1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY & ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 2333 OF 2009 IN SUIT NO. 1407 OF 2009 Prachar Communications Limited. ... Plaintiff. V/s. The General Manager, Brihanmumbai Electric Supply and Transport Undertaking & Anr. ... Defendants. Mr. Virag Tulzapurkar, Sr. Counsel a/w. Chetan Kapadia i/b. Munir Merchant for the Plaintiff. Mr. Darius Khambata, Sr. Counsel a/w. Harinder Toor and S.K. Chari, Dipankar Das i/b. M.V. Kini & Co. for the Defendant. CORAM : S.C. DHARMADHIKARI,J. DATED : 2ND SEPTEMBER 2009. P.C. :- This matter was argued yesterday and at the conclusion of arguments it was informed that the orders would be dictated in Court. 2. The Plaintiff has filed this Suit for the principal relief that the communications/letters dated 21st October 2008, 29th December 2008, 15th January 2009 and 21st January 2009 are bad in law, illegal, non est, void ab-initio and be quashed and set aside. In furtherance of this, a declaration is claimed that the contract which is subject matter of this Suit (Annexure ‘D’) 2 is valid, subsisting and binding and the First Defendant is bound and liable to perform the same. 3. In furtherance of prayer clause ‘D’ which is a relief of permanent injunction restraining the Defendants from in any manner acting upon and/or implementing the aforesaid letters that an interim injunction has been claimed and this Notice of Motion is principally moved for that relief so also the other prayers viz. the Defendants shall not in any manner obstruct the completion of the pending advertising contracts and therefore, they should apply to the Municipal Corporation of Greater Bombay (Defendant No.2) for No Objection Certificate in respect of the locations more particularly referred to in the contract Annexure ‘D’ to the plaint. 4. The First Defendant is Bombay Electric Supply and Transport Undertaking which is an Undertaking incorporated and established under the Bombay Municipal Corporation Act, 1888. Defendant No.2 is the Municipal Corporation of Greater Bombay, a Municipal Corporation for the City of Mumbai and Suburbs also established under the same Act. 5. The First Defendant is providing electric supply and transport services to the residents of Mumbai. While providing such services, the First Defendant has purchased buses/vehicles which ply within the Municipal limits and even further. For these buses/vehicles, there are Bus Stops erected. These Bus Stops denote the stoppages stage wise. 3 The bus routes are demarcated in such a manner that the entire area of operation is covered. However, it was noticed that these Bus Stops are not in a proper condition and expose the passengers to sun and the rains more particularly as there is no proper cover or shelter. In such circumstances, the Bus Queue Shelters were proposed to be set up. The existing Bus Stops were also to be upgraded. Since the First Defendant desired private participation in these works, it invited interested parties to place their bids and proposals. It is not in dispute that certain comprehensive proposals and bids were invited but on account of the peculiar locations, the response thereto was minimum. There was increasing response to certain bids with regard to erection of Bus Queue Shelter on certain busy roads. Therefore, it was decided that there should be a proper blend and the expenses necessary for construction and maintenance of Bus Queue Shelters and Bus Stops on busy roads being recovered by display of Advertisements thereon and with the income generated from such advertisements, the construction of Bus Queue Shelters and Bus Stops for other internal and arterial roads would be completed. With this in mind, it is stated that the First Defendant issued an offer document dated 11th December 2006 expressing desire to have Bus Queue Shelter (for short BQSs) and for erecting the Bus Stop Poles on first finder basis at various places at the operational areas of Defendant No.1. The Plaintiff offered to erect 450 BQSs as detailed in Annexure ‘A’ of their bid submitted to Defendant No.1. By a Resolution dated 27th December 2006, the Plaintiff was awarded contract 4 to erect 128 BQSs. The Plaintiff was thus permitted to construct 128 BQSs and display advertisement for a period of 10 years. 6. It was thereafter noticed that the First Defendant did not receive any response from several BQSs/Bus Stop Poles within the operational area as they are located at distant places where the frequency of buses was very less. These Bus Stop Poles have no commercial value to the advertisers. In the light of this, a letter was address on 8th May 2007. The Plaintiff offered that 500 BQSs of size 18’ and 814 BQSs of size 12’ would be constructed at the rate of Rs.700/- per 18’ size BQS and Rs. 400/- per 12’ size BQS. 477 Designer Bus Stop Poles were also offered to be constructed. This letter was duly received and on 7th June 2007, the First Defendant communicated that the Plaintiff should enhance its offer. The counter offer was made. The said counter offer was accepted by the Plaintiff by their letter dated 7th June 2007. Copies of these letters are at Annexures ‘A’ and ‘B’ to the plaint. Thereupon, a letter of acceptance dated 27th July 2007 came to be issued and a copy thereof is annexed as Annexure ‘C’. 7. The Plaintiff placed the initial sum and security deposit at the disposal of the First Defendant and thereafter was awarded the formal contract. The formal contract was executed on 28th September 2007. 8. It is stated that the Bus Queue Shelters were to be 5 erected as per Drawing, Designs and specification of the shelter, which will be available with the Assistant Manager (Civil) of Defendant No.1. The construction was to be made in accordance with the drawing and as per the specification of the First Defendant. It is stated that periodical allotment letters were issued and the Plaintiff was alloted a total 1863 Bus Stop Poles for erection of BQSs and Designer Bus Stops. 9. The other obligations of the parties have been referred to in the plaint and it is then alleged in paragraph 8 that all the Bus Stop Poles were not offered and some 89 Bus Stop Poles were offered to another agency. This is in breach of the Agreement and more particularly clause 8 of the agreement/contract. 10. The further allegations and primarily, breach of which is alleged pertain to the designs and specifications of the BQSs. It is alleged that the designs and specifications of the Designer Poles were already submitted with the letter of offer and in fact the Plaintiff were ready and wiling to commence the work. As per approved drawing and specifications, the Plaintiff erected about 100 BQSs. They completed fabrication of 300 BQSs which were lying with the suppliers, by March 2008. 11. As per the agreed details and figures, it is stated that the Plaintiffs have put up some 714 BQSs and Bus Stop Poles whereas the Plaintiff asserts that the number is 984 and all 6 payments with regard to this construction is forwarded as per the terms and conditions of the contract. 12. The Plaintiff has alleged delay on the part of the First Defendant in approving the designs and specifications so also the drawing. In paragraph 8(c) of the plaint, it is alleged that there were changes suggested from time to time in the drawing and the finalization could not take place till 25th July 2008. The First Defendant called upon the Plaintiff by their letter dated 21st August 2008 to furnish a structural stability certificate and perspective view to enable the First Defendant to obtain approval of the user department to the said design. While it is alleged by the Plaintiff that several alternatives were suggested but on account of revisions and modifications so also changes, the designs themselves under-went modification. The inordinate delay in approval of the designs of BQSs is alleged and that is how the letter dated 13th October 2008 placing on record the steps taken was addressed by the Plaintiff to the First Defendant. The letters are annexed as Annexures G-1 to G-4. 13. Thereafter, it is alleged that by letters dated 17th November 2008 and 22nd November 2008, details and drawing along with photographs of sample Bus Stop Poles for approval of the First Defendant came to be forwarded. Defendant No.1 much after the expiry of 12 months period prescribed under the LOI and only by their letter dated 18th December 2008, granted approval. A copy of this letter is annexed as 7 Annexure H-1 to the plaint. 14. In paragraph 9 of the plaint, the Plaintiff alleges as under :- “9. Under the contract between the Plaintiff and Defendant No.1, it is mentioned that the Plaintiff would obtain statutory approval for BQS and Designer BSP and would erect the BQS and the Designer BSP only after statutory approvals have been obtained and the Assistant General Manager (Civil) of Defendant No.1 gives written intimation to the Plaintiff to commence the work. However, Defendant No.2 never entertain the Plaintiff for grant of any approval in respect of erection of BQS and/or designer BSP. Under the Development Control Regulations for Greater Bombay 1991 (DCR), it is provided under Regulation 9 Table 4 at Sr. No.IV(d) that Development of Bus Station can be approved on an application by Defendant No.1. It is as a result of the above legal position that Defendant No.2 had from the very beginning refused to entertain and/or grant approvals to the Plaintiff. Thus, Clause 2 of the Contract which imposed an obligation on the Plaintiff to do an act, which is impossible for the Plaintiff to do under law, is accordingly void. (a) The Plaintiff used to submit the drawings 8 to Defendant No.1 from time to time. By 27th February 2008, the Plaintiff has submitted 975 location plans. Thereafter, from time to time under cover of seven letters dated 27th February 2008, 4th April 2008, 19th April 2008, 29th April 2008, 4th June 2008, 3rd July 2008, 21st July 2008 and 4th August 2008, the Plaintiff submitted additional numbers of location plans for construction of BQS. The total number of location plans submitted by the Plaintiff aggregated to 1,563 by then. The Plaintiff awaited intimation from the Assistant General Manager (Civil) to commence the work of erection of BQS and BSP. (c) The Plaintiff understands that Defendant No.2 had issued one Central NOC to Defendant No.1 vide its letter dated 17th January 2008, approving the design of BQS, which would b e erected in place of existing BSPs. However, an NOC for every separate location may be required under the requisition to be issued. On receipt of an NOC in respect of a location, Defendant No.1 would call upon the Plaintiff to commence the work of erection. Defendant No.1 has communicated a receipt of a total of 175 location NOCs to the Plaintiff till date. Hereto annexed and marked Exhibit ‘H2’ is the letter granting Central NOC dated 17th January 2008, Exhibit ‘H3’ is a specimen copy of separate location 9 NOC issued by Defendant No.2 to Defendant No.1 and Exhibit ‘H4’ is a specimen copy of communication of receipt of location NOC from Defendant No.1 to the Plaintiff.” 15. It is in these circumstances, that the Plaintiff states that it faced various problems which created innumerable hurdles in the completion of the construction of remaining BQS and Designer Bus Stop Poles. The 12 months’ period stipulated in the contract could not be abided by but there is absolutely no fault of the Plaintiff in that behalf. The reasons for the same are set out in the letters which are annexed as Annexures L-1 to L-11. 16. Reliance is also placed upon the direction of the First Defendant with regard to removal of certain BQSs and that correspondence is also referred in paragraph 10(c) with copies of relevant letters annexed to the plaint. 17. Despite all this, it is stated in the plaint that the Plaintiffs have made periodical payments and reliance in that behalf is placed on paragraph 11 of the plaint. Thus, it is alleged that the Plaintiff has paid the display charges for 1863 BQSs and Designer BSPs. 18. It is in this context that the plaint alleges illegal, unlawful, unreasonable and arbitrary acts of Defendant No.1 in issuing notice of termination. It is stated that non- 10 performance alleged in the notice has no basis because the contract was threatened to be terminated although there were no breaches on the part of the Plaintiff. The reasons for the delay are directly attributable to the First Defendant as they were to grant necessary approvals. Further, as far as their action of directing the Plaintiff to move the Bombay Municipal Corporation for necessary approvals resulted in the Plaintiff having to abide by the further directions of that authority and considerable time took place in obtaining the same. For all these reasons, the letter threatening termination and the notice are all bad in law. This is a clear case wherein the First Defendant, as a statutory body, invited the Plaintiff to participate in the process wherein on behalf of the First Defendant, the BQSs and BSPs were constructed and maintained. The display of advertisement was the only mode by which the costs could have been recovered. Having delayed the project and works, the Plaintiff cannot be blamed and the First Defendant have, therefore, acted unlawfully and contrary to the terms of the contract between parties. For all these reasons, it is claimed that the declaration be granted so also the interim reliefs. 19. Mr. Tulzapurkar, learned Senior Counsel appearing on behalf of the Plaintiff has taken me through the plaint averments and relevant Annexures including the terms and conditions of the contract and reiterated that it is not open to the First Defendant to allege breach of the terms and conditions of the contract by the Plaintiff. In fact, when they 11 address a letter dated 21st October 2008 and there was a reply given by the Plaintiff to the same, by a further letter dated 29th December 2008, Defendant No.1 communicated that the anomalies were brought to the Plaintiff’s notice which were to be corrected and modified. However, despite such notice which was issued in the month of October 2008, the First Defendant had informed the Plaintiff that the contract can be performed by the Plaintiff. In such circumstances, the stand taken in the notice/letter dated 21st October 2008 is waived. If the letter of 21st October 2008 is not capable of being implemented on account of the Defendant No. 1’s response dated 18th December 2008 approving the drawing of the Designer Bus Stop Poles, then, according to Mr. Tulzapurkar, the termination notice cannot be said to be valid and binding. The Plaintiff has pointed out that it is the Defendants who have delayed approvals and permissions. It is they who are responsible for the Plaintiff not being able to complete the works within the stipulated period. If this is the position, then, clause 24 could not have been invoked. Mr. Tulzapurkar has laid great emphasis on the clauses of the contract and more particularly, the requirements therein of approval and permission. He submits that the Plaintiff was not allowed to erect BQSs and Designer type of Bus Stop Poles so as to display advertisements unless and until permission from the M.C.G.M. and other statutory authorities are obtained. That was the obligation of Defendant No.1. Mr. Tulzapurkar submits that while relevant applications were duly forwarded, the same were not processed and the permission 12 and approvals were not granted by the statutory authorities. The Contractor cannot therefore be blamed in such circumstances. Mr. Tulzapurkar submits that at the ad-interim stage, this Court was satisfied that the Plaintiff had completed substantial part of the contract and therefore, allowed the Plaintiff to have the advertisements displayed. The ad-interim order sufficiently protects the parties. He submits that no useful purpose would be served by now upholding the actions of the First Defendant. More so, when a strong prima-facie case is made out, balance of convenience is in favour of the Plaintiff and there is no question of any irreparable harm and injury to the First Defendant. Instead the Plaintiff having invested huge sums and making periodical payments, they should be allowed to complete the contractual obligations. Mr. Tulzapurkar submits that this contract is specifically enforceable inasmuch as the damages/compensation can not be said to be adequate relief. These are matters where advertisements were to be displayed on the BQSs and Designer Bus Stop Poles. The advertising revenue is based upon the advertising agency approaching the Plaintiff and placing their offers. The advertising agencies in turn are depending upon their own clients. Therefore, it is not possible to ascertain the damages under the contracts with these advertising agencies. The period under the same is between minimum of 4 to 5 years upto 15 years. There is no formula or basis upon which the actual damages could be computed and therefore, this is not a contract which cannot be held to be not specifically enforceable. For all these reasons, the 13 interim reliefs be granted. 20. On the other hand, Mr. Khambata, learned Additional Solicitor General appearing on behalf of the First Defendant submitted that the Plaintiffs have conveniently omitted to point out the breaches on their part. It is the Plaintiff’s own doing and acts for the BQSs and Designer Bus Stop Poles not being constructed and functional fully. There is no question as both sides have understood the terms and conditions of the contract in a commercial and business sense. They were fully aware that the Designer Bus Stop Poles and the Bus Queue Shelters were to be erected and constructed by the Plaintiff within the time stipulated in the contract. The Plaintiff has conveniently omitted to point out this aspect of the matter in the plaint. The plaint proceeds on the basis that the First Defendant was obliged under the contract to obtain approvals and permissions and No Objection Certificate from even B.M.C. However, it was the obligation of the Plaintiff to do so. The Plaintiff has approached the M.C.G.M. but the M.C.G.M. could not grant necessary approvals/N.O.C. as the Plaintiff failed to pay the excavation charges. There was a dispute with regard to the excavation charges and a representation was made by the Plaintiff to the M.C.G.M. which representation has been rejected. This is all to the knowledge of the Plaintiff and it has suppressed this vital aspect from this Court and obtained ad-interim order. Mr. Khambata has taken me through the contract terms and conditions so also the correspondence. He submits that there 14 is nothing on record to demonstrate that the termination of the contract has been waived by Defendant No.1. The contract is terminable admittedly. The contract envisages that before termination is effected, notice would have to be issued and the period of same is also provided in the contract. All letters commencing from October 2008 to December 2008 culminating in the termination may be seen in the back-drop of the contractual terms. There is no question of any waiver of the termination. The correspondence must be seen as a whole and not in bits and pieces. It is seen as a whole, then, merely because a letter was issued on 18th December 2008 with regard to specifications and designs of some of the BQS and Designer Bus Stop Poles does not mean that the contract work was not to commence much less completed in the 12 months period. It was not for the First Defendant to have approved every single design and specification as the broad terms and specifications were agreed between parties. In these circumstances, there is no substance in the contention that the termination of the contract is bad in law. It is ultimately a contract for carrying out some works, such contract does not create any right in any of the properties. It is the transport undertakings obligation to provide the essential services. For the same, the properties both movable and immovable, vest in the undertaking. It is only to enable the undertakings to fulfill the public duty and service that participation was invited from private parties. Such a contract by its very nature cannot be specifically enforced. The damages/compensation is an adequate relief. More so, when 15 it is for the Plaintiff to prove their case. Presently, in the light of the clear clauses in the contract, no interim reliefs can be granted and even ad-interim orders should be vacated. 21. Mr. Khambata has placed reliance upon the decision of the Supreme Court reported in AIR 1968 S.C. 522 (The Naihati Jute Mills V/s. Khyaliram Jagannath). He has also relied upon the Judgment of the Madhya Pradesh High Court reported in AIR 1988 M.P. 46 (M/s. Sagar Art Service, New Delhi V/s. Municipal Corporation, Gwalior & Anr.). He has also handed over a copy of the letter dated 3rd January 2009 addressed to the Additional Municipal Commissioner (City) of the Municipal Corporation. Mr. Khambata emphasizes that it is as late in January 2009 that all the steps to obtain approvals and N.O.C. were commenced and there was no explanation for the inaction from July 2008 till this period. Therefore, neither prima-facie case is made out nor balance of convenience is in favour of the Plaintiff. Considering that the BQSs and Designer Bus Stop Poles are for public convenience and is a public utility, today, the undertaking cannot be prevented from acting upon its termination notice and complete the works either by itself or through other agencies. There is an element of public interest in the matter and the ad-interim order be vacated forthwith. 22. Having considered the rival contentions, the only point that arises for my determination is whether the Plaintiff makes out a prima-facie case, in whose favour the balance of 16 convenience lies and whether any irreparable harm or injury would be caused and to whom. 23. The undisputed facts are that the the First Defendant and the Plaintiff had executed a contract. The proposal for construction of BQSs and Designer Bus Stop Poles under first finder scheme came to be forwarded by the Plaintiff on 8th May 2007. The offer made in that behalf was placed before the First Defendant and on 7th June 2007 it made a counter offer as is evident from the plaint allegations. Thereafter, a further letter of 27th July 2007 came to be forwarded and the First Defendant intimated and informed the Plaintiff that the proposals/offer for 1791 Bus Stop Poles made vide letter dated 8th May 2007 at a total consideration of Rs.16,65,36,000/- is accepted on the terms and conditions stipulated in this letter. 24. The letter forwarded the terms and conditions of contract, the letter itself intimated that the Plaintiff must submit the detailed drawing of Designer Bus Stop for scrutiny and approval of the Undertaking immediately. The letter itself points out that the Plaintiff must obtain all approvals required for erection of modern type BQS and Designer Bus Stop Poles from the statutory authorities concerned within a period of one year from the date of acceptance letter. 25. Thereafter, the contract, copy of which is annexed as Annexure ‘D’ came to be executed. The contract itself recites that the Undertaking has agreed to award the contract for 17 erection of modern type BQSs and Designer type Bus Stop Poles in place of Bus Stop Poles existing and display of advertisements thereon. It is not as if the Bus Stops are not demarcated and earmarked. The Bus routes are already notified. The Bus Stops and stages are known and that is how the public utility service is being operated. It is only to modernize the Bus Queue Shelter and to have a proper Bus Stop Pole that the existing locations were notified in the contract. The contract may be for 15 years