Dispute Arising From Commercial Contract With Govt Can't Be Adjudicated Under Writ Jurisdiction, Civil Law Remedies Available: Telangana HC

The Telangana High Court has held that once it is established that a contract entered into between the government and a private party is in the nature of a commercial contract, merely because of allegations that the subject premise was seized by the authorities under the capacity of the State, that by itself would not convert the inherent nature of the dispute into a public law dispute.

With that observation, Justice T. Vinod Kumar held that the same could not be adjudicated under Writ jurisdiction and directed Kotagiri Ajay Kumar, the petitioner/lessee to work out the remedies available to him under the Civil law. Relying upon Joshi Technologies International Inc v. Union of India the Bench held that there is a clear distinction carved out between private law and public law.

“If the above aspect of law is taken into consideration, the agreement under which the immovable property of the 2nd respondent has been leased out would have to be construed as like any commercial contract governed by the provisions of Indian Contract Act, 1872. Once, the Agreement entered into between the petitioner and 2nd respondent is considered as contract like any other contract, for the enforcement of the covenants of the contract or for any breach thereof, the parties have to work out their remedies under civil law. Thus, a mere allegation that the subject premises was seized by the authorities under the capacity of the state would not by itself convert the inherent nature of the disputes. Resultantly, the same would not be amenable to writ jurisdiction,” the Bench noted.

The order was passed in a Writ petition, filed by the petitioner challenging the order passed and the subsequent seizure of the property leased out to him by the Jagtiyal Municipality, alleging that the same had been done without following the principles of natural justice and in violation of Articles 12, 14 and 300A of the Constitution.

He stated that the property known as the 'Town Hall' was leased out to him in the year 2022 for 5 years and although he was working within the parameters of the contract, he alleged that, due to the change in government, the lease was sought to be unlawfully terminated.

The State, refuting these contentions stated that the 'change of government' plea was baseless as the petitioner was issued notices of violations on two prior occasions for which the petitioner has also approached the Court.

It was further stated that the purpose of the town hall was to hold educative meetings and gatherings specifically with the agenda to promote cottage and handloom industries along with local produce and products, However, the petitioner was admittedly running multiple food stalls in the hall turning it into a food court.

The petitioner denied this claim stating that he was entitled to run food stalls that represented the culture and tradition of Telangana.

Justice Vinod, while reminiscing about the importance of Town Halls noted that the Halls gained their importance through the Swadeshi Movement, and played a key role in facilitating gatherings through the freedom struggle. Justice Vinod irked at the thought of Town Halls being leased out for commercial purposes and the thought of the younger generation using these halls to 'chill'.

Nonetheless, he noted, that so far as the agreement entered upon between the parties was established to be in the nature of a commercial contract, it would be governed by the Indian Contracts Act.1872

“Though as per Section 52(9) of the Act (Telangana Municipalities Act, 2019), it is the duty and responsibility of the Commissioner to provide for amenities and facilities like community halls, the agreement at hand was neither entered into for the purpose of maintaining nor operating the town hall on behalf of respondent municipality as provided under section 52(9) of the Act to claim involvement of element of public law. On the contrary it is a contract purely of commercial nature where the municipality pursuant to a resolution passed by the council has leased the subject property on an agreed consideration payable by the petitioner as a lessee.”

The Court noted that in the present case, there was a dispute of facts that could not be adjudicated under Writ Jurisdiction and advised the petitioner to seek a review of the order passed before the District Collector since the Corporation is subject to the jurisdiction of the District Collector as per section 53(5) of the Municipalities Act.

Case no.: WP 4125 of 2024

Counsel for petitioner: M/s. Kowlur Archana

Counsel for respondents: respective GPs and SCs

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