Dismissed

Ad on Wheels v. Kerala State Road Transport Corporation

Kerala HC1 Oct 2021WP(C)/29125/2020

Case brief

AI extract

What is this about?

Writ petition filed by a partnership firm seeking declaration of contract extension, quashing of cancellation, and refund of dues with interest against KSRTC. Bench held that disputed questions of fact regarding frustration and breach require civil jurisdiction.

What did the court decide?

Writ petition dismissed; petitioners reserved right to seek relief in appropriate civil proceedings.

Ad on Wheels Vs Kerala State Road Transport… — Contract and Commercial Disputes | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE SUNIL THOMAS

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FRIDAY, THE 1^ST DAY OF OCTOBER 2021 / 9TH ASWINA, 1943

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WP(C) NO. 29125 OF 2020

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PETITIONERS:

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1 AD ON WHEELS HAVING ITS REGISTERED OFFICE AT RAJADHANI BUILDING, NORTH BLOCK, EAST FORT, THIRUVANANTHAPURAM-695 023, A REGISTERED PARTNERSHIP FIRM REPRESENTED BY ITS PARTNER R. VINOD, S/O. RAVINDRAN NAIR, AGED 55 YEARS, RESIDING AT TC 21/168, VISHNUPRIYA, NSS SAMAJAM ROAD, KARAMANA, THIRUVANANTHAPURAM-695 002.

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2 R.VINOD AGED 55 YEARS S/O. RAVINDRAN NAIR, PARTNER, M/S. AD ON WHEELS, THIRUVANANTHAPURAM-695 023, RESIDING AT TC 21/168, VISHNUPRIYA, NSS SAMAJAM ROAD, KARAMANA, THIRUVANANTHAPURAM-695 002.

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3 RANI BIJU AGED 55 YEARS D/O. E.K. CHANDRASENAN, PARTNER, M/S. AD ON WHEELS, THIRUVANANTHAPURAM-695 023 SAMPTHRIPTHI RAJADHANI FORT P.O., THIRUVANANTHAPURAM-695 023.

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4 SHIBU PRABHAKARAN AGED 54 YEARS S/O. M.PRABHAKARAN, RESIDING TC 39/1726 (2) GNRA-3H, DEVIKA GARDENS, MANACAUD P.O., THIRUVANANTHAPURAM-695 009.

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5 MOHAMMED RASEFF AGED 48 YEARS S/O. LATE MOHAMMED ABDUL KHADER, RESIDING AT HIDA COTTAGE, KARICHARA, PALLIPPURAM, THIRUVANANTHAPURAM-695 316.

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BY ADV R.S.KALKURA

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RESPONDENTS:

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1 KERALA STATE ROAD TRANSPORT CORPORATION HAVING ITS REGISTERED OFFICE AT TRANSPORT BHAVAN, FORT P.O., THIRUVANANTHAPURAM-695 023., REPRESENTED BY ITS

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W.P.(C) No.29125/2020

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MANAGING DIRECTOR.

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2 THE MANAGING DIRECTOR KERALA STATE ROAD TRANSPORT CORPORATION, HAVING ITS REGISTERED OFFICE AT TRANSPORT BHAVAN, FORT P.O., THIRUVANANTHAPURAM-695 023.

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3 STATE OF KERALA REPRESENTED BY THE PRINCIPAL SECRETARY, TRANSPORT DEPARTMENT, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM-695 001.

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BY ADV SRI.DEEPU THANKAN

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OTHER PRESENT:

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GP. ADV.VENUGOPAL

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.07.2021, THE COURT ON 1/10/2021 DELIVERED THE FOLLOWING:

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W.P.(C) No.29125/2020

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JUDGMENT

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The first petitioner is a firm of which petitioners 2 to 5 are the partners. Ext.P1 is a partnership deed. The first respondent is the KSRTC. Pursuant to a notification published by the KSRTC calling for tenders for awarding license to carry courier-cum-parcel service in KSRTC buses for a period of one year by Ext.P3 notification, the first petitioner firm responded. Subsequently, by Ext.P4, the first petitioner was informed that the tender submitted by the petitioner was accepted being the highest bidder, who had quoted for Rs.6 Lakhs per month. By Ext.P4 dated 18/12/2019, the various terms and conditions were informed which, inter alia, included payment of 5% on tender allotment, 45% within a period of 30 days thereafter and the entire remaining 50% within six months. Subsequently, by Ext.P5 the first petitioner informed that they could not comply with the terms and conditions regarding the payment and sought extension. By Ext.P6, dated 20/2/2020, KSRTC directed the first petitioner to pay the entire amount. Accordingly, Rs.37,51,200/- was claimed to have been paid on 29/2/2020 and a sum of Rs.18 Lakhs as security deposit on 29/2/2020. By Ext.P8 letter dated 2/3/2020, KSRTC permitted the petitioner to carry courier service utilising the KSRTC buses. By Ext.P9 communication dated 7/3/2020, KSRTC allotted space in various bus stands for housing courier office. By Ext.P12 letter dated 10/3/2020 , the first petitioner sought permission to commence business and operation of courier service. Towards the middle of March 2020, Covid pandemic spread and hence, according to the petitioner, no

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business could be conducted during the lock down period and some time, thereafter. Virtually, all the businesses came to a stand still. Courier and parcel services almost ceased to operate. Consequently, by Ext.P13 communication dated 20/3/2020, the petitioner requested to shift the date of commencement of agreement from 29/2/2020 to 28/2/2021. By Ext.P14 dated 9/4/2020, KSRTC was informed by the first petitioner that they cannot take up the business on the basis of the agreement having retrospective effect from 2020. According to the petitioner, this communication was not replied by the KSRTC. Since Ext.P14 was not replied, by Ext.P15 e mail, dated 2/6/2020, it was requested that the agreement to be made operational on the date on which the KSRTC resuming full transport service in the inter district and state. After receipt of Exts.P14 and P15, the KSRTC called the first petitioner for a negotiation. By Ext.P17 dated 28/9/2020, the first petitioner offered to accept the performance of agreement subject to certain conditions. Negotiations were held thereafter. Exts.P18 to P22 are the communications which were exchanged between the parties in the interregnum. Ultimately, by Ext.P23 dated 16/12/2020 issued by the KSRTC to the first petitioner, it was informed that since the business was not commenced by the petitioner and there was breach of terms, the contract was cancelled by the KSRTC. It was claimed by the first petitioner that the contract became aborted by force majure and the contract stood frustrated due to the supervening impossibility . T he petitioners instituted the writ petition seeking various prayers. The first prayer sought was to declare that

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the petitioner was entitled to have the period of commencement of the contract extended. The petitioners also sought quashing of Ext.P20,P22 and P23. An alternative relief sought was that, if for any reason, the court finds that the extension of time, as sought by the petitioner, could be granted, a writ or other direction may be issued directing the first respondent to refund the entire amount of Rs.62,13,603/- and Rs.18 Lakhs paid as security deposit, along with Rs.1,65,603/- paid by the first petitioner to the first respondent for allotment of space with 12% interest per annum from the date of deposit till the date of payment within the time limit fixed by the court.

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The respondent-KSRTC filed a counter affidavit denying the various allegations and the claims set up by the petitioners. It was contended that as per the terms and conditions communicated and the provisional confirmation order, the licensee was directed to enter into an agreement within 30 days of the allotment letter. However, due to out break of Covid 19 and the national vide lock down declared by the Central Government from 24/3/2020 onwards, KSRTC could not operate its services. It slowly started functioning after the lifting of lock down on 8/6/2020 with relaxation and at present the buses have begun operating its services in a partial manner. Corporation by its letter dated 20/11/2020 informed the petitioner to enter into an agreement as agreed initially and start the courier service. The petitioner failed to do so. The petitioner was the licencee for the period 2018 – 2019 also, the licence fee offered was Rs.13,50,000/- per month. Since the petitioner was not ready to continue the service and withdrew from the tender

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citing high license fee and loss of business, the Corporation floated new tender . Again licence was allotted to the petitioner with decreased license fee of Rs.6 Lakhs, considering the fact that the petitioner had conducted the business with the Corporation in the previous term. It was claimed that Corporation has taken very lenient view in awarding licence as well as instructing the petitioner to conduct the business by issuing communication for the same. The petitioner was duly informed to enter into the agreement and start business after the lock down was lifted in spite of the fact that the work was awarded to the petitioner after the long back on 18/12/2019 and after the issuance of communication, there was no response from the petitioner, nor the agreement was entered into to start the business, after the lifting of the lock down by letter dated 20/11/2020. As the petitioner was awarded works way back in 18/12/2019 and after the issuance of communications, there was neither response from the petitioner nor an agreement was entered to start the business as per the terms, the licence issued was cancelled on 16/12/2020. The license fee and the security deposit can be refunded only after assigning the liabilities. It was contended that, disputes relating to contract cannot be agitated,under Article 226 of the Constitution of India. It has been so held by the various decisions.

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The first petitioner filed a reply affidavit denying all the above contentions and produced Exts.P24 to P29 communications to advance the contention that the KSRTC had committed breach of the terms of the contract. It was also contended that, they revealed that there was no latches

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on the part of the petitioners. On the other hand, respondents themselves were at fault and had admitted that the licence agreement could not be executed on account of Covid 19 outbreak and nation wide lock down. It was further contended that merely because one of the parties to the litigation raised a dispute regarding the facts of the case, a proceeding under Article 226 of the Constitution of India does not invite an adjudication in a trial court and in appropriate cases, the writ court has the jurisdiction to entertain the writ petition involving disputed questions of fact involving a contractual obligation or involving some disputed question of facts.

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The basic facts are not in dispute. Learned counsel for the petitioners relied on a catena of decisions to support the legal principles involved and also to contend that in exceptional cases, as is available in the present case, the Constitutional Courts are entitled to exercise the writ jurisdiction, notwithstanding the fact that element of enforcement of contract arise. It was contended by the learned counsel for the petitioners that, the disputed facts are not involved and that the question was whether due to supervening reasons, the contract got frustrated. It was also contended that, in the above circumstances, no latches or negligence or breach of contract can be attributed to the petitioners and hence, by efflux of time and the supervening impossibilities, the contract got frustrated, necessarily the petitioners are entitled to refund of the amounts paid, it was contended.

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Per contra, learned counsel for the respondent -KSRTC opposing the application, contended that since disputed facts are involved and the writ

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petition is not maintainable as held by the few decisions relied on by the learned counsel. It was contended that, there was no frustration of contract and the petitioners, by sheer neglect to perform their part of the contract, violated the terms of contract and has forfeited substantial portion of the amount paid. They were repaid the amounts which were allowable after deducting the damages caused to the KSRTC.

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Learned counsel for the KSRTC relied on the decision reported in State of U.P. & others v. Bridge and Roof Company (India) Ltd. (1996 (6) SCC 22) to contend that, in disputes relating to terms of private contract, proper course would be to refer to arbitration or institution of suit and not by invoking the writ jurisdiction. It was held that, in the contract between the parties, which is not a statutory contract, the parties are governed by the provisions of the Contract Act or may be also by certain provisions of Sales of Goods Act. Any dispute relating to interpretation of terms and conditions of such a contract cannot be agitated and could not have been agitated in a writ petition. That is a matter either for arbitration as provided by the contract or for the civil court, as the case may be. The learned counsel further relied on the decision reported in Barilly Development Authority and Another v. Ajai Pal Singh and others (1989) 2 SCC116) to contend that the writ petition in this case is not sustainable. It was held in that decision that there is a line of decisions where the contract entered into between the State and persons aggrieved is non -statutory and purely contractual, that the rights are governed only by the terms of the contract. Hence, no writ or order can be

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issued under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract pure and simple. In State of Bihar & others v. Jain Plastics And Chemicals Ltd.(2002) 1 SCC 216) , it was held that question of fact which was based on serious disputed questions or rival claims arising out of the breach of contract are required to be investigated and determined on the basis of evidence led in a civil suit. To further buttress this argument, the learned counsel relied on a Division Bench decision of this Court in W .P.(C) No.27395/2020 and on K.K.Saksena v. International Commission on Irrigation and Drainage and Others ( 2015) 4 SCC 670). In the later case, it was affirmed by the Supreme Court that contractual and commercial obligations are enforceable only by ordinary civil action and not by judicial review.

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To counter the above contentions of the respondents and to advance the arguments that in certain cases a writ jurisdiction is maintainable, the learned counsel for the petitioners relied on the decision reported in Hindusthan Construction Company Ltd. v. KSEB 1999 (2) KLT 30). In para 9 of the above decision, it is stated that though the decisions taken by the Board and the orders issued by the Board are in reference to the contractual work, in so far as the decision and the orders are concerned, they are taken by the Board, as a public statutory body and hence susceptible to a writ jurisdiction. In ABL International Ltd. & another v. Export Credit Guarantee Corporation of India Ltd. & others. (2004 KHC 506) , the question that came up for consideration was whether

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the writ petition under Article 226 of the Constitution of India was maintainable to enforce a contractual obligation of the State or its instrumentality. In the above proceedings which commenced from the writ petition filed before the Single Judge of the Calcutta High Court, the prayer sought was to quash the letter of repudiation was issued by the first respondent and for a consequential direction to the first respondent to make payment of the dues to it under the contract of insurance. Since the only limited question was whether the letter of repudiation sustainable in law, it was held by the Supreme Court that writ was maintainable in such cases. In

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Punjab National Bank & others v. Atmanand Singh and Others (2020 KHC 6374 ), it was held that even in the case of disputed question of fact of complex nature requiring production of documentary evidence, though it should not normally be entertained by High Court, however, even in certain disputed questions of fact, on sound judicial principles and considering the nature of controversy, a writ petition under Article 226 was sustainable.

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A reference to the above three decisions clearly show that the consistent view taken by the Supreme Court was that normally, disputed questions of fact and enforcement of contractual obligation arising from breach of contract are to be adjudicated in civil jurisdiction. However, the court had held that in exceptional cases wherein such a detailed enquiry was not contemplated or substantial questions of disputed facts are not involved, a writ jurisdiction may be sustainable. In all the above cases referred above, disputed question of facts were not involved and the attack

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was essentially based on legal issues.

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Having considered the parameters laid down by the various decisions, the question that arises for consideration in the present case is whether the disputed question is susceptible to the writ jurisdiction or adjudication or arbitration. As mentioned earlier, basic facts including the acceptance of the tender, communication regarding the terms of the contract and payment of money are not in dispute. It is also seen on facts that though the petitioner was informed about the awarding of the contract, by Ext.P5, an extension was sought. It was granted and substantial payments were made thereafter. There is no dispute that during March 2020, due to Covid, lock down was declared and the KSRTC services were brought to a stand still. It is also admitted that commercial activities stood paragsed for a long period. In the above circumstance, petitioner issued Ext.P13 communication, by which the request was made to commence the agreement. After the lifting of lock down, the KSRTC resumed its activities and reached full fledged transportation some time later. In the above circumstances, whether Ext.P13 request was sustainable is a crucial disputed fact. This is an important factor to be adjudicated to decide whether there was frustration of contract and whether circumstance was such that, performance of contract was beyond the control of the petitioners. It is also to be noted that virtually the petitioners did not commence their work for long. The petitioner have a definite contention that the contract stood frustrated. To substantiate the legal principles involved in the frustration, the learned counsel relied on the

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following decisions; T.V.Kochuvareed v. Mariappa Goundan (1953 KLT SN 16) ( C.No.44) , Satyabrata Ghose v. Mugneeram Bangur and Co.and Another (1954 KHC 413(SC) , Thomas v. Moran Mar Baselious Ougen(1979 KHC 305) , Thomas v. Piravanthoor Panchayat (1985 KLT SN 47) , X avier v. Joseph(1994 (2) KLT SN 26, ) Vigneshwara Bhar v. Srikrishna Bhat (2006 (1) KLT SN 94) , S yed Khursed Ali v. State of Orissa and Another (2007 KHC 7548) , Alluri Narayana Murthy Raju v. Dist.Collector Visakhapatnam Dist.and Others (2008 KHC 7457) , Kuriakose v. State of Kerala (2009 (4) KLT SN 17) , Delhi Development Authority v. Kenneth Builders & Developers Ltd. And Others (2016 KHC 6421 )

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Rival contentions are set up by both sides. The claim of frustration set up by the petitioners was seriously opposed by the contesting respondents. There was no frustration of contract since the respondent was ready and willing to continue the terms of the offer made and the petitioners willfully refrained from executing the agreement. It was also stated that after a short period of lock down, transportation system came to the normalcy and there was no supervening impossibility regarding performance of the terms of the contract. This is also a relevant factor which needs to be adjudicated on the basis of evidence let in by both sides.

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Petitioners have also a case that the contract has become void . To substantiate it, the petitioner relied on the decision reported in Mary v. State of Kerala and Others (2013 (4) KHC 372). According to the

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petitioners, they are entitled for refund of the entire amount deposited . The learned counsel, relying on the decision reported in Krishna and Company (M/s.) v. Government of A.P. And Others (1993 KHC 1359) contended that the petitioners were prevented from exercising their rights and consequently, entitled for the refund of the amount. This fact is also disputed by the KSRTC by contending that the petitioners voluntarily refrained from performing their parts of the duties.

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Evaluation of the facts disclosed show that there are few matters which are in serious issue and calls for an adjudication, before conclusion can be arrived at as to whether there was a frustration of contract or due to supervening reasons, the contract became void as claimed by the plaintiffs . Having considered this, I am of the opinion that the subject matter and the issue involved is beyond the writ jurisdiction of this court. The writ petition is not sustainable, which is accordingly dismissed reserving the right of the petitioners to seek appropriate relief by appropriate civil proceedings. It is made clear that this court has not made any comment on the rival contentions set up by the parties at each stage.

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The writ petition is accordingly dismissed.

Sd/-

SUNIL THOMAS

Judge

dpk

W.P.(C) No.29125/2020

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APPENDIX OF WP(C) 29125/2020

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PETITIONER EXHIBITS

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EXHIBIT P1	TRUE COPY OF THE PARTNERSHIP DEED DATED 22.8.2015 ENTERED INTO BETWEEN THE PETITIONERS 2 TO 5.
EXHIBIT P2	TRUE COPY OF THE ACKNOWLEDGEMENT OF REGISTRATION OF FIRM DATED 30.9.2015 ISSUED BY THE REGISTRAR OF FIRMS IN RESPECT OF IST PETITIONER PARTNERSHIP.
EXHIBIT P3	TRUE COPY OF THE TENDER NOTIFICATION DATED 17.10.2019 ISSUED BY KSRTC.
EXHIBIT P4	TRUE COPY OF THE ORDER DATED 18.12.2019 ISSUED BY THE KSRTC TO THE IST PETITIONER.
EXHIBIT P5	TRUE COPY OF THE LETTER DATED 17.1.2020 ISSUED BY THE PETITIONER TO THE KSRTC.
EXHIBIT P6	TRUE COPY OF THE LETTER DATED 20.2.2020 ISSUED BY KSRTC TO THE IST PETITIONER.
EXHIBIT P7	TRUE COPY OF THE RECEIPT NO.109953 AND RECEIPT NO.109952 DATED 29.2.2020 ISSUED BY THE KSRTC.
EXHIBIT P8	TRUE COPY OF THE CIRCULAR DATED 2.3.2020 ISSUED BY KSRTC.
EXHIBIT P9	TRUE COPY OF THE CIRCULAR DATED 7.3.2020 ISSUED BY KSRTC IN RESPECT OF THE CONTRACT.
EXHIBIT P10	TRUE COPY OF THE CIRCULAR DATED 13.3.2020 ISSUED BY THE KSRTC TO THE IST PETITIONER.
EXHIBIT P11	TRUE COPY OF THE RECEIPT NO.109958 DATED 13.3.2020 ISSUED BY THE KSRTC TO THE IST PETITIONER.

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EXHIBIT P12	TRUE COPY OF THE LETTER DATED 10.3.2020 ISSUED BY THE IST PETITIONER TO THE KSRTC.
EXHIBIT P13	TRUE COPY OF THE LETTER DATED 20.3.2020 ISSUED BY THE IST PETITIONER TO THE KSRTC.
EXHIBIT P14	TRUE COPY OF THE EMAIL LETTER DATED 9.4.2020 ISSUED BY THE IST PETITIONER TO THE KSRTC.
EXHIBIT P15	TRUE COPY OF THE EMAIL DATED 2.6.2020 ISSUED BY THE IST PETITIONER TO THE KSRTC.
EXHIBIT P16	TRUE COPY OF THE LETTER DATED 28.9.2020 ISSUED BY THE KSRTC TO THE IST PETITIONER.
EXHIBIT P17	TRUE COPY OF THE LETTER/REPRESENTATION/REPRESENTATION DATED 28.9.2020 ISSUED BY THE IST PETITIONER TO THE KSRTC.
EXHIBIT P18	TRUE COPY OF THE EMAIL DATED 28.10.2020 ISSUED TO THE IST PETITIONER BY THE KSRTC.
EXHIBIT P19	TRUE COPY OF THE DRAFT AGREEMENT ENT OVER TO THE IST PETITIONER BY THE KSRTC.
EXHIBIT P20	TRUE COPY OF THE LETTER DATED 20.11.2020 ISSUED BY THE KSRTC TO THE IST PETITIONER.
EXHIBIT P21	TRUE COPY OF THE COMMUNICATION DATED 30.11.2020 ISSUED BY THE IST PETITIONER TO THE KSRTC.
EXHIBIT P22	TRUE COPY OF THE LETTER DATED 15.12.2020 ISSUED BY THE KSRTC THROUGH EMAIL TO THE PETITIONER.
EXHIBIT P23	TRUE COPY OF THE COMMUNICATION DATED 16.12.2020 ISSUED BY THE KSRTC TO THE PETITIONER.

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EXHIBIT P24	THE TRUE COPY OF THE LETTER DATED 17.10.2018 ISSUED BY THE RESPONDENT TO THE PETITIONER ACCEPTING THE BID OF THE PETITIONER FOR A PERIOD OF ONE YEAR FROM 5.10.2018 TO 4.10.2019.
EXHIBIT P25	TRUE COPY OF THE COMPLAINT DATED 14.4.2020 ISSUED BY THE PETITIONER THROUGH E-MAIL TO THE RESPONDENT.
EXHIBIT P26	TRUE COPY OF THE LETTER DATED 10.3.2020 ISSUED BY THE PETITIONER TO THE RESPONDENT.
EXHIBIT P27	TRUE COPY OF THE LETTER DATED 30.11.2020 ISSUED BY THE PETITIONER TO THE RESPONDENT.
EXHIBIT P28	TRUE COPY OF THE LETTER DATED 6.12.2019 ISSUED BY THE PETITIONER TO THE FIRST RESPONDENT.
EXHIBIT P29	TRUE COPY OF THE LETTER DATED 7.11.2019 ISSUED BY THE FIRST RESPONDENT TO THE PETITIONER.

Ad on Wheels v. Kerala State Road Transport Corporation

Case brief

What is this about?

What did the court decide?

Ad on Wheels v. Kerala State Road Transport Corporation

Case brief

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