IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.9856 of 2011 M/S S.B.Air Cargo, 45-2-17/2 Abid Nagar, Vishakhapatnam-16 (Andhra Pradesh) through its Attorney Shri S. R. Basha, son of Sri S. H. Basha, resident of 45-2- 17/2 Abid Nagar, Vishakhapatnam-16, Andhra Pradesh. ……Petitioner. Versus 1. The Union of India through Divisional Railway Manager, Dhanbad. 2. The Chief Commercial Manager/Divisional Railway Manager, Dhanbad of East Central Railways. 3. The Divisional Railway Manager (Commercial) East Central Railway, Dhanbad. 4. The Senior Divisional Commercial Manager, Dhanbad Division, East Central Railway, Dhanbad. …..Respondents. With CWJC No.10173 of 2011 M/S L.Ethirajulu 11/20, Nanniyan Street, Wall Tax Road, Chennai -600003 through its Attorney Shri N. Prasad Rao, son of Shri Sivunnaidu, resident of 58-30-55/1, Sakethapuram, Nad Post, Vishakhapatnam-09-Andhra Pradesh. …….Petitioner. Versus 1. The Union of India 2. The Chief Commercial Manager/Divisional Railway, Manager, Dhanbad of East Central Railways. 3. The Divisional Railway Manager (Commercial) East Central Railway, Dhanbad. 4. The Senior Divisional Commercial Manager, Dbented Division, East Central Railway, Dhanbad. ……Respondents. ----------- For the petitioner : Mr. Naresh Kumar Malhotra, Senior Advocate with (in both the cases) M/s Pramod Kumar, Binod Kumar Sinha & Mariya Fatima, Advocates. For the respondents : Mr. D.K.Sinha, Senior Advocate with (in both the cases) Mr. Rajeshwar Prasad, Advocate. --------- P R E S E N T Hon’ble Mr. Justice S. N. Hussain O R D E R 15/ 24-11-2011 Both the aforesaid cases had been heard together and are being decided by this common order as the principles involved in both the cases are the same and only some facts are different. The points raised by the respective parties are also on the same lines in both the cases which are detailed in the following paragraphs. - 2 - 2. CWJC No.9856 of 2011 was filed by M/s. S. B. Air Cargo Vishakhapatnam, Andhra Pradesh challenging tender notice No.C-740/Leasing of SLR/DHN/11 dated 01.06.2011 issued by the Divisional Railway Manager (Commercial), East Central Railway, Dhanbad (respondent no.3) inviting sealed tenders for leasing out 04 tonne parcel space in two compartments of front SLR of Train No.13351 (Old Train No.3351) as contained in serial no. 9(b) of the tender notice at reserve price of Rs.14270.00 for single trip for a period of three years and for further direction to the authorities to extend the lease of the petitioner in terms of lease agreement dated 23.09.2008 (Annexure-1) for further two years. 3. The claim of the petitioner-firm is that it is a transporter and had entered into a lease agreement for the aforesaid parcel space in brake vans in the above train from Dhanbad to Alleppy Express at the rate of Rs.11500 plus 2% development charge for each single trip in the compartment of FSLR and for the said purpose, lease agreement was executed at Dhanbad on 23.09.2008 (Anneuxre-1) between the Chief Commercial Manager/Divisional Railway Manager, East Central Railway, Dhanbad and the petitioner and the validity of period of lease was for three years from that date ending on 22.09.2011. 4. Learned counsel for the petitioner also stated that on 08.02.2011 and 26.05.2011 (Annexure-2) i.e. much before the expiry of the period of lease the petitioner sent letters to the Senior Divisional Commercial Manager, East Central Railway, Dhanbad for extension of the period of lease for further two years in view of specific terms & conditions of the agreement. It was also submitted by learned counsel for the petitioner that no heed was paid to the said letters of the petitioner by the Railway Administration and they issued tender notice bearing C-740/Leasing of SLR/DHL/11 dated 01.06.2011 (Annexure-3) inviting sealed tender by 29.06.2011 for leasing out 04 tonne parcel space in Train no. 13351 Dhanbad-Alleppy Express in its two compartments FSLR vide - 3 - serial no.9(b) of the tender notice, although even the period of petitioner‟s lease had not expired. 5. It was stated by learned counsel for the petitioners that the respondents had tried to create confusion taking help of similarity in the name of petitioner and the name of the other concern Sri Balaji Train Cargo Service, although both are different and separate concerns having no connection with each other as the petitioner is of Dhanbad, whereas the other concern is of Jamshedpur, but the petitioner was not given any chance to explain the matter, nor his request for extension was decided as had he been aware that his claim was rejected he would have approached the concerned authorities, but he was deprived from taking any step by the aforesaid attitude of the respondents. 6. It was also averred by learned counsel for the petitioner that the petitioner had been paying full freight for loading and unloading days which had to be adjusted and no loss was being accrued to the Railways, but the respondents-authorities without considering or deciding petitioner‟s petition for extension issued impugned notice inviting tender during the pendency of the earlier lease and hence the petitioner never participated in the subsequent tender dated 01.06.2011 which was however stayed by this Court vide order dated 20.07.2011. 7. On the other hand, learned counsel for the respondents stated that clause 20.1 of the agreement in question dated 23.09.2008 clearly showed that two years extension to be granted was not mandatory rather it was subject to satisfactory performance, but in the instant case the performance of the petitioner was not satisfactory as penalty was imposed by the authorities which was paid by the petitioner for the discrepancies and irregularities committed by him. He thus stated that since the period of lease was going to expire on 19.09.2011 tenders were invited, not for the period before the expiry of the petitioner‟s lease but for the period after expiry of the said lease and hence there was no illegality therein. - 4 - It was further submitted by learned counsel for the respondents that extension vide clause 20.1. was not a right, especially when there were incidences of overloading and intention to defraud Railways. It was also claimed that it was a mere privilege provided only when the working of the lease was found satisfactory which was not available to the petitioner in the instant case. 8. Learned counsel for the respondents also argued that market demand also required more open invitation of offers rather than restricting others from participating and creating monopolistic atmosphere as in the aforesaid open tender even the petitioner can participate. It was also claimed by learned counsel for the respondents that the petitioner on one hand was ready to extend the agreement paying 25% more i.e. Rs.14,276.00 whereas on the other hand he had offered Rs.27,468.00 in his tender offer which clearly showed that he was taking shelter of clause 20.1. of the agreement for monopolizing the subject matter and restricting others. Learned counsel for the respondents also explained that the petitioner‟s application for extension of contract was not considered on the ground that any such extension given to the petitioner would mean not only loss to the government revenue, but also undue favour to the petitioner and denying opportunities to others for fetching more government revenue. 9. Learned counsel for the respondents also claimed that earlier while declaring weakly non-loading/monthly rest at originating station i.e. Dhanbad, the petitioner had availed SLR and loaded in intermediate Stations which was detected on eight different dates due to which fine was levied and was collected by lease contractor, hence it was a clear cut case of defrauding Railways due to which the petitioner had rendered himself unfit for extension. 10. CWJC No.10173 of 2011 has been filed by M/s L. Ethirajulu of Chennai challenging the same notice inviting tender dated 01.06.2011 with respect to serial no.9(b) thereof and only the date of agreement of the petitioner - 5 - with authorities was different, i.e. 17.07.2008 for the period 25.07.2008 to 24.07.2011 (three years). 11. It was claimed by learned counsel for the petitioner of 2nd writ that he sent letter dated 20.01.2011 to the respondents for extension of his agreement for two years as per clause 20.1 of the aforesaid deed of lease, but without considering the same and without passing any order with respect thereto, the authorities issued a fresh notice inviting tender much before the expiry of the lease with the petitioner. 12. The denial of the respondents to the claim of this petitioner is on the lines similar to the lines taken by them in the first writ petition and the difference is only that in this case the allegation is only regarding loading on non- loading days. 13. From the aforesaid facts and circumstances and the pleadings of learned counsel for the parties in both the aforesaid cases as well as the materials on records, it transpires that there is no dispute with respect to agreements involved in both the cases which are verbatim same and clause 20.1 thereof reads as follows:- “Extension of lease is permissible only in case of long term lease of 3 years when the same can be extended only once, by 2 more years at a lease rate of 25% more than the lumpsum leased freight rate subject to satisfactory performance by the lease holder, without any penalty for overloading or violation of any provision of the contract.” 14. It is also not in dispute that the petitioners sent letters for extension of their respective leases as per the aforesaid clause 20.1 of the lease deed much before the expiry of the period of lease, but no reply to the said letters were given by the respondents and only after receiving the said representations fresh notice inviting tenders dated 01.06.2011 were issued much before the expiry of the period of petitioners‟ leases which is under challenge in both the cases. - 6 - 15. Although, learned counsel for the respondents had claimed that the contracts of the petitioners were terminated, but there is no material to support the said bald statement of the respondents. They had produced a letter dated 24.06.2011 as annexure „B‟ in the first writ petition, but a bare perusal of it showed that it was not a termination letter, rather it was a mere notice to the petitioner to explain certain facts and furthermore there is no material also to show that the said or similar letters were ever served upon the petitioner of either of the writ petitions. Moreover, the said letter was issued on 24.06.2011 not only after the issuance of notice inviting tender on 01.06.2011, but also after serving copies of the writ petitions upon learned counsel for the respondents on 20.06.2011. Thus, it is quite apparent that neither the representations of the petitioners for extension of period of lease by two years as per clause 20.1. of the agreement between the parties were ever considered or decided nor their lease deeds were ever terminated by the respondents authorities. 16. Learned counsel for the petitioners had produced copies of three orders of Andhra Pradesh High Court obtained from the internet. Those decisions are all dated 23.02.2010 passed in W.P. No.141 of 2010 (M/S NITCO Roadways Pvt. Ltd. Vs. Chief Commercial Manager & Anr.); W.P.No.1403 of 2010 (Bhoomaneni Ganesh vs. Chief Commercial Manager & Anr.); and W.P No.375 of 2010 (M/S Andhra Cargo Service Vs. Chief Commercial Manager & Anr.). In the said decisions it had been held that when an application/representation of lease is filed by the petitioner much before the expiry of the lease, the respondents were under obligation to consider and decide the same as valuable right had been accrued to the petitioner on the strength of extension clause and it can be denied only by an order if the circumstances warrant and there was no justification for the respondents in issuing fresh tender notice in respect to the same subject matter unless representation made by the petitioner is disposed of. Accordingly, the said writ petitions were allowed and the notice inviting tender in so far as it related to - 7 - the subject matter concerned was set aside and the respondents were directed to consider the representation submitted by the petitioner for extension of lease in terms of the extension clause of the lease agreement and pass appropriate order within a period of four weeks and till such time the contract with the petitioner shall be continued by enhancing the freight charges by 25%. 17. Learned counsel for the petitioners also relied upon a decision dated 09.07.2010 passed by a Bench of this Court allowing CWJC No.9396 of 2010 (M/S SRI SAI LOGISTICS Vs. Union of India and others) after coming to the following findings and conclusions: 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 lump sum freight rate which would be automatic, subject only to satisfactory performance by the lease holder, 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 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 - 8 - 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 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 petitioner for a further period of two years from 2.3.2010 in terms of the Circular No.12/2006 dated 27.3.2006.” 18. So far the allegations made against the petitioners are concerned, it cannot be disputed that the petitioners had never been intimated regarding their performance to be unsatisfactory in reply to their letter for extension of lease period. Furthermore, in the first writ petition bearing CWJC No.9856 of 2011 the allegation of overloading is against Sri Balaji Train Cargo Services, Jamshedpur which is apparent from Annexure-D to the counter affidavit of the respondents, whereas petitioner had no concern with the said firm as it is M/s S.B. Air Cargo, Dhanbad and apart from that Annexure-E to the said counter affidavit also showed that the petitioner, in fact, loaded less weighted parcels to the extent of 3,536.9 Kgs. though he was entitled to load up to 4 tonnes as per the agreement. - 9 - Annexure-B to the said counter affidavit showed that it was the same overloading as had been alleged in Annexure-D, whereas Annexure-C showed that the said amount was paid by the other concern of Jamshedpur using only the abbreviation of its name which caused confusion. Hence, violation of overloading of M/s Balaji Train Cargo Services, Jamshedpur had been wrongly fastened/imposed on the petitioner due to similarity in the names. 19. So far the petitioner of other writ petition bearing CWJC No.10173 of 2011 is concerned, the allegation against him is only for loading on non- loading days which cannot be in any manner whatsoever termed as overloading. Furthermore, the assessment that loading and non-loading days was violation of the term of lease is also not sustainable because no words regarding non-loading has been mentioned in the agreement and Freight Marketing Circular No.12 of 2006 dated 27.03.2006 (Annexure-R/2 to the petitioner‟s reply to C.A.) clearly provided in Clause “Z” thereof that loading and non-loading were permissible on payment of full charges per day of assessing 25% of the said charge which is to be deposited by the lease holder for availing non-loading day. Hence the said objection of the respondents is also not sustainable. 20. From the aforesaid facts and circumstances, it is quite apparent that the respondents have failed to show that the petitioners of either writ cases had overloaded or violated any provision of the contract or had paid any penalty or had ever done anything which could be legally presumed to be non-satisfactory performance. 21. In view of the principles of law settled in the decisions detailed in the foregoing paragraphs as well as the aforesaid factual aspects of the matter, including the filing of the petitions for extension of the period of lease by two years by the petitioners of both the writ petitions much before the expiry of the period of lease which was legal and proper in all aspect, it becomes quite apparent that the respondents-authorities committed serious illegality and - 10 - irregularity by not deciding the said request of the petitioner of both the cases and issuing a fresh notice inviting tender which clearly meant taking away the valuable right of the petitioner of both the cases which was provided under clause 20 of the agreement. Not only this they had harassed the petitioner of both the cases which forced them to approach this Court and kept them on tenter- hooks till this day on frivolous grounds as discussed above due to which they lost several valuable months with respect to freight of their goods. 22. Accordingly, both these writ petitions are allowed and the Tender Notice No.C-740/Leasing of SLR/DHN/11 dated 01.06.2011 with respect to the item at serial no.9(b) thereof is hereby quashed and the respondents-authorities of the East Central Railway are directed to issue the required orders within fifteen days from today extending the period of leases of the petitioners of both the cases for a further period of two years from the date the said orders of extension are issued by the authorities. (S. N. Hussain, J. ) Sunil/