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M/S Libra Bus Service P. Ltd. v/s D.T.C.


Company & Directors' Information:- B S AND SERVICE PRIVATE LIMITED [Active] CIN = U92419MH1946PTC004912

Company & Directors' Information:- LIBRA BUS SERVICE PVT LTD [Active] CIN = U60210PB1973PTC003336

Company & Directors' Information:- LIBRA INDIA PRIVATE LIMITED [Under Process of Striking Off] CIN = U51909DL1996PTC082555

Company & Directors' Information:- SERVICE CORPORATION LIMITED [Dissolved] CIN = U93090KL1946PLC001075

    W.P.(C) 3951 of 2006, W.P.(C) 3952 of 2006

    Decided On, 24 April 2006

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE VIKRAMAJIT SEN

    For the Petitioner: R.K. Kapoor with Mukesh, Verma and Gobind Kaushik, Advocates.For the Respondents: Ajay Kapoor with G. Panmei , Adv. for DTC.



Judgment Text

Vikramajit Sen, J. (Oral)


1. The dispute that has arisen in this case is the cancellation of the Petitioners' contract for plying of buses on two inter-State Routes. It is the contention of learned counsel for the Petitioners that a Contract for a fixed period of five years, from 20.1.2005 till 19.1.2010, had been entered into between the parties. Learned counsel contends that the Contract could be terminated only if the Respondent Corporation (DTC) was not satisfied with the performance of the Petitioner, or if Petitioner had violated the Terms and Conditions of the Agreement. The Agreement also contains an Arbitration Clause, which has not been taken recourse to.


2. Learned counsel for the Petitioners further submits that the Petitioners are willing to pay to the DTC a Flat Rate of Rs.25,000/- per month per bus in advance, and all expenses will be borne by the Petitioners.


3. Learned counsel for the Respondent submits that the Contract was not for a fixed term of five years and was inherently terminable by either party by giving sixty days written notice. Apart from the existence of the alternative remedy by way of Arbitration, the Writ Petition would not be maintainable assuming that a breach had taken place on behalf of the Respondents. In this context, learned counsel for the Respondent has relied on Indian Oil Corporation Limited vs. Amritsar Gas Service, (1991) 1 SCC 533, Bareilly Development Authority vs. Ajay Pal Singh, AIR 1989 SC 1076, Kerala State Electricity Board vs. Kurien E. Kalathil, (2000) 6 SCC 293, National Textile Corporation Limited vs. Haribox Swalram, (2004) 9 SCC 786 and State of Jammu and Kashmir vs. Ghulam Mohd. Dar, (2004) 12 SCC 327. All these Judgments recommend that the extraordinary jurisdiction of the High Court ought not to be exercised in contractual matters.


4. Learned counsel for the Petitioner relies on Harbans Lal Sahni vs. Indian Oil Corporation Limited, (2003) 2 SCC 107, Paragraph 7 of which reads thus:


7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies :


(i) where the writ petition seeks enforcement of any of the fundamental rights;


(ii) where there is failure of principles of natural justice; or


(iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. v. Registrar of Trade Marks). The present case attracts applicability of the first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings.


5. Harbans Lal's case does not come to the rescue of the Petitioners, since it does not lay down the proposition that even in contractual matters writ proceedings would invariably be maintainable. It is an authority for the proposition that even in the presence of an Arbitration Clause writ jurisdiction is not automatically ousted.


6. Reliance has also been placed by learned counsel for the Petitioner on Kumari Shrilekha Vidyarthi v. State of U.P., AIR 1991 SC 537, and in particular to the following paragraph :


48. In our view, bringing the State activity in contractual matters also within the purview of judicial review is inevitable and is a logical corollary to the stage already reached in the decisions of this Court so far. Having fortunately reached this point, we should not now turn back or take a turn in a different direction or merely stop there. In our opinion, two recent decisions in M/s. Dwarkadas Marfatia and Sons (AIR 1989 SC 1642) (supra) and Mahabir Auto Stores (ARI 1990 SC 1031) (supra) also lead in the same direction without saying so in clear terms. This appears to be also the trend of the recent English decisions. It is in consonance with our commitment to openness which implies scrutiny of every State action to provide an effective check against arbitrariness and abuse of power. We would much rather be wrong in saying so rather than be wrong in not saying so. Non-arbitrariness, being a necessary concomitant of the rule of law, it is imperative that all actions of every public functionary, in whatever sphere, must be guided by reason and not humour, whim, caprice or personal predilections of the persons entrusted with the task on behalf of the State and exercise of all power must be for public good instead of being an abuse of the power.


7. The contention of learned counsel for the Respondent is that the Routes are not proving to be financially beneficial. In fact, losses have been sustained. In these circumstances it would not be possible to say that the decision to put an end to the Contract was arbitrary. The Writ Court should always abjure writing out a new contract for the parties. It is in this regard that learned counsel for the Petitioners had submitted that the Petitioners would be willing to pay Rs.25,000/- per month per bus inclusive of all expenses/salaries. Learned counsel for the Petitioners stresses on the point that if the agreement had not been for a period of five years, the Petitioners would not have made such a heavy investment, that is, Rs.60 lac per Volvo Bus, especially designed for the Respondent's custom only. Even this matter, which is arbitrable, would be relevant so far as adjudication of damages is concerned.


8. A Contract, which is

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specifically enforceable, can lead to a number of consequences, one of which would be awarding of damages, if that rather than specific enforcement of the contract is found to be appropriate in the view of the Court or the Arbitrator. The fact that the Petitioners have agreed to pay Rs.25,000/- per month per bus inclusive of all expenses/disbursements/salaries may be relevant either for the contention that the Contract was unfairly and incorrectly terminated or for the quantum of damages. It would, however, not be a valid consideration for the exercise of extraordinary powers under Article 226 of the Constitution of India. 9. Dismissed. 10. Dasti.
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