Putul Saha vs Food Corporation of India and Others

S. Talapatra, J.—1. Heard Mr. I. Chakraborty, learned counsel appearing for the petitioner as well as Mr. C.S. Sinha, learned counsel appearing for the respondents.

By means of these writ petition, the petitioner who is a transport contractor, out of apprehension that the respondents might deduct the railway demurrage charges from the transportation bills as raised by her, approached this court for a writ of prohibition, directing the respondents not to deduct any amount from her transportation bills for transporting food grains, sugar and allied materials in terms of the order awarding the transport contract, being No. Cont.9/NEFR/TC/DMR-CDR/2011, dated 18.05.2012 (Annexure-2 to the writ petition).

The petitioner has submitted that after she was awarded the work for transportation as stated, she commenced the execution of the work on depositing the required security deposit. The petitioner has deposited the bank guarantee as well to the satisfaction of the respondents. According to the petitioner, the respondents were engaged in unloading of the food grains from the railway wagons at the railway siding, FSD Dharmanagar whereas the petitioner had been transporting those materials to the FSD Chandrapur, Udaipur. The respondents did unload and store those materials at Chandrapur, Udaipur. If for any reason, unloading of goods from railway wagon is delayed beyond the stipulated period, the demurrages/wharfage charges as per railway rules are to be paid by the respondents. It has been also asserted that the agreement, the petitioner has entered into, does not contain any clause shifting obligation to the petitioner for payment of the railway demurrage etc. But, for similar nature of works, in the earlier agreement, a clause used to be incorporated, which provides as under :

"12(a)........ The contractors shall be liable for all costs, damages, demurrages, wharfages, forfeiture of wagon, registration fees, charges and expenses suffered or incurred by the Corporation due to the contractor negligence and un-workman like performance of any services under this contract or breach of any terms thereof or their failure to carry out the work with a view to avoid incurrence of demurrage, etc. and for all damages or losses occasioned to the Corporation due to any act whether negligent or otherwise of the contractors themselves or their employees. The decision of the General Manager regarding such failure of the contractors and their liability for the losses, etc. suffered by Corporation shall be final and binding on the contractors."

Since there is no such clause in the agreement under which the petitioner is operating as the transporting contractor, the respondents cannot, according to the petitioner, shift any liability of payment of railway demurrage and wharfage charges. As corollary, the respondents cannot deduct any amount on that account. As the petitioner apprehends that the respondent would deduct the railway demurrage from the petitioner''s bills, she has approached this court for protection against the arbitrary action of the respondents on deducting the railway demurrage from the bills of the petitioner. The petitioner has submitted that the delay in clearance of the food-grains from the railway wagons cannot be attributed to the petitioner, inasmuch as the respondents are under obligation to that part of the work.

Be that as it may, the respondents by filing the counter-affidavit, has submitted that the petitioner was cautioned to improve her performance as the performance was found unsatisfactory. It has been further stated that, in terms of the order delivered in W.P.(C) No. 460/2011 (Abhijit Paul v. F.C.I.), the Gauhati High Court has permitted the Food Corporation of India to recover the losses suffered due to negligence of the contractor after necessary enquiry. The concerned Depot In-charge should fix the liability arising from the railway demurrage charges etc. after necessary enquiry at his level. As such, the demurrage charges, accrued due to the detention of wagons for short supply of trucks from the day of issuance of the indent is liable to be borne by the petitioner. The respondents have denied the allegations that the delay in clearance of the wagons took place for the fault attributable to them. They have further asserted that the claim of the petitioner is not based on records. Apart that, deduction of the railway demurrage has been contemplated/done as per clause 12(a) of the agreement after necessary enquiry. Thus the respondents be permitted to recover the losses suffered due to failure/negligence of the petitioner in the public interest.

What transpires from the reply is that the respondents have contemplated deduction of the railway demurrage under clause 12(a) of the agreement. But there is no such clause in the agreement. It clearly transpires that, even if there had been any enquiry, the petitioner was not given any opportunity to have her say. Neither was she served with a show cause after determining the railway demurrage at any point of time.

Even though the dispute has emerged from the contract, this court have the limited jurisdiction to judicially review the action of the respondents, inasmuch as, it has been enunciated by the apex court in Kumari Shrilekha Vidyarthi v. State of U.P. & Ors., reported in , AIR 1991 SC 537 that the State activity in contractual matters also may fall within the purview of judicial review. Every State action must survive the test against arbitrariness and abuse of power. Non-arbitrariness, being a necessary concomitant of the rule of law, is imperative that all actions of every public functionary, in whatever sphere, must be guided by reasons and not by whim, caprice or personal predilections of the persons entrusted with the task on behalf of the State. Exercise of all powers must be for public good, instead of being abuse of the power.

The respondents have failed to disclose that the petitioner is under obligation by the provisions of the agreement to make the payment of railway demurrage under all or certain conditions. Further it has transpired that either during "enquiry" or after determining the railway demurrage, the petitioner was never asked to have her say on the matter. Thus this court does not have any hesitation to hold that the action of the respondents is wholly arbitrary and abuse of the power. Hence, the respondents are prohibited from deducting the railway demurrage from the petitioner''s transportation bills unless the loss suffered by the Food Corporation of India for any action or inaction of the petitioner is established following the principles of natural justice or by due process of law. At the same time, this court must record that mere absence of any clause like clause 12(a) as reproduced, the petitioner cannot claim total immunity against the loss caused to the respondents by the petitioner during execution of the transport contracts. If for negligence or dereliction of the petitioner any loss is caused to the respondents, the petitioner is under obligation to make good of that loss, but determination shall always be subject to the due process of law.

Having held so, this writ petition is allowed to the extent as indicated above.

There shall be no order as to costs.