AI Structured Summary
Not yet generated for this judgment
Judgment
B. Rajendran, J.—The Petitioner is the franchisee for running the hotel units of the Tamil Nadu Tourism Corporation Ltd, Sattur, Virudhunagar District, on franchise basis. In this regard, an agreement has been entered into on 19.09.2007 for a period of fifteen years. The franchise fee for the said period was Rs. 2,70,000/-per annum with 15% escalation once in three years. The Petitioner would contend that the said hotel has been taken on contract by him and the same was managed by one Rajasekaran and the Petitioner is not aware of the happenings. Since the said premises was misused by the said Rajasekaran, it led to the registration of criminal cases against him and the Petitioner. The Respondent would contend that the Petitioner is vicariously liable for prosecution. In fact, the Petitioner along with Rajasekaran was booked under various offences for conducting the immoral trafficking and gambling and brothel in the hotel. But, the Petitioner would contend that he was physically not present at the time of occurrence and he was included for the reasons that he was a franchisee of the said hotel besides agreement stood in his name. Therefore, he would contend that the termination order dated 24.01.2011 terminating the franchisee agreement and ordered to hand over the hotel is illegal, arbitrary and violation of principles of natural justice. He would also contend that the said impugned order is passed without any notice to him and he has No. knowledge about the crime committed by the said Rajasekaran. Aggrieved against the action of the Respondents, the Petitioner is before this Court with the present Writ Petition.
The Respondents have filed a counter affidavit (vacate stay petition) in which they would contend that criminal cases have been registered against the Petitioner as well as the said Rajasekaran for the offences committed by them under the Tamil Nadu Gambling Act and Immoral Traffic (Prevention) Act. They would also contend that the Petitioner is responsible for the commission and omission of the action, where immoral activities had taken place in the hotel premises. As per Clause 29 of the agreement, the franchisee shall not undertake any immoral activity or malpractices in the hotel premises franchised by the Tamil Nadu Tourism Development corporation. Knowing full well, the Petitioner has committed serious crimes, that too, in the building owned by the Government, which has tarnished the image of the Respondents Corporation. As per the agreement, immediate action had to be taken, as serious crimes had been committed in the hotel premises and accordingly, it was taken by the Respondents. Therefore, the termination order is just and equitable and the Respondents have taken a decision in a judicious manner. Apart from that, as per Clause No. 35 of the agreement, in case of any dispute, the franchisor will refer the dispute to an Arbitrator in accordance with the provisions of the Arbitration and Conciliation Act,1996. Without invoking the arbitration, the Petitioner cannot straight away file a Writ Petition. Even otherwise, the issue in question is purely a contractual in nature, which cannot be agitated under Article 226 of the Constitution of India. Above all these things, on merits also, based on the news paper publication, an First Information Report has been lodged for immoral trafficking and gambling and the Petitioner has not denied the allegations of the Respondents and therefore, the action of the Respondents is valid in the eye of law and need not interference at the hands of this Court.
Heard both parties.
The Petitioner who is a franchisee for running the hotel units of the Tamil Nadu Tourism Development Corporation has filed this Writ Petition only on the ground that even though he is the franchisee, he was not present in the hotel at the time of the alleged occurrence said to have taken place in the hotel premises owned by him, since said premises was managed by one Rajasekaran. Unfortunately, he has misused the premises for conducting the immoral trafficking and gambling activities, which he was not aware of. The First Information Report is lodged only on the basis of newspaper report and the Respondents would contend that that the Petitioner is vicariously liable, as he is the contractor of the premises in question. Ultimately, he would contend that even the criminal case ended in acquittal, as the prosecution witnesses turned hostile. Therefore, invoking Clause No. 24 of the agreement for rescinding the contract unilaterally by the authorities is legally not sustainable. He would only contend that the impugned order is passed not on verification, but only on the basis of the newspaper publication and such action should not have been initiated by the Respondents.
It is very clear that the hotel which is owned by the Government has been taken on lease by the Petitioner and as he was the franchisee, under law, he was held responsible for all action taken place in the premises. He cannot now claim that he is not in the place and one Rajasekaran was taking care of the hotel, cannot be excused at all. It is also an admitted case that FIR in Crime Nos. 22 & 23 of 2011 have been filed as against the Petitioner as well as the said Rajasekaran and others. The FIR would indicate that the girls were being offered to customers. Therefore, the typical prostitution is done in the hotel. Further, the complainant would also state that there were gambling and playing of cards was prevalent in the hotel premises. of course, the FIR was lodged against the Petitioner, only on the basis that he was the owner of the franchisee. He may not be present in the hotel premises, but he is responsible for all incident taken place in the hotel premises. Merely because, subsequently P.W.1, the complainant, has turned hostile, would not make the case different.
The facts remains that the police have raided the premises and FIR has been lodged and matters have been published widely in the newspaper. It is a very serious offence. Even the Petitioner would contend that the said Rajasekaran has misused and abused his possession. He never stated anywhere in the affidavit that such incident was not at all taken place. Therefore, the Petitioner cannot now say that the termination as per Clause No. 29 of the agreement is illegal. When he allowed the hotel units for illegal activities to commit such crimes, the contract could be cancelled forthwith. Therefore, this Court does not find any infirmity or illegality in the impugned order.
Among all other things, after all, the dispute is in respect of the contract. In contractual dispute, time and again, the Apex Court as well as this Court have held that a Writ Petition will not lie. There are a catena of decisions in this regard dealing with the issue in question. It is relevant to point out that in Pimpri Chinchwad Municipal Corporation and Others Vs. Gayatri Construction Company and Another, , the Apex Court has elaborately dealt with the issue in question. In the said decisions, various judgments are referred to hold that the Writ Petition is not maintainable, which are usefully extracted below:
In National Highways Authority of India v. Ganga Enterprises it was inter alia held as follows: (SCC p.415, para 6)
"6. The Respondent then filed a writ petition in the High Court for refund of the amount. On the pleadings before it, the High Court raised two questions viz.: (a) whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and also contrary to Section5 of the Contract Act; and (b) whether the writ petition is maintainable in a claim arising out of a breach of contract. Question (b) should have been first answered as it would go to the root of the matter. The High Court instead considered Question (a) and then chose not to answer Question (b). In our view, the answer to Question (b) is clear. It is settled law that disputes relating to contracts cannot be agitated under Article226 of the Constitution of India. It has been so held in Kerala SEB v. Kurien E. Kalathil, State of U.P. v. Bridge and Roof Company (India) Ltd. and Bareilly Development Authority v. Ajai Pal Singh. This is settled law. The dispute in this case was regarding the terms of offer. They were thus contractual disputes in respect of which a writ court was not the proper forum. Mr Dave, however, relied up on Verigamto Naveen v. Govt. of A.P. and Harminder Singh Arora v. Union of India
These, however, are cases where the writ court was enforcing a statutory right or duty. These cases do not lay down that a writ court can interfere in a matter of contract only. Thus on the ground of maintainability the petition should have been dismissed.
In Kerala SEB v. Kurien E. Kalathil this Court dealt with the question of maintainability of petition under Article 226 of the Constitution and the desirability of exhaustion of remedies and availability of alternative remedies, as also difference between statutory contracts and non-statutory contracts. In paras 10 and 11 of the judgment it was noted as follows: (SCC pp. 298-99)
We find that there is a merit in the first contention of Mr Raval. Learned Counsel has rightly questioned the maintainability of the writ petition. The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observation of the High Court that since the obligations imposed by the contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in coming to the conclusion that the contract in question was statutory in nature.
A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract ordeal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the Appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies.
Reference can also be made to State of Gujarat v. Meghji Pethraj Shah Charitable Trust. In para 22 it was observed as follows: (SCC pp 568-69)
We are unable to see any substance in the argument that the termination of arrangement without observing the principle of natural justice (audi alter am partem) is void. The termination is not a quasi-judicial act by any stretch of imagination; hence it was not necessary to observe the principles of natural justice. It is not also an executive or administrative act to attract the duty to act fairly. It was-as has been repeatedly urged by Shri Ramaswamy-a matter governed by a contract/agreement between the parties. If the matter is governed by a contract, the writ petition is not maintainable since it is a public law remedy and is not available in private law field e.g. where the matter is governed by a non-statutory contract. Be that as it may, in view of our opinion on the main question, it is not necessary to pursue this reasoning further.
Again, in State of U.P. v. Bridge and Roof Company (India) Ltd. this Court dealt with the issue in paras 15 and 16 in the following manner:(SCC p.30)
In our opinion, the very remedy adopted by the Respondent is misconceived. It is not entitled to any relief in these proceedings i.e. in the writ petition filed by it. The High Court appears to be right in not pronouncing upon any of the several contentions raised in the writ petition by both the parties and in merely reiterating the effect of the order of the Deputy Commissioner made under the proviso to Section8-D(1).
Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, maybe, also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as provided by the contract or for the civil court, as the case may be. Whether any amount is due to the Respondent from the Appellant Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition. The prayer in the writ petition viz. to restrain the Government from deducting a particular amount from the writ Petitioner''s bill(s) was not a prayer which could be granted by the High Court under Article 226. Indeed, the High Court has not granted the said prayer. 7. In view of the decisions cited supra, the Writ Petition is not maintainable. If at all any damages is caused by the Respondents, the Petitioner can only approach the proper forum or submit to arbitration for appropriate relief and he cannot take a recourse by way of this Writ Petition. Above all these things, Clause 25 in the agreement would clearly denotes, if there is any dispute, the matter would be referred to franchiser for the arbitration. On that ground also, this Writ Petition is not maintainable.
For the foregoing reasons and decisions cited supra, this Writ Petition stands dismissed. Consequently, the connected miscellaneous petitions are also closed. No. costs.