Bharat Mahana v. Mcd & Anr

JUDGMENT 13-10-2009 MUKUL MUDGAL.J. 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. t % + IN THE HIGH COURT OF DELHI AT NEW DELHI FAO(OS) NO. 387/2009 and CM No. 12513/2009 Reserved on Date of decision September 16, 2009 October 13, 2009 Dr. Mulcherjee 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.L 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 FAO(OS) NO. 399/2009 and CM No. 12829/2009 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 Page 1 of15 I MunicipalCorporationofDelhiandAnother 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, withMr. 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. ManjitSinghAhluwaliafor MangalamJan KalyanSamiti. Pase2 of 15 MunicipalCorporationofDelhiand 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. MunicipalCorporationof 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. Pase 3 of15 S % MunicipalCorporationof Delhiand Another 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. Advocateand 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 Reportersof localpapers / may be allowed to see the judgment?

¶2To be referredto the Reporteror not?

¶3Whetherthejudgmentshouldbe ^ reported in the Digest? % JUDGMENT 13-10-2009 MUKUL MUDGAL J.

¶1By this judgmentwe proposeto disposeof a batch of connectedjfirst appealsagainstcommonorderdated25^''August,2009passedby the learned FAO(OS)No. 387/2009and connectedmatters Page4of15 , SingleJudge of this court disposingofthe petitionsunder Section9oftlie 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 furtherperiod of five years which requestwas turneddown. Aggrievedby the said decision ofthe respondents,the petitionersapproachedthe learnedSingleJudge with 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 quotedby 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 authorizesitto use the said CommunityHall as detailed here above subject to the conditions hereinafter appearingfor a periodoffive years commencingfrom the date of FAO(OS)No. 387/2009andconnectedmatters Pase5of15 1^- R^s. •••rr ;• ? fram fh" te™°ffive years,tenyearsin all from the date of entenng mto the licenseedeed for the first time in the year 2003.

(a) In the default to pay the license fee of Rs.21 213/- ner monthas agreedtogetherbeforethe lO"' dayofthe monthto which It relates the licensee shall pay interest which will form part of Licence@24/o per annum on the arrearsofthe LicenceFee from ° month i.e. from the month in respectofwhich the defaultin paymenttakesplacetill the priorto the effectivedate ofdeterminationoflicense. In case the licensefee remainsunpaid for three months, the license will be cancelled. The interest@ 7 YzVo 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 dateofpayment. The Commissioner,MCD may, however, on receipt of requestand clearanceofall the dues mentionedabove, restorethe licenseon the existinglicensefee or on such conditionas may be fixed by the Commissionerathisabsolutediscretion.

(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 observe4 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-enter upon 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 antecedents breach of terms and conditions and covenantson the partoflicensee. The licenseshallstandipso facto terminatedwithoutany righttocompensation.

(c) Remissionin licensefee onany 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 Page6of15 !«• f iVJ

¶37That in case of any disputearisingbetweenthe hcensorand the licenseein respectofthe interpretationor performanceofany terms or conditionsof this licence,the same shall be referredto the solearbitrationofthe 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 coimected 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 obligationupon the respondentto renew the licence for another period of five years and therefore the interim injunctionsoughtfor couldnot be granted.

¶5The order of the learned Single Judge has been assailed by the appellantmainly on 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. FAOfOS)No. 387/2009andconnectedmatters Pase 7of15 r* Li - m-m: b. Thatthe decisionnot to renewthe licenceshas beentakenwithoutany basisand withoutgivingthem any opportunityofbeingheard.

¶6Elaboratingthe above grounds, Mr. V.P. Singh, the learned senior counsel for the appellant also strenuously urged that the license itself providedthat it has been grantedfor a periodof five years extendablefor a further period of five years. The extensionwas natural, unless there was violationof the terms and conditionsof the license. No such violationhad ever been brought to the notice of the appellant-licenseeby the respondents—licensorand, therefore, the action of the respondents in unilaterallycancellingthe licensewithouthearingthe appellantor providing any opportunitywhatsoeverto the appellantto presenttheircase for renewal was in utter violationof the well establishedprinciplesof naturaljustice. The breaches,if any (now soughtto be urged),ofthe agreementwere never broughtto the noticeofthe appellantnor as amatteroffact the respondents were basing their case on any breach of the agreementby the appellant. Thoughtherewere no groundswiththe respondentsnot to renewthe license, neverthelessthe impugnedorderhad beenpassed. 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. 387/2009andconnectedmatters Pase8of15 p,,. 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 proposal no./issueno.982dated12.2.09. Proposal No.66: Followingproposal were made by Shri Anesh Kumar Jain and Parvesh Vahi and supported by Sh. VijenderGupta. Proposal No.982: Because Corporationfor the marriageand other functions constructthe communitycentres and provide them to thepeople on rent. Becausesome of the communitycentres have 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 resolved that those communitycentres which have been given on the license to the contractortheir license may FAO(OS)No. 387/2009andconnectedmatters Pase9of15 notbe 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 wilhngness"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 legitimate expectationof 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 unlessthe right ofthe appellantwas adjudicatedupon by the AdjudicatoryForum under the arbitrationclause ^Clause37 ofthe agreement),the appellantinthe circumstancesdeservedto be protected,more so, as the CommunityHalls had been booked well in advancefor weddingsand otherfunctions. FAO(OS)No. 387/2009andconnectedmatters Pagg10of15 I . e5>'* i

¶8During the course of the arguments,the learned Senior Counsel Sh. V.P. Singh,appearingonbehalfof some ofthe appellants,submittedthatthe decisiontaken by the Standing Committeenot to renew any of the nine licencesin questionwas takenwithoutany materialorcomplaintsagainstthe 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 Pase 11 of15 is based on the relevant material placed before the deciding authority. 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 appropriatecases. Referencein this regard can be made to the judgment of the Hon'ble Supreme Court in the case of Sethi Auto Service Station and Another vs. 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 doctrine of legitimate expectation, 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 Paee 12 of15 --.x. power. The court must not usurp the discretion of the public authoritywhich is empoweredto take the decisionsunder law and the court is expectedto apply an objectivestandardwhichleavesto the decidingauthoritythe full range of choicewhichthe legislature is presumedto have intended.Even in a case where the decisionis left entirelyto the discretionof the decidingauthoritywithoutany such legalboundsand if the decisionistakenfairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectationmight be affected. Therefore,a legitimateexpectationcan 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 materialplacedbefore us it cannotat this stage be stated that the action not to renew the licences for another term of 5 years is so arbitraryor unreasonableso as to be coveredby the positionof 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 Pase 13 of15 @ AssociationandOrs. versus Vmonoflndiaflinn

¶13The Counselfor the Appellantstatedthat as per the arbitrationclause all appellantswouldpresenttheircasejointlybeforethe arbitratorand would not take more than halfan hour to do so, which will be set out in aclaim petitionnot exceeding3pages with only 3citations. 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 been made by the licencees. The respondents'counselstatedthat such bookings will be honoured.

¶14In this view of the matter, we are not inclined to interfere with the learnedSingleJudge'sorderdecliningto grantthe interimreliefofinjunction prayed for by the appellants. However, in case the arbitration is invoked as per the conditions set out in para 10 above and the Arbitrator decides in favour of the appellants herein to hold that licenses were liable to be renewed, the respondents shall reinstate their licenses within one week of the 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 Page 14 of15 -TfaSnV \ iJ 'dt.' 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 infirmityin the impugnedjudgment 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 (MUKUL MUDGAL) JUDGE VA KHETRAPAL) JUDGE Pase 15 of15

/ * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) NO. 386/2009 and CM No. 12510/2009 Reserved on Date of decision : September 16, 2009 : October 13, 2009 Bharat Mahana Appellant Through : Mr.V.P.Singh, Sr.Advocateand Mr. Raju Ramachandran,Sr. Advocate, with Mr. Arvind K. Gupta, Mr. Rakesh Garg, Mr. Mohit Garg, Mr. M.L Choudhary, Advocates. versus MunicipalCorporationofDelhi and 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 1. 2. 3. % Whetherthe Reporters of localpapers may be allowed to see thejudgment? To be referred to the Reporter or not? Whetherthejudgmentshouldbe reportedin the Digest?