2003 (2) TMI 403 - HC - Companies Law

Summary

Issues Involved:
1. Termination of Contract
2. Applicability of Specific Relief Act
3. Public vs. Private Contract
4. Compliance with Supreme Court Directions
5. Injunction and Compensation

Detailed Analysis:

1. Termination of Contract:
The petitioner filed a petition under section 9 of the Arbitration and Conciliation Act, 1996, seeking to restrain the Delhi Transport Corporation (DTC) from removing or defacing advertisement panels on DTC buses. The contract between the parties included an arbitration clause and allowed termination by either party with three months' notice. The DTC invoked this clause, issuing a termination notice on 2-11-2002, effective from 2-2-2003, citing directions from the Supreme Court and the Government of NCT of Delhi.

2. Applicability of Specific Relief Act:
The DTC argued that granting the petitioner's prayers would amount to specific performance of a determinable contract, which is prohibited under section 14 of the Specific Relief Act. The petitioner contended that since the contract prohibited claims for damages, the provisions of the Specific Relief Act were not applicable. The court noted that section 9 of the Arbitration and Conciliation Act has a wide scope, allowing for injunctions to prevent breaches of contract, even if compensation is not claimed.

3. Public vs. Private Contract:
The petitioner argued that the contract involved a public body (DTC) and not private parties, thus requiring adherence to principles of fair play and non-arbitrariness. The court emphasized that government contracts must be scrutinized for fairness and reasonableness, unlike private contracts. The court found that the DTC failed to justify its termination action adequately, as the reasons cited were known at the time the contract was entered into and when it was subsequently extended after a compromise.

4. Compliance with Supreme Court Directions:
The court observed that the DTC's reliance on Supreme Court directions and the Government of NCT of Delhi's instructions was not substantiated by any new developments. The court noted that similar advertisements were allowed on bus shelters, garbage collection centers, and lamp posts, questioning the DTC's selective enforcement. The court cited the Supreme Court's judgment in P. Narayan Bhatt v. State of Tamil Nadu, which held that mere visibility of hoardings to traffic is insufficient grounds for removal.

5. Injunction and Compensation:
The court held that the DTC's termination of the contract was whimsical and devoid of reasons, failing to meet the standards required for government actions. The court granted the petitioner's prayers, restraining the DTC from removing or defacing the advertisements on the buses. The court noted that the contract prohibited claims for compensation, distinguishing between termination and determination of the contract. The court emphasized that government actions must be unbiased and based on good reasons, which were lacking in this case.

Conclusion:
The petition was allowed, and the DTC was restrained from removing or defacing the advertisements on the buses. The court highlighted the need for government actions to be fair, reasonable, and justified, distinguishing this case from private contracts. The decision underscored the importance of adhering to principles of non-arbitrariness and fair play in public contracts. No order as to costs was made.