Full Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT THE HONOURABLE MR.JUSTICE ANIL K. NARENDRAN & THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR MONDAY, THE 31ST DAY OF JANUARY 2022 / 11TH MAGHA, 1943 PETITIONER: SURESH KUMAR D., AGED 49 YEARS, S/O.DAMODARAN, PUTHENVEETTIL HOUSE, KANNAMANGALAM SOUTH, CHETTIKULANGARA P.O., PIN - 690 106, ALAPPUZHA DISTRICT. BY ADV B.RENJITHKUMAR RESPONDENTS:
1 STATE OF KERALA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF DEVASWOM, KERALA GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN- 695 001. 2 TRAVANCORE DEVASWOM BOARD, DEVASWOM BOARD HEAD QUARTERS, NANDANKODU P.O., THIRUVANANTHAPURAM, PIN - 695 003, REP. BY ITS SECRETARY. 3 THE ASSISTANT COMMISSIONER, MAVELIKKARA GROUP OF TRAVANCORE DEVASWOM BOARD, OFFICE OF THE MAVELIKKARA GROUP OF TDB, MAVELIKKARA, PIN - 690 101. 4 THE SUB GROUP OFFICER, KANDIYOOR DEVASWOM OF TRAVANCORE DEVASWOM BOARD, KANDIYOOR DEVASWOM OFFICE (KANDIYOOR TEMPLE), MAVELIKKARA P.O., PIN - 690 101.
W.P.(C)NO.2789 of 2022 BY ADV SHRI.G.BIJU, SC, TRAVANCORE DEVASWOM BOARD OTHER PRESENT: SMT. DEEPA V - GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.01.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
JUDGMENT
Anil K. Narendran, J.
The petitioner, who is the successful bidder of Kuthaka
right for sale of flower garlands and pooja items in Kandiyoor Devaswom Temple under the management of the Travancore Devaswom Board, for the year 2021-2022, has filed this writ petition under Article 226 of the Constitution of India, seeking a writ of mandamus commanding the respondents to exempt him from payment of contractual amount, during the period in which the temple was closed due to Covid-19 pandemic during the current financial year. The petitioner has also sought for a writ of mandamus commanding the respondents to reschedule the installments in a relaxed manner for payment of the balance contract amount.
2. Going by the averments in the writ petition, the
petitioner participated in the auction conducted by the respondent for Kuthaka items in question. The tenure of the contract expires on 31.03.2022. The bid amount for sale of
flower garland is Rs.2,25,500/- and that for sale of pooja items is Rs.3,87,500/-. Therefore, the total amount for two Kuthaka items is Rs.6,13,000/-. As per the terms and conditions of the contract, the said amount has to be remitted in three installments. The first installment, which is half of the total amount, has to be remitted at the time of confirmation of auction itself. Accordingly, the petitioner remitted a sum of Rs.3,13,000/-, as evidenced by Ext.P1 receipt dated 05.04.2021. The balance amount has to be remitted in two equal installments. On 31.08.2021, the petitioner remitted a further sum of Rs.1,50,000/-, as evidenced by Ext.P2 receipt. The balance amount comes to Rs.1,50,000/-, which the petitioner is yet to remit.
3. According to the petitioner, due to the restrictions
imposed in connection with Covid-19 pandemic, the Temple was closed for a long period. Therefore, the petitioner could not remit the balance amount. On 13.01.2022, the 4 th respondent Sub Group Officer issued Ext.P3 notice, whereby the petitioner was required to remit the balance amount,
before 20.01.2022. The petitioner submitted Ext.P4 representation dated 17.01.2022, before the 2 nd respondent Travancore Devaswom Board and the 4th respondent Sub Group Officer, with a request for exemption from payment of the contractual amount, during the days on which the Temple was closed. The document marked as Ext.P5 is a reply obtained under the Right to Information Act, which is one dated 10.11.2021, wherein it is stated that the temple was closed due to lock down for the period from 28.04.2021
till 23.06.2021 and thereafter, from 30.08.2021 till 05.09.2021. Further, the entry to Temple was restricted since 06.09.2021 till 18.09.2021. Therefore, the entry of devotees to the Temple was totally banned for a period of 77 days. In such circumstances, from the total contractual amount of Rs.6,13,000/-, proportionate amount for 77 days has to be excluded. Despite, the submission of Ext.P4 representation, respondents 2 and 4 have not considered that request. Feeling aggrieved, the petitioner has filed this writ petition, seeking the aforesaid reliefs.
4. On 20.01.2022, when this writ petition came up for admission, the learned Standing Counsel for Travancore Devaswom Board was directed to get instructions.
5. On 21.01.2022, when this writ petition came up
for consideration, the learned Standing Counsel for Travancore Devaswom Board furnished the auction amount for pooja articles and flower garlands for the previous years, which are as follows; Period Amount for Pooja Amount for Articles (Rs.) Garlands (Rs.) 2018-19 6,94,211/- 3,48,999/- 2019-20 5,31,404/- 2,79,200/- 16.09.2020 to 41,500/- 35,001/- 31.03.2021 2020-21 3,87,500/- 2,25,500/-
6. Heard the learned counsel for the petitioner, the learned Government Pleader for the 1st respondent and also the learned Standing Counsel for Travancore Devaswom Board for respondents 2 to 4.
7. The issue that arises for consideration in this writ petition is as to whether the petitioner is entitled to exemption from payment of contractual amount, for the period specified in this writ petition.
8. The learned counsel for the petitioner would place
reliance on the provisions of Section 65 of the Contract Act, 1872 and also the decision of the Apex Court in Firm Sriniwas Ram Kumar v. Mahabir Prasad and others [AIR 1951 SC 177].
9. Per contra, the learned Standing Counsel for
Travancore Devaswom Board would place reliance on the provisions under Sections 24 to 30 and 56 of the Contract Act and also the law laid down by the Division Bench of this Court in Suresan Nair T.S. and others v. Travancore Devaswom Board and others [2021 (6) KHC 837].
10. Sections 56 of the Contract Act deals with
agreement to do impossible act. As per Section 56, an agreement to do an act impossible in itself is void. 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. 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 promisor must make compensation to such promisee for any loss which such promisee sustains through the non- performance of the promise.
11. Section 65 of the Contract Act deals with obligation
of person who has received advantage under void agreement, or contract that becomes void. As per Section 65, when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.
12. In Suresan Nair T.S. and others v.
Travancore Devaswom Board and others [2021 (6) KHC 837], a decision relied on by the learned Standing Counsel for Travancore Devaswom Board, a Division Bench of this Court held that, when the petitioners therein
responded to Ext.P1 tender notification issued by the Travancore Devaswom Board by submitting their respective bids for their respective items, they made their offer and the same was accepted by the Travancore Devaswom Board and they were conferred with the kuthaka/right. Thereupon, they remitted the first instalment of the bid amount as per the terms of Ext.P1 and the contract between the petitioners and the Travancore Devaswom Board is completed. The prescription in clause (7) for execution of formal agreement within seven days from the date of conferring with the
kuthaka/right is only for embodying the terms and conditions of the contract already concluded by the acceptance of the bid. Absence of a formal contract cannot lead to an inference that there is no concluded contract when the contract is completed by the acceptance of bid and deposit of the requisite portion of bid amount by the petitioners.
13. In Suresan Nair T.S., relying on the decision of the Apex Court in Dresser Rand S.A. v. Bindal Agro
Chemicals Ltd. [(2006) 1 SCC 751] the petitioners therein contended that, in the absence of a written agreement between parties, there is no binding contract. The Division Bench noticed that, in Dresser Rand S.A., the Apex Court was considering the question as to whether a tender document can be construed as arbitration agreement and the Court, after considering the difference between negotiating a bargain and entering into a binding contract held, on the facts of the said case, that unless a purchase
order was placed, there would be no agreement between
the parties. Everything that took place before such purchase
order was placed, would only be a prelude to a contract
which cannot be confused with the contract itself. It was further held that a letter of intent is only an intention to enter into a contract in future and it is not binding on the parties and it does not amount to contract. The process of bidding or submission of tenders would result in a contract when a bid or offer is made by a prospective supplier and such bid or offer is accepted. The Division Bench held that,
the decision of the Apex Court in Dresser Rand S.A. cannot fetch any help to the petitioners, as admittedly, the bids submitted by them were accepted by the Travancore
Devaswom Board and they have remitted the first instalment of the premium amount. It is not merely a negotiation of bargain, but acceptance of petitioners' bids by the Travancore Devaswom Board, giving rise to a binding contract. Therefore, absence of a formal agreement cannot lead to an inference that there is no binding contract between the petitioners and the Travancore Devaswom Board.
14. In Suresan Nair T.S., the Division Bench noticed
that, as per Ext.P1 tender notification, once the kuthaka right is received, an agreement in stamp paper as per the approved draft shall be entered into within seven days at the office of the Devaswom concerned. Once the grant of kuthaka is informed and the person who received kuthaka remits the first instalment of the kuthaka, he is bound to scrupulously follow the other conditions in the tender
notification and execute the agreement within the stipulated time. Having not done the same, he cannot be permitted to take advantage of avoidance of that obligation and get the fruits of his refusal to honour the obligation. By refusing to enter into an agreement and taking advantage of the same, the petitioners cannot be heard to contend that there is no concluded contract and they are not liable to pay the auction amount. It is trite that, where an obligation is cast on a party and he commits a breach of such obligation, he cannot be permitted to take advantage of such situation. This is based on the Latin maxim 'commodum ex injuria sua nemo habere debet' (no party can take undue advantage of his own wrong). Therefore, the Division Bench held that, the petitioners cannot contend that there is no binding contract between the petitioners and the Travancore Devaswom Board or that the tenders are liable to be cancelled. Their contention that they are not liable to deposit the bid amount and that they are entitled to get back the amount already deposited cannot be sustained.
15. In Harikumar G. v. Travancore Devaswom
Board and others [ILR 2021 (1) Kerala 1050], a Division Bench of this Court was dealing with a case in which extension of licence period for selling pooja items in Ettumanoor Sree Mahadeva Temple was sought for in the background of Covid-19 pandemic. While declining the said prayer, the Division Bench noticed that, even the petitioner has not shown that the supervening events have struck at the root of the contract. In other words, it has not become humanly impossible to perform the contract. Even though for some time in the beginning, it had become more onerous to get returns as expected by him, after lifting the ban in entering of devotees in temple, devotees have resumed visiting the temple and thus the petitioner has started supplying materials as required under the contract. After starting to supply materials, he cannot turn round and say that the contract has become impossible of performance and frustrated. Paragraphs 8 to 10 of that decision read thus;
"8. Doctrine of frustration or otherwise known as
doctrine of impossibility is based on the legal provision for the discharge of a contract, subsequent to its formation, in the event of change of circumstances rendering the contract illegal or physically impossible of performance. 'Impossibilium nulla obligatio est' is an accepted Latin Maxim meaning that there is no obligation to do impossible things. Similarly, the scope of application of the doctrine of 'lex non cogit ad impossibilia', that is, the law does not compel a man to do what he cannot possibly perform, the Roman Maxim 'nemo tenetur ad impossibilia', no one is bound to do an impossibility, have no application in the fact situation. Here no one has a case that the first part of Section 56 has any application. The petitioner wanted to bring his case under the second part, saying that due to supervening reasons, that is, introduction of complete lock-down due to the spread of Covid-19 pandemic, it became impossible for him to perform his part of the contract and thus the contract stands frustrated. We have no doubt that on his own showing, it is brought out by the petitioner that the second part of Section 56 also has no application. It is evident that from 17.08.2020 onwards, he could do business. The term of the contract is up to 31.03.2021. If it was an absolute impossibility, he would not have been able to perform the contract and supply items as required under the terms of the contract. Therefore, the petitioner cannot take shelter
under Section 56 of the Contract Act. For the very same reason, his argument that he has suffered a huge loss of Rs.30 lakhs a month also cannot be looked into by the Court.
9. It is also important to consider the effect of
impossibility or frustration. When there is frustration, the dissolution of the contract occurs automatically. It does not depend, as happens in rescission of a contract on the ground of repudiation or breach, on the choice of election of either party. It depends on the effect of what has actually happened on the possibility of performing the contract.
10. In Smt. Sushila Devi and another v. Hari
Singh and others [AIR 1971 SC 1756] the Honourable Supreme Court held that Section 56 of the Contract Act lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties. The impossibility contemplated by Section 56 of the Contract Act is not confined to something which is not humanly possible. If the performance of a contract becomes impracticable or useless having regard to the object and purpose of the parties had in view then it must be
held that the performance of the contract has become
impossible. But the supervening events should take away the basis of the contract and it should be of such a character that it strikes at the root of the contract. As noticed, here even the petitioner has not shown
that the supervening events have struck at the root of the contract. In other words, it has not become humanly impossible to perform the contract. Even though for some time in the beginning, it had become more onerous to get returns as expected by him, after lifting the ban in entering of devotees in temple, devotees have resumed visiting the temple and thus the petitioner has started supplying materials as required under the contract. After starting to supply materials, he cannot turn round and say that the contract has become impossible of performance and frustrated. He cannot blow hot and cold at the same time". (underline supplied)
16. In Suresan Nair T.S. [2021 (6) KHC 837] one
of the contentions raised by the petitioners was that, due to the outbreak of Covid-19 pandemic and the turn of events thereby, the contract could not be performed and has become frustrated. The Division Bench held that, when the case of the petitioners is that there is no binding contract, they cannot plead frustration of contract. The Division Bench noticed that the issue regarding frustration of contract was elaborately considered by this Court in Harikumar G. [ILR 2021 (1) Kerala 1050], wherein extension of licence
period for selling pooja items in Ettumanoor Sree Mahadeva Temple was sought for in the background of Covid-19 pandemic. The Division Bench further noticed that the lock down and the resultant restriction in entry of devotees to temples on account of Covid-19 pandemic did not cover the entire period of contract. After lifting the lock down and when the temples were opened for devotees, they could conduct business for the rest of the period of contract. The petitioners were doing business during the previous season
also on getting the kuthaka/right. As observed in
Harikumar G., in contractual matters, unforeseen eventualities are bound to happen. For the reason that contractors could reap good profit during a season do not bind them to pay any additional amount to the Board. In the said decision, this Court also held that alteration of circumstances does not lead to frustration of contract and that the doctrine of frustration has to be applied narrowly.
17. In Harikumar G., relying on the decision in Travancore Devaswom Board v. Thanath International
[(2004) 13 SCC 44], the Division Bench held that, merely because performance had become more onerous is not a ground for non performance or for claiming enhancement of price. Since the petitioners could do business during the rest of the term of the contract on lifting the restrictions, it cannot be said that the contract has become impossible for performance. Frustration of contract happens when the execution of contract is wholly impossible. The supervening events followed by the pandemic have not made the execution of contract wholly impossible, though it might have made the performance of contract more onerous and difficult. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification to wriggle out of the contractual obligations which the parties had accepted with open eyes.
18. In State of Haryana v. Jage Ram [(1980) 3 SCC 599], relying on the decision of the Constitution Bench in Har Shankar v. Deputy Excise and Taxation
Commissioner [(1975) 1 SCC 737], the Apex Court held
that, the respondent therein entered into a contract with the State authorities with the full knowledge of conditions which they had to carry out in the conduct of their business, on which they had willingly and voluntarily embarked. The occurrence of a commercial difficulty, inconvenience or hardship in the performance of those conditions, like the sale of liquor being less in summer than in winter, can provide no justification for not complying with the terms of the contract which they had accepted with open eyes. The respondents could not, therefore, invoke the writ jurisdiction of the High Court to avoid the contractual obligations incurred by them voluntarily.
19. In Firm Srinivas Ram Kumar v. Mahabir Prasad and others [AIR 1951 SC 177], a decision relied on by the learned counsel for the petitioner, a Three-Judge Bench of the Apex Court made reference to the pronouncement of the Judicial Committee in Babu Raja Mohan Manucha v. Babu Manzoor [AIR 1943 PC 29].
That appeal arose out of a suit commenced by the plaintiff appellant to enforce a mortgage security. The plea of the defendant was that the mortgage was void. This plea was given effect to by both the lower courts as well as by the Privy Council. But the Privy Council held that it was open in
such circumstances to the plaintiff to repudiate the transaction altogether and claim a relief outside it in the form of restitution under Section 65 of the Indian Contract Act. Although no such alternative claim was made in the plaint, the Privy Council allowed it to be advanced and gave a decree on the ground that the respondent could not be prejudiced by such a claim at all and the matter ought not to be left to a separate suit.
20. In South East Asia Marine Engineering and
Construction Limited v. Oil India Limited [(2020) 5 SCC 164], the Apex Court held that, when the parties have not provided for what would take place when an event which renders the performance of the contract impossible, then Section 56 of the Indian Contract Act applies. When the act
contracted for becomes impossible, then under Section 56, the parties are exempted from further performance and the contract becomes void. As held in Satyabrata Ghose v. Mugneeram Bangur and Co. [AIR 1954 SC 44], in deciding cases in India, the only doctrine that we have to go by is that of supervening impossibility or illegality as laid down in Section 56 of the Indian Contract Act, taking the word ‘impossible’ in its practical and not literal sense. It must be borne in mind, however, that Section 56 lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties. In India, Contract Act, 1872 had already recognised the harsh consequences of such frustration to some extent and had provided for a limited mechanism to ameliorate the same under Section 65 of the Contract Act. Section 65 provides that, when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person
from whom he received it. The aforesaid clause provides the basis of restitution for ‘failure of basis’. The aforesaid provision addresses limited circumstances wherein an agreement is void ab initio or the contract becomes subsequently void.
21. In Sabarimala Vyapari Vyavasayi Ekopana
Samathi v. Travancore Devaswom Board [2020 (5) KLT Online 1058], a decision relied on by the learned Standing Counsel for the Travancore Devaswom Board, the Division Bench of this Court was dealing with a case in which the grievance raised by the first petitioner Samithi on behalf of its members including the second petitioner was that for the year 2019-20, they participated in the auction under the impression that they could conduct business for a period of 142 days. As an impact of the Covid-19 pandemic, they could conduct business only for a period of 70 days as there was no pilgrimage from March 2020 onwards. The prayer in the writ petition was for issuance of writ of mandamus to allow the members of the first petitioner including the
second petitioner to do business for the remaining 72 days, commencing from November 2020. In other words, the petitioners contended that for the year 2020-21, at least for 72 days, no other person shall be permitted to conduct the business in respect of the businesses being conducted by the members of the first petitioner. In the contextual situation, the Division Bench referred to paragraph 12 of the decision of the Apex Court in Travancore Devaswom Board v. Thanath International [(2004) 13 SCC 44], which reads thus; “12. The law on the subject is well settled. In the case of Alopi Parshad and Sons Ltd. v. Union of India [AIR 1960 SC 588] this Court has held that the Contract Act, 1872 does not enable a party to a contract to ignore the express covenants thereof. It is
held that the Contract Act does not permit a party to
claim payment of consideration for performance of contract at rates different from the stipulated rates, on some vague plea of equity. It is held that in the performance of a contract, one often faces, in the course of carrying it out, a turn of events which are not anticipated, e.g., an abnormal rise or fall in prices, sudden depreciation of currency, an unexpected obstacle to execution or the like. It is held that these
do not affect the bargain that has been made. It is held
that there is no general liberty reserved to the courts to absolve a party from liability to perform his part of the contract, merely because on account of an uncontemplated turn of events, the performance of the contract has become onerous. It is held that compensation quantum meruit is awarded when the price is not fixed by the contract. It is held that for work done or services rendered pursuant to the terms of contract, compensation quantum meruit cannot be awarded.”
22. In Sabarimala Vyapari Vyavasayi Ekopana
Samathi, the Division Bench noticed that, in the light of the decision in Travancore Devaswom Board [(2004) 13 SCC 44], there can be no doubt with respect to the position that in respect of concluded contract, the parties are
governed by the terms of contract. Subsequent developments cannot be a reason for the petitioners to say that ignoring the specified terms in the contract, right should be extended even though no such right is actually flowing from the concluded contract. On the facts of the case on hand, the Division Bench noticed that, the members of the first petitioner as also the second petitioner got right to conduct business in Sabarimala till 31.10.2020 only on the strength of becoming the successful bidders in the
auction conducted in the year 2019-2020. That circumstances cannot be a reason for the first petitioner to contend that ignoring the terms of the contract as also the factum of issuance of fresh tender notification, its members including the second petitioner should be permitted to continue to do business this entire season or for a period of 72 days. The Division Bench found no merit in the writ petition filed by Sabarimala Vyapari Vyavasayi Ekopana Samathi and another, for issuance of writ of mandamus to allow the members of the first petitioner including the
second petitioner to do business for the remaining 72 days, commencing from November 2020, and consequently dismissed the same.
23. Viewed in the light of the law laid down in the
decisions referred to supra, conclusion is irresistible that, the petitioner is not entitled to seek exemption from payment of contractual amount, for the period during which certain restrictions were imposed in connection with Covid-
19 pandemic. The period of contract will expire on 31.03.2022. Going by the averments in the writ petition, the petitioner is yet to make payment of the balance amount of Rs.1,50,000/-. The petitioner, who is a defaulter, who has not chosen to make balance amount within the extended time granted by the Travancore Devaswom Board, is not entitled to seek an order to reschedule the balance installment.
24. Admittedly, the petitioner has defaulted payment of installments in respect of the kuthaka items, in violation of the tender conditions. As per clause (10) of the tender
conditions, the petitioner is liable to pay 18% interest for belated remittance of instalments. In view of the provisions under clause (12) of the tender conditions, since the petitioner has defaulted payment of the balance auction amount, which has resulted in the Board sustaining loss, the Board has the right to proceed against his movable and
immovable properties for recovering the said loss. Therefore, it is for respondents 3 and 4 to initiate recovery proceedings against the petitioner, in accordance with law, since he has defaulted payment of balance auction amount, to recover the said amount together with 18% interest provided as per clause (10) of the tender conditions. Necessary steps in this regard shall be taken within two weeks from the date of receipt of a certified copy of this
judgment.
25. We find no merit in the contentions raised in the writ petition. The writ petition fails and the same is accordingly dismissed. No order as to costs. The learned counsel for the petitioner would submit
that the petitioner shall pay the entire balance amount in terms of the tender conditions, for which he requires a breathing time. Based on the aforesaid submissions made by the learned counsel for the petitioner, the petitioner is granted time till 15.02.2022 for remitting the entire balance amount together with 18% interest, in terms of clause (10) of the tender conditions.
Sd/- ANIL K. NARENDRAN, JUDGE Sd/- P.G. AJITHKUMAR, JUDGE MIN APPENDIX OF W.P.(C) No.2089 of 2022 PETITIONER'S EXHIBITS: Exhibit P1 TRUE COPY OF THE RECEIPT DATED RESPONDENT. Exhibit P2 TRUE COPY OF THE RECEIPT DATED RESPONDENT. Exhibit P3 TRUE COPY OF THE NOTICE DATED RESPONDENT TO THE PETITIONER. Exhibit P4 TRUE COPY OF THE REQUEST DATED PETITIONER. Exhibit P5 TRUE COPY OF THE INFORMATION STATEMENT ISSUED BY THE OFFICE OF THE 3RD RESPONDENT DATED 10/11/2021. RESPONDENT'S EXHIBITS: NIL.