Calcutta High Court Slams Railway For Arbitrary Conduct | Failure To Address Grievances And Auctioning Same Parcel Space ‘Terminates Contract By Operation Of Law’
Safiya Malik
The Calcutta High Court, Single Bench of Justice Rai Chattopadhyay, ordered the termination of a contentious lease agreement between a private company and the Indian Railways. The Court directed the railway authorities to refund the security deposit amounting to Rs. 56,94,274/- to the petitioner company within two weeks.
The petitioner, a private limited company engaged in the transportation of perishable goods and temperature-sensitive life-saving drugs, entered into a lease agreement with the respondent 'Railway' on April 15, 2023. The contract required the petitioner to commence operations from the same date. However, citing severe operational inconveniences, the petitioner ceased its operations shortly after commencement.
The petitioner addressed a letter dated May 10, 2023, to the respondent Railway, outlining specific operational challenges:
- "The train has been running late on both sides daily by 8 to 10 hours."
- "Placement and retrieval at Shalimar further gets delayed by over 8 to 10 hours."
- "There is an overall delay of over 24 hrs, which is putting your Petitioner’s sensitive cargo to serious risk of contamination, due to this delay."
- "Petitioner has requested vide letter dated 19th April 2023, for platform loading/unloading of perishable cargo for better transit time, which was not answered. In the process petitioner has lost a lot of sensitive cargo clients as it is not in a position to provide better transit time."
- "Upon arrival of train the concerned LVP may be placed 2 hours after at the yard for unloading so that perishable items may not get damaged for unnecessary delay in placing the Rakes."
Despite the acknowledgment of these grievances by the Railway through its communication dated May 11, 2023, no remedial steps were taken.
The petitioner, initially seeking operational resolution and protection against punitive actions, later modified its prayer to seek refund of the security deposit, asserting that the operational impossibility and conduct of the Railway effectively terminated the contract. The petitioner heavily relied on Clause 17.2 of the Freight Marketing Circular No. 11 of 2022, arguing that in cases of operational exigency, the contract could be terminated without financial repercussions.
The respondent Railway, represented by Mr. Dwijadas Chakraborty, contested these claims, stating that the petitioner ceased operations by choice and without justifiable cause. It was contended that other operators under similar circumstances did not face such inconveniences. The Railway further submitted that the auction catalogue dated June 11, 2024, which led to a fresh contract, pertained to a different parcel van space.
Justice Rai Chattopadhyay critically analysed the conduct of the respondent Railway and observed:
"The Railway refraining itself from examining and ascertaining about any operational exigency or alleged inconveniences in case of the present petitioner, would be non-compliance with the duties and responsibilities under the contract and would amount to gross arbitrariness of the said Authority."
The Court noted that despite the petitioner’s prompt complaint within a month of starting operations, the Railway neither investigated nor addressed the grievances. This, according to the Court, amounted to arbitrary conduct and failure to uphold contractual obligations.
On the issue of the auction catalogue published on June 11, 2024, the Court observed:
"Publication of auction catalogue during pendency of this writ petition and during existence of the interim order passed by the Court, particularly during validity period of the contract of the petitioner amounts to termination of that, by the respondent by conduct."
The Court concluded that the Railway acted in violation of the contractual terms and the interim protection granted by the Court. It declared the actions of the Railway as arbitrary and illegal.
Based on its findings, the Court issued the following directives:
- "The agreement entered into between the petitioner and the respondent/railway dated March 27, 2023 stands cancelled/terminated/revoked."
- "Let the respondent immediately refund the security deposit amount to the tune of Rs. 56,94,274/- to the writ petitioner, maximum within a period of two weeks from the date of communication of copy of this order."
The Court further noted that the Writ Petition (Appeal) No. 12139 of 2023 is disposed of along with applications, if any. Interim order would stand vacated upon refund of the security deposit.
Advocates Representing the Parties
For the Petitioner: Mr. Saptarshi Roy, Ms. Kakali Das Chakraborty
For the Respondents: Mr. Dwijadas Chakraborty
Case Title: Moonline Express Cargo Pvt. Ltd. Vs. Union of India & Ors.
Case Number: WPA 12139 of 2023
Bench: Justice Rai Chattopadhyay
[Read/Download order]
