Veena Verma v. Mcd & Anr

JUDGMENT 13-10-2009 For orders see, FAO(OS) No. 387/2009. October 13, 2009 sk / "• (MUKUL MUDGAL) JUDGE (REVA KHETRAPAL) JUDGE Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. 1, ''i-S. r ¥' . * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) NO. 387/2009 and CM No. 12513/2009 Reserved on : September 16, 2009 Date of decision : October 13, 2009 Dr. Mukherjee Nagar Resident Welfare Club Appellant Through : .Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. versus Municipal Corporation of Delhi and Another Respondents Through : Mr. H.S. Phoolka, Sr. Advocate, with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND ||:>i FAO(OS)NO. 399/2009and CM No. 12829/2009 i "V • v:> f. '•> K.L. Arora Appellant Through : Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, ; with Mr. Arvind K. Gupta, Mr. Rakesh " Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. versus FAQ (OS) No. 387/2009 and connected matters Pase 1 of15 t' : MunicipalCorporationofDelhiand Another Respondents Through ; Mr. H.S. Phoolka,Sr. Advocate,with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS)NO. 386/2009and CM No. 12510/2009 Bharat Mahana Through Appellant Mr.V.P.Singh,Sr. Advocateand Mr. RajuRamachandran,Sr.Advocate, with Mr. ArvindK. Gupta,Mr. Rakesh Garg,Mr. MohitGarg,Mr. M.I. Choudhary, Advocates. versus MunicipalCorporationofDelhiand Another Respondents Through : Mr. H.S. Phoolka,Sr. Advocate,with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS)NO. 388/2009and CM No. 12516/2009 Kamal Kishore versus Appellant Through : Mr.V.P.Singh,Sr. Advocateand Mr. RajuRamachandran,Sr.Advocate, withMr. ArvindK. Gupta,Mr. Rakesh Garg,Mr. MohitGarg,Mr. M.I. Choudhary, Advocates. Mr. Manjit Singh Ahluwaliafor MangalamJan Kalyan Samiti. FAO(OS) No. 387/2009 and connected matters Pase 2 of15 i;. £.'• • r.v Municipal Corporation of Delhi and Another Respondents Through : Mr. H.S. Phoolka, Sr. Advocate, with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS) NO. 389/2009 and CM No. 12519/2009 Kamal Kishore versus Appellant Through : Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr, Rakesh Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. Mr. Manjit Singh Ahluwalia for Mangalam Jan Kalyan Samiti. Municipal Corporation of Delhi and Another Respondents Through : Mr. H.S. Phoolka, Sr. Advocate, with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS) NO. 390/2009 and CM No. 12527/2009 Veena Verma versus Appellant Through : Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. FAO(OS) No. 387/2009 and connected matters Pase3 of15 MunicipalCorporationof DelhiandAnother Respondents Through : Mr. H.S. Phoolka, Sr. Advocate, with Ms. Mini Pushkama,Advocate, for the respondent-MCD. AND FAO(OS) NO. 394/2009 and CM No. 12731-12732/2009 RavinderKumarDua Appellant Through : Mr.V.P. Singh, Sr. Advocate and Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.I. Choudhary, Advocates. versus MunicipalCorporationofDelhiand Another Respondents Through : Mr. H.S. Phoolka, Sr. Advocate,with Ms. Mini Pushkama,Advocate, for the respondent-MCD. CORAM: HON'BLE MR. JUSTICE MUKUL MUDGAL HON'BLE MS. JUSTICE REVA KHETRAPAL ' . • .

¶1Whetherthe Reportersoflocalpapers / may be allowedto see thejudgment?

¶2To be referredto the Reporteror not? v/ ^

¶3Whetherthejudgmentshouldbe ^ K; reportedin the Digest? % JUDGMENT 13-10-2009 MUKUL MUDGAL.J.

¶1By this judgmentwe proposeto disposeof a batch of connectedfirst appealsagainstcommonorderdated25^''August,2009passedby the learned FAO(OS)No. 387/2009andconnectedmatters Page4 of15 SingleJudge ofthis court disposingofthe petitionsunder Section9ofthe Arbitrationand ConciliationAct, 1996 (for short 'the Act') filed by the appellants herein.

¶2The petitioners had entered into licences with the MCD, the respondentherein,to use communityhalls,belongingto the respondentfor a periodof five years each, subjectto terms and conditionscontainedin their licence deeds. These licenseswhich were executedin August-September, 2004 have since then, either expired or are going to expire shortly. The petitionershad, on the basis ofthe renewal clause containedin the Licence Deed requestedthe respondentto renew the licencefor a furtherperiodof five years which requestwas turned down. Aggrievedby the said decision ofthe respondents,the petitionersapproachedthe learnedSingleJudge with i a petition under Section 9 of the Act.

¶3The relevantnecessaryclausesarisingfor considerationin this appeal are as under: - "1. That in considerationof the payment of Rs.1,27,278/-as securitydepositreceivedvide ReceiptNo dated Inthe form of adjusted from EMD, being equivalent to six months licencefee quoted by the licenseefor due and properperformance of these presents and also willingness of the licensee to pay Rs.21,213/-only per mensem for . The licensorsgrants unto the licenseeand authorizesit to use the said CommunityHall as detailed here above subject to the conditions hereinafter appearingfor a periodoffive years commencingfrom the date of FAQ(OS) No. 387/2009andconnectedmatters Page5of15 p. tr'":. i thesepresentsrenewableforanothertermoffive years,ten yearsin all froin the date of entenng mto the licensee deed for the first time m the year 2003.

(a) In the default to pay the license fee of Rs.21 213/- per monthas agreedtogetherbeforethe lO"^ day ofthe monthto which It relates the licenseeshall pay interestwhich will form part of Licence@24% per annum on the arrearsofthe LicenceFee from lu ° in respectof which the defaultmpaymenttakesplacetill the priorto the effectivedate ofdeterminationoflicense. In case the licensefee remainsunpaid tor three months, the license will be cancelled. The interest@ 7 14% per month over and above the existing License fee, and interestdue before the effectivedate of determinationof License tee, and interestdue before the effectivedate ofdeterminationof Licenseshallbe payableby the Licenseetill the date ofpayment. The Commissioner,MCD may, however, on receipt of requestand clearanceofall the dues mentionedabove, restorethe licenseon the existinglicensefee or on such conditionas may be fixedbythe Commissionerathis absolutediscretion.

(b) Ifthe licensefee herebyreservedor any partthereofshallat any time be in arrearsor remainunpaidafterthe due date or if the licenseeat any time fails or neglectsto performor observeany of thetermsand conditionsand covenantshereincontainedand onhis part to be observed and performed and in any such case the Corporationmay, withoutprejudiceto its other rights, giving 30 days' notice, in writing,to the licenseedeterminethe license and re-enterupon the said premisesor in part thereof The Licensee shall upon such determinationpeacefully stop use of the said premises without any right to compensation whatsoever and thereupon this license shall be absolutely determined without prejudice to any antecedentsbreach of terms and conditions and covenantson the partoflicensee. The licenseshallstandipso facto terminatedwithoutany righttocompensation.

(c) Remissioninlicensefee on any extraneousconditionsshall not considered by the Licensor

¶35That the licensor shall have the right to terminate the licence after giving one month's notice without assigning any reasons thereof FAO(OS)No. 387/2009andconnectedmatters Paee6of15 (• , I

¶37That in case of any disputearisingbetweenthe licensorand the licenseein respectofthe interpretationor performanceofany terms or conditions of this licence, the same shall be referred to the sole arbitrationof the Commissioner,MCD whosedecisionthereon shall be final and binding on both the parties. The licenseeshall not objectto the Commissioner,MCD acting as sole arbitratoron the ground that he had dealt with the case or has at some stage expressed opinion in any matter connected therewith."

¶4The learned Single Judge held that the renewal clause of the licence deed was not solelydependenton the exerciseofmere optionofrenewalby the licence,but also requiredthe consentofthe licensor. The learnedSingle Judge also found that the clause35 ofthe LicenceDeed conferredupon the licensorthe rightto terminatethe licenceby givingone month'spriornotice withoutassigningany reason therefor.The learnedSingle Judge, therefore, primafacie, foundthattherewas no obligationuponthe respondentto renew the licence for another period of five years and therefore the interim injunctionsoughtfor couldnot begranted.

¶5The order of the learned Single Judge has been assailed by the appellantmainlyon two grounds:- a. That on accountofthe money spentby the appellantsin development of the said communitycentres and the renewal clause, they have a legitimateexpectationthat the licence shall be renewed for a further period of five years. FAO(OS)No. 387/2009andconnectedmattes Pase7of15 b. That the decisionnot to renew the licenceshas been taken withoutany basis and without giving them any opportunityof being heard.

¶6Elaborating the above grounds, Mr. V.P. Singh, the learned senior counsel for the appellant also strenuously urged that the license itself provided that it has been granted for a period of five years extendablefor a further period of five years. The extension was natural, unless there was violation of the terms and conditions of the license. No such violation had ever been brought to the notice of the appellant-licenseeby the respondents-licensorand, therefore, the action of the respondents in unilaterallycancellingthe licensewithouthearingthe appellantorproviding any opportunitywhatsoeverto the appellantto presenttheir case for renewal was in utter violationof the well establishedprinciplesof natural justice. The breaches,if any (now soughtto be urged),of the agreementwere never broughtto the noticeofthe appellantnor as a matterof fact the respondents were basing their case on any breach of the agreementby the appellant. Thoughtherewere no groundswiththe respondentsnot to renewthe license, neverthelessthe impugnedorderhad been passed. Bookingshad been made upto February, 2010, regardingwhich the documentshad been placed on record. Such bookings were On-line bookings made by the respondents FAO(OS)No. 387/2009 and connected matters Page 8 of15 themselvesas was evidentfrom the documentson record. The learnedsenior counsel also invited our attention to the minutes of the meeting of the MunicipalCorporationand in particularto ProposalNo.982,which read as under: "Copy ofsittingofMunicipalCorporation/SamitiBody for proposalno./issueno.982dated12.2.09. Proposal No.66: Followingproposal were made by Shri Anesh Kumar Jain and Parvesh Vahi and supported bv Sh. VijenderGupta. Proposal No.982: Because Corporationfor the marriageand other functions constructthe communitycentres and provide them to thepeople on rent. Becausesome of the communitycentreshave been handedover to the contractorsfor their upkeepingand running. Becausethe contractorsofsuch communitycentres are working as per their whims and wishes due to which people are requiredtopay higherrate. Because the period of lease of these community centresofgivingto the contractorsare expiringor likely to expire in near future. Therefore, in order to save the peoplefrom the exploitationof the contractors, their license may not be renewed. Therefore,this samitiofthe Corporationsolemnly resolvedthat those communitycentres which have been given on the license to the contractortheir license may FAO(OS)No. 387/2009andconnectedmatters Page9of15 •) not be renewedafterexpiryoftheperiod. Proposalispassedwithfullconsent. sd/- Superintendent ' OfficeofSecretary MunicipalCorporationofDelhi"

¶7Interpretingthe word 'renewable'in Clause1ofthe LicenseDeed,Mr. Raju Ramchandransubmittedthat the word 'renewable'must be interpreted mthe light of the precedingclause whereunderthe licenseehad given its wiilmgness"to make adequatearrangementsfor developing,managing and operatinga CommunityHall". He contendedthat the doctrine of legitimateexpectationwas attractedin the instant case as the investments made by the appellants were with the obvious legitimateexpectationof renewalof the LicenseDeed. Not only the respondentsfailed to renew the LicenseDeed, no individualcommunicationwas sent by the respondentsto the appellantrefusingto renew the licensenor was any cause made out for cancellationofthe license. Until and unless the right ofthe appellantwas adjudicatedupon by the AdjudicatoryForum under the arbitrationclause (Clause37 ofthe agreement),the appellantin the circumstancesdeservedto be protected,more so, as the CommunityHalls had been booked well in advancefor weddingsand other functions. FAO(OS)No. 387/2009andconnectedmatters Pase10of15 E-t-i' ;•

¶8During the course of the arguments,the learned Senior Counsel Sh. V.P. Singh,appe^ing on behalfof some of the appellants,submittedthatthe decision taJcen by the Standing Committeenot to renew any of the nine licencesinquestionwas takenwithoutany materialor complaintsagainstthe appellantsbeing placedbeforethe said Committeeand requestedthis Court to summon the record of the Standing Committee..

¶9The learned counsel for the respondent was consequently asked to place the relevant records pertaining to the decision of the Standing Committee before this Court. The learned counsel for the respondent took us through the records which showed several complaints against the appellants and show cause notices issued to the appellants consequent thereto. It was also pointed by the counsel for the respondent that the appellants had raised permanent structures even though they were specifically directed not to raise such structures, which was also a contractual term and they cannot have any legitimate claim to be considered for renewal on that basis.

¶10It was contended by the learned Senior Counsel for the respondent, Sh. Phoolka, that the respondent has taken the policy decision not to renew the contracts upon their expiry in the normal course of 5 years in view of the complaints against the appellants.

¶11Prima facie, we are satisfied that the decision not to renew the licence FAOfOS) No. 387/2009 and connected matters Pase 11 of15 ¥: - •: is based on the relevantmaterialplaced before the decidingauthority. We are also satisfied that the decision seems to have been taken keeping in view the numerous complaints made against the appellants. The doctrine of legitimate expectation is only an aspect of Article 14 of the Constitution which does not give rise to an enforceable right but only provides that the • action taken by the authority while dealing with the citizens is not arbitrary. The doctrine of legitimate expectation must yield, wherever required, to larger public interest in appropriate cases. Reference in this regard can be made to the judgment of the Hon'ble Supreme Court in the case of Sethi Auto Service Station and Another V5. Delhi Development Authority and Ors. (2009) 1 Supreme Court Cases 180 wherein it was held as under: - "32. An examination of the afore-noted few decisions shows that the golden thread running through all these decisions is that a case for applicability of the doctrine of legitimate expectation, now accepted in the subjective sense as part of our legal jurisprudence, arises when an administrative body by reason of a representation or by past practice or conduct aroused an expectation which it would be within its powers to fulfill unless some overriding public interest comes in the way. However, a person who bases his claim on the • f' doctrineof legitimateexpectation,in the first instance,has to satisfy - that he has relied on the said representation and the denial of that expectation has worked to his detriment. The Court could interfere only if the decision taken by the authority was found to be arbitrary, unreasonable or in gross abuse of power or in violation of principles of natural justice and not taken in public interest. But a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles.

¶33It is well settled that the concept of legitimate expectation has no role to play where the State action is as a public policy or in the public interest unless the action taken amounts to an abuse of FAOfOS) No. 387/2009 and connected matters Pase 12 of15 power. The court must not usurp the discretion of the pubHc authority which is empoweredto take the decisionsunder law and the court is expectedto apply an objectivestandard which leaves to the deciding authority the full range of choice which the legislature is presumedto have intended.Even in a case where the decisionis left entirely to the discretion of the deciding authority without any such legal boundsand if the decisionis takenfairlyand objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. Therefore, a legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. [Vide Hindustan Development Corporation (supra)]" In the light of the material placed before us it cannot at this stage be stated that the action not to renew the licences for another term of 5 years is so arbitrary or unreasonable so as to be covered by the position of law laid down in the above judgment. However, this is subject to the decision of the Arbitrator in case recourse to arbitration is taken.

¶12Even otherwise, raising of permanent structures which was otherwise not permissible under the licence cannot be said to give rise to any legitimate expectation. Prima facie, we are satisfied, therefore that not to renew the licence was a policy decision which cannot be termed as arbitrary and unreasonable. In matters affecting policy requiring technical expertise, Court would leave the matters for decision of those who are qualified to address the issue, unless such action is arbitrary, irrational and unconstitutional. In this regard, reference can also be made to Federation of Railway Officers FAO(OS) No. 387/2009 and connected matters Pase 13 of15 AssociationanriOrs. versus Vmonoflnain(TJnnair 2003SC1344.

¶13The Counselfor the Appellantstatedthat as per the arbitrationclause all appellantswouldpresenttheircasejointlybeforethe arbitratorandwould not take more than halfan hour to do so, which will be set out in aclaim petitionnot exceeding3pages with only3citations. We directthat in case recourseto arbitrationis taken by the appellantas per the arbitrationclause, the MCD would also follow the above time table to enable an expeditious award within 30 days of the submissionof the statementof claim. The counsel for the appellantsubmittedthat several advance bookings for the venueshad beenmade by the licencees. The respondents'counselstatedthat such bookings will be honoured.

¶14In this view of the matter, we are not inclinedto interferewith the learnedSingleJudge'sorderdecliningto grantthe interimreliefofinjunction prayed for by the appellants. However,in case the arbitrationis invokedas per the conditionsset out in para 10 above and the Arbitratordecides in favour of the appellants herein to hold that licenses were liable to be renewed,the respondentsshallreinstatetheirlicenseswithinone weekofthe passingofthe award. We also make it clearthat since we were told by the counselfor the MCD that the bookingsalreadymade shall be honoured,the appellantswould be permittedto supply services only to such pre-booked FAO(OS)No. 387/2009andconnectedmatters Pase14of15 & events at the rates fixed by the respondents. However, such rendering of services shall not be construed to confer any other right on the appellant, save and except, any right which may accrue to them in case the Arbitrator holds in their favour. Needless to say that the observations made hereinabove, being only prima facie, shall not be binding or otherwise on the Arbitrator who shall be at liberty to take his own view depending on the record of the case.

¶15In light of the above, there is no infirmity in the impugned judgment of the learned Single Judge. Consequently,there is no merit in the appeals. The same are dismissed. Parties to bear their own costs. October 13, 2009 sk FAO(OS) No. 387/2009 and connected matters (MUKUL MUDGAL) JUDGE 10^-^ (REVA KHETRAPAL) JUDGE Pa2e 15 of 15

IN THE HIGH COURT OF DELHI AT NEW DELHI rAO(OS)NO. 390/2009and CM No. 12527/2009 + Reservedon •" September16, 2009 Dateofdecision : October13, 2009 Veena Verma Appellant Mr.V.P.Singh, Sr. Advocateand Mr. Raju Ramachandran,Sr.Advocate, with Mr. ArvindK. Gupta,Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.L Choudhary, Advocates. Through versus MunicipalCorporationofDelhiandAnother Respondents Through : Mr. H.S. Phoolka,Sr. Advocate,with Ms. Mini Pushkarna,Advocate, for the respondent-MCD. CORAM: HON'BLE MR. JUSTICE MUKUL MUDGAL HON'BLE MS. JUSTICE REVA KHETRAPAL 1. 2. 3. % Whetherthe Reportersof localpapers may be allowedto see thejudgment? To be referred to the Reporteror not? Whetherthejudgmentshouldbe reportedin the Digest? MUKUL MUDGAL.J.