THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.13936 of 2011 Date: 24.08.2011 Between: M/s. RAM Informatics Ltd., … Petitioner And The Executive Director and 2 others. … Respondents THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.13936 of 2011 O R D E R : By agreement dated 14.05.2007 entered into between the A.P.State Road Transport Corporation (for short ‘the Corporation’) and the writ petitioner, the petitioner-company was entrusted the implementation of the project for computerization of bus pass center called “Pass Automation and Accountal System” (PAAS) in Visakhapatnam City for a period of five years i.e. from 06.01.2007 to 31.05.2012. This writ petition is filed aggrieved by the action of the Corporation in terminating the said agreement with effect from 05.05.2011 duly forfeiting the security deposit and invoking the Bank guarantee apart from confiscating the hardware, furniture etc., available with the bus pass centers. The petitioner accordingly seeks a Mandamus declaring that the termination order dated 04.05.2011 issued by the 3rd respondent is arbitrary, illegal and against the principles of natural justice. The impugned order dated 04.05.2011 shows that the agreement in favour of the petitioner was terminated on the ground of short remittance of the bus pass earnings realized in the bus pass issuing centers on several occasions. It was stated in the impugned order that in spite of issuing notices to remit the bus pass earnings regularly as per the agreement, the petitioner had failed to remit the amounts and that the net shortage as on 04.05.2011 was Rs.19,41,722/-. The impugned action of the Corporation has been assailed in the writ petition primarily on the ground that the termination was ordered without prior notice and without considering the track record of the petitioner-company. The learned counsel for the petitioner while submitting that in spite of the fact that there was delay on the part of the Corporation in payment of the commission to which the petitioner-company was entitled to, the petitioner had been operating the project in accordance with the terms and conditions of the agreement and without causing inconvenience to the public and that the petitioner was also ready and willing to make good the short remittance of the bus pass earnings realized in the centers entrusted to the petitioner at the earliest, vehemently contended that the impugned termination was unwarranted and unjustified. In the counter affidavit on behalf of the Corporation it is stated that though the petitioner failed to remit the total amount realized in the months of June, July and August, 2010 in terms of clause 34 of the agreement, having considered the petitioner’s request the commission payable to him by the Corporation was adjusted towards the shortage and notice dated 11.08.2010 was issued calling upon the petitioner to show cause as to why the contract should not be terminated for violation of the terms and conditions of the agreement. The petitioner had again committed default in October, 2010 and as per his request the commission payable to the petitioner for the months of August, September and October, 2010 was adjusted towards the amounts due from the petitioner. Still there was balance of Rs.9,31,508/- and again in January, 2011 the petitioner made heavy short remittance which crossed the security deposit and Bank guarantee furnished by the petitioner. To ensure prompt realization, the Corporation had to depute 23 employees and thus incurred additional amount of Rs.14,11,925/-. In the circumstances, by notice dated 02.02.2011 the petitioner was called upon to remit Rs.38,74,454/- along with penal interest within 7 days failing which the contract would be terminated besides forfeiting the security deposit and the Bank guarantee. In response to the said notice, the petitioner gave a reply dated 05.03.2011 undertaking to pay Rs.8 to 10 lakhs before 20.03.2011 and the balance before 20.04.2011. However, the petitioner could not keep up his promise and paid only Rs.4,99,250/- on 17.03.2011. It is stated that the total shortage as on 03.05.2011 was Rs.35,14,389/- and that apart a sum of Rs.1,66,380/- was payable towards 36% penalty as provided under clause 36 of the agreement. Thus, a total sum of Rs.36,80,369/- was payable by the petitioner as on 03.05.2011. Out of the said amount, a sum of Rs.17,38,647/- payable to the petitioner towards commission from November, 2010 to April, 2011 was adjusted and thus, the net shortage was Rs.19,41,722/-. Hence, the impugned termination order was passed invoking clause 21 of the agreement. It is also stated that the work in question was entrusted to M/s. Bajarang Infotech Systems Private Limited on 28.04.2011 and the said company had been carrying out the work at present. I have heard the learned counsel for the petitioner as well as the learned standing counsel appearing for the Corporation. Clause 34.0 and clause 36.0 of the agreement dated 14.05.2007 which provided for remittance of the amounts realized in the bus pass centers entrusted to the petitioner read as under: Clause 34.0: The Daily amount realized at all centers towards issue of bus passes (sale of application forms, issue of identity card/Fresh pass/Renewals) should be remitted into APSRTC designated Bank Accounts as per the Day Revenue Report, on the next day before 13.00 hrs. and to hand over the BANK receipt to Deputy Chief Accounts Officer/Accounts Officer, Visakhapatnam Region, APSRTC, keeping a Xerox copy with M/s RAM Informatics Limited and a Xerox copy to be handed over to incharge, Bus Pass Section, Visakhapatnam. Clause 36.0: Any failure to remit the cash realized to APSRTC designated Bank accounts immediately on the next day before 13.00 hrs. results in recovery of the amount with 36% penalty besides forfeiture of Security Deposit and invoking the Bank Guarantee in case of repetition. The connectivity to the bus pass centers from the Central File Server shall be stopped immediately and necessary penal provisions shall be invoked viz., collecting penal interest @ 36% P.A. A reading of the above clauses make it clear that the petitioner is liable to remit the amounts realized at all centers to the Corporation’s designated Bank accounts on the next day before 13.00 hours. In the event of failure, the Corporation is entitled to recover the amounts with 36% penalty besides forfeiting security deposit and invoking the Bank guarantee in case of repetition. The specific case of the Corporation that the petitioner had failed to remit the amounts realized on several occasions could not be disputed by the petitioner. In fact, in its reply dated 05.03.2011 the petitioner admitted the outstanding amount towards short remittance of earning realized through the sale of bus passes and assured that the amounts due would be paid before 20.04.2011. In the said letter the petitioner had also requested the Corporation to waive the penalty. However, the petitioner could not make the payments as promised and as on 04.05.2011 there was net shortage of Rs.19,41,722/-. Thus, it is clear that the petitioner failed to adhere to its contractual obligations. As per Clause 21.0 of the agreement if the petitioner does not fulfill the terms and conditions of the agreement the Corporation shall have the right to cancel the contract by giving one month’s notice duly forfeiting the security deposit and invoking the Bank guarantee. Thus, the impugned order of termination dated 04.05.2011 came to be passed invoking clause 21.0 of the agreement. However, learned counsel for the petitioner vehemently contended that since the impugned termination was not preceded by one month’s notice as provided under clause 21.0, on that ground itself the impugned order is liable to be set aside. It is true that Clause 21.0 provides for one month’s notice. However, the record placed before this Court shows that such a notice was issued by the Corporation on 02.02.2011 calling upon the petitioner to remit the amounts due. It was also made clear in the said notice that in default the contract would be terminated besides forfeiting the security deposit and Bank guarantee. The said notice was admittedly received by the petitioner and in its reply the petitioner had not only admitted the amounts due but also assured payment of the same before 20.04.2011. It is not disputed before this Court that the amounts as promised could not be remitted by the petitioner. In the circumstances, the Corporation was justified in terminating the contract as proposed in the notice dated 02.02.2011. Hence, the contention that the impugned termination order was not preceded by notice is untenable. It is also relevant to note that the matter does not involve enforcement of any statutory right. Admittedly, it is a case of a concluded non-statutory contract voluntarily entered into between the parties and as such all the rights and liabilities of the parties are regulated by the terms and conditions of the agreement itself. As noticed above, the petitioner had admittedly committed breach of terms and conditions agreed upon. Absolutely no case could be made out to show that the impugned termination was discriminatory, unreasonable or arbitrary. Therefore, the interference by this Court in exercise of jurisdiction under Article 226 of the Constitution of India is not warranted on any ground whatsoever. Accordingly, the writ petition is dismissed. No costs. ______________ G. ROHINI, J Date: 24.08.2011 KLP