JUDGMENT
Pranab Kumar Chattopadhyay, J.
1. The petitioners herein have challenged the acts and actions of the State respondents regarding enhancing of the annual licensee fee/rent as proposed by the respondent State Government for displaying advertisement at Theme Park upon renewing the earlier agreement.
2. It has been submitted on behalf of the petitioners that the Government of West Bengal while renewing the license for putting up hoarding proposed exorbitant enhancement of the annual license fees. In the present case, undisputedly, the agreement provides for renewal but does not provide any guidelines for determination of annual fees/rents to be charge during the period of renewal. Clause (1) of the Deed of Lease executed by the petitioner clearly provides for further renewal of the lease period. The respondent State Government has also agreed to grant renewal in the present case.
3. The only question now to be decided is whether the Government is entitled to charge renewal fees at exorbitant rate.
4. The facts of this case are briefly narrated hereinafter:
In 2001, the per company participated in the tender process initiated by the PWD, Government of West Bengal for issuance of license for execution of work of beautification of Theme Park and its maintenance and display of advertisements on VIP Road (Nazrul Islam Avenue) at the connection of Jessore Road, Kolkata. On 23.11.2001 the Executive Engineer, Barasat Highway Division No. I, PW (Roads) Department, on behalf of the Governor, State of West Bengal entered into a license agreement for execution of work of beautification of Theme Park and its maintenance and display of advertisements on VIP Road (Nazrul Islam Avenue) at the connection of Jessore Road, Kolkata for a period of three years, with effect from 15th November, 2001 to 14th November, 2004.
5. The petitioner company made investments to the tune of Rs. 2.25 crores for beautification and maintenance of the Them Park. By an office memo dated 4.7.2003, the petitioner company was granted the leave to use the space on the uppermost portion. i.e. 300 ft. x 20 ft. (total 6000 sq.ft.).
6. The petitioner company has been paying an annual rent of Rs. 12.24,000/- for total display of 11,600 sq.ft. within which the petitioner company had to put up a huge advertisement display of West Bengal Industrial Development Corporation, free of all costs and charges. In the month of August, 2004 the petitioner company was informed that the annual rent would be substantially increased at the time of renewal.
7. Accordingly, in the month of August-September, 2004, the petitioner company made applications for renewal before the PWD authorities and also before the Hon’ble Chief Minister and the Minister-in-Chage of the PWD. By a notice dated 8.11.04 issued by the Executive Engineer, Barasat Highway Division, PWD, the petitioner company was directed to remove the advertisement and hand over the Theme Park to the Assistant Engineer, Baguihati Highway Sub-Division on 15th November, 2004. In the said notice, it was stated that your petitioners had not applied for renewal of the said agreement, which is absolutely contrary to the facts.
8. By an office memo dated 9.11.04, the Chief Engineer (Roads) communicated to the petitioner company that the license agreement might be renewed for a period of three years and your petitioner would be required to pay an annual rent of Rs. 41,98,720/- for displaying advertisements in an area of 5600 sq.ft. to the Public Works Department. The office memo dated 9.11.04 implies that the petitioner company would be required to pay 7 times the current annual rent of half the total display area presently used by the petitioner company.
9. On 21st October, 2003, the PWD has issued license in favour of “pioneer publicity corporation” for execution of work of beautification and maintenance of the verge road divider along with 5 Nos. of bus shelters, 3 Nos. of gantries, 32 Nos. of double sided backlit signage and Kiosks on electric poles in the central verge with advertisements rights on Kazi Nazrul Islam Avenue (VIP Road) (starting from Ultadanga to 70 metres before airport crossing) approximately 8 kms. for rent of Rs. 2.00 lakhs for the entire contractual period of six years.
10. Measurement of the land occupied by the structure supporting the display board was made by the Executive Engineer, Government of West Bengal on 6th April, 2005 in presence of the writ petitioner’s representative and his report has been field in Court on 7th April, 2005. The area of land occupied by the structure supporting the display board has been found to be 220.9 meter, say 221 sq.mts.
11. Mr. Anindya Mitra, learned senior counsel appearing on behalf of the petitioners submits that under the agreement of license the petitioner was to pay for 12000 sq.ft. of display board at the rate of Rs. 12,24,000/- per annum with an obligation to beautify and maintain the Theme Park at its own costs and with further obligations to allow free display of the Government advertisement in the middle of the display board. By the impugned order dated 9th November 2004 the Government has proposed the renewal fees of Rs. 41,98,720/- for the lower part of the display board (6000 sq.ft.). Mr. Mitra further submits that for the upper part of the display board, the Government had issued memo dated 1st December, 2004 expressing the willingness to renew but have not mentioned any rate.
12. The learned senior counsel of the petitioners thus contends that the Government previously under the agreement of license was charging Rs. 6,12,000/- per annum for 6000 sq.ft. of lower part of the display board which is now proposed to be increased 700%. The learned senior counsel of the petitioners submits that the Government has not been able to show any evidence or record that the during the last three years, license fee for other display boards have gone up by 700%.
13. The respondent authorities, however, referred to and relied upon the circular dated 3rd September, 2002 issued by the Deputy Secretary (III), Public Works department, Government of West Bengal as the basis for the proposed enhancement and/or revision of license fees. The relevant portion of the said circular which is applicable in the facts of the present case is quoted hereunder:
In no case the accepted rate will fall below the reserve rate as follows :-
Sl. No. Classification of locality Rate
1. Land and Bridges falling Rs. 8000/-
within the Kolkata (Rupees Eight thousand)
Municipal Corporation Area only per Sq.mtr.
And in VIP Road, Jessore per annum.
Road and B.T. Road.
14. The learned Counsel of the petitioners, however, submits that the aforesaid circular dated 3rd September, 2002 does not apply to the facts of the present case for the reasons summarized hereinbelow:
(1) Circular relates to the display board simpliciter and not in respect of the display board with an obligation for beautification and maintenance of Theme Park free of costs and space for display of Government advertisement free of costs.
(2) The said circular became effective on 3rd September, 2002. License for additional display board of 6000 sq.ft. on upper most portion was granted by the Government on 4th July, 2003. The rate of Rs. 8000/- per sq. meter as provided in the circular has not been applied even on July 4, 2003 and much lesser rate was charged for the upper most portion of the display board measuring 6000 sq.ft. which was Rs. 51,000/- per month aggregating to Rs. 6,12,000/- per annum. This fact clearly shows that even the Government did not consider that the circular of September 3, 2002 was applicable in the case of display board with obligation to beautify and maintain the land underneath as a Theme Park and with the additional obligation to provide free space in the display board to the Government.
(3) In the case of Pioneer, the rates stipulated in the Government’s circular dated 3rd September, 2002 was not applied to the display board and advertisement materials. Both the Pioneer and the writ petitioner have undertaken the responsibility of beautification and maintenance of the concerned area free of costs which amounts to another admission by the Government that the circular dated 3rd September. 2002 do not apply in the case of license for the display board with an obligation for beautification and maintenance of the concerned area.
(4) In the case of Pioneer the total area of various display boards and signage etc. amounts to an aggregate of 19600 Sq.ft. which is equal to approximately to 1888.25 sq.mts. The lump sum annual fee for the period of six years has been fixed at Rs. 2 lakhs amounting to Rs. 33,330/- per annum in case of Pioneer. The area of display boards of 1888.24 sq.mts. of the Pioneer divided by Rs. 33,330/- works out at Rs. 17.65 paise per sq. meter per annum whereas under the circular dated 3.9.02 it should have been Rs. 8.000/- per sq. meter. Mr. Mitra further submits that the State Government did not disclose any basis for non-application of the circular dated 3rd September, 2002 in the case of the Pioneer and on the contrary the respondent State Government has sought to suggest that Pioneer has undertaken the beautification and maintenance at considerable costs and therefore, the contract of Pioneer stands on different footing. It has been urged before this Court that the petitioners and the Pioneer, both stand on the same footing and no reason for discrimination between the Pioneer and the petitioners has been disclosed by the respondent State Government.
(5) It has also been submitted that the Pioneer was given the license even without inviting any tender and only adopting the procedure and private negotiation.
(6) The learned senior counsel of the petitioners submits that no reason has been assigned by the respondent State Government as to why the same rate, as has been applied in the case of Pioneer, should not be made applicable in the case of the petitioner.
(7) The learned senior counsel of the petitioners also raised a question to the effect that whether proposed license fees of the petitioner has been calculated in accordance with the Government circular of fee dated 3rd September, 2002.
(8) Referring to the aforesaid circular dated 3rd September, 2002, it has been submitted on behalf of the petitioners that the rate in respect of the lands and bridges in KMC area, VIP Road, Jessore Road and BT Road has been fixed at the rate of Rs. 8000/- sq. mt. per annum.
(9) According to the petitioners, display board are put up at height on air which only occupies the air space and the structure supporting the display board occupies the land. Therefore, it has been contended on behalf of the petitioners that the rate of Rs. 8000/- per sq. mt. should reasonably be calculated on the basis of land occupied by the structure supporting the display board high up in the air and the Government cannot let out air space calculated at the rate mentioned in the Government’s circular.
15. Mr. Mitra, learned senior counsel of the petitioners further raised a question in this regard that whether out of the said sum of Rs. 17.68.000/-, Government should allow the rebate of the petitioner on the following grounds:
(a) Free user by the Government of the middle portion of the display board which is 6000 sq.ft. but as per the agreement is 3000 sq.ft.
(b) The cost of maintenance and beautification of Theme Park. As already submitted the circular dated 3rd September, 2002 does not apply to license for display board with an obligation on the part of the licensee to maintain and beautify the land on which the structure stands and with additional obligation to provide l/3rd of the display board for the Government use free of costs.
16. The learned senior counsel of the petitioners further submits that Government has made hostile discrimination between Pioneer and the writ petitioner. According to Mr. Mitra, Pioneer was granted license on 21st October, 2003. License for the upper most display board was granted to the petitioner on 4th July, 2003 and license for renewal has been proposed by the Government on 9th November, 2004. Mr. Mitra further submits that both the writ petitioner and the Pioneer have the obligation to maintain and beautify the area occupied by the structure supporting the hoarding although it does not appear that Pioneer has any obligation to provide any portion of such display board for Government use free of costs.
17. Mr. Mitra therefore, submits that the Government has not been able to disclose any basis, rational or otherwise to support the proposed exorbitant increase of the annual rate of rent for the purpose of renewing the license of the petitioner herein.
18. The learned advocate of the respondents, however, submits that contractual disputes raised in this writ petition cannot be decided by the writ Court. In support of the aforesaid argument. Mr. Arabinda Chatterjee, learned Counsel of the respondents referred to and relied upon a decision of the Hon’ble Supreme Court in the case of National Highways Authority of India v. Ganga Enterprises and Anr. .
19. Mr. Chatterjee further submits that the earlier contract of the petitioner expired in November, 2004 and the renewal clause mentioned in the said contract should be regulated as per the Government order prevailing at the time of renewal. According to Mr. Chatterjee, renewal of a contract is always a fresh grant on fresh terms and relates to the enhancement of the rent. The learned Counsel of the respondents submits that agreement with the petitioner was executed in November, 2001 on the basis of the ordinary principles of law of contract and by invoking the renewal clause, the State Government merely made an offer with fresh terms which may not be acceptable to the petitioner.
20. The learned Counsel of the respondents urged before this Court that every act of statutory body may not always involve an exercise of statutory power and such activities may not raise any issue of public law. In the present case, according to the respondents, renewal of the agreement is not a statutory contract and the disputes relating to the terms and conditions of the renewal of a contract cannot be agitated in the writ jurisdiction of this Hon’ble Court. Mr. Chatterjee, learned Counsel of the respondents further submits that the renewal of the contract cannot, in any event be regarded as continuance of the contract.
21. It has also been submitted on behalf of the respondents that the rate of display depends on the location and not the contents of the advertisement. In the present case, according to the respondents rate of advertisement has been fixed on the basis of the display area and the location in question. Mr. Chatterjee specifically submits before this Court that in view of the circular dated 3rd September, 2002, the rate has been rightly charged for display of the advertisement boards at the rate of Rs. 8000/- per sq. meter per year.
22. The learned Counsel of the respondents specifically urged before this Court that the other advertising agency, namely, the Pioneer and the petitioner herein cannot be placed in the same footing as regards to the fixation of rates in question in view of the fact that the extra work done by the Pioneer free of cost cannot be altogether ignored and thus, the petitioner’s contract regarding display of the advertisement boards cannot be equated with the other advertising agency, namely, the Pioneer. Mr. Chatterjee also submits that the Judgments relied upon by the petitioners is no longer applicable to the facts and circumstances of this case as in the said Judgments relied upon by the petitioners, the contract was subsisting whereas in the present case, according to Mr. Chatterjee, no contract is subsisting as the renewal of the contract cannot in any way be regarded as the continuance of the earlier contract.
23. Undisputedly, agreement of license specifically provides for renewal of the same although no formula or guideline has been mentioned in the renewal clause of the earlier agreement. However, the fixation of the renewal fees under no circumstances can be arbitrary or discriminatory one.
24. The sudden enhancement of the license fees for renewing the license granted earlier to the petitioner, in the present case, is not only unreasonable and arbitrary but the same is also discriminatory in view of the fact that different yardsticks have been applied while renewing similar type of license of the other advertising agency, namely, the Pioneer. The aforesaid unreasonable and discriminatory acts of the concerned respondents in fixing the rate for renewal of the license in question cannot escape judicial scrutiny on the ground that the decision of the respondent authorities in fixing the rate of renewal fees is not only unreasonable and arbitrary but the same is also discriminatory.
25. Undisputedly, the original license agreement specifically provides the renewal clause and the respondent authorities herein are also agreeable to renew the license subject to payment of renewal fees. Although the respondents are entitled to fix the license fees for renewing the license but in the present case, the concerned respondent, namely, the Executive Engineer, Barasat Highway Division – I, agreed to renew the license for displaying the advertisements in the said Theme Park subject to payment of the annual rent amounting to Rs. 41,98,720/- instead of the previous license fees of Rs. 51,000/-per month aggregating to Rs. 6,12,000/- per annum.
26. The aforesaid enhancement of the license fees by the respondent authorities for renewing the license virtually made the renewal clause of the earlier agreement invalid or infructuous. Furthermore, no basis has been disclosed by the respondents for enhancing the license fees from Rs. 6,12,000/- per annum to Rs. 41,98,720/- only after a period of three years as the previous agreement was executed in the year 2001 for a period of three years only which expired in the month of November, 2004.
27. The respondent authorities, in my view, cannot fix the renewal fees at an extraordinary high rate in order to render the renewal clause of the original agreement invalid and/or inoperative.
28. The basis of the license fee under circular dated 3rd November, 2002 is not applicable in the facts of the present case as the petitioners herein are obliged to maintain and beautify the Theme Park where the display boards of the petitioners are advertised even though the beautification of the area has not been contemplated in the aforesaid circular in question.
29. Furthermore, the basis of fixing rent has also not been disclosed in the aforesaid circular dated 3rd September, 2002. The respondent authorities while disclosing the charges for displaying the advertisements did not consider the price of the land which is to be used and/or utilised for the purpose of displaying the advertisements.
30. Mr. Chatterjee, learned Counsel of the respondents although urged before this Court that the provision of Article 14 of the Constitution of India is not at all applicable in the contractual field but the same cannot be accepted in view of the various decisions of the Supreme Court of India.
31. In view of the large number of judicial pronouncements of the Hon’ble Supreme Court, it can be said without any hesitation that a writ petition under Article 226 of the Constitution of India is very much maintainable to enforce even a contractual obligation of the State or its instrumentality at the instance of any aggrieved party. Mr. Arabinda Chatterjee, learned Counsel of the respondents cited a decision of the Supreme Court in the case of National Highways Authority of India v. Ganga Enterprises and Anr. in support of his contention that in a contractual dispute, writ Court is not the appropriate forum.
32. In the aforesaid case, the writ petition was admittedly filed challenging the forfeiture of security deposit and for refund of the amount of security deposit. The contract provides for forfeiture of security deposit and the terms of the contract were not contrary to Indian Contract Act. Thus, the dispute involved was covered by contract clause but in this case, there is no clause in the contract for license for fixation of the rate of license during the period of renewal. Secondly, the security deposit was given by way of bank guarantee and the Supreme Court held that the settled law is that the contract of guarantee is a separate contract by itself and therefore, invocation of bank guarantee would not be interfered with when invocation is not against the terms of the bank guarantee. Thirdly, the forfeiture of security deposit was challenged to be without authority of law and that there was no binding contract between the parties. The dispute was whether there was a concluded contract or not. Accordingly, in this case, there is no dispute that the contract has been concluded. There is no dispute regarding the terms of the contract of license. It is mentioned in the contract that it is renewable but the renewal fees have not been mentioned in the contract. The only question is whether the Government can fix the fees for renewal period in an arbitrary, unreasonable and discriminatory manner, which is completely within the scope of judicial review under Article 14 of the Constitution of India.
33. In the subsequent decision of the Supreme Court, it has been clearly held that Article 14 is very much applicable even in the contractual field.
34. In the case of Jamshed Howmusji Wadiav. Board of Trustees, Port of Mumbai and Anr. , the Hon’ble Supreme Court held as follows:
16. The position of law is settled that the State and its authorities including instrumentalities of States have to be just, fair and reasonable in all their activities including those in the field of contracts. Even while playing the role of a landlord or a tenant, the State and its authorities remain so and cannot be heard or seen causing displeasure or discomfort to Article 14 of the Constitution of India.
18. In our opinion, in the field of contracts the State and its instrumentalities ought to so design their activities as would ensure fair competition and non-discrimination. They can augment their resources but the object should be to serve the public cause and to do public good by resorting to fair and reasonable methods. The State and its instrumentalities, as the landlords, have the liberty of revising the rates of rent so at to compensate themselves against loss caused by inflationary tendencies. They can – and rather must also save themselves from negative balances caused by the cost of maintenance, payment of taxes and costs of administration. The State, as the landlord, need not necessarily be a benevolent and good charitable Samaritan. The felt need for expanding or stimulating its own activities or other activities in the public interest having once arisen, the State need not hold its hands from seeking eviction of its lessees. However, the State cannot be seen to be indulging in rack-renting, profiteering and indulging in whimsical or unreasonable evictions or bargains.
35. A similar view has also been taken in the case of ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Ltd. and Ors. .
36. For the aforementioned reasons, the impugned Memos dated 8th November, 2004 and 9th November, 2004 cannot be sustained and the same are accordingly quashed.
37. The respondents herein are also directed to renew the license agreement of the petitioner dated 23rd November, 2001 for a further period of three years w.e.f. 15th November, 2004 as agreed by the respondent authorities and mentioned in the impugned Memo dated 9th November, 2004 either on the same financial terms or enhancing the renewal fees to a reasonable extent which should not be more than double the existing rate under any circumstances.
38. The respondents are further directed to adjust the amount already received from the petitioner in terms of the earlier order passed by this Court in this matter from the future renewal fees.
39. This writ petition thus stands allowed. There will be, however, no order as to costs.
Let urgent xerox plain copy of this Judgment duly countersigned by the Assistant Registrar (Court) be handed over to the learned advocates of the parties upon compliance with usual undertaking in this regard.