Ganne Venkata Narayana Prasad vs Government of Andhra Pradesh and Others

S.V. Maruthi, J.—This writ petition is filed to declare the demand of full amount payable by the petitioner in respect of collection of toll tax on the bridge Keesra in Krishna district on the national highway No.9 as arbitrary and illegal and to consider the representation filed by the petitioner for remission of the lease amount in respect of contract of collection of toll tax on the Bridge Keesra on national highway No.9 in Krishna district and for other reliefs.

The petitioner was awarded the contract for collection of toll tax on the bridge across the river Muniyeru near Keesra village in Krishna district for the period from 1-4-1995 to 31-3-1997 for an amount of Rs.2,15,00,000/-. The toll gate was handed over to the petitioner on 20-4-1995. The national highway Nos.5 to 9 covers the route. On this route there is a bridge known as Prakasam barrage. This is the main link between the two national highways. The entire traffic from Madras side pass through this bridge to go to national highway No.9. On 31-8-1996, Prakasam Barrage was closed on account of repairs. The closure of the barrage adversely affected the petitioner to a considerable extent. In view of the closure of the Prakasam Barrage the entire vehicular traffic from the national highway Nos.5 to 9 is now passing through Mangalagiri and Kanakadurgamma Varadhi on the Krishna river. On the terms and conditions of contract which were entered into by the petitioner with the respondents, in case two or more bridges falling in close proximity to each other is within 80 Kms. from a point at the beginning of approach of entry to the first bridge to be crossed on the same day i.e., Kanakadurgamma Varadhi under the jurisdiction of the same executive agency, fees shall be collected at the first bridge which includes to cross the Kanakadurgamma Varadhi Bridge. If the driver, owner of the vehicle is holding the receipt of such payment of toll tax to the said Kanakadurgamma Varadhi Bridge on the same day, he should be allowed to pass the Muniyeru bridge without collecting any toll tax.

In view of the above conditions, the entire vehicular traffic which was passing through national highway No.9 and which has to cross Krishna river and which is the main feeding road to the Bridge on the Muniyeru river for which the petitioner is the Contractor, is being diverted via Kanakadurgamma Varadhi as the said Kanakadurgamma Varadhi is within a reach of 80 Kms. from Muniyeru bridge. Therefore, the petitioner could not collect any toll tax. Consequently the collections were affected. Hence, the petitioner filed representations to the respondents seeking remission of toll tax till the traffic of Prakasam barrage is restored. The 2nd respondent issued a reply stating that as per the lease agreement the petitioner is not entitled to any remission and, therefore, he should pay lease amount as agreed. The refusal of the respondents to consider the representation of the petitioner and grant remission is arbitrary, illegal, unjust and unsustainable. The respondents themselves had closed the Prakasam barrage through which the traffic was passing through when the contract was entered into. Though the respondents themselves had stipulated the condition that the petitioner should not collect toll tax if once the toll tax is paid while passing through Kanakadurgamma Varadhi, by reason of the subsequent conduct of the respondents, the collection of the toll tax was considerably affected. In view of the conduct of the respondents they are not entitled to collect the toll tax as agreed. Further the entire vehicular traffic passing through Madras to Hyderabad is affected consequent on the closure of Prakasam Barrage and all the vehicles passing from Madras to Hyderabad are now passing through Kanakadurgamma Varadhi thereby depriving the petitioner of the toll tax.

In the additional affidavit filed by the petitioner, it is stated that clauses 11 and 12 of the lease agreement dated 19-4-1994 which read as under :

"11. No remission or abatement of the lease amount shall be Claimed on any account by the lessee.

The lessee shall not claim any remission of any compensation, etc., during the lease period or after due to any bundh, curphew, strike or any other hindrances or any obstructions caused by anybody or due to any natural calamities or for any loss or damages caused to the collection of fees at any time during the lease period. No remission of any lease amount will be considered or recommended by the Department and Government."

should be declared arbitrary, void and violative of Article 14 of the Constitution of India as the respondents have taken shelter under the said two clauses to deny the claim of the petitioner for remission of toll tax.

In the counter-affidavit filed by the respondents, it is stated that in order to effect repairs to Prakasam Barrage, Government issued orders prohibiting the movements of all vehicular traffic over Prakasam Barrage except Irrigation Department Vehicles connected with the work of replacement of scour sluice gates of Prakasam Barrage with effect from 1-11-1996 to31-7-1997. The Prakasam Barrage is meant for irrigation of 13-08 lakh acres of ayacut covering West Godavari, Krishna, Guntur and Prakasam Districts and road bridge is the secondary.

The respondents contended that the writ petition itself is not maintainable as the matter in dispute is covered by contractual obligation and is a disputed fact. The petitioner was fully aware of the existence of the Kanakadurgamma Varadhi bridge toll gate within 80 Kms. even at the time of participating in the toll auction in respect of Keesra bridge and it is not open to the petitioner to raise the said question at the end of the lease period. The petitioner is not entitled to seek any remedy under Article 226 of the Constitution of India. The respondents denied the allegation that the Vigilance and Enforcement Department of the Government had made a thorough investigation and submitted a report to the Government about the mala fide and dishonest intentions of the concerned authorities in closing the Prakasam Barrage and that the said decision was taken and was implemented to benefit the toll gate contractor of Kanakadurgamma Varadhi with huge amounts as kick backs to the authorities concerned. The bridge was closed for repairs and the fact that the repairs were carried out itself will disprove the allegations made by the petitioner. The writ petition is not maintainable and the petitioner is bound by the terms of the contract and cannot rely on the newspaper report and allege about the increase of income of contractor on the tones of APSRTC etc.

The learned Counsel appearing for the petitioner relying on the decisions in Kumari Shrilekha Vidyarthi and Others Vs. State of U.P. and Others, , Nathulal Vs. Phoolchand, , Timblo Irmaos Ltd., Margo Vs. Jorge Anibal Matos Sequeira and Another, , K. Krishna Murthy v. Excise Superintendent, Nalgonda, 1989 (2) APLJ 166 and LIC of India and Another Vs. Consumer Education and Research center and Others, , contended that there is a change in the thinking of the Courts as to the exercise of extra-ordinary jurisdiction under Article 226 of the Constitution of India in matters relating to the contracts. The modem trend is to examine the unreasonableness of a term in contracts where the bargaining power is unequal. Such unequal power of bargaining is subject to judicial review and the Courts are declaring such clauses as arbitrary and violative of Article 14 of the Constitution of India. The Courts have held that the distinction between the public law remedy and private law field cannot be demarcated with precision. Each case lias to be examined on its own facts and circumstances to find out the nature of the activity or scope and nature of the controversy. Therefore, it is open to this Court to declare clauses 11 and 12 of the Agreement as violative of Article 14 of the Constitution of India though they are the terms of the contract entered into between the petitioner and the respondents. Further by virtue of the acts of the respondents in closing the Prakasam Barrage for vehicular traffic on the ground that it requires repairs, they failed to perform the contract on their part. Therefore, they cannot insist on the petitioner for performing his part of the contract as, if, under the terms of the contract the obligations of the parties have to be performed in a certain sequence, one of the parties to the" contract cannot require compliance with the obligations by the other parry within in the first instance performing his own part of the contract which in the sequence of obligations is performable by him earlier. When the respondents have not fulfilled their part of the contract they cannot insist upon the petitioner to comply with the terms of the contract as in the case of Timblo Irmaos ''s case (supra) wherein it was held :

".....It is apparent that the basis upon which the agreement to pay demurrage rested was that the appellant will afford proper facilities for loading. When the appellant had committed breaches of its obligations, it is difficult to sec how the respondents could be made responsible for the delay in loading."

The Counsel submitted that the State cannot take advantage of its own default.

While the learned Government Pleader for the respondents contended that the petitioner is bound by the terms of the contract and submitted that this Court in ./ J. Siva Sankara Rao Vs. Prl. Secretary to Govt., Transport, Roads and Buildings (Road-II-I) Dept., Hyderabad and Others, , under exactly similar circumstances refused to entertain the writ petition under Article 226 of the Constitution of India. He relied on the following observation:

"In our view the approach of the appellant-petitioner under Article 226 of the Constitution of India for the relief of remission is not appropriate. Hence it is ordered that the writ does not lie in respect of contracts."

The Government Pleader submitted that it is a case where the appellant was the Contractor and the 2nd respondent viz., the Chief Engineer, National Highway Errum Manzil, Hyderabad put up for auction the annual rights to collect toll fee at Kanakadurgamma Varadhi across the river Krishna for the period from 1-4-1992 to 31-3-1993. The appellant-petitioner was the highest bidder and he offered a sum of Rs.1,07,15,000/-. The contract was conferred in his favour. While carrying on his business of collecting toll fee, there was a strike called by the All India Tnick Operators from 1-7-1992 to 7-7-1992 and as a result of the said strike, no trucks passed over the said river and the appellant-petitioner was unable to collect any toll during those days. Therefore, the appellant-petitioner claimed remission from 1-7-1992 to 7-7-1992 which was rejected by the Government. Aggrieved by the same, he approached the Court. In these circumstances, it was held that writ petition was not maintainable.

The learned Government Pleader also relied on State of Andhra Pradesh and Others Vs. Super Constructions, , wherein it was held that:

"The question whether an agreement is unconscionable and is opposed to public policy and thus void u/s 23 of the Contract Act cannot be one only of law which can be answered by the Court without any reference to the facts. Any adjudication as to the validity or otherwise of a condition of contract in a given situation has to be decided with reference to such attendant facts and circumstances which alone will show whether the impugned condition was opposed to public policy. Moreover, a person who has agreed to a condition of contract, it is said, with a view to grabbing the contract and grabbed the contract, cannot be said to be an innocent victim of the dictates of the Superintending Engineer to which he yielded and accordingly agreed to a certain unconscionable clause in the contract. Contract is always achieved by conscientious ad idem. Such, thus, being the conduct of the petitioner-respondent, to say at his instance that he yielded to the dictates of the Superintending Engineer would amount to putting the clock back to the time when the contract was offered to the concerned with a condition which according to him was opposed to public policy he should invoke this Court''s jurisdiction before contract was awarded."

The learned Government Pleader relying on Radhakrishna Agarwal v. State of Bihar, AIR 1977 SC 1466, wherein it was held that:

"....But, after the State or its agents have entered into the field of ordinary contract the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Article 14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract."

contended that since there is a concluded contract between the petitioner and the respondents, the relation between the petitioner and the respondents is governed by the terms of the contract and no writ could be issued under Article 226 of the, Constitution of India.

From the above, it follows that the main contention of the learned Counsel for the petitioner is that clauses 11 and 12 of the Contract are unconscionable and violative of Article 14 of the Constitution of India as the petitioner is not entitled for any remission under any circumstances. While the Government Pleader contended that the writ petition is not maintainable and the question whether the agreement is unconscionable and is opposed to public policy cannot be challenged in a writ under Article 226 of the Constitution of India after entering into a contract. He ought to have challenged it before lie entered into the contract. Having entered into the contract and having availed the benefits of the contract, the petitioner cannot challenge the said clauses Nos. 11 and 12 of the agreement as unconscionable. We have already extracted clause Nos.11 and 12 of the agreement. Clause 11 says tliat no remission is permissible at all. Clause 12 deals with claim of remission on happening of certain events and it says no remission is permissible on the happening of the events mentioned in the said clause. This clause is not applicable to the facts of the present case. The only clause applicable is clause 11. The main argument of the petitioner is that having regard to the (act that the respondents have closed the vehicular traffic on the Prakasam Barrage he suffered loss and, therefore, he is entitled for remission and clause 11 which prohibits claiming of remission under any circumstances is violative of Article 14 of the Constitution of India. As pointed out in State of A. P. v. Super Constructions (supra) whether a clause of the agreement is unconscionable or not depends on facts and circumstances of the case. The issue is to be decided with reference to the attendant facts and circumstances which alone will show whether the impugned condition was opposed to public policy. Moreover the petitioner has agreed to the condition and entered into the contract. Therefore, it cannot be said that he is an innocent victim of the dictates of the respondents to which he yielded and accordingly agreed to a certain unconsionable clause in the contract. Having entered into the agreement and having availed the benefits of the same for a particular period, it is not open to the petitioner to challenge clause No. 11 of the agreement. He ought to have challenged the same before entering into the contract. Further, this Court is also of the view that the writ petition under Article 226 is not maintainable in a case where a contract was entered into for collection of toll tax and when the application for remission on certain grounds was rejected.

The writ petition is, therefore, dismissed as not maintainable. However, it does not preclude the petitioner from seeking any remedy available, if so advised.