M/S Morgan Enterprises vs State Of Telangana

Mr. Srinivas Kapatia, learned counsel for the appellant. Mr. G.Vidya Sagar, learned Senior Counsel representing Mr. Thoom Srinivas, learned counsel for respondents No.2 to 5.

This intra court appeal is filed against the order dated 30.10.2023 passed by the learned Single Judge by which the writ petition preferred by the appellant, namely W.P.No.21760 of 2023, challenging the validity of the notice of termination of licence dated 15.06.2023 has been upheld.

Facts giving rise to filing of this appeal briefly stated are that the Telangana State Road Transport Corporation (hereinafter referred to as, “the Corporation”) issued a notification on 16.12.2022 by which tenders were invited for two/four wheeler parking. The appellant participated in the aforesaid tender notification and was declared successful. Thereafter, a deed of licence was executed in favour of the appellant on 17.02.2023 for a period of four years in respect of a stall bearing No.94A (open area admeasuring 12362 square feet). The appellant, under the licence, was required to pay a monthly sum of Rs.2,50,000/- and it had deposited a sum of Rs.21,92,500/- as security deposit and one month advance licence fee.

Clause 23 of the deed of licence reads as under:

TERMINATION OF LICENCE:

a. The licence is liable for termination with one month advance notice on the following grounds:

i. If the licensee defaults in payment of licence fee for three months consecutively or three times in a calendar year.

ii. If the Licensee fails to do the business (for which licence is granted) in the stall for a continuous period of NINETY(90) days.

iii. If the licensee is found encroached on to the area meant for passenger movement or any other area/stall/shop.

iv. If the licensee performs other business, other than the specified in tender notification or as recorded in the deed of licence.

v. If the licensee commits any fraudulent activities.

vi. If the licensee is found doing or resorting to any unethical activities or indulging in moral turpitude.

vii. In case of mis-behaviour /assault committed by the licensee, his/her representatives against the employees/Representatives of the corporation.

viii. For breach of terms and conditions of deed of licence.

ix. In case the contract is terminated, Corporation shall have the right to adjust the Security Deposit amount towards all the dues payable to the Corporation including incidental financial losses that might arise on account of such premature termination and also to forfeit the balance of deposit amount.

b. The contract can be terminated by giving three months advance notice on either side. In such circumstances, the deposits which may remain to the credit of the licensee will be refunded, after all the dues payable to the Corporation have been settled out of the deposits made by the Licensee. Corporation shall not be liable to pay any damages that the licensee may suffer on account of such termination.

However, the licensee is permitted to exercise this option only on completion off minimum stipulated period of one year. Corporation reserves the right to terminate the contract any time during the contract period by giving 3 months advance notice to the Licensee.

The Licensor shall have right to terminate the license. His decision in this regard shall be final.

c. The licensor shall have right to terminate the licence if in his opinion the quality of the work is not satisfactory and his decision in this regard shall be final.

d. The licensor reserves the right to terminate the licence by giving one month's notice in case the premises are required by the licensor for public purpose or for the usage of the licensor.

From a perusal of Clause 23 of the deed of licence, it is evident that the Corporation can terminate the contract any time during the contract period by giving three months notice.

The appellant started operating the contract. However, in exercise of the power under Clause 23 of the deed of licence, the notice for termination of licence was issued to the appellant on 15.06.2023, inter alia, on the ground that the Corporation has decided to provide modern digitalized parking system to ensure better services to the customers who use the parking space of the Corporation.

The appellant filed the writ petition in which the validity of the notice for termination of licence dated 15.06.2023 was assailed. The learned Single Judge, by an order dated 30.10.2023, dismissed the writ petition. In the aforesaid factual background, this appeal arises for consideration.

Learned counsel for the appellant submits that under the terms and conditions of the deed of licence, a minimum period of one year has been guaranteed to the appellant. Therefore, the contract cannot be terminated before expiry of one year. It is further submitted that the work of digitisation can take place without interrupting the possession of the appellant over the open space. It is further submitted that there is no element of public interest involved in termination of the licence issued in favour of the appellant and this Court, in exercise of powers under Article 226 of the Constitution of India, can grant appropriate relief to the appellant. In support of the aforesaid submission, reliance has been placed on the decision of the Supreme Court in M.P.Power Management Company Limited, Jabalpur v. Sky Power Southeast Solar India Private Limited (2023) 2 SCC 703.

On the other hand, learned Senior Counsel for the Corporation has submitted that the licence of the appellant has been terminated in consonance of the terms and conditions of the deed of licence and in a larger public interest i.e., with a view to provide better facilities to the passengers. It is submitted that the Corporation had cancelled the contract of similarly situated contractors who had also filed a writ petition which was dismissed by the learned Single Judge. The order of dismissal has been upheld by a Division Bench of this Court and the Special Leave Petition preferred against the said order passed by the Division Bench of this Court has also been dismissed.

We have considered the submissions made on both sides and have perused the record.

It is trite law that an instrumentality of the State is supposed to act in a fair, rational and reasonable manner even in a contractual field. The contract awarded to the licensee can be terminated under Clause 23 of the deed of licence, which has already been extracted above. The contract of the appellant is being terminated to provide a digitalized parking system so as to ensure better services to the customers who utilise the parking space of the Corporation. Thus, for a larger public interest, the contract awarded to the appellant has been terminated. It is trite that an individual’s interest has to yield to a broader public interest. The action of termination of the contract which has been taken in consonance with Clause 23 of the deed of licence, does not suffer from any infirmity warranting interference of this court in exercise of writ jurisdiction.

For the aforementioned reasons, we do not find any ground to differ with the view taken by the learned Single Judge.

In the result, the appeal fails and is herein dismissed.

Miscellaneous applications pending, if any, shall stand closed. However, there shall be no order as to costs.