Valmiki J Mehta, J.
1(i). This is a suit filed by the plaintiff for recovery of Rs. 22,73,930.50/- alongwith interest. The amount as claimed in the suit has been broken up
as per para 33 of the plaint which reads as under:-
That as per the terms between the defendant and the plaintiff, and on the basis of Rs. 1,19,17,936/- cash collection on the basis of actual meter
reading of the STD Pay Phones and deposited by the plaintiff with the defendant, the plaintiff is entitled for the sum of Rs. 18,64,274/- on account
of salary and supervision charges, Rs. 2,59,656.50 towards profit and 1,50,000/- the amount of security and Bank guarantee, totalling Rs.
22,73,930.50 which the defendant is liable to pay to the plaintiff. However, the amount admitted by the defendant payable to the plaintiff on
account of manning charges upto 15.4.1992 is Rs. 18,62,800/- and a sum of Rs. 3,35,075/- on account of profit but the said amount as per the
statement enclosed with the letter of the defendant dated 22.4.1992 under the signature of Shri O.S. Tyagi has been deducted from the total
amount of the MTNL''s Bills instead of making payment to the plaintiff, which is unconstitutional, against the terms and illegal.
(ii) The facts of the case are that the plaintiff was appointed to run nine phone booths by the defendant/International Airport Authority of India. Six
booths were granted with effect from 6.1.1990. Three other booths were thereafter granted w.e.f. 14.3.1990, 18.4.1990 and 1.5.1990. With
respect to the six booths, the contract between the parties is encompassed in two documents being the letter dated 5.1.1990/Ex.P1 of the plaintiff
to the defendant and the letter dated 23.2.1990/Ex.P2 of the defendant to the plaintiff. After the expiry of original term of six months for which the
booths were granted, for all the nine booths the period was extended for two years in terms of the letter dated 22.11.1990/Ex.P7 of the defendant
to the plaintiff, and which contains more or less the same terms as contained in Ex.P2.
(iii) The main aspects of the contract in terms of the documents Ex.P1 and Ex.P2 were that the plaintiff had to employ manpower for operating the
telephone booths at the two terminals of the defendant; plaintiff had to collect the charges from the customers who utilize the phone services from
the phone booths; the total collection was to be deposited with the defendant; the defendant was to make payment of the bills of the phones to
MTNL; out of the difference which would still be remaining balance with the defendant, the plaintiff was first to be paid with respect to the
expenses incurred for the phone booths i.e. the salary and supervision charges which the plaintiff had to incur for manning of the booths, and finally
the net balance which was then available was to be divided in the ratio of half and half between the plaintiff and the defendant i.e. the profit sharing
ratio was 50-50.
(iv) Disputes and differences arose between the parties because the plaintiff complained to the defendant that the phone booth which was in
Terminal II i.e. the Cargo terminal was being misused during the night hours for making STD/ISD calls leading to bills to be paid to MTNL being
unnecessarily inflated. The plaintiff contends that it is not liable to pay the extra charges which have been shown in the bills of the MTNL qua the
booth in question, to the extent the same contain charges of illegal calls made through the line in the phone booth in the cargo Terminal/Terminal II.
(v) The contention of the defendant however is that in terms of Clause 13 of the letter of the defendant to the plaintiff dated 23.2.1990/Ex.P2, if
there was a discrepancy between the MTNL bills and the collection deposited by the plaintiff with the defendant, then it was the plaintiff which had
to absorb the deficiency. What the defendant effectively pleads is that the plaintiff cannot rake up the issue of inflated charges, and if there was an
issue of inflated charges, it was for the plaintiff to pursue the matter with MTNL, and defendant had no role in this regard. The defendant in fact
pleaded that not only the plaintiff was not entitled to the amount claimed, but the fact of the matter was that it was the plaintiff which was liable to
pay to the defendant a sum of Rs. 38,82,385/-.
The following issues were framed in this suit on 11.4.2001:-
(1) Whether the suit is bad for mis-joinder of parties especially M/s. Omnital and M/s. MTNL and is liable to be dismissed? OPD
(2) Whether the plaintiff is entitled to an amount of claim of Rs. 22,73,930.50 from the defendant on account of excessive billing of the manning of
the STD pay phone booth more particularly which the bills were issued by MTNL? OPD
(3) Whether the plaintiff has not performed his part of obligations in accordance with the work order dated 23.2.1990? OPD
(4) Whether the defendant had assured the plaintiff that the defendant shall be entirely responsible for the issues due to excessive billing by MTNL
and undertook the responsibility of dealing with MTNL for refund of excessive bills paid by the defendant? OPD
(5) Whether clause 13 as contained in the letter dated 23.2.1990 issued by the defendant is liable to struck down as illegal and void being
unconscionable and against public policy and violative of Section 23 of the Contract Act? OPD
(6) Whether the defendant is entitled to counter-claim of Rs. 16.49 lacs with interest from the plaintiff? OPD
(7) Whether the plaintiff is entitled to interest, if any on what rate? OPD
(8) Relief.
Issue No. 6
2. So far as issue No. 6 is concerned, I may state that the counter claim was dismissed on account of the non-payment of Court fees, however, the
defendant has filed a suit claiming the amount of Rs. 18,58,422/- from the plaintiff alongwith interest, and which suit being CS(OS) No. 701/1995.
This issue therefore does not call for decision in the present suit.
Issue No. 1
3. This issue is with respect to whether the suit is not maintainable on account of non-joinder of M/s. Omnitel (which had supplied the phone
equipments) and M/s. MTNL (whose lines were provided in the phone booths). Counsel for the defendant does not press this issue and this issue
is therefore decided as not pressed accordingly.
Issue Nos. 2 to 4
4. All these issues can be dealt with together inasmuch as the main point for consideration is as to whether plaintiff is entitled to the suit amount of
Rs. 22,73,930.50/- and which has been broken up in different parts as stated in para 33 of the plaint reproduced above. If the plaintiff has not
performed his part of the obligation in terms of the agreement between the parties, then the plaintiff will not be entitled to the suit amount.
5(i) In order to decide these issues, firstly we will have to refer to the two main documents Ex.P1 and Ex.P2, being the letters dated 5.1.1990 of
the plaintiff to the defendant and the letter dated 23.2.1990 of the defendant to the plaintiff. Since most of the terms of these two documents are
relevant, I reproduce both these documents in entirety as below:-
Ex.P1
To
Dy. General Manager (Elect.)
I.A.A.I. Hqrs.
Chanakyapuri
New Delhi.
Sub:- Operation of STD Pay phones at IGI Airport.
Dear Sir,
With reference to your discussion held in the office of Member (F&A) we agree to deploy 21 persons for operations of STD Pay phone as per the
following terms and conditions:-
1. Staff shall be paid as per labour contract act.
2. IAAI shall be paid 50% of profit after deduction of the following expenditure;
In the first year, the expenditure shall be Rs. 39,375/- as maintenance charges shall not be considered for equipment being in guarantee period of
manufacturers. The maintenance of the equipment shall be responsibility of IAAI.
Profit = 20% of MTNL Bill--Expenditure i.e. Rs. 39,375/- for first year. In case of increase in staff expenditure shall be increased correspondingly
and additional staff shall be decided mutually.
3. In case of loss, the firm shall bear the loss.
4. No separate rent shall be paid for the space occupied and IAAI shall give free permit to our staff.
5. In case of increase in minimum wages, 50% increase shall be added to the agreed rate of Rs. 1,500/- and paid to us as staff wages.
6. We agree to deposit Rs. 50,000/- within one week as security deposit.
7. Apart from this, one lakh shall be given as Bank Guarantee to IAAI.
8. All the collection shall be made by us and we shall deposit the bill of IAAI to MTNL directly and pay IAAI profit within one week of receipt of
bill from IAAI/.
Thanking you,
Yours faithfully,
:: ARVIND KHANNA ::
Ex.P2
No. AAD/EINCS/30/419/
Dated: February 23, 1990.
M/s Arvind Khanna
A-103 Lok Vihar
New Delhi: 110034.
Subject: Operational contract for STD phones at IGI Airport.
Sir,
We are pleased to inform you that the IAAI management has decided to entrust you with the responsibility of manning the STD booths as IGI
Airport, as per the following terms and conditions.
1) This operational contract will be for a period of six months from 6.1.90 initially and thereafter the operational contract shall be decided suitably
depending upon the observations made during the above period.
2) Your are required to deposit Rs. 50000/- in cash and submit a bank guarantee for Rs. 1 lac within one week from the date of issue of this
order, as security deposit.
3) The firm will not pay any rental for the space occupied.
4) Free permits will be issued to the staff of the contractor who are been employed to man the STD booths.
5) The firm would deploy necessary skilled staff to run the following positions on round the clock basis for issue of coins and necessary assistance
to the users.
However, the IAAI reserves the right to increase or decrease the number of position as per the requirement.
6) The firm shall recruit 4.2 person per position. In addition the firm shall recruit necessary supervisory staff. The staff for the purpose will be
recruited with the concurrence of the undersigned.
7) The firm has to strictly observe the IAAI contractors labour regulations in force.
8) The firm has to be produce necessary licence to employ personnel from the competent authority.
9) M/s. Omnitel Industrial will provide necessary STD instruments. Any malfunctioning of the same may be rectified in Lisan with the supplier IAAI
electronics staff working round the clock will provide necessary assistance for the smooth functioning of the system.
10) The staff manning the STD booths will be under the overall supervision of the Electronics staff working round the clock at respective terminals.
11) The firm will deposit with IAAI all the collection on completion of every month. The firm has to maintain a register for recording the meter
reading daily booth wise, meter reading should be forwarded to the office of the SML.
12) The firm has to clear the MTNL bill after obtaining the cheque from the IAAI.
13) If there is a discrepancy between the MTNL bill and the collection deposited with IAAI, the firm will absorb the deficiency.
14) The payment for the services of the firm will be on a profit sharing basis. The profit sharing will be on 50-50 basis by the form and IAAI on the
basis of the following calculations.
-20% of the billing amount shall be received from MTNL in the franchise scheme 80-20. Out of this 20% the staff expenditure @ 1500/- per
person for the total no. of person employed vide para 6 as skilled personnel will be paid to the firm. Besides firm will be paid 25% of the above for
supervisory charges. The balance profit will be shared between the firm and IAAI equally. However, the staff expenditure is more than the income
from MTNL under franchise scheme, this loss will be absorbed by the form. IAAI would not therefore share the loss.
15) M/s Arvind Khanna is to execute and sign an agreement in a non-judicial stamp paper of Rs. 5/- at their cost within 10 days from the date of
this letter.
A confirmation of acceptance of this award may be sent to undersigned.
(ii) As per Ex.P1, the plaintiff referred to the discussions with the concerned officer of the defendant and agreed to deploy 21 persons for the
phone booths subject to the term of 50% of the profit to be paid to the plaintiff after deducting the expenditure incurred by the plaintiff towards
salaries and supervision charges. I am not referring to maintenance expenditure as stated in Ex.P1 because the same is not the subject matter of the
issue in the present case. One another important aspect contained in letter Ex.P1 is that the defendant was only entitled to share all profits and if
there were losses, it was the plaintiff which was to bear the losses.
(iii) So far as the terms contained in Ex.P2 are concerned, the important terms are the Clauses 11 to 14 and more particularly Clause 13. The net
effect of Clauses 11 to 14 is that the plaintiff after making collections from the phone booths would maintain a register/record and deposit at the
end of the month the total collections with the defendant. The defendant will thereafter issue the cheques with respect to bills raised by the MTNL
for payment to MTNL. It is clearly provided in Clause 13 that in case there is any discrepancy between the bills raised by the MTNL and the
collections deposited by the plaintiff with the defendant, it will be the plaintiff firm which will be liable to absorb the deficiency i.e. issues as to
inflated billing or wrong billing or other aspects of billing are for the plaintiff to absorb and the defendant would have no role in the same. After the
entire expenditure was met and as stated above, the profit was to be shared half and half between the plaintiff and the defendant.
6(i) Though the plaint does not give details as to how the figures of salaries and supervision charges or the profit amount claimed by the plaintiff is
arrived at by reference to the different months and qua the different heads of the expenditure, however, it is agreed by the counsel for the parties
that two documents, as stated hereinafter, contain the respective cases of the defendant and the plaintiff with regard to the bills issued by the
MTNL, collections deposited by the plaintiff with the defendant, the salary and supervision charges to be incurred, and finally the amount of profits
which have to be divided between the plaintiff and the defendant.
(ii) These two documents are the letters Ex.P14 from the defendant to the plaintiff dated 22.4.1992 and Ex.P44 from the plaintiff''s Advocate to
the defendant dated 30.4.1992. What really is relevant is reference to the two annexures, one each to the two letters Ex.P14 and Ex.P44. The
annexure to the defendant''s letter Ex.P14 is given an exhibit number Ex.P13, however, there is no exhibit mark to the annexure to the plaintiff''s
Advocate''s letter Ex.P44. It is however agreed by the counsel for the defendant that the annexure does exist to Ex.P44 and which is annexed
immediately following the document Ex.P44 in the court file.
(iii) Since the calculations which are stated in the annexures to Ex.P14 & Ex.P44 are relevant in order to determine the controversy in the present
suit, I am reproducing both the annexures of the defendant and the plaintiff respectively to Ex.P14 & Ex.P44 below:-
Ex.P14/(of the defendant)
STATEMENT OF ACCOUNTS FOR MANNING STD/PAY
PHONES BY M/S. ARVIND KHANNA, TERMINAL-I
N.B. :-Amount shown at Sl.No. 3, 4 & 5 is approximate. Exact calculations shall be done after receipt of Bills from MTNL.
(2) Amount shown against Sl.No. 3 & 4 are based on Meter readings provided by M.T.N.L.
Ex.P44 (of the plaintiff)
Statement showing the amounts due to M/s Arvind Khanna from I.A.A.I. on account of services rendered for manning & supervising STD/ISD
Pay Phones at IGI Airport w.e.f. 6.1.1990 to 15.4.1992
7(i) A reference to the aforesaid two annexures shows that the defendant claims that the total bills which were raised by the MTNL for total period
of contract for the phone booths add to Rs. 1,57,96,263/- A reference to the response of the plaintiff Ex.P44 with its annexures shows that there
is no comment or response or refusal by the plaintiff with respect to this amount of Rs. 1,57,96,263/-. Therefore, this figure of Rs. 1,57,96,263/-
can and is being taken as the total amount of bills raised by the MTNL with respect to the phone lines which were provided in nine booths
contracted out to the plaintiff for the entire contract period.
(ii) In terms of the contract, the plaintiff had to deposit the total collections with respect to phone booths with the defendant at the end of the
month. Out of the balance available after the deposit of the bills of MTNL, the salary and supervision charges had to be deducted and thereafter
the net balance was to be divided in the profit sharing ratio of half and half between the plaintiff and the defendant.
(iii) On the aspect of the amount deposited with the defendant by the plaintiff, whereas plaintiff states the figure to be Rs. 1,19,17,936/-, the
defendant states this figure at Rs. 1,17,39,966/-. The issue is as to which of these two figures has to be taken. In my opinion, considering the fact
that the defendant did not give a further response to the annexure contained in Ex.P44 by disputing the same, I would prefer to take the figure as
stated by the plaintiff being Rs. 1,19,17,936 instead of the figure of Rs. 1,17,39,966 of the defendant.
(iv) The next aspect is what should be taken as the figure of salary and supervision charges to be paid by the defendant to the plaintiff. Defendant
has argued that this should be an amount of Rs. 18,62,800/-, whereas the plaintiff states that it should be Rs. 18,64,274/-. There is difference just
about Rs. 1500/- odd in two figures and therefore I once again would accept the figure of the plaintiff being Rs. 18,64,274/-.
(v) It is also undisputed that a security of Rs. 50,000/- is lying with the defendant and for which amount credit will have to be given to the plaintiff.
(vi) Plaintiff has also given the bank guarantee of Rs. 1,00,000/- to the defendant and this original bank guarantee continues to remain with the
defendant. Considering the judgment of the Supreme Court in the case of Bank of India Vs. Nangia Constructions (I) Pvt. Ltd. and Others, , the
plaintiff should also be given the benefit of the figure of Rs. 1 lakh leaving the defendant at liberty to invoke and encash the bank guarantee in terms
of the judgment of the Supreme Court in the case of Bank of India (supra) or also any other legal basis which the defendant is entitled to.
8. Therefore, a conclusion of the above is that the plaintiff claims adjustment of Rs. 1,41,91,866/- but it was liable to account for Rs.
1,57,96,263/- i.e. the plaintiff has not accounted and paid to the defendant an amount of Rs. 16,04,397/-. The question is that whether it is the
plaintiff who is liable to pay this amount to the defendant or whether the claim of the plaintiff must succeed on account of the fact that this difference
essentially arises from the claim of the plaintiff that the bills of the MTNL were inflated on account of illegal user of the phone lines at Terminal
II/Cargo Terminal of the defendant.
9. So far as the aspect that misuser of the telephone lines did take place, could not be disputed on behalf of the defendant inasmuch as the
defendant itself had filed an arbitration claim with MTNL making detailed references to the misuser of the telephone lines. The plaintiff has filed in
this regard the claims and averments made by the defendant in this Court in Suit No. 249/1993, whereby the present defendant (plaintiff in the Suit
No. 249/1993) had asked for reference of the disputes between the defendant herein and MTNL to arbitration in terms of Section 7B of the
Indian Telegraph Act, 1863 read with Section 20 of the Arbitration Act, 1940. This document/petition has been exhibited as Ex.DW1/P1. I may
note that the petition was allowed and the disputes were referred to arbitration vide order dated 13.5.1996/Ex.DW1/P2 passed in the said
petition. I am informed on behalf of the defendant that the claim petition which was filed before the Arbitrator was rejected and the claim
dismissed. The Award in this regard has been filed in other suit CS(OS) No. 701/1995 of the defendant and it has been exhibited as Ex.PW1/D2
in the said suit.
10. Learned counsel for the plaintiff very vehemently argued that once the defendant admits that there was misuser of telephones, and it had filed a
claim in arbitration against MTNL, the plaintiff being a bonafide person must be exempted from the excessive billing which has been caused on
account of misuse of telephone lines. Though in equity I did find a lot of strength in the argument which was raised on behalf of the plaintiff,
however, equity can have no role to play once the law comes in. Parties are bound by Clause 13 of the terms agreed upon and which specifically
states that in case of any issues of billing i.e. difference between the actual collections and the higher bills of MTNL, it would be the plaintiff which
would have to absorb the excess. The plaintiff entered into this contract with open eyes. Plaintiff was aware that in the relevant days, there was a
possibility of phone lines being misused, however, the plaintiff in terms of Clause 13 did take upon himself the liability to absorb the difference.
After having taken over the phone booths and working out the contract, it is not permissible for the plaintiff to renege from his commitment merely
because the plaintiff has written certain letters to the defendant that the plaintiff is not bound by Clause 13. The plaintiff cannot take up such a
stand, inasmuch as, whereas the contract with respect to the first six phone booths commenced from 6.1.1990 and the first period of six months
ended on 6.7.1990, the first letter which is written by the plaintiff to the defendant in this regard is much later on 22.11.1990/Ex.P17. Therefore,
having worked out the contract and having taken benefit thereupon the plaintiff cannot be allowed to backtrack. Acting upon the terms of the
contract amounts to acceptance of the terms of the contract as contained in the document/Ex.P2. In fact, there cannot be any doubt in this regard
inasmuch as when the contract for all the phone lines was again extended for two years vide Ex.P7 dated 22.11.1990 with its annexures, once
again vide Clause 13 of the said annexure to Ex.P7 dated 22.11.1990 the contract was extended only subject to this term that the plaintiff was to
absorb the deficiency/any issue with respect to billing of MTNL. In my opinion, it is not permissible for the plaintiff to blow hot and cold inasmuch
as the plaintiff need not have continued with or taken extension of the contract for a period of two years if Clause 13 was not acceptable to the
plaintiff, and the plaintiff should have forthwith surrendered all the phone booths. The plaintiff on the contrary continued with the contract, acted
upon the same, and therefore, by mere writing of letters plaintiff cannot be allowed to run away from its contractual commitments. I therefore hold
that in terms of Clause 13, it was the plaintiff who had to absorb any deficiency with respect to the bills, and if the plaintiff had any issue of inflated
bills, it was the plaintiff who was bound to pursue the matter with MTNL. The defendant cannot be fastened with any liability in this regard in view
of the categorical language of Clause 13 reproduced above.
11. At one stage, I was inclined on account of equities in the present case to read down Clause 13 in entitling the plaintiff to its claims and
disentitling the defendant of the defence based on Clause 13, inasmuch as, the defendant would not have been entitled to benefit of Clause 13 if the
officers of the defendant were guilty in misusing the phone lines or taking undue benefit by making STD calls or other calls from the phone lines. I
may however note that it is not the case of the plaintiff at any stage during the present suit, or during the correspondence with the defendant, that
the misuse in the telephone lines was on account of the misuse by the officers of the defendant. On the contrary, what the plaintiff alleged was that it
was the staff of MTNL, which was responsible for misuse of the phone lines, and this aspect is confirmed by the letter of the defendant to the
MTNL which is filed by the plaintiff itself and which is the letter dated 9.1.1991/Ex.P18. Therefore, once the officers of the defendant are not
guilty, and misuse of the lines is by the staff of MTNL, I do not find any equity in favour of the plaintiff and against the defendant for the plaintiff to
be exempted from the categorical language of Clause 13.
12. Accordingly, issue Nos. 2 to 4 are decided in favour of the defendant and against the plaintiff and it is held that the plaintiff is not entitled to any
amount, much less the suit amount from the defendant.
Issue No. 5
13. This issue is that the plaintiff contends that Clause 13 is illegal and void being hit by Section 23 of the Contract Act.
14. While dealing with issue Nos. 2 to 4 I have partly dealt with this issue in that, if the phone lines were misused by the officers or employees of
the defendant then possibly Clause 13 would be hit by Section 23 of the Contract Act, 1872 inasmuch as no clause can permit a person to be
exempted from liability, although, such person himself causes deliberately losses to the opposite side. Also, in my opinion, in a case where the
officers or staff of the defendant may have misused the phone lines then really it would be a case of non-application of Clause 13 and not that the
Clause 13 was void by virtue of Section 23 of the Contract Act, 1872. I thus do not find any illegality in Clause 13 to hold the same to be violative
of Section 23 of the Contract Act, 1872. I may note that it is not the case of the plaintiff that the plaintiff was forced to sign on dotted lines with the
defendant which is a huge organization, so that the case would come under the ratio of Central Inland Water Transport Corporation Limited and
Another Vs. Brojo Nath Ganguly and Another, . Also, I may note that the Supreme Court in various other judgments including S.K. Jain Vs. State
of Haryana and Another, and Assistant Excise Commissioner and Others Vs. Issac Peter and Others, has held that when there is a commercial
contract, and a person has an option whether or not to enter into a contract with the Government/State, after having entered into the contract, it
cannot take up the defence of unreasonableness of the terms of the contract or that the contract is unconscionable.
15. Accordingly, this issue is decided in favour of the defendant and against the plaintiff and it is held that Clause 13 of the contract is not liable to
be struck down as violative of Section 23 of the Contract Act, 1872.
Issue No. 7
16. Since the plaintiff is not entitled to the suit amount there is no question of granting any interest to the plaintiff. This issue is therefore also decided
in favour of the defendant and against the plaintiff.
Relief.
In view of the above discussion, the suit of the plaintiff has no merit and is accordingly dismissed, leaving the parties to bear their own costs.
Decree sheet be prepared.
