published in http://judis.nic.in/judis_andhra/filename=10241
HON'BLE SRI JUSTICE C.V. NAGARJUNA REDDY
W.P.Nos.14577 of 2013 and batch
16-8-2013
S.C.R. Caterers, Dry Fruits, Fruit Juice Stalls Welfare Association,Warasiguda,
Secunderabad,Represented by its Secretary Ritesh Kaushik.. Petitioner
Senior Divisional Commercial Manager,Vijayawada Division, South Central
Railways,Vijayawada, Krishna District and others.. Respondents
Counsel for petitioner : Sri C. Ramachandra Raju
Counsel for respondents : Sri T.S. Venkataramana
<GIST:
>HEAD NOTE :
?CASES REFERRED :
Nil
W.P.14577, 14888, 15072 OF 2013
The Court made the following :
COMMON JUDGMENT:
The parties as well as the subject matter of the dispute in these Writ
Petitions are common.
As such, they are heard and being disposed of together.
INTRODUCTION:
The petitioner in these Writ Petitions is the South Central Railway
Caterers, Dry Fruits, Fruit Juice Stalls Welfare Association, Warasiguda,
Secunderabad.
W.P.No.14577/2013 is filed on behalf of the members of the
petitioner-Association running canteens in 25 Railway Stations of the Vijayawada
Division.
W.P.No.14888/2013 is filed by the members of the petitioner-
Association running catering stalls and fruit juice stalls in 29 Railway
Stations of the Vijayawada Division.
W.P.No.15072/2013 is filed on behalf of
the members of the petitioner-Association running catering and other stalls in
various Railway Stations of the Guntakal Division.
THE FACTS:
The members of the petitioner-Association were granted licences for
running General Minor Units (GMUs) or Special Minor Units (SMUs), as the case
may be, in Categories A, B and C Railway Stations. The said licences were
granted prior to the creation of the Indian Railways Catering and Tourism
Corporation Limited (IRCTC) under the Catering Policy 2005 (for short "the 2005
Policy"). Under the 2005 Policy, the contracts under Categories A, B and C
Railway Stations were transferred to the IRCTC while continuing the contracts
granted under Categories D to F Railway Stations under the control of the South
Central Railways (SCR) till the IRCTC was equipped to take over these Units. It
is not in dispute that the contracts held by the members of the petitioner-
Association were renewed during the subsistence of the 2005 Policy. The 2005
Policy was replaced by the Catering Policy 2010 (for short "the 2010 Policy").
Under this Policy, contracts of all the existing major and minor catering units
will be awarded and managed by the Zonal Railways, except Food Plaza, Food
Courts and Fast Food Units. It has also envisaged taking over of the management
of all mobile catering services including base kitchens and mobile catering
through departmental catering in a phased manner. The IRCTC was left with
running of the Food Plaza, Food Courts and Fast Food Units alone.
Consequent on the 2010 Policy, the Chief Commercial Manager of respondent
No.3 has issued Circular No.78/F/Catering Policy/2010, dated 23-8-2011 wherein
it is mentioned that the SCR has decided to grant renewal of licences for a
period of three years w.e.f. 21-7-2010 i.e., the date on which the 2010 Policy
was made effective in respect of the GMUs and SMUs taken over from the IRCTC,
subject to the conditions stipulated in paras 16.1.3 and 16.2.1 of the 2010
Policy. Consequently, proceedings were issued by the Vijayawada and Guntakal
Divisions renewing the licences of the members of the petitioner-Association
from
21-7-2010 to 20-7-2013. On the eve of expiry of these licences, the Senior
Divisional Commercial Manager, Vijayawada, has issued bid notice
No.B/C.79/GMUs/BZA/2, Notice No.01/2013, dated 26-4-2013 inviting sealed bids on
the Single Stage Two-Packet System from food and catering service providers for
provision of catering services at the various GMUs of Categories A and B Railway
Stations in the Vijayawada Division. A similar notification dated 3-5-2013 was
issued for establishment of catering stalls/fruits and fruit juice stalls in
SMUs in A1, A and B Category Railway Stations. The Senior Divisional Commercial
Manager, Guntakal of respondent No.3 has issued a similar tender notice dated
15-5-2013 for running of SMUs in A1, A and B category Railway Stations falling
under the Guntakal Division. Feeling aggrieved by these tender notifications,
the petitioner filed these Writ Petitions.
THE PLEADINGS:
The main plea of the petitioner, which is common in all these three Writ
Petitions, is that under the 2010 Policy, the existing licencees are entitled
for renewal of their licences for a period of three years each time in respect
of both the GMUs and SMUs in A, B and C Category Railway Stations subject to
their satisfactory performance, payment of all dues and arrears and withdrawal
of Court cases, if any, and that only in cases where the renewal of licences was
not made due to non-performance, non-payment of arrears/dues and pendency of
Court cases, the licences will be awarded through fresh tenders. The petitioner
has filed material in support of this plea, which will be discussed infra.
It needs to be pointed out at this stage that the Writ Petitions were
initially filed only against the Senior Divisional Commercial Manager,
Vijayawada and Guntakal Divisions in the respective Writ Petitions. However, on
the objection taken by the learned Standing Counsel for the SCR, applications
for impleadment of the Union of India and the South Central Railways as
respondent Nos.2 and 3 were filed by the petitioner. This Court, by order dated
18-7-2013 allowed the said applications, following which the impleaded
respondents have filed counter-affidavits similar to that filed by the original
respondent.
Sri T.S. Venkata Ramana, learned Standing Counsel for the SCR who entered
appearance for the Senior Divisional Commercial Managers, Vijayawada and
Guntakal Divisions, appeared for the impleaded respondents as well. The learned
Counsel has submitted that the arguments advanced by him on behalf of the
original respondent are adopted by the impleaded respondents as well. The gist
of the counter-affidavits is as follows:
The members of the petitioner-Association were granted licences more than
40 years back in some cases and more than 20 years back in some other cases on
payment of nominal licence fees and their licences were extended from time to
time on more than four occasions. No proof has been submitted by any of the
licencees that they were granted licenses either under the 2005 Policy or under
the 2010 Policy. As they were not granted licences under either of the said
Policies and the licences were granted on nomination basis much earlier thereto,
the members of the petitioner-Association are not entitled for renewal of their
licences. Respondent No.2 has issued commercial circular No.37/2010 dated 9-8-
2010 in continuation of the 2010 Policy with respect to the existing licencees
whose licences expired or going to expire. Under Para 1(d) of the Immediate
Operating Instructions issued under the said circular, the Zonal Railway should
renew all agreements which have expired or are due for expiry in the next six
months by giving extension subject to a maximum extension of six months from the
date of issue of the 2010 Policy. Under Para 1(e) thereof, the Zonal Railways
may take appropriate action as per paras 16 and 17 of the 2010 Policy in respect
of the contracts whenever required. Under proceedings No.2010/TG.III/645/13,
dated 29-12-2010 of respondent No.2, the Zonal Railways were advised that they
should renew all agreements which expired or due for expiry in the next six
months subject to a maximum of six months from the date of issue of the 2010
Policy and as the preparation of the Standard Bid Document (SBD) and model
agreements was entrusted to M/s. RITES and the same was in process, a further
extension of contracts for a period of six months by the Zonal Railways was
permitted. The SBD was prepared and approved by the Ministry of Railways with
the concurrence of the Finance and Legal Directorate of the Railway Board on 5-
7-2011. In pursuance of the instructions issued by the Chief Commercial
Manager, SCR, vide his letter dated 23-8-2011, the licences
transferred to the IRCTC by the Railways from 2005 and continued without any
renewal by the IRCTC between 2005 and 2010, were renewed from 21-7-2010 as a
stop gap arrangement. But once the SBD is released, the question of
continuation of the earlier licencees who were granted licences prior to 2010
Policy does not arise as the extension of their licences was temporary and from
time to time and the claim by the petitioner-Association that the existing
licencees are entitled for further extension/renewal is contrary to Circular
No.37/2010 dated 9-8-2010; proceedings No.2010/T.G.III/645/13, dated 29-11-2010;
and proceedings No.2010/TG.III/600/13, dated 1-7-2011, which only envisaged
temporary extensions with a view to ensure uninterrupted service to the Railway
passengers. The 2010 Policy did not permit renewal of any licences which were
originally granted either by the Railways or by the IRCTC and such renewals are
confined only to fresh stalls which were allotted after 2010.
In short, the stand taken by the respondents is that under the 2010
Policy, such of those licencees who were granted licences under the said Policy
alone are entitled for renewal of their contracts and that those licencees who
were granted licences prior to the 2010 Policy are not entitled for renewal.
THE 2010 POLICY, CIRCULARS AND THE CORRESPONDENCE:
Having regard to the respective pleas of the parties, it is necessary to
refer to the 2010 Policy, the amendments made thereto, the relevant Circulars
and the relevant correspondence in this regard. The paras of the 2010 Policy
which are material for the present purpose are reproduced hereunder :
16. TENURE :
16.1 : TENURE OF MAJOR UNITS & GENERAL MINOR UNITS
16.1.1 Tenure of all major units including food courts, fast food units (except
Food Plazas, Base Kitchens and AVMs) will be for a period of 5 years. There
will be no renewals.
16.1.2 : Tenure of AVMs will be made for a period of 5 years. There will be no
renewals as per policy as these are major units.
16.1.3 : Allotment of all GMUs at A, B & C category stations shall be awarded
for a period of 5 years with a provision for renewal after every 3 years on
satisfactory performance and payment of all dues and arrears and withdrawal of
court cases. Allotment of all GMUs at D, E & F category stations will be for a
period of 5 years with a provision for renewal after every 5 years for a further
period of 5 years on satisfactory performance and payment of all dues and
arrears and withdrawal of court cases, if any.
16.1.4 : Tenure of Food Plaza will be for 9 years with an extension of 3 years
on satisfactory performance and payment of all dues and arrears and withdrawal
of court cases, if any.
16.1.5 : All efforts must be made to manage the services departmentally at the
earliest. The Service contracts for on-board services managed by departmental
supervision would have a tenure for 5 years.
16.2 : TENURE OF SPECIAL MINOR UNITS
16.2.1 : SMUs at A, B and C category stations shall be awarded for a period of 5
years with a renewal after every 3 years on satisfactory performance and payment
of all dues and arrears and withdrawal of court cases, if any.
16.2.2 : SMUs at D, E, F category stations shall be awarded for a period of 5
years with a provision for renewal after every 5 years for a further period of 5
years on satisfactory performance and payment of all dues and arrears and
withdrawal of court cases, if any. Efforts must, however, be made at the time
of renewal to ensure a minimum increase of 10% over the prevailing licence fee.
16.2.3 : Licence fee will be reassessed and revised at the time of each renewal.
To arrive at a realistic figure zonal railways will ensure that a fresh
assessment of sales turnover/revenue is conducted during the peak season and
lean season of the year immediately preceding the year of renewal with the
periodicity of three - three months in order to assess the actual sales turnover
so as to fix the revised licence fee.
16.3 : Allotments after expiry of this extended period will be made by calling
for fresh tenders/applications as the case may be, and the process will be
started well in time so that fresh allotments are finalized timely and further
extension of existing contracts is necessitated.
17. RENEWAL
Renewal will not be a matter of right. The licencee must apply for
renewal minimum 6 (six) months in advance before the expiry of the contract.
Renewal will be based on the following:
17.1 : Satisfactory performance of the licencee during the tenure of the
contract. An imposition of fine/warnings on or more than 5 occasions will
result in rejection of the application for renewal.
17.2 : Payment of all dues/arrears - No Dues Certificate from the concerned
authority, must be attached along with the application for renewal.
17.3 : The applicant must submit the documents afresh along with the renewal
application regarding the details mentioned in para 14.2.1.1, 14.2.1.2 and
14.2.1.3 and in case of GMUs relevant documents as mentioned in the Standard Bid
Documents will be required to be submitted afresh along with the above mentioned
documents.
17.4 : The Annual Confidential Reports (ACRs) on catering performance will be
modified in accordance with this policy. The detailed instructions on ARCs will
be issued by the Railway Board. ACRs maintained by the Railways for the
licencee seeking renewal shall be scrutinized by the Competent Authority
granting renewal. Based on the ACRs for the period of tenure the marks will be
allotted to the licencee. A minimum cut off criteria based on the grading of
the ACRs for grant of renewal must be notified by the Zonal Railways in advance.
17.5 : The licence fee shall be revised and reassessed at the time of each
renewal subject to a minimum increase of 10% of the existing licence fee.
18. FIXATION OF LICENCE FEE
18.1 : Minimum licence fees/minimum reserve price (in case of tendered units)
shall be fixed realistically, equitable in order to have a fair, just and
equitable fixation of licence fees without adversely affecting the quality of
service. It shall be based on the following factors (i) category of station,
(ii) type of licence, (iii) number of originating passengers, (iv) number of
trains stopping (day & night), (v) duration of stoppages (vi) location of the
unit at the station, (vii) approximate licence fees of a similar type of unit at
a similar category of station in proximity. In case of Static Units on Category
'A1' and 'A' stations of Metro cities and 'C' category stations having high
purchasing power, the fixation of minimum licence fee will apart from all other
factors take into account the Circle rates notified by the competent authority
of the State Government as fixed from time to time.The zonal railways shall
evolve a formula based on the above parameters for fixing the licence fees for
the units falling within their jurisdiction. A Committee comprising three SA
Grade officers from Commercial, Finance and Civil Engineering shall be nominated
by the General Manager which shall fix the formula for each category of
stations. The formula so fixed by the zonal railway shall be applicable to the
entire zonal railway. Apart from the above zonal railways may include and
consider any other factor/s unique to the unit/units.
18.2 : Minimum licence fee will be fixed as 12% of the estimated annual sales
turnover for static units, mobile units of Ordinary Mail/Express trains &
premium super fast trains and 15% for Rajdhani/Shatabdi trains/Duronto trains of
the annual sales turnover based on actual occupancy figures certified by the
Train Superintendent.
18.3 : At the time of renewal of licence, licence fee should be
enhanced/reassessed based on actual sales turnover of the unit. Licence fee
will be reassessed and revised at the time of each renewal subject to a minimum
of 10% increase over the prevailing licence fee of the unit. To arrive at a
realistic figure zonal railways will ensure that a fresh assessment of sales
turnover/revenue is conducted during the peak period and lean period i.e., with
the periodicity of three - three months in order to assess the actual sales
turnover so as to fix the revised licence fee. Renewal will be done for the
existing licensees only on withdrawal of court cases by the licensees, if any,
against the railways and payment of railway dues and arrears.
18.4 : No operational charges like haulage/maintenance/detention etc, in case of
mobile services will be recoverable from the licensees. In the case of static
units also there will be no separate charges payable towards rent for
building/land, vender's fee and conservancy charges etc, except electricity and
water charges, which will be based on actual consumption.
18.5 : Minimum licence fee will be fixed by the Zonal Railways (CCMs) for all
major units (except Food Plazas, Fast Food units and Food Courts), GMUs at A, B
& C category stations and SMUs at A, B, C categories of stations as per extant
instructions issued by Railway Board. For GMUs and SMUs at D, E, F categories
of stations minimum licence fee will be fixed by DRMs as per extant instructions
issued by Railway Board.
18.6 : The licence fee will be required to pay all the charges as per the
contract agreement and all statutory duties/charges/levies etc, would also be
borne by the licensee as and when due. However, land licence fee for land
leased to IRCTC will be payable by IRCTC and revenue sharing will be as per
Memorandum of Understanding in vogue from time to time between IR and IRCTC.
As noted from the gist of the counter-affidavits, following the issue of
the 2010 Policy, the Railway Board has issued Immediate Operative Instructions
on 9-8-2010 for implementation of some aspects of the said Policy. Under para
1-(d) thereof, the Zonal Railways were directed to renew all agreements which
have expired or are due for expiry in the next six months by giving extension
subject to a maximum extension of six months from the date of issue of the 2010
Policy. In para-2(iv) it was directed that after taking over the licences, the
Zonal Railways henceforth will reassess the licence fees based on the parameters
stated in the 2010 Policy and the licence fees so assessed shall be levied with
prospective effect at the time of renewal after the date of issue of the 2010
Policy. The applications for renewal will be considered by the Zonal Railways
only after payment of all the dues, licence fees and arrears.
Through its Circular No.78/F/Catering Policy/2010, dated 23-8-
2011, respondent No.3 has decided to grant renewal of licence for a period of
three years w.e.f. 21-7-2010 (the date on which the 2010 Policy was made
effective) in respect of the GMUs and SMUs taken over from the IRCTC subject to
the condition stipulated in paras 16.1.3 and 16.2.1 of the 2010 Policy.
Accordingly, all the licences of the members of the petitioner-Association were
renewed till 20-7-2013.
It is significant to note that the Railway Board has issued commercial
Circular No.03/2012, dated 12/13-1-2012 by which it has amended paras 16.3 and
21 of the 2010 Policy. As para 16.3 alone is relevant for the present purpose,
the existing and the amended paras are extracted hereunder :
Para 16.3 (Existing): Allotments after expiry of this extended period will be
made by calling for fresh tenders/applications as the case may be, and the
process will be started well in time so that fresh allotments are finalized
timely and further extension of existing contracts is necessitated.
Para 16.3 (Amended) : In case of contracts of some units which are not renewed
by the Zonal Railways due to non-performance etc., the process should be
initiated by the zonal railways for fresh allotment well in time to avoid
further extension of existing contracts.
When the respective Divisional Managers have issued tender notifications,
a representation dated 22-5-2013 was made by the General Secretary, South
Central Zone Catering Contractors Welfare Association to the Railway Board.
Consequent thereto, the Additional Member (T&C), Railway Board, New Delhi,
addressed letter dated 13-6-2013 to the General Manager of the South Central
Railway, Secunderabad. The said letter referred to letters No.78/F/Catering
Policy/2010, dated 23-8-2011 and 9-9-2011 of the Chief Commercial
Manager of respondent No.3 renewing the licences of the GMUs/SMUs as well as the
licences granted by the IRCTC for a period of three years in terms of para
16.1.3, 16.2.1 and 18.3 of the 2010 Policy. Para-2 of the letter dated 13-6-
2013, which is very relevant for this case, reads as under:
"By following para No.5 regarding scale of catering services through static
units on each category of Railway Station, a master plan has been prepared, in
view of this contracts for only new identified units (GMUs/SMUs) have to be
awarded by Division under two packet tender system (GMUs) and by calling of
application (SMUs). But South Central Railway Divisions viz., BZA (25 GMU, 29
SMUs), SC (105 GMUs) GTL (14 SMU/19 GMUs) & NED (31 GMU) (total 223) have called
for NIT for GMU and calling for applications for SMUs. In this regard, it is
advised to review the issue of the renewal of all the existing minor static
catering units in terms of para no.18.3 of catering policy, 2010 along with
Board's Comml. Circular no.12/2013 & letter no.2010/T.G.-III/600/25pt.2 dtd.
22/24.1.13 on the matter. It is also advised that Board's letter
no.2012/T.G.III/600/5 dtd. 13/15.3.12 regarding ceiling limit para no.19.2 is
still under review with Board and a final outcome in this regard would be
advised accordingly. To reply various representation received in Board's office
on the above, a detailed report on such references may kindly be sent at the
earliest"
In response to the said letter, the Chief Commercial Manager of respondent No.3
has addressed letter No.C.78/F/Catering Policy/Vol.III, dated 18-6-2013 wherein
he has given Division-wise status of the tender process. The said letter
referred to the view of the Additional Member (T&C), Railway Board, that
contracts for only newly identified units (GMUs/SMUs) have to be awarded by
following the Two-Packet System for GMUs and by calling for applications for
SMUs. In para-5 of the said letter, it is stated as follows :
"This Railway is now proposing to follow para No.16.3 of Correction Slip No.1 to
CommercialCircular No.35/2010 (Catering Policy) issued vide Railway Board's
Commercial circular No.03/2012 dt. 12/13-1-2012. Accordingly, all existing
minor static units (originally awarded by Railway and handed over to IRCTC and
again taken over from IRCTC) will now be processed for further renewals, duly
observing various clauses of Catering Policy 2010, as amended from time to time.
Hence, the tender process initiated for existing minor static units (awarded by
Railway) will be stopped, advising the divisions suitably."
The Additional Member (T&C), Railway Board, has addressed letter dated 18-6-2013
to the General Manager of respondent No.3 wherein he has clarified that para
16.3 of the 2010 Policy was revised by issuing Circular No.3/2012 vide Railway
Board's letter No.2010/T.G.III/600/25/Pt.2 dated 13-1-2012. However, through
his letter dated 19-6-2013, the Additional Member (T&C), Railway Board has
withdrawn his letters dated 13-6-2013 and 18-6-2013 and described his telephonic
conversation referred in para-1 of the Chief Commercial Manager's letter dated
18-6-2013 only as "an informal discussion" which cannot supplement or modify the
existing policy and that while the issue in para-5 of the letter dated 18-6-2013
is under examination of the Railway Board and the outcome will be intimated in
due course, action may be taken in terms of the Policy and the directives in
vogue.
DISCUSSION:
From the operating guidelines issued under the 2010 Policy and the
correspondence exchanged between the Railway Board and respondent No.3, what
emerges is discussed hereunder:
Para 16.1.3 of the 2010 Policy envisages award of licences for GMUs at the
A, B and C category Railway Stations for a period of five years and renewal for
three years on each occasion. However, such renewal is subject to compliance
with three requirements, viz., satisfactory performance, payment of all the dues
and arrears and withdrawal of Court cases, if any, against the Railways.
Similar is the situation in respect of the SMUs at A, B and C category Railway
Stations in para 16.2.1 of the 2010 Policy. Under para-17 thereof, renewal of
licence is not made a matter of right. A licencee must apply for renewal
minimum six months in advance before the expiry of the contract. If the
licencee is imposed fine or administered warnings on more than five occasions,
his application for renewal will be rejected. The licence fee is enhanced/re-
assessed on actual sales turnover of the Unit. Para 18.3 reiterated paras 16
and 17 relating to the conditions subject to which renewal of the existing
licences will be renewed.
The primordium of the respondents' case is rested on circular No.37/2010
dated 9-8-2010 and para 16.3 of the 2010 Policy. It needs to be noted that
while paras 16.1.3, 16.2.1 and 18.3 read together leave no scope for any doubt
that all licencees are entitled for renewal subject to their complying with the
three requirements as envisaged in paras 16.1.3 and 16.2.1, para 16.3 as
originally conceived, created ambiguity which declared that after the expiry of
the extended licences, allotments will be made by calling for fresh
tenders/applications and such process will be started well within the time to
avoid further extensions of the licence periods. This para was however amended
by the Railway Board commercial circular No.03/2012 dated 12/13-1-2012 which was
reproduced hereinbefore. As per this modified para, allotment through fresh
tenders/applications will be made only in cases of contracts which are not
renewed by the Zonal Railways due to non-performance etc. Indeed, the amended
para 16.3 was specifically emphasized by the Additional Member (T&C) in his
letter dated 18-6-2013 addressed to the General Manager of respondent No.3,
which, later, for inexplicable reasons was withdrawn by him along with his
earlier letter dated 13-6-2013. However, as rightly pointed out by him, any
correspondence or communications cannot supplement or modify the existing policy
and its true purport has to be culled out from its own contents.
Be that as it may, respondent No.3 has very correctly understood the scope of
paras 16.1.3, 16.2.1 and 18.3 of the 2010 Policy and renewed the licences in
question for a period of three years. While the 2010 Policy proper has not
envisaged renewal of the existing licences for a period not exceeding six
months, the Immediate Operative Instructions issued in commercial circular
No.37/2010, dated 9-8-2010, has directed the Zonal Railways to renew the
licences for a maximum period of six months from the date of issue of the 2010
Policy. If the 2010 Policy is understood as providing renewals only in respect
of the licences issued under the said Policy, there was no reason why respondent
No.3 has not called for tenders on the expiry of six months period from the date
of coming into force of the 2010 Policy. Instead of calling for tenders,
respondent No.3 has renewed all the GMU and SMU licences for a period of three
years in terms of paras 16.1.3 and 16.2.1 of the 2010 Policy. This was done
even before para 16.3 of the said Policy was amended. Having understood the
2010 Policy in its true spirit even before the amendment of para 16.3, it is
incomprehensible that respondent No.3 projects the said Policy in a different
light by seeking to give it an interpretation which runs contrary to its plain
language. No where in the 2010 Policy, the licencees are classified into two
categories, namely, those who were granted licences prior to the commencement of
the 2010 Policy and those who were granted licences after the said Policy came
into force. On the contrary, all the GMUs and SMUs were treated under one
category. Irrespective of whether the licences were granted by the Railways
prior to 2005 or by the IRCTC from 2005 and by the Indian Railways after 2010,
renewal of licences is envisaged for all these categories of licencees subject
to their fulfillment of the three requirements as referred to hereinbefore.
In this context, it is significant to point out that the Chief Commercial
Manager, Central Railways, Mumbai, in his letter dated 4-4-2012 addressed to the
Additional Member (T&C), Railway Board, pointed out the contradiction between
paras 16.3 and 18.3 of the 2010 Policy and referred to the amendment made to
para 16.3 thereof. However, he has sought for clarification of this ambiguity.
In his letter, the Director (T&C) has referred to the Board's circular No.3/2012
dated 12-1-2012 and stated that in the said circular it was clarified that
renewal of the existing GMUs and SMUs will be considered by the Railways subject
to withdrawal of Court cases by the licencees, if any against the Railways,
payment of the Railway dues and arrears, if any, and satisfactory performance of
the licencees. This letter is a complete fortification of the petitioner's plea
that if a licencee has satisfied the three requirements of satisfactory
performance, not being in arrears and non-pendency of Court cases against the
Railways, he is entitled for renewal of his licence once in every three years.
The plea taken by the respondents is thus contrary to the plain language of the
2010 Policy and their own understanding of the said policy as evident from the
various events referred to above, including the renewal of the licences without
calling for tenders for a period of three years after the advent of the 2010
Policy. I am therefore in complete agreement with the plea of the petitioner-
Association, as ably projected by Mr. C. Ramachandra Raju, its Counsel.
Sri T.S. Venkata Ramana, learned Counsel for the respondents, has
submitted that even assuming that the licences given to the members of the
petitioner-Association are also covered by the 2010 Policy for renewal, they
cannot claim renewal of their licences as of right and that unless they satisfy
the three requirements envisaged by paras 16.1.3 and 16.2.1, they are not
entitled for renewal of the contracts. The learned Counsel also pointed out
that under para 17 of the 2010 Policy, a licencee must apply for renewal at
least six months in advance before the expiry of the contract and that none of
the members of the petitioner-Association have complied with this requirement.
With regard to the first part of the submission of the learned Counsel, I
find myself in agreement with the same.
If and when a licencee applies for
renewal, he needs to satisfy the conditions stipulated in the above mentioned
two paras of the 2010 Policy.
A right for renewal will accrue to such licencee
only if he satisfies those requirements.
However, every licencee has a right to
be considered for renewal in the first place and whether a right for renewal
accrued to him or not depends upon his satisfying the stipulated requirements.
In none of the cases of the members of the petitioner-Association, respondent No.3 has considered renewal of their licences and it has issued the tender notifications under a misconception that the persons who were granted licences in the previous regime are not entitled for renewal.
Respondent No.3 has
therefore to evaluate the performance of each of the licencees seeking renewal
and consider their applications in the light of the conditions stipulated in
paras 16.1.3 and 16.2.1, as the case may be, and take a decision.
With regard to the second part of the submission of the learned Counsel
for the respondents,
it is an admitted fact that none of the licencees in
question have applied for renewal of their respective licences six months in
advance. Significantly, in the affidavits filed in the Writ Petitions, a
reference to the 2005 Policy was made and it was averred that under the said
Policy, a licencee shall apply for renewal one month prior to the expiry of the
licence period and that therefore the members of the petitioner-Association have
got time upto the end of June 2013 to apply for renewal of their licences.
The
learned Counsel for the petitioner has submitted that his clients were under a
mistaken notion that they are entitled to apply for renewal one month prior to
the expiry of their licences and therefore they could not comply with the
requirement of para-17 of the 2010 Policy. He has also submitted that almost
all the licencees are either semi-literates or illiterates and they are not
aware of the implications of non-compliance with the said para.
It is true that under the 2010 Policy, applications for renewal have to be made
at least six months before the expiry of the existing licences and it is equally
true that this condition is not complied with by the members of the petitioner-
Association. But respondent No.3 has refused to renew the licences not on the
ground of failure of the licencees to apply for renewal six months in advance.
On the contrary, the respondents have initiated the tender process in the view
that under the 2010 Policy, these licencees are not entitled for renewal.
Therefore, it would have hardly made any difference even if the members of the
petitioner-Association made their applications six months before the expiry of
their licence periods. In the light of these facts, I am not prepared to non-
suit the members of the petitioner-Association only for the reason of non-
compliance with para-17 of the 2010 Policy. It is not the case of respondent
No.3 that any prejudice is caused to the Railways by such non-compliance by the
members of the petitioner-Association or that the latter's failure to apply for
renewal six months in advance was with any mala fide intention.
I have no
reason to disbelieve the version of the learned Counsel for the petitioner that
his clients' non-compliance with para-17 of the 2010 Policy was a bona fide
mistake. When the licencees are entitled for consideration of their cases for
renewal, it would be wholly iniquitous to deny the same to them on a
technicality such as this. As pointed out hereinbefore, non-consideration of
renewal of licences of the members of the petitioner-Association was not on the
ground that they have not applied for the same six months in advance and this
objection of the respondents, therefore, is a pure afterthought.
The learned Counsel for the respondents submitted that
since the members of the
petitioner-Association have been conducting their respective businesses for the
past 40/20 years, there is no justification for them to seek renewals and that
by renewing their licences, the Railways will lose revenue.
I do not find any merit in this submission.
The 2010 Policy does not
differentiate among the licencees based on the number of years for which they
have been carrying on their businesses.
Moreover, under the 2010 Policy, the
licence fee is liable for revision based on the potentiality of each Railway
Station and the turnover of the licencees during the previous years.
Therefore,
the question of the Railways suffering any loss due to renewals would not arise.
At any rate, in the face of the plain Policy of the Railways providing for
renewal of licences, respondent No.3 cannot act contrary thereto, either on the
ground of the licencees having long standing or the purported loss of revenue.
CONCLUSION AND THE RESULT:
For all the above reasons, I am of the opinion that the claims of the members of
the petitioner-Association for renewal of their licences deserve to be
considered on their own merits and that they are entitled for renewal subject to
their satisfying the conditions stipulated in paras 16.1.3 and 16.2.1 of the
2010 Policy.
In the result, the Writ Petitions are allowed in the following terms:
1. The members of the petitioner-Association shall make applications for renewal
of their licences within one month from today.
2. Respondent No.3 shall consider each of such applications with reference to
paras 16.1.3 and 16.2.1, as the case may be, and communicate its decision to the
members of the petitioner-Association.
3. In the event of rejection of the application of any of the licencees for
renewal, respondent No.3 shall record reasons therefor and communicate the same
to the licencee concerned.
4. Till completion of the above mentioned process, the members of the
petitioner-Association shall be permitted to continue to run their respective
GMUs and SMUs.
As a sequel to the disposal of the Writ Petitions, the Miscellaneous Petitions,
if any pending, shall stand disposed of as infructuous.
________________________
Justice C.V. Nagarjuna Reddy
Date : 16-8-2013
HON'BLE SRI JUSTICE C.V. NAGARJUNA REDDY
W.P.Nos.14577 of 2013 and batch
16-8-2013
S.C.R. Caterers, Dry Fruits, Fruit Juice Stalls Welfare Association,Warasiguda,
Secunderabad,Represented by its Secretary Ritesh Kaushik.. Petitioner
Senior Divisional Commercial Manager,Vijayawada Division, South Central
Railways,Vijayawada, Krishna District and others.. Respondents
Counsel for petitioner : Sri C. Ramachandra Raju
Counsel for respondents : Sri T.S. Venkataramana
<GIST:
>HEAD NOTE :
?CASES REFERRED :
Nil
W.P.14577, 14888, 15072 OF 2013
The Court made the following :
COMMON JUDGMENT:
The parties as well as the subject matter of the dispute in these Writ
Petitions are common.
As such, they are heard and being disposed of together.
INTRODUCTION:
The petitioner in these Writ Petitions is the South Central Railway
Caterers, Dry Fruits, Fruit Juice Stalls Welfare Association, Warasiguda,
Secunderabad.
W.P.No.14577/2013 is filed on behalf of the members of the
petitioner-Association running canteens in 25 Railway Stations of the Vijayawada
Division.
W.P.No.14888/2013 is filed by the members of the petitioner-
Association running catering stalls and fruit juice stalls in 29 Railway
Stations of the Vijayawada Division.
W.P.No.15072/2013 is filed on behalf of
the members of the petitioner-Association running catering and other stalls in
various Railway Stations of the Guntakal Division.
THE FACTS:
The members of the petitioner-Association were granted licences for
running General Minor Units (GMUs) or Special Minor Units (SMUs), as the case
may be, in Categories A, B and C Railway Stations. The said licences were
granted prior to the creation of the Indian Railways Catering and Tourism
Corporation Limited (IRCTC) under the Catering Policy 2005 (for short "the 2005
Policy"). Under the 2005 Policy, the contracts under Categories A, B and C
Railway Stations were transferred to the IRCTC while continuing the contracts
granted under Categories D to F Railway Stations under the control of the South
Central Railways (SCR) till the IRCTC was equipped to take over these Units. It
is not in dispute that the contracts held by the members of the petitioner-
Association were renewed during the subsistence of the 2005 Policy. The 2005
Policy was replaced by the Catering Policy 2010 (for short "the 2010 Policy").
Under this Policy, contracts of all the existing major and minor catering units
will be awarded and managed by the Zonal Railways, except Food Plaza, Food
Courts and Fast Food Units. It has also envisaged taking over of the management
of all mobile catering services including base kitchens and mobile catering
through departmental catering in a phased manner. The IRCTC was left with
running of the Food Plaza, Food Courts and Fast Food Units alone.
Consequent on the 2010 Policy, the Chief Commercial Manager of respondent
No.3 has issued Circular No.78/F/Catering Policy/2010, dated 23-8-2011 wherein
it is mentioned that the SCR has decided to grant renewal of licences for a
period of three years w.e.f. 21-7-2010 i.e., the date on which the 2010 Policy
was made effective in respect of the GMUs and SMUs taken over from the IRCTC,
subject to the conditions stipulated in paras 16.1.3 and 16.2.1 of the 2010
Policy. Consequently, proceedings were issued by the Vijayawada and Guntakal
Divisions renewing the licences of the members of the petitioner-Association
from
21-7-2010 to 20-7-2013. On the eve of expiry of these licences, the Senior
Divisional Commercial Manager, Vijayawada, has issued bid notice
No.B/C.79/GMUs/BZA/2, Notice No.01/2013, dated 26-4-2013 inviting sealed bids on
the Single Stage Two-Packet System from food and catering service providers for
provision of catering services at the various GMUs of Categories A and B Railway
Stations in the Vijayawada Division. A similar notification dated 3-5-2013 was
issued for establishment of catering stalls/fruits and fruit juice stalls in
SMUs in A1, A and B Category Railway Stations. The Senior Divisional Commercial
Manager, Guntakal of respondent No.3 has issued a similar tender notice dated
15-5-2013 for running of SMUs in A1, A and B category Railway Stations falling
under the Guntakal Division. Feeling aggrieved by these tender notifications,
the petitioner filed these Writ Petitions.
THE PLEADINGS:
The main plea of the petitioner, which is common in all these three Writ
Petitions, is that under the 2010 Policy, the existing licencees are entitled
for renewal of their licences for a period of three years each time in respect
of both the GMUs and SMUs in A, B and C Category Railway Stations subject to
their satisfactory performance, payment of all dues and arrears and withdrawal
of Court cases, if any, and that only in cases where the renewal of licences was
not made due to non-performance, non-payment of arrears/dues and pendency of
Court cases, the licences will be awarded through fresh tenders. The petitioner
has filed material in support of this plea, which will be discussed infra.
It needs to be pointed out at this stage that the Writ Petitions were
initially filed only against the Senior Divisional Commercial Manager,
Vijayawada and Guntakal Divisions in the respective Writ Petitions. However, on
the objection taken by the learned Standing Counsel for the SCR, applications
for impleadment of the Union of India and the South Central Railways as
respondent Nos.2 and 3 were filed by the petitioner. This Court, by order dated
18-7-2013 allowed the said applications, following which the impleaded
respondents have filed counter-affidavits similar to that filed by the original
respondent.
Sri T.S. Venkata Ramana, learned Standing Counsel for the SCR who entered
appearance for the Senior Divisional Commercial Managers, Vijayawada and
Guntakal Divisions, appeared for the impleaded respondents as well. The learned
Counsel has submitted that the arguments advanced by him on behalf of the
original respondent are adopted by the impleaded respondents as well. The gist
of the counter-affidavits is as follows:
The members of the petitioner-Association were granted licences more than
40 years back in some cases and more than 20 years back in some other cases on
payment of nominal licence fees and their licences were extended from time to
time on more than four occasions. No proof has been submitted by any of the
licencees that they were granted licenses either under the 2005 Policy or under
the 2010 Policy. As they were not granted licences under either of the said
Policies and the licences were granted on nomination basis much earlier thereto,
the members of the petitioner-Association are not entitled for renewal of their
licences. Respondent No.2 has issued commercial circular No.37/2010 dated 9-8-
2010 in continuation of the 2010 Policy with respect to the existing licencees
whose licences expired or going to expire. Under Para 1(d) of the Immediate
Operating Instructions issued under the said circular, the Zonal Railway should
renew all agreements which have expired or are due for expiry in the next six
months by giving extension subject to a maximum extension of six months from the
date of issue of the 2010 Policy. Under Para 1(e) thereof, the Zonal Railways
may take appropriate action as per paras 16 and 17 of the 2010 Policy in respect
of the contracts whenever required. Under proceedings No.2010/TG.III/645/13,
dated 29-12-2010 of respondent No.2, the Zonal Railways were advised that they
should renew all agreements which expired or due for expiry in the next six
months subject to a maximum of six months from the date of issue of the 2010
Policy and as the preparation of the Standard Bid Document (SBD) and model
agreements was entrusted to M/s. RITES and the same was in process, a further
extension of contracts for a period of six months by the Zonal Railways was
permitted. The SBD was prepared and approved by the Ministry of Railways with
the concurrence of the Finance and Legal Directorate of the Railway Board on 5-
7-2011. In pursuance of the instructions issued by the Chief Commercial
Manager, SCR, vide his letter dated 23-8-2011, the licences
transferred to the IRCTC by the Railways from 2005 and continued without any
renewal by the IRCTC between 2005 and 2010, were renewed from 21-7-2010 as a
stop gap arrangement. But once the SBD is released, the question of
continuation of the earlier licencees who were granted licences prior to 2010
Policy does not arise as the extension of their licences was temporary and from
time to time and the claim by the petitioner-Association that the existing
licencees are entitled for further extension/renewal is contrary to Circular
No.37/2010 dated 9-8-2010; proceedings No.2010/T.G.III/645/13, dated 29-11-2010;
and proceedings No.2010/TG.III/600/13, dated 1-7-2011, which only envisaged
temporary extensions with a view to ensure uninterrupted service to the Railway
passengers. The 2010 Policy did not permit renewal of any licences which were
originally granted either by the Railways or by the IRCTC and such renewals are
confined only to fresh stalls which were allotted after 2010.
In short, the stand taken by the respondents is that under the 2010
Policy, such of those licencees who were granted licences under the said Policy
alone are entitled for renewal of their contracts and that those licencees who
were granted licences prior to the 2010 Policy are not entitled for renewal.
THE 2010 POLICY, CIRCULARS AND THE CORRESPONDENCE:
Having regard to the respective pleas of the parties, it is necessary to
refer to the 2010 Policy, the amendments made thereto, the relevant Circulars
and the relevant correspondence in this regard. The paras of the 2010 Policy
which are material for the present purpose are reproduced hereunder :
16. TENURE :
16.1 : TENURE OF MAJOR UNITS & GENERAL MINOR UNITS
16.1.1 Tenure of all major units including food courts, fast food units (except
Food Plazas, Base Kitchens and AVMs) will be for a period of 5 years. There
will be no renewals.
16.1.2 : Tenure of AVMs will be made for a period of 5 years. There will be no
renewals as per policy as these are major units.
16.1.3 : Allotment of all GMUs at A, B & C category stations shall be awarded
for a period of 5 years with a provision for renewal after every 3 years on
satisfactory performance and payment of all dues and arrears and withdrawal of
court cases. Allotment of all GMUs at D, E & F category stations will be for a
period of 5 years with a provision for renewal after every 5 years for a further
period of 5 years on satisfactory performance and payment of all dues and
arrears and withdrawal of court cases, if any.
16.1.4 : Tenure of Food Plaza will be for 9 years with an extension of 3 years
on satisfactory performance and payment of all dues and arrears and withdrawal
of court cases, if any.
16.1.5 : All efforts must be made to manage the services departmentally at the
earliest. The Service contracts for on-board services managed by departmental
supervision would have a tenure for 5 years.
16.2 : TENURE OF SPECIAL MINOR UNITS
16.2.1 : SMUs at A, B and C category stations shall be awarded for a period of 5
years with a renewal after every 3 years on satisfactory performance and payment
of all dues and arrears and withdrawal of court cases, if any.
16.2.2 : SMUs at D, E, F category stations shall be awarded for a period of 5
years with a provision for renewal after every 5 years for a further period of 5
years on satisfactory performance and payment of all dues and arrears and
withdrawal of court cases, if any. Efforts must, however, be made at the time
of renewal to ensure a minimum increase of 10% over the prevailing licence fee.
16.2.3 : Licence fee will be reassessed and revised at the time of each renewal.
To arrive at a realistic figure zonal railways will ensure that a fresh
assessment of sales turnover/revenue is conducted during the peak season and
lean season of the year immediately preceding the year of renewal with the
periodicity of three - three months in order to assess the actual sales turnover
so as to fix the revised licence fee.
16.3 : Allotments after expiry of this extended period will be made by calling
for fresh tenders/applications as the case may be, and the process will be
started well in time so that fresh allotments are finalized timely and further
extension of existing contracts is necessitated.
17. RENEWAL
Renewal will not be a matter of right. The licencee must apply for
renewal minimum 6 (six) months in advance before the expiry of the contract.
Renewal will be based on the following:
17.1 : Satisfactory performance of the licencee during the tenure of the
contract. An imposition of fine/warnings on or more than 5 occasions will
result in rejection of the application for renewal.
17.2 : Payment of all dues/arrears - No Dues Certificate from the concerned
authority, must be attached along with the application for renewal.
17.3 : The applicant must submit the documents afresh along with the renewal
application regarding the details mentioned in para 14.2.1.1, 14.2.1.2 and
14.2.1.3 and in case of GMUs relevant documents as mentioned in the Standard Bid
Documents will be required to be submitted afresh along with the above mentioned
documents.
17.4 : The Annual Confidential Reports (ACRs) on catering performance will be
modified in accordance with this policy. The detailed instructions on ARCs will
be issued by the Railway Board. ACRs maintained by the Railways for the
licencee seeking renewal shall be scrutinized by the Competent Authority
granting renewal. Based on the ACRs for the period of tenure the marks will be
allotted to the licencee. A minimum cut off criteria based on the grading of
the ACRs for grant of renewal must be notified by the Zonal Railways in advance.
17.5 : The licence fee shall be revised and reassessed at the time of each
renewal subject to a minimum increase of 10% of the existing licence fee.
18. FIXATION OF LICENCE FEE
18.1 : Minimum licence fees/minimum reserve price (in case of tendered units)
shall be fixed realistically, equitable in order to have a fair, just and
equitable fixation of licence fees without adversely affecting the quality of
service. It shall be based on the following factors (i) category of station,
(ii) type of licence, (iii) number of originating passengers, (iv) number of
trains stopping (day & night), (v) duration of stoppages (vi) location of the
unit at the station, (vii) approximate licence fees of a similar type of unit at
a similar category of station in proximity. In case of Static Units on Category
'A1' and 'A' stations of Metro cities and 'C' category stations having high
purchasing power, the fixation of minimum licence fee will apart from all other
factors take into account the Circle rates notified by the competent authority
of the State Government as fixed from time to time.The zonal railways shall
evolve a formula based on the above parameters for fixing the licence fees for
the units falling within their jurisdiction. A Committee comprising three SA
Grade officers from Commercial, Finance and Civil Engineering shall be nominated
by the General Manager which shall fix the formula for each category of
stations. The formula so fixed by the zonal railway shall be applicable to the
entire zonal railway. Apart from the above zonal railways may include and
consider any other factor/s unique to the unit/units.
18.2 : Minimum licence fee will be fixed as 12% of the estimated annual sales
turnover for static units, mobile units of Ordinary Mail/Express trains &
premium super fast trains and 15% for Rajdhani/Shatabdi trains/Duronto trains of
the annual sales turnover based on actual occupancy figures certified by the
Train Superintendent.
18.3 : At the time of renewal of licence, licence fee should be
enhanced/reassessed based on actual sales turnover of the unit. Licence fee
will be reassessed and revised at the time of each renewal subject to a minimum
of 10% increase over the prevailing licence fee of the unit. To arrive at a
realistic figure zonal railways will ensure that a fresh assessment of sales
turnover/revenue is conducted during the peak period and lean period i.e., with
the periodicity of three - three months in order to assess the actual sales
turnover so as to fix the revised licence fee. Renewal will be done for the
existing licensees only on withdrawal of court cases by the licensees, if any,
against the railways and payment of railway dues and arrears.
18.4 : No operational charges like haulage/maintenance/detention etc, in case of
mobile services will be recoverable from the licensees. In the case of static
units also there will be no separate charges payable towards rent for
building/land, vender's fee and conservancy charges etc, except electricity and
water charges, which will be based on actual consumption.
18.5 : Minimum licence fee will be fixed by the Zonal Railways (CCMs) for all
major units (except Food Plazas, Fast Food units and Food Courts), GMUs at A, B
& C category stations and SMUs at A, B, C categories of stations as per extant
instructions issued by Railway Board. For GMUs and SMUs at D, E, F categories
of stations minimum licence fee will be fixed by DRMs as per extant instructions
issued by Railway Board.
18.6 : The licence fee will be required to pay all the charges as per the
contract agreement and all statutory duties/charges/levies etc, would also be
borne by the licensee as and when due. However, land licence fee for land
leased to IRCTC will be payable by IRCTC and revenue sharing will be as per
Memorandum of Understanding in vogue from time to time between IR and IRCTC.
As noted from the gist of the counter-affidavits, following the issue of
the 2010 Policy, the Railway Board has issued Immediate Operative Instructions
on 9-8-2010 for implementation of some aspects of the said Policy. Under para
1-(d) thereof, the Zonal Railways were directed to renew all agreements which
have expired or are due for expiry in the next six months by giving extension
subject to a maximum extension of six months from the date of issue of the 2010
Policy. In para-2(iv) it was directed that after taking over the licences, the
Zonal Railways henceforth will reassess the licence fees based on the parameters
stated in the 2010 Policy and the licence fees so assessed shall be levied with
prospective effect at the time of renewal after the date of issue of the 2010
Policy. The applications for renewal will be considered by the Zonal Railways
only after payment of all the dues, licence fees and arrears.
Through its Circular No.78/F/Catering Policy/2010, dated 23-8-
2011, respondent No.3 has decided to grant renewal of licence for a period of
three years w.e.f. 21-7-2010 (the date on which the 2010 Policy was made
effective) in respect of the GMUs and SMUs taken over from the IRCTC subject to
the condition stipulated in paras 16.1.3 and 16.2.1 of the 2010 Policy.
Accordingly, all the licences of the members of the petitioner-Association were
renewed till 20-7-2013.
It is significant to note that the Railway Board has issued commercial
Circular No.03/2012, dated 12/13-1-2012 by which it has amended paras 16.3 and
21 of the 2010 Policy. As para 16.3 alone is relevant for the present purpose,
the existing and the amended paras are extracted hereunder :
Para 16.3 (Existing): Allotments after expiry of this extended period will be
made by calling for fresh tenders/applications as the case may be, and the
process will be started well in time so that fresh allotments are finalized
timely and further extension of existing contracts is necessitated.
Para 16.3 (Amended) : In case of contracts of some units which are not renewed
by the Zonal Railways due to non-performance etc., the process should be
initiated by the zonal railways for fresh allotment well in time to avoid
further extension of existing contracts.
When the respective Divisional Managers have issued tender notifications,
a representation dated 22-5-2013 was made by the General Secretary, South
Central Zone Catering Contractors Welfare Association to the Railway Board.
Consequent thereto, the Additional Member (T&C), Railway Board, New Delhi,
addressed letter dated 13-6-2013 to the General Manager of the South Central
Railway, Secunderabad. The said letter referred to letters No.78/F/Catering
Policy/2010, dated 23-8-2011 and 9-9-2011 of the Chief Commercial
Manager of respondent No.3 renewing the licences of the GMUs/SMUs as well as the
licences granted by the IRCTC for a period of three years in terms of para
16.1.3, 16.2.1 and 18.3 of the 2010 Policy. Para-2 of the letter dated 13-6-
2013, which is very relevant for this case, reads as under:
"By following para No.5 regarding scale of catering services through static
units on each category of Railway Station, a master plan has been prepared, in
view of this contracts for only new identified units (GMUs/SMUs) have to be
awarded by Division under two packet tender system (GMUs) and by calling of
application (SMUs). But South Central Railway Divisions viz., BZA (25 GMU, 29
SMUs), SC (105 GMUs) GTL (14 SMU/19 GMUs) & NED (31 GMU) (total 223) have called
for NIT for GMU and calling for applications for SMUs. In this regard, it is
advised to review the issue of the renewal of all the existing minor static
catering units in terms of para no.18.3 of catering policy, 2010 along with
Board's Comml. Circular no.12/2013 & letter no.2010/T.G.-III/600/25pt.2 dtd.
22/24.1.13 on the matter. It is also advised that Board's letter
no.2012/T.G.III/600/5 dtd. 13/15.3.12 regarding ceiling limit para no.19.2 is
still under review with Board and a final outcome in this regard would be
advised accordingly. To reply various representation received in Board's office
on the above, a detailed report on such references may kindly be sent at the
earliest"
In response to the said letter, the Chief Commercial Manager of respondent No.3
has addressed letter No.C.78/F/Catering Policy/Vol.III, dated 18-6-2013 wherein
he has given Division-wise status of the tender process. The said letter
referred to the view of the Additional Member (T&C), Railway Board, that
contracts for only newly identified units (GMUs/SMUs) have to be awarded by
following the Two-Packet System for GMUs and by calling for applications for
SMUs. In para-5 of the said letter, it is stated as follows :
"This Railway is now proposing to follow para No.16.3 of Correction Slip No.1 to
CommercialCircular No.35/2010 (Catering Policy) issued vide Railway Board's
Commercial circular No.03/2012 dt. 12/13-1-2012. Accordingly, all existing
minor static units (originally awarded by Railway and handed over to IRCTC and
again taken over from IRCTC) will now be processed for further renewals, duly
observing various clauses of Catering Policy 2010, as amended from time to time.
Hence, the tender process initiated for existing minor static units (awarded by
Railway) will be stopped, advising the divisions suitably."
The Additional Member (T&C), Railway Board, has addressed letter dated 18-6-2013
to the General Manager of respondent No.3 wherein he has clarified that para
16.3 of the 2010 Policy was revised by issuing Circular No.3/2012 vide Railway
Board's letter No.2010/T.G.III/600/25/Pt.2 dated 13-1-2012. However, through
his letter dated 19-6-2013, the Additional Member (T&C), Railway Board has
withdrawn his letters dated 13-6-2013 and 18-6-2013 and described his telephonic
conversation referred in para-1 of the Chief Commercial Manager's letter dated
18-6-2013 only as "an informal discussion" which cannot supplement or modify the
existing policy and that while the issue in para-5 of the letter dated 18-6-2013
is under examination of the Railway Board and the outcome will be intimated in
due course, action may be taken in terms of the Policy and the directives in
vogue.
DISCUSSION:
From the operating guidelines issued under the 2010 Policy and the
correspondence exchanged between the Railway Board and respondent No.3, what
emerges is discussed hereunder:
Para 16.1.3 of the 2010 Policy envisages award of licences for GMUs at the
A, B and C category Railway Stations for a period of five years and renewal for
three years on each occasion. However, such renewal is subject to compliance
with three requirements, viz., satisfactory performance, payment of all the dues
and arrears and withdrawal of Court cases, if any, against the Railways.
Similar is the situation in respect of the SMUs at A, B and C category Railway
Stations in para 16.2.1 of the 2010 Policy. Under para-17 thereof, renewal of
licence is not made a matter of right. A licencee must apply for renewal
minimum six months in advance before the expiry of the contract. If the
licencee is imposed fine or administered warnings on more than five occasions,
his application for renewal will be rejected. The licence fee is enhanced/re-
assessed on actual sales turnover of the Unit. Para 18.3 reiterated paras 16
and 17 relating to the conditions subject to which renewal of the existing
licences will be renewed.
The primordium of the respondents' case is rested on circular No.37/2010
dated 9-8-2010 and para 16.3 of the 2010 Policy. It needs to be noted that
while paras 16.1.3, 16.2.1 and 18.3 read together leave no scope for any doubt
that all licencees are entitled for renewal subject to their complying with the
three requirements as envisaged in paras 16.1.3 and 16.2.1, para 16.3 as
originally conceived, created ambiguity which declared that after the expiry of
the extended licences, allotments will be made by calling for fresh
tenders/applications and such process will be started well within the time to
avoid further extensions of the licence periods. This para was however amended
by the Railway Board commercial circular No.03/2012 dated 12/13-1-2012 which was
reproduced hereinbefore. As per this modified para, allotment through fresh
tenders/applications will be made only in cases of contracts which are not
renewed by the Zonal Railways due to non-performance etc. Indeed, the amended
para 16.3 was specifically emphasized by the Additional Member (T&C) in his
letter dated 18-6-2013 addressed to the General Manager of respondent No.3,
which, later, for inexplicable reasons was withdrawn by him along with his
earlier letter dated 13-6-2013. However, as rightly pointed out by him, any
correspondence or communications cannot supplement or modify the existing policy
and its true purport has to be culled out from its own contents.
Be that as it may, respondent No.3 has very correctly understood the scope of
paras 16.1.3, 16.2.1 and 18.3 of the 2010 Policy and renewed the licences in
question for a period of three years. While the 2010 Policy proper has not
envisaged renewal of the existing licences for a period not exceeding six
months, the Immediate Operative Instructions issued in commercial circular
No.37/2010, dated 9-8-2010, has directed the Zonal Railways to renew the
licences for a maximum period of six months from the date of issue of the 2010
Policy. If the 2010 Policy is understood as providing renewals only in respect
of the licences issued under the said Policy, there was no reason why respondent
No.3 has not called for tenders on the expiry of six months period from the date
of coming into force of the 2010 Policy. Instead of calling for tenders,
respondent No.3 has renewed all the GMU and SMU licences for a period of three
years in terms of paras 16.1.3 and 16.2.1 of the 2010 Policy. This was done
even before para 16.3 of the said Policy was amended. Having understood the
2010 Policy in its true spirit even before the amendment of para 16.3, it is
incomprehensible that respondent No.3 projects the said Policy in a different
light by seeking to give it an interpretation which runs contrary to its plain
language. No where in the 2010 Policy, the licencees are classified into two
categories, namely, those who were granted licences prior to the commencement of
the 2010 Policy and those who were granted licences after the said Policy came
into force. On the contrary, all the GMUs and SMUs were treated under one
category. Irrespective of whether the licences were granted by the Railways
prior to 2005 or by the IRCTC from 2005 and by the Indian Railways after 2010,
renewal of licences is envisaged for all these categories of licencees subject
to their fulfillment of the three requirements as referred to hereinbefore.
In this context, it is significant to point out that the Chief Commercial
Manager, Central Railways, Mumbai, in his letter dated 4-4-2012 addressed to the
Additional Member (T&C), Railway Board, pointed out the contradiction between
paras 16.3 and 18.3 of the 2010 Policy and referred to the amendment made to
para 16.3 thereof. However, he has sought for clarification of this ambiguity.
In his letter, the Director (T&C) has referred to the Board's circular No.3/2012
dated 12-1-2012 and stated that in the said circular it was clarified that
renewal of the existing GMUs and SMUs will be considered by the Railways subject
to withdrawal of Court cases by the licencees, if any against the Railways,
payment of the Railway dues and arrears, if any, and satisfactory performance of
the licencees. This letter is a complete fortification of the petitioner's plea
that if a licencee has satisfied the three requirements of satisfactory
performance, not being in arrears and non-pendency of Court cases against the
Railways, he is entitled for renewal of his licence once in every three years.
The plea taken by the respondents is thus contrary to the plain language of the
2010 Policy and their own understanding of the said policy as evident from the
various events referred to above, including the renewal of the licences without
calling for tenders for a period of three years after the advent of the 2010
Policy. I am therefore in complete agreement with the plea of the petitioner-
Association, as ably projected by Mr. C. Ramachandra Raju, its Counsel.
Sri T.S. Venkata Ramana, learned Counsel for the respondents, has
submitted that even assuming that the licences given to the members of the
petitioner-Association are also covered by the 2010 Policy for renewal, they
cannot claim renewal of their licences as of right and that unless they satisfy
the three requirements envisaged by paras 16.1.3 and 16.2.1, they are not
entitled for renewal of the contracts. The learned Counsel also pointed out
that under para 17 of the 2010 Policy, a licencee must apply for renewal at
least six months in advance before the expiry of the contract and that none of
the members of the petitioner-Association have complied with this requirement.
With regard to the first part of the submission of the learned Counsel, I
find myself in agreement with the same.
If and when a licencee applies for
renewal, he needs to satisfy the conditions stipulated in the above mentioned
two paras of the 2010 Policy.
A right for renewal will accrue to such licencee
only if he satisfies those requirements.
However, every licencee has a right to
be considered for renewal in the first place and whether a right for renewal
accrued to him or not depends upon his satisfying the stipulated requirements.
In none of the cases of the members of the petitioner-Association, respondent No.3 has considered renewal of their licences and it has issued the tender notifications under a misconception that the persons who were granted licences in the previous regime are not entitled for renewal.
Respondent No.3 has
therefore to evaluate the performance of each of the licencees seeking renewal
and consider their applications in the light of the conditions stipulated in
paras 16.1.3 and 16.2.1, as the case may be, and take a decision.
With regard to the second part of the submission of the learned Counsel
for the respondents,
it is an admitted fact that none of the licencees in
question have applied for renewal of their respective licences six months in
advance. Significantly, in the affidavits filed in the Writ Petitions, a
reference to the 2005 Policy was made and it was averred that under the said
Policy, a licencee shall apply for renewal one month prior to the expiry of the
licence period and that therefore the members of the petitioner-Association have
got time upto the end of June 2013 to apply for renewal of their licences.
The
learned Counsel for the petitioner has submitted that his clients were under a
mistaken notion that they are entitled to apply for renewal one month prior to
the expiry of their licences and therefore they could not comply with the
requirement of para-17 of the 2010 Policy. He has also submitted that almost
all the licencees are either semi-literates or illiterates and they are not
aware of the implications of non-compliance with the said para.
It is true that under the 2010 Policy, applications for renewal have to be made
at least six months before the expiry of the existing licences and it is equally
true that this condition is not complied with by the members of the petitioner-
Association. But respondent No.3 has refused to renew the licences not on the
ground of failure of the licencees to apply for renewal six months in advance.
On the contrary, the respondents have initiated the tender process in the view
that under the 2010 Policy, these licencees are not entitled for renewal.
Therefore, it would have hardly made any difference even if the members of the
petitioner-Association made their applications six months before the expiry of
their licence periods. In the light of these facts, I am not prepared to non-
suit the members of the petitioner-Association only for the reason of non-
compliance with para-17 of the 2010 Policy. It is not the case of respondent
No.3 that any prejudice is caused to the Railways by such non-compliance by the
members of the petitioner-Association or that the latter's failure to apply for
renewal six months in advance was with any mala fide intention.
I have no
reason to disbelieve the version of the learned Counsel for the petitioner that
his clients' non-compliance with para-17 of the 2010 Policy was a bona fide
mistake. When the licencees are entitled for consideration of their cases for
renewal, it would be wholly iniquitous to deny the same to them on a
technicality such as this. As pointed out hereinbefore, non-consideration of
renewal of licences of the members of the petitioner-Association was not on the
ground that they have not applied for the same six months in advance and this
objection of the respondents, therefore, is a pure afterthought.
The learned Counsel for the respondents submitted that
since the members of the
petitioner-Association have been conducting their respective businesses for the
past 40/20 years, there is no justification for them to seek renewals and that
by renewing their licences, the Railways will lose revenue.
I do not find any merit in this submission.
The 2010 Policy does not
differentiate among the licencees based on the number of years for which they
have been carrying on their businesses.
Moreover, under the 2010 Policy, the
licence fee is liable for revision based on the potentiality of each Railway
Station and the turnover of the licencees during the previous years.
Therefore,
the question of the Railways suffering any loss due to renewals would not arise.
At any rate, in the face of the plain Policy of the Railways providing for
renewal of licences, respondent No.3 cannot act contrary thereto, either on the
ground of the licencees having long standing or the purported loss of revenue.
CONCLUSION AND THE RESULT:
For all the above reasons, I am of the opinion that the claims of the members of
the petitioner-Association for renewal of their licences deserve to be
considered on their own merits and that they are entitled for renewal subject to
their satisfying the conditions stipulated in paras 16.1.3 and 16.2.1 of the
2010 Policy.
In the result, the Writ Petitions are allowed in the following terms:
1. The members of the petitioner-Association shall make applications for renewal
of their licences within one month from today.
2. Respondent No.3 shall consider each of such applications with reference to
paras 16.1.3 and 16.2.1, as the case may be, and communicate its decision to the
members of the petitioner-Association.
3. In the event of rejection of the application of any of the licencees for
renewal, respondent No.3 shall record reasons therefor and communicate the same
to the licencee concerned.
4. Till completion of the above mentioned process, the members of the
petitioner-Association shall be permitted to continue to run their respective
GMUs and SMUs.
As a sequel to the disposal of the Writ Petitions, the Miscellaneous Petitions,
if any pending, shall stand disposed of as infructuous.
________________________
Justice C.V. Nagarjuna Reddy
Date : 16-8-2013
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