(Prayer: Appeal suit is filed under Order XLI, Rule 1 of C.P.C. and under Section 96 of Civil Procedure Code, to set aside the judgment and decree dated 08.01.2008 made in O.S.No.13 of 2006 on the file of the District Judge/Fast Track Court No.II, Tuticorin.)
P. Kalaiyarasan, J.
1. This appeal suit is directed against the judgment and decree of the Additional District Judge/F.T.C.No.II, Tuticorin dated 08.01.200 in O.S.No.13 of 2006, dismissing the suit for recovery of sum of Rs.1,30,86,731/- with interest or for an alternative relief of specific performance.
2. The plaint averments are as follows:
2.1. The plaintiffs are carrying on business in handling liquid cargo by providing storage facilities in various Ports throughout India. In response to the tender notice dated 13.02.1998 of the defendant Port Trust as to the allotment of land on lease basis for creation of facilities like Warehouses, Tank Farms, Marine Workshop etc. the plaintiff submitted the tender for Tank Farms for storage and handling of Non-Hazardous cargo and Hazardous cargo of B and C clause commodities. The defendant allotted 8.9 acres of land in Hare Island, the Port Trust area to the plaintiff on 20.05.2000 to the plaintiff. The plaintiff has also paid Rs.98,17,200/- by demand draft on 29.11.2000 towards advance lease rent, premium and refundable security deposit as demanded by the defendant in its letter dated 08.11.2000.
2.2. The land leased out was falling under the Coastal Regulation Zone-I(CRZ-I) and therefore necessary clearance has to be obtained from the government agencies including the Ministry of Environment and Ministry of Surface Transport before setting up the storage facilities. As a result, the land that has been allotted to the plaintiff has not been physically handed over till date and the plaintiff has not commenced any activity in the said land. The contract between the plaintiff and the defendant has become impossible of performance. The land allotted to the plaintiff was subject to approval by Government of India and to the environmental clearance to be given by the Union Government.
2.3. Meanwhile, the defendant demanded lease rental for subsequent years. The defendant has taken a stand that they are not responsible for getting site clearance from the government agencies contrary to their earlier assurance that they are obtaining clearance from the Government at the earliest, failing which, the defendant would allot alternate land to the plaintiff. The defendant had the benefit of amount deposited by the plaintiff. The plaintiff is entitled to claim the amount deposited by him with interest at 12% p.a. Therefore, the present suit has been filed.
3. The contentions of the written statement of the defendant are as follows:
3.1. It is true that the plaintiff was allotted land along with 5 others for storage and handling of Non-Hazardous cargo and Hazardous cargo of B and C clause commodities, pursuant to the tender notice of the Port Trust. Since the plaintiff had not informed his acceptance within 15 days and failed to takeover the possession of land, within three months from the date of furnishing willingness, the defendant cancelled the allotment. The plaintiff repeatedly requested to confirm the allotment agreeing to the conditions as per the allotment order dated 20.05.2000. Thus, the plaintiff's request was considered and issued a demand indicating the amount by the defendant in its letter dated 08.11.2000.
3.2. As per the conditions of allotment itself, the plaintiff has to obtain all necessary clearance from the government agencies. Tender was called for only for CRZ-I area and the plaintiff duly applied for it agreeing for obtaining clearance by themselves. The plaintiff with an intention to obtain the alternate land on higher value and in the front had requested the defendant by its various letters for change of site. The plaintiff purposely had not taken the possession of land allotted and now filed the suit to evade future lease rent. The parties are governed by the contract entered into between them.
3.3. The defendant never assured contra to the agreement. The plaintiff cannot take advantage of defendant's administrative proceedings to his favour and seek relief in this suit. Claiming interest to the deposited amount is against the agreement. The defendant's claim of rent is legal and in accordance with the lease agreement. The plaintiff is not entitled to the relief as prayed for.
4. The contentions in the reply statement of the plaintiff are as follows:
4.1. CRZ classification can be obtained only for the area/Island from the Ministry of Environment and Forest and cannot be claimed for a particular plot. Knowing this, the defendant has only written various letters to the Ministry and relevant authorities and taken steps for the reclassification. The defendant in its letter dated 08.11.2000, admitted that land was physically handed over to the plaintiff. The defendant agreed to get the clearance from the environmental ministry by subsequent conduct. Any lease deed exceeding 12 months can be only effected through a registered document under Section 17 of the Registration Act and even part performance of contract by putting the lessee in possession under Section 53(A) of the Transfer of Property Act has to be registered under the amended law. Only to satisfy audit needs, the paper work is done to claim lease amount for unleased property and for inchoate lease allotment. Only after physical handing over, the plan can be approved and then on construction made on the site. The doctrine of unjust enrichment squarely applies to the facts of this case.
5. The learned Additional District Judge framed necessary issues and after analysing both oral and documentary evidence of both sides, dismissed the suit. Aggrieved by the judgment and decree, the plaintiff has filed this appeal suit.
6. The learned senior counsel appearing for the appellant contends that statutory clearance mentioned in condition No.ix of the allotment order dated 20.05.2000 and re-classification of Coastal Regulation Zone are two different connotations and that the government order dated 15.02.2000 in Ex.A21 requires the respondent/defendant to obtain necessary statutory clearance; that the possession has not been given to the appellant as the reclassification could not be obtained by the respondent from the government and that the process of re-classification of land is a governmental action. It is further contended that contract becomes impossible to perform and therefore, under the doctrine of frustration of contract under Section 56 of the Indian Contract Act, 1872 the appellant is entitled to the relief as prayed for in the suit. Further, even as per Section 65 of the Indian Contract Act, 1872, the respondent/defendant is not entitled to the unjust enrichment.
7. The learned counsel appearing for the respondent, per contra, contends that the appellant/plaintiff has to get all statutory clearances as per condition No.ix of the allotment order dated 20.05.2000; that the plaintiff to evade the rent and also to get an alternative site in prime area, has filed this suit and the trial Court, after analysing the evidence has rightly dismissed the suit and the same does not warrant any interference. It is also contended that the government order dated 15.02.2000 is not applicable to the plaintiff since the government order of the year 2000 cannot be made applicable to the contract entered pursuant to the tender of 1998 and further, the plaintiff agreed to abide the conditions stipulated in the allotment order dated 20.05.2000.
8. The admitted facts are that the defendant called for tenders as to the allotment of land on lease basis in the Port Trust area for creation of facilities like Warehouses, Tank Farms, Marine Workshop etc. by tender notice dated 13.02.1998. The plaintiff submitted his tender for Tank Farms for storage and handling of Non-Hazardous cargo and Hazardous cargo of B and C clause commodities. The defendant by its order dated 20.05.2000 allotted 8.9 acres of land in Hare Island to the plaintiff. The plaintiff has paid Rs.98,17,200/- to the defendant towards the advance lease rent, premium and refundable security deposit.
9. The plaintiff claims the above deposit made by him from the defendant under the doctrine of frustration of contract as the act under the contract has become impossible. As already pointed out, tenders were called for by the defendant for allotment of land for putting up the facilities separately for each (a) for construction of Warehouses, (b)Tank Farms for storage and handling of Non Hazardous cargo like Molasses, edible oils etc. and/or Hazardous cargo of B and C class commodities like Diesel, Kerosene, Furnace oil etc., (c)construction of Marine Workshop and (d)providing water sports complex. The plaintiff applied for the purpose of constructing Tank Farms for storage and handling of liquid cargo and Hazardous commodities of B and C clause like Diesel, Kerosene, Furnace Oil etc. as seen from Ex.B12. The defendant, by its allotment order (Ex.A1) dated 20.05.2000 allotted land measuring 36,000 sq.m (8.9 acres) for a period of 30 years of long term lease to the plaintiff for providing Tank Farms for storage and handling of Non-Hazardous cargo like Molasses, Edible Oils etc., and/or Hazardous cargo or BandC class commodities like Diesel, Kerosene, Furnace Oil, etc. subject to the terms and conditions therein. Thus, for providing Tank Farms for storage and handling of Non-Hazardous cargo like Molasses, Edible Oils etc., and/or Hazardous cargo or BandC class commodities, the land was allotted to the plaintiff by the defendant on lease. There is no dispute that the above land is situate in Coastal Regulation Zone.
10. The Ministry of the Environment and Forests issued notification under Section 3(1) and Section 3(2)(v) of Environment (Protection) Act, 1986 and Rules thereon, declaring Coastal Stretches as Coastal Regulation Zone (CRZ) and regulating activities in CRZ and the same has been marked as Ex.A25. In this notification, Section 2 relates to prohibited activities. Section 2(ii) of the notification reads thus:
2. Prohibited activities:
The following activities are declared as prohibited within the Coastal Regulation Zone, namely:
(i) .........
(ii) manufacture or handling or storage or disposal of hazardous substances as specified in the Notifications of the Government of India in the Ministry of Environment and Forest No.S.O.594(E) dated 28th July, 1989, S.O.966 (E) dated 27th November, 1989 and GSR 1037(E) dated 5th December 1989 (except transfer of hazardous substance from ships to ports, terminals and refineries and vice-versa, in the port areas);
(Provided that, facilities for receipt and storage of the petroleum products and Liquefied Natural Gas as specified in Annexure-III appended to this notification and facilities for regasification of Liquefied Natural Gas, may be permitted within the said zone not classified as CRZ-I (i), subject to implementation of safety regulations including guidelines issued by Oil Industry Safety Directorate in the Government of India, Ministry of Petroleum and Natural Gas and guidelines issued by the Ministry of Environment and Forests and subject to such further terms and conditions for implementation of ameliorative and restorative measures in relation to the environment as may be stipulated by the Government of India in the Ministry of Environment and Forests).
Thus, handling of storage of Non-Hazardous cargo like Molasses, Edible Oils etc., and/or Hazardous cargo or BandC class commodities is prohibited in CRZ area and such receipt and storage of the petroleum products and liquefied natural gas may be permitted within the said zone not classified as CRZ-I. Therefore, storage or handling of Hazardous substances is completely prohibited in CRZ-I area.
11. The fact also remains that the area allotted to the plaintiff lies in CRZ-I. Therefore, unless the area allotted to the plaintiff, which is classified as CRZ-I is reclassified as CRZ-II, handling or storage of Hazardous substances as mentioned in the tender by providing Tank Farms becomes impossible.
12. The respondent/defendant contends that as per the condition No.ix of the allotment order, it is for the plaintiff to get the clearances from the government and therefore, he is bound to pay the rent and he is not entitled to any refund of the deposit.
13. The allotment order Ex.A1 stipulates several conditions.
Condition No.9 reads thus:
9. The lessee shall obtain all statutory clearances as may be required by law including environmental clearances by Central Governments and State Government, Chief Controller of Explosives, Nagpur and Inspectorate of Dock Safety, Mumbai, before actual commencement of Construction.
Further clause in the order is that the lessee shall execute lease agreement with the Tuticorin Port Trust and also confirm the willingness within 15 days. It is also stated that taking over the land by the lessee will be after the joint survey. No doubt, the plaintiff accepted the above conditions in the allotment order and confirmed his willingness under Ex.B5 dated 20.07.2000. But, neither the lease agreement was executed nor joint survey was done. Thus, possession has not been handed over to the plaintiff.
14. Though tender notice was issued in the year 1998, allotment was given on 20.05.2000. Even prior to the allotment order, there is a government order dated 15.02.2000, which is marked as Ex.A21. In this government order, para 3 (v) reads thus:
Ports will obtain statutory clearances before giving effect to the lease agreements.
Thus, government order is applicable to the contract in question also. The statutory clearances mentioned in the allotment order relates to usual statutory clearances for constructing the storage and not with respect to getting reclassification for a portion of the land, out of a larger extent for which reclassification is required. The Port Trust being the owner of the entire land had issued notice calling for tender to provide Tank Farms, Warehouses etc., to store and handle Hazardous substances and so, the Port Trust is duty bound to get reclassification of the entire area. Considering such contingencies, the above government order has been issued.
15. Taking entire scenario and the government order into consideration, the defendant has also taken steps by writing to the government for reclassification of the land as CRZ-II instead of CRZ-I under Ex.A18 dated 19.12.2001, Ex.A19 dated 04.10.2002 and under various letters. Ex.A33 is the letter addressed by the defendant Port Trust to the Secretary, Ministry of Shipping. In this letter, it has been stated that the plaintiff have been informed that the Port is taking action to get Hare Island reclassified as CRZ-II and hence, the proposal for the allotment of alternate land has been kept pending. In Ex.A20, letter addressed by the defendant Port Trust to the Directorate of Department of Environment, it is stated that for want of reclassification, the allottees of land at Pandian Theevu are unable to commence construction activities connected with the development of the Port like establishing Tank Farms for liquid cargoes. Defendant's witness No.1 has also admitted in his evidence that there are three allottees like the plaintiff in Hare Island @ Pandian Theevu and all of them could not start the activity under the contract for want of reclassification of Coastal Regulation Zone. Thus, it is clear from the above evidence that entire land covered under the tender has to be reclassified as CRZ-II, so that Farm Tanks, Warehouses etc., for storage of Hazardous substances can be provided. The contention of the defendant that reclassification of the land has to be obtained by the plaintiff as per the conditions stipulated in allotment order is not sustainable.
16. The allotment order was issued on 20.05.2000. Till the date of filing of the suit and even afterwards, reclassification of the land has not been done. Therefore, leasing out the land for the purpose of handling and storage of Hazardous substances by providing Tank Farms has become impossible. Section 56 of the Contract Act is as follows:
56. Agreement to do impossible act.- An agreement to do an act impossible in itself is void. Contract to do act afterwards becoming impossible or unlawful.- A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Compensation for loss through nonperformance of act known to be impossible or unlawful.- Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such primisor must make compensation to such promisee for any loss which promisee sustains through the non-performance of the promise.
Such impossibility is due to non clearances of the reclassification by the government. The defendant though has taken steps for reclassification, the Government of India has not reclassified as CRZ-II. Impossibility is also not self induced by the promisor or due to his negligence. It is also to be noted that the acts under the contract becomes impracticable automatically and not at the violation of any of the parties to the contract.
17. It is useful to refer the judgment of the Hon'ble Supreme Court in Boothalinga Agencies, Vs. V.T.C.Poriaswami Nadar reported in AIR 1969 Supreme Court 110, wherein, it has been held as follows:
10. The doctrine of frustration of contract is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract Act. It should be noticed that Section 56 lays the matter to be determined according to the intention of the parties.
.........
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14. .........the provisions of Section 56 of the Indian Contract Act cannot apply to the case of self induced frustration . In other words, the doctrine of frustration of contract cannot apply where the event which is alleged to have frustrated the contract arises from the act or election of a party.
In this case on hand, as already pointed out, the act under the contract is impossible unless the area is reclassified as CRZ-II and the area under the present classification as CRZ-I is prohibited to have any storage or handling of Hazardous substances as per the notification of the government in Ex.A25.
18. At the risk of repetition, it is to be pointed out that the defendant took all effective steps to get reclassification into CRZ-II from CRZ-I and the same could not be achieved. Section 65 of the Indian Contract Act also provides that party to the contract is liable to return the benefit derived under a contract which becomes impossible of performance. Therefore, as per the doctrine of frustration of contract under Section 56 of the Indian Contract Act, 1872, the plaintiff is entitled to be refunded the amount paid by him with reasonable interest.
19. Considering the entire facts and circumstances of the case, the date of deposit and length of period, this Court is of the view that awarding 6% interest will be just and reasonable. For the above said reasons, this appeal is liable to be allowed.
20. In the result, this appeal is allowed and the judgment and decree dated 08.01.2008 made in O.S.No.13 of 2006 on the file of the District Judge/Fast Track Court No.II, Tuticorin are hereby set aside. The suit is decreed, directing the respondent/defendant to pay a sum of Rs.98,17,200/- along with interest at the rate of 6% from the date of deposit viz., 30.11.2000 till the date of realization of the amount with cost.
A. Selvam, J. and P. Kalaiyarasan, J.
06/02/2017
1. This petition has been filed by the appellant/petitioner to admit the documents listed therein as additional evidence.
2. It is averred that these documents came to the knowledge of the petitioner only subsequent to the dismissal of the suit by the trial Court and therefore, they could not be produced.
3. The documents now sought to be admitted as additional evidence are the correspondences made by the Port Trust with respect to re-classification of CRZ. All documents have been obtained under RTI. Reasons that document came to the knowledge only subsequent to the dismissal of the suit is not acceptable.
4. Further, this Court is of the view that the documents now, sought to be admitted are not required to pronounce the judgment in this case.
5. Therefore, this petition is dismissed.