Kerala High Court
Suresan Nair T.S vs The Travancore Devaswom Board on 6 July, 2021
Author: Murali Purushothaman
Bench: C.T.Ravikumar, Murali Purushothaman
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN
TUESDAY, THE 6TH DAY OF JULY 2021 / 15TH ASHADHA, 1943
WP(C) NO. 13039 OF 2020
PETITIONERS:
1 SURESAN NAIR T.S.,
AGED 60 YEARS
S/O. LATE SADASIVAN NAIR, THUNDIYIL HOUSE,
MALAYALAPPUZHA, THAZHOM P.O., PATHANAMTHITTA-
689666.
2 R. ANIL KUMAR,
AGED 52 YEARS
S/O. LATE RAMACHANDRAN, KOCHUPURAKKAL VEEDU,
KIZHAKKEKARA, KOTTARAKKARA, KOLLAM-691506.
3 GOPAKUMAR N.,
AGED 50 YEARS
S/O. LATE NEELAKANTAN NAIR, LAKSHMI SADANAM,
MALAYALAPPUZHA, THAZHOM P.O., PATHANAMTHITTA-
689666.
4 PRAVEEN KUMAR S.,
S/O. SUDHAKARAN NAIR, PLAVARAKIZHAKKATHIL,
MALAYALAPPUZHA, THAZHOM P.O., PATHANAMTHITTA-
689666.
5 K.G. RAMESAN NAIR,
AGED 54 YEARS'S/O. LATE GOPALAN NAIR,
KIZHAKKEMURIYIL VEEDU, MALAYALAPPUZHA, THAZHOM
P.O., PATHANAMTHITTA-689666.
BY ADV B.MOHANLAL
RESPONDENTS:
1 THE TRAVANCORE DEVASWOM BOARD,
REPRESENTED BY ITS SECRETARY, NANDANCODE,
THIRUVANANTHAPURAM-69503
W.P.(C) 13039/2020 ..2..
2 THE COMMISSIONER,
TRAVANCORE DEVASWOM BOARD, NANDANCODE,
THIRUVANANTHAPURAM-69503
3 THE DEPUTY DEVASWOM COMMISSIONER,
TRAVANCORE DEVASWOM BOARD, PATHANAMTHITTA-689645.
4 THE ASSISTANT DEVASWOM COMMISSIONER,
TRAVANCORE DEVASWOM BOARD, ARANMULA P.O.,
PATHANAMTHITTA-689533.
5 THE ASSISTANT DEVASWOM COMMISSIONER,
TRAVANCORE DEVASWOM BOARD, KOTTARAKKARA, KOLLAM-
691506.
6 THE ADMINISTRATIVE OFFICER,
MALAYALAPPUZHA BHADRAKALI TEMPLE, DEVASWOM, THAZHOM
P.O., PATHANAMTHITTA-689666.
7 THE ADMINISTRATIVE OFFICER,
P.D. MANIKANTESWARAM DEVASWOM, KOTTARAKKARA P.O.,
KOLLAM-691506.
BY ADV SRI.G.BIJU,SC,TRAVANCORE DEVASWOM BOARD
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 06.07.2021, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
W.P.(C) 13039/2020 ..3..
C.R
JUDGMENT
Murali Purushothaman, J.
The petitioners are contractors supplying pooja and other materials to various temples under the Travancore Devaswom Board (TDB) for the last more than 5 years. The TDB issued Ext. P1 E- Tender notification for auctioning the 'kuthaka avakasham' (exclusive right) to sell pooja/other items at different temples under the jurisdiction of Pathanamthitta Deputy Devaswom Commissioner for the financial year 2020-2021. The petitioners participated in the tender and submitted their bids for their respective items along with the required Earnest Money Deposit (EMD). Going by the averments in the writ petition, the respective bids submitted by the petitioners were accepted and the respondents finalized the tender concerned in their favour. As per the tender conditions, each of the petitioners remitted 50% of the respective bid amount. However, they could not supply the materials to the temple as per the tender for the period from 01.04.2020 since temples were closed on directions from Government on the outbreak of Covid-19 pandemic.
Therefore, the petitioners submitted representations before W.P.(C) 13039/2020 ..4..
the TDB requesting to extend the term of contract for the next financial year or discount the rate of tender or to cancel the tender and return the EMD and the amount deposited by them. However, the TDB issued Ext. P17 notice directing the petitioners to remit the balance 50% of the bid amount. The petitioners submitted further representations before the TDB to cancel the tender and to return the amount already remitted. According to the petitioners, they have not executed any formal agreement with the TDB in terms of Ext.P1 tender and as such, there is no concluded contract and they are entitled to get back the amounts remitted by them including the EMD. They have filed this writ petition for direction to cancel their respective tenders and for return of the amounts remitted by them including the EMD and to declare that the petitioners are not liable to remit any amount to the respondents by applying the principle of 'Force Majeure' and that the contract is frustrated on account of Covid-19 pandemic.
2. Heard the learned counsel for the petitioners and the learned standing counsel for the TDB.
W.P.(C) 13039/2020 ..5..
3. According to the petitioners, the bids submitted by them were accepted and the tender was finalized in their favour by the TDB and they remitted 50% of the auction amount as per the terms of tender. However, they could not do any business pursuant to the contract on account of closure of temples due to the outbreak of Covid -19 pandemic. It is the case of the petitioners that they have not executed any agreement pursuant to the tender and therefore, there is no concluded contract and they are not liable to pay any amounts at all and further that they are entitled to get back the amount already remitted. The petitioners also have a case that the contract could not be performed due to the outbreak of Covid-19 pandamic and the turn of events thereby and the contract has become frustrated.
4. Admittedly, the petitioners participated in the E- tender, remitted EMD and the bids submitted by the petitioners were accepted and the respondents finalized the tender in favour of the petitioners in respect of their W.P.(C) 13039/2020 ..6..
respective items. In terms of Ext. P1 tender notification, the petitioners have also remitted the 1 st installment of the auction amount. The balance amount is to be remitted before 31.07.2021 as stipulated by clause 9 of Ext. P1. However, the petitioners contend that, no agreement was executed by them pursuant to the finalization of tender and as such, there is no concluded contract and they are not liable to deposit the bid amount and are entitled to get back the 1 st installment of the bid amount already deposited.
5. Clauses 6 and 7 of Ext. P1 tender notification conjointly read that the person who is granted with the kuthaka shall be informed of the grant of kuthaka in his favour and the person who receives the kuthaka shall remit the first installment of the kuthaka amount on the same day and shall obtain the kuthaka right certificate from the authority concerned and the Department shall have the absolute right to cancel the kuthaka right or to re-tender, if the remaining installments are not remitted within the W.P.(C) 13039/2020 ..7..
stipulated period. Once the kuthaka right is so received, an agreement shall be entered into within seven days at the office of Devaswom concerned and the kuthaka shall be conducted. Clause 11 provides that if the tenderer withdraws from the auction after the finalization of tender or after confirming the right or after entering into agreement, the entire amount deposited by him will be forfeited.
6. When the petitioners responded to Ext. P1 tender notification by submitting their respective bids for their respective items, they made their offer and the same was accepted by the TDB and they were conferred with the kuthaka / right. Thereupon, the petitioners remitted the 1 st installment of the bid amount as per the terms of Ext. P1 and the contract between the petitioners and the TDB is completed. The prescription in Clause 7 for execution of formal agreement within 7 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 W.P.(C) 13039/2020 ..8..
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.
7. Relying on the decision of the Apex Court in Dresser Rand S. A. v. Bindal Agro Chem.Ltd., (2006 (1) SCC 751: 2006 KHC 79), the petitioners contend that in the absence of written agreement between parties, there is no binding contract. In the said decision, 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 W.P.(C) 13039/2020 ..9..
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. In paragraphs 27 and 32 of the judgment, the Apex Court held as follows: -
"27. The tender document or the invitation to bid of BINDAL (containing the "instructions to bidders" and the "general conditions of purchase"), by itself, is neither an agreement nor a contract. The instructions to bidders informed the intending bidders how the bid should be made and laid down the procedure for consideration and acceptance of the bid. 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 by BINDAL. The second part of the Invitation to Bid consists of the 'General Conditions of Purchase', that is, the conditions subject to which the purchase order will be placed or offer will be accepted. The 'General Conditions of Purchase' were made available as a part of the Invitation to bid, so as to enable the prospective suppliers to ascertain their obligations and formulate their offers suitably."
xxx "32. Parties agreeing upon the terms subject to which a contract will be governed, when made, is not the same as entering into the contract itself. Similarly, agreeing upon the terms which will govern a purchase when a purchase order is placed is not the same as placing a purchase order. A prelude to a contract should not be confused with the contract itself. The purpose of Revision No. 4 dated 10.6.1991 was that if and when a purchase order was placed by BINDAL, that would be W.P.(C) 13039/2020 ..10..
governed by the "general conditions of purchase" of BINDAL, as modified by Revision No. 4. But when no purchase order was placed, neither the 'general conditions of purchase' nor the arbitration clause in the 'General Conditions of Purchase' became effective or enforceable."
The said decision, in our view, cannot fetch any help to the petitioners, as admittedly, the bids submitted by them were accepted by the TDB and they have remitted the 1 st installment of the premium amount. It is not merely a negotiation of bargain, but acceptance of petitioners' bids by the TDB, 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 TDB.
8. Ext. P1 tender notification provides that, 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 receives the kuthaka remits the first installment of the kuthaka, he is bound to scrupulously follow the other conditions in the W.P.(C) 13039/2020 ..11..
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 petitioners cannot contend that there is no binding contract between the petitioners and the TDB 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.
W.P.(C) 13039/2020 ..12..
9. The petitioners have a further case that, due to the outbreak of Covid-19 pandamic and the turn of events thereby, the contract could not be performed and has become frustrated. When the case of the petitioners is that there is no binding contract, they cannot plead frustration of contract. Even if we are to treat it otherwise as an alternative case of the petitioners, the issue regarding frustration of contract was elaborately considered by this Court in the recent decision in G.Harikumar v. Travancore Devaswom Board 2021 (2) KLT SN 17 (Case No.16) (of which one of us, Ravikumar, J., was a member), wherein extension of licence period for selling pooja items in Ettumanoor Sree Mahadeva Temple for the next financial year was sought in the background of Covid-19 pandemic. While declining the said prayer, this Court held:
"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 W.P.(C) 13039/2020 ..13..
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 Hon'ble 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 (emphasis supplied). 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 W.P.(C) 13039/2020 ..14..
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".
10. 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 by this Court in G.Harikumar's case (supra), 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.
W.P.(C) 13039/2020 ..15..
Relying on the decision in Travancore Devaswom Board v. Thanath International [(2004)13 SCC 44], this Court in G.Harikumar's case (supra) 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. In this context, it is apposite to refer to the W.P.(C) 13039/2020 ..16..
decision of the Apex Court in State of Haryana v. Jage Ram [AIR 1980 SC 2018: 1980 (3) SCC 599] wherein, the Court, relying on the Constitution Bench decision in Har Shankar and others v. Deputy Excise and Taxation Commissioner and others [AIR 1975 SC 1121: 1975 (1) SCC 737], held:
"13....They 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. On this ground alone, the State is entitled to succeed in this appeal."
In identical circumstances, in Sabarimala Vyapari Vyavasai Ekopana Samathi v. Travancore Devaswom Board (judgment dated 13.10.2020 in W.P. (C) No.21621/2020 of which one of us, Ravikumar, J., was a member) and in G.Harikumar's case (supra), this Court observed that, bidders cannot be permitted to beat a retreat W.P.(C) 13039/2020 ..17..
to their convenience whenever unfavorable turn of events take place and dismissed those writ petitions. We do not find any reason to take a different stand in this writ petition and to give any direction as sought for by the petitioners. The writ petition is, accordingly, dismissed. No costs.
Sd/-
C.T.RAVIKUMAR, JUDGE Sd/-
MURALI PURUSHOTHAMAN, JUDGE
W.P.(C) 13039/2020 ..18..
APPENDIX
PETITIONER EXHIBITS:
EXHIBIT P1 THE TRUE COPY OF THE TENDER NOTIFICATION
DATED 19/02/2020 ISSUED BY THE
RESPONDENTS.
EXHIBIT P2 THE TRUE COPY OF THE DETAILS OF THE BID
SUBMITTED BY THE 1ST PETITIONER TO
MALAYALAPPUZHYA DEVASWOM.
EXHIBIT P3 THE TRUE COPY OF THE DETAILS OF THE BID
SUBMITTED BY THE 2ND PETITIONER IN RESPECT OF TWO ITEMS TO P.D. MANIKANDESWARAM DEVASWOM AND KOTTARAKKARA DEVASWOM.
EXHIBIT P4 THE TRUE COPY OF THE DETAILS OF THE BID SUBMITTED BY THE 3RD PETITIONER IN RESPECT OF THE TWO ITEMS TO MALAYALAPPUZHA DEVASWOM.
EXHIBIT P5 THE TRUE COPY OF THE DETAILS OF THE BID SUBMITTED BY THE 4TH PETITIONER TO MALAYALAPPUZHA DEVASWOM.
EXHIBIT P6 THE TRUE COPY OF THE BID SUBMITTED BY THE 5TH PETITIONER IN RESPECT OF THE THREE ITEMS AND TWO ITEMS TO MALAYALAPPUZHA DEVASWOM.
EXHIBIT P7 THE TRUE COPY OF THE DETAILS OF THE AMOUNT OF RS. 43,00,000/- REMITTED BY THE 1ST PETITIONER TO THE 1ST RESPONDENT.
EXHIBIT P8 THE TRUE COPY OF THE DETAILS OF THE TOTAL AMOUNT OF RS.78,01,211/- REMITTED BY THE 2ND PETITIONER IN RESPECT OF TWO ITEMS TO THE 1ST RESPONDENT.
EXHIBIT P9 THE TRUE COPY OF THE DETAILS OF THE AMOUNT OF RS.12,50,000/- REMITTED BY THE 3RD PETITIONER IN RESPECT OF THE TWO ITEMS TO THE 1ST RESPONDENT.
EXHIBIT P10 THE TRUE COPY OF THE DETAILS OF THE AMOUNT RS. 17,57,505/- REMITTED BY THE 4TH PETITIONER TO THE 1ST RESPONDENT.
EXHIBIT P11 THE TRUE COPY OF THE DETAILS OF THE AMOUNT
W.P.(C) 13039/2020 ..19..
OF RS 19,00,000/- REMITTED BY THE 5TH
PETITIONER IN RESPECT OF THE THREE ITEMS. EXHIBIT P12 THE TRUE COPY OF THE RECEIPT DATED 12/02/2020 ISSUED BY THE 6TH RESPONDENT FOR RS.2,20,500/- TO THE 5TH PETITIONER IN RESPECT OF THIRUMADURAM IN MALAYALAPPUZHA DEVASWOM.
EXHIBIT P13 THE TRUE COPY OF THE RECEIPT DATED 12/02/2020 ISSUED BY THE 6TH RESPONDENT FOR RS.63,101/- TO THE 5TH PETITIONER IN RESPECT OF THULABHARAM PAZHAKULA IN MALAYALAPPUZHA DEVASWOM.
EXHIBIT P14 THE TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONERS 1, 3,4 AND 5 BEFORE THE 6TH RESPONDENT.
EXHIBIT P15 THE TRUE COPY OF THE REPRESENTATION DATED 12/05/2020 SUBMITTED BY THE 2ND PETITIONER BEFORE THE 3RD RESPONDENT.
EXHIBIT P16 THE TRUE COPY OF THE REPRESENTATION DATED 12/06/2020 SUBMITTED BY THE PETITIONERS BEFORE THE PRESIDENT OF THE TRAVANCORE DEVASWOM BOARD.
EXHIBIT P17 THE TRUE COPY OF THE NOTICE NO. 1286 DATED 15/06/2020 ISSUED BY THE 4TH RESPONDENT TO THE 3RD PETITIONER.
EXHIBIT P18 THE TRUE COPY OF THE APPLICATION DATED 22/06/2020 SUBMITTED BY THE 2ND PETITIONER BEFORE THE 3RD RESPONDENT.
EXHIBIT P19 THE TRUE COPY OF THE APPLICATION DATED 23/06/2020 SUBMITTED BY THE 4TH PETITIONER BEFORE THE 3RD RESPONDENT.
EXHIBIT P20 THE TRUE COPY OF THE NOTIFICATION ROC NO.8763/2016/NS2 DATED 25/02/2021 ISSUED BY THE RESPONDENTS.
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