Delhi High Court: In a case wherein the petitioners submitted that the introduction of additional trains would result in commercial non-viability and poor business prospects for them, and hence the tender notification issued by the respondents should be scrapped, the Division Bench of Satish Chandra Sharma, C.J., and Sanjeev Narula, J.*, opined that the petitioners’ active engagement in the process and the subsequent success in securing the bid, prevented them from now seeking quashing of the tender. The Court further opined that the respondents’ decision to introduce new trains was a legitimate and essential step, aimed at enhancing railway services and meeting the evolving needs of the public. Thus, the Court dismissed the petition with costs of Rs. 5,00,000 to be deposited with the Delhi Police Welfare Fund and concluded that the petitioners’ contentions lacked merit and did not reveal any legal or constitutional grounds to support the petition.
The petitioners had a long-standing association with respondents for approximately fifteen years and during this time, the petitioners had entered into multiple contracts with Indian Northern Railways for leasing of parcel vans for various train operations. One such contract was the Agreement to Lease (‘Agreement’) a parcel cargo express train that operated from Alwar to New Guwahati. This Agreement was executed on 23-03-2018 and was valid for six years. As per the terms contained therein, the petitioners had agreed to pay a lumpsum freight rate of Rs. 35,32,155 for each round trip of the leased parcel cargo express train.
As per Clause 14.3 of the Agreement, the petitioners had a contractual obligation to maintain a ‘manifest’, which was a document containing essential information related to the consignments loaded in the parcel vans. Upon reviewing the manifests for the last six months, it had come to light that the cargo train had been operated by the petitioners with significantly low occupancy and many days witnessed the train running nearly empty, indicating a lack of sufficient demand for parcel leasing services on the specified route. Despite lower than anticipated demand and low occupancy levels, the petitioners continued to pay the full lease rental amount for each round trip, as per the terms agreed upon in the Agreement. The petitioners had adhered to the contractual commitments despite the financial burden in sustaining the operations and experiencing minimal returns due to the lack of demand for their parcel leasing services.
On 03-06-2019, the respondents issued a tender notice proposing leasing of similar parcel cargo express trains. Concerned with the potential adverse impacts on their business, Petitioner 1 submitted a representation dated 01-07-2019 to the respondents, requesting them to withdraw the tender. Since their request did not yield the desired outcome, the petitioners had filed the present petition for setting aside of the tender.
Analysis, Law, and Decision
The Court opined that the respondents’ submission that the petitioners lack the locus standi to challenge the tender was well-founded. The Court observed that the petitioners willingly participated in the tender process, subjecting themselves to the rules and conditions governing the tender process and as a result, they emerged as the successful bidder, yet failed to complete the necessary formalities mentioned in the acceptance letter. The Court opined that the petitioners’ active engagement in the process and the subsequent success in securing the bid, prevented them from now seeking quashing of the tender.
The Court noted that while the petitioner had expressed concerns about the proposed trains affecting their business, there was insufficient evidence to substantiate this assertion. Thus, the Court opined that the mere proposal of a new train on a similar route did not guarantee that it would lead to a significant diversion of customers or affect the petitioners’ business substantially. The Court further opined that it could not base its decision on mere apprehensions, without proof of actual harm and if the terms of the Agreement were perceived to be commercially inviable due to factors such as low demand and infrequent service, the petitioners were free to seek alternative remedies available under law to address these issues effectively.
The Court rejected the petitioners’ contention that their right to do business under Article 19(1)(g) of the Constitution was being violated by the tender. The Court opined that the right to conduct business was subject to reasonable restrictions in the interest of public welfare and economic balance. The respondents’ decision to introduce new trains was a legitimate and essential step, aimed at enhancing railway services and meeting the evolving needs of the public. Such measures were essential for the efficient functioning of the railway system and could not be considered as arbitrary or unconstitutional restrictions on the petitioners’ right to conduct business of their choice. Improvisation of railway operations should not be hindered by speculative apprehensions of adverse impacts on the petitioners’ business.
The Court opined that by raising such a plea, and securing an interim stay, the petitioners had effectively gained an unfair advantage by depriving the respondents of potential financial benefits that could have been derived from the impugned tender, thus, the Court could not endorse such an action which impeded the respondent from fulfilling their legitimate functions.
The Court dismissed the petition with costs of Rs. 5,00,000 to be deposited with the Delhi Police Welfare Fund and concluded that the petitioners’ contentions lacked merit and did not reveal any legal or constitutional grounds to support the petition.
[D.G. Raj Commercial (P) Ltd. v. Northern Railways, 2023 SCC OnLine Del 4574, decided on 01-08-2023]
*Judgment authored by: Justice Sanjeev Narula
Advocates who appeared in this case :
For the Petitioners: Manish Kohli, Manjit Kumar Pathak, Advocates;
For the Respondents: Arunima Dwivedi, CGSC; Pinky Pawar, Aakash Pathak, Advocates for UOI.