted insolvent or going into liquidation of winding up his business of making arrangements with their creditors or failing to observe any of the provisions of this contract or is convicted or punished under the provisions of the Essential Commodities Act, or Central Orders issued under the said Act, or any of the terms and conditions as governing the contract. The Vice Chairman and Managing Director of the Andhra Pradesh State Civil Supplies Corporation Limited shall be at liberty to terminate the contractor forthwith without prejudice to any other rights or remedies under the contract and to get the work done for the un-expired period of the contract at the risk and cost of the contractor and to claim from the contractor any resultant loss sustained or costs incurred. 7 (b) It shall be open to the corporation to suspend the transport contract, being ordering termination of the transport contract under this sub-clause. 7 (c) The Managing Director shall have without prejudice to other rights and remedies the right in the event of breach by the contractor of any of the terms and conditions of the contract to terminate the contract forthwith and to get the work done for the un-expired period of the contract at the risk and cost of the contractors and/or forfeit the Security Deposit of any part thereof and also claim from the bankers who gives Bank guarantee for the sum due for any damages, losses, charges, expenses or costs that may be suffered incurred by the corporation due to the contractor’s negligence, or un workman like performance of any of the services under the contract. The Managing Director, Andhra Pradesh State Civil Supplies Corporation Limited, shall also have the right to claim from the contractors or to invoke contractors to recover any dues from them. 10. A reading of the conditions laid down under Clause No.7 of the agreement goes to show that the first respondent – Joint Collector has no jurisdiction either to terminate the contract or forfeit the deposit and the conditions laid down under clause No.7 of the agreement only empowers the Vice Chairman and Managing Director of the Corporation to take action in case of violation of the conditions of agreement. 11. Under the above facts and circumstances of the case, the findings of the learned single Judge are set aside and the impugned proceedings is also set aside and the writ petition is allowed as prayed for. However, this order does not preclude the third respondent - Vice Chairman and Managing Director of the Corporation to take action if he so desires in case of any allegations against the appellant. 12. With the above observation, the writ appeal is accordingly allowed. No costs. JUSTICE T.MEENA KUMARI JUSTICE C.V.NAGARJUNA REDDY 12-2-2009. I s L ........REGISTRAR To 1. 2.2 CD copies Form-NIC-OGS/WA { }