Kerala High Court
M/S Mapsglobal Constructions Pvt Ltd vs Superintending Engineer on 13 November, 2024
Author: N.Nagaresh
Bench: N.Nagaresh
2024:KER:84263
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
WEDNESDAY, THE 13TH DAY OF NOVEMBER 2024/22ND KARTHIKA, 1946
WP(C) NO. 20310 OF 2024
PETITIONERS:
1 M/S MAPSGLOBAL CONSTRUCTIONS PVT. LTD.,
32/595, AMBIKALAYAM, CHELAVOOR,
KARANTHUR P.O., KOZHIKODE,
REPRESENTED BY ITS MANAGING DIRECTOR,
PIN - 673571
2 SATHEESH KUMAR,
AGED 57 YEARS,
S/O APPUKUTTAN NAIR,
MANAGING DIRECTOR,
M/S MAPSGLOBAL CONSTRUCTIONS PVT. LTD.,
RESIDING AT AMBIKALAYAM,
KOLAYITHAZHAM,
KARANTHUR P.O, KUNNAMANGALAM,
KOZHIKODE DISTRICT, PIN - 673571
BY ADVS.
P.V.ANOOP
PHIJO PRADEESH PHILIP
ANJU R S.
K C MOHAMED RASHID
ABIN BENNY
S.SREEKUMAR (SR.)(S-571)
RESPONDENTS:
1 SUPERINTENDING ENGINEER,
OFFICE OF SUPERINTENDING ENGINEER,
KERALA WATER AUTHORITY, PH CIRCLE,
KOZHIKODE,
MALAPARAMBA P.O., PIN - 637009.
2024:KER:84263
W.P.(C) No.20310/2024
:2:
2 DEPUTY BRANCH HEAD,
MCB, KERALA FINANCIAL CORPORATION,
KOZHIKODE, PIN - 673001.
3 CHIEF MANAGER,
KERALA FINANCIAL CORPORATION,
MANUELSONS BUILDING,
G.H. ROAD,
KOZHIKODE, PIN - 673001.
BY ADVS.
JOSHY V.V.
ADV. VENUGOPAL M.R.
DHANYA P.ASHOKAN (SR.)(K/001671/2000)
S. MUHAMMAD ALIKHAN(K/000644/2020)
ANJANA S. RAJ(K/001318/2024)
P.M.JOHNY, SC
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 12.08.2024, THE COURT ON 13.11.2024 DELIVERED
THE FOLLOWING:
2024:KER:84263
W.P.(C) No.20310/2024
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N. NAGARESH, J.
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W.P.(C) No.20310 of 2024
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Dated this the 13th day of November, 2024
JUDGMENT
~~~~~~~~~ The petitioners challenge Ext.P2 notice issued by the 3rd respondent.
2. The 1st petitioner is a Private Limited Company and the 2nd petitioner is its Managing Director. The petitioners state that they bid a tender for construction work in Kottayam and Kozhikode Districts. The petitioners entered into an agreement on 28.10.2022 with the Kerala Water Authority (KWA) in this regard.
3. The 3rd respondent-Kerala Financial Corporation sanctioned a line of credit of ₹20 Crores to the petitioners. The petitioners have given co-obligants and have created equitable 2024:KER:84263 W.P.(C) No.20310/2024 :4: mortgage over secured properties. The 3 rd respondent disbursed ₹15,72,82,000/- for funding the work awarded by the KWA.
4. Now, the 3rd respondent has issued a notice recalling the entire loan disbursed to the petitioners and directing the petitioners to deposit an amount of ₹15,83,14,261/- with future interest. The 3rd respondent alleged that the petitioners have fraudulently replaced virtual account number already given, by another account number maintained in the Canara Bank and received an amount of ₹19,49,39,947/- from the KWA towards bill amount in respect of the abovementioned work. The 3 rd respondent alleged that the petitioners have breached the agreement. Though the petitioners submitted Ext.P3 reply notice, the 3rd respondent insisted to deposit the demanded money.
5. The petitioners state that the Power of Attorney executed by the petitioners do not stipulate any condition to the effect that any payments made to the petitioners for the works 2024:KER:84263 W.P.(C) No.20310/2024 :5: of the KWA should be routed only through the virtual account number maintained by the petitioners with the 3 rd respondent. The petitioners have been paying the instalments regularly. They have not defaulted in making any instalment till date. The petitioners have not made any other breach. The breach alleged in Ext.P2 notice is unreal. Ext.P2 notice is therefore liable to be quashed.
6. The 2nd and 3rd respondents filed a counter affidavit and opposed the writ petition. Respondents 2 and 3 submitted that the 1st respondent was obliged to make payment under the contract directly to the Corporation. Through Ext.R2(a) letter, the 3rd respondent had requested the 1st respondent to confirm that amount to be released to the petitioners towards the work bill be routed through the Kerala Financial Corporation, Kozhikode Branch Office. The 2nd respondent executed Ext.P4 Power of Attorney to this effect.
7. However, the petitioners fraudulently replaced the virtual account number maintained by the Corporation, already 2024:KER:84263 W.P.(C) No.20310/2024 :6: provided to the KWA, by giving another account number maintained by the petitioners in Canara Bank, to the officials of the KWA. Thereafter, the petitioners received an amount of ₹19,49,39,947/- in 13 part bills from the KWA towards the bill payments. This was in violation of Ext.P4 Power of Attorney. The 3rd respondent informed about this fraud to the 1st respondent and have filed a complaint at Kasaba Police Station. Furthermore, the Corporation issued Ext.P2 loan recall notice to the petitioners on the ground of breach of loan agreement covenants. The writ petition is therefore without any merit and it is liable to be dismissed, contended the Senior Counsel appearing at the instance of the 3rd respondent.
8. The petitioners filed a reply affidavit. The petitioners pointed out that the virtual account number and details of the account furnished in Ext.R2(a) was not a live account and thus, the bill amount due to the petitioners was not credited to the virtual account. The 1st respondent had communicated the 2nd and 3rd respondents to furnish the details of a live virtual 2024:KER:84263 W.P.(C) No.20310/2024 :7: account. The officials of the 2nd and 3rd respondents intentionally neglected the same. The delay in crediting the money would have affected the work entrusted. Therefore, the 1st respondent was constrained to credit the bill amount to the account of the petitioners.
9. Respondents 2 and 3 submitted that a writ petition by the petitioners in respect of a purely contractual transaction, is not maintainable. The counsel for the petitioners relied on the judgment of the Hon'ble Apex Court in Subodh Kumar Singh Rathour v. The Chief Executive Officer and others [(2024) 7 SCR 532] and submitted that the KFC is an instrumentality of the State. The Hon'ble Apex Court has held that the ultimate impact of all actions of the State or a Public Body being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. The Apex Court held that it is difficult and unrealistic to exclude the State actions in contractual matters, after the contract has been made, from the purview of judicial review to test its validity 2024:KER:84263 W.P.(C) No.20310/2024 :8: on the anvil of Article 14.
10. I have heard the learned Senior Counsel assisted by the counsel for the petitioners, the learned Standing Counsel appearing for the 1st respondent and the learned Senior Counsel assisted by the counsel appearing for respondents 2 and 3.
11. Ext.P1 is the loan agreement entered into by the petitioners with the 3rd respondent. Clause XVII of Ext.P1 loan agreement states that it is agreed that the Corporation will have first charge over all moneys receivables including cheques in payment of bills and shall also be entitled to realise the amount of the bills, direct from the Government or other institutions which Awards works to the borrower and the remittances of such bills will be made direct by the Government or other institutions to the account and in the name of Corporation as attorneys and the Corporation shall repay themselves such receipts of moneys due from the borrower. It is therefore evident that the petitioners had agreed that the 3 rd respondent 2024:KER:84263 W.P.(C) No.20310/2024 :9: will have first charge over all moneys receivables direct from the 1st respondent.
12. Ext.P4 is the Power of Attorney given by the petitioners in favour of the 3rd respondent. By Ext.P4, the petitioners have authorised the 3rd respondent to receive any amounts due to the petitioners under the terms and conditions of agreement and to receive payments of all kinds of bills which bills will be accepted and signed by the petitioners and to cash and receive the amounts thereof and appropriate such receipts to itself towards amounts spent by it or to be due to it and all other moneys agreed to be payable to it under the arrangement between the petitioners and the 3rd respondent.
13. Therefore, it is evident that there was an agreement and a Power of Attorney executed by the petitioners with the 3 rd respondent which mandated that the bill amounts paid by the 1 st respondent should be credited to the virtual account maintained by the 3rd respondent. Pursuant to the said agreement, the 3 rd respondent had issued Ext.R2(a) letter dated 03.02.2023 to the 2024:KER:84263 W.P.(C) No.20310/2024 : 10 : 1st respondent requiring to make payments under the contract directly to the 3rd respondent through the virtual account indicated in Ext.R2(a) letter.
14. In Ext.R2(b) proceedings dated 07.02.2023, the 1 st respondent-KWA has ordered that all the payments due to the Contractor on account of the work will be made to the Manager, the Kerala Financial Corporation, Kozhikode Branch. By providing another account number to the 1st respondent and by receiving ₹19,49,39,947/- in that account, prima facie the petitioners have violated the conditions of Ext.P1 agreement and undermined Ext.P4 Power of Attorney.
15. The claim of the petitioners that the virtual account provided by the 3rd respondent was non-functional and that was the reason for receiving the bill amounts to a different account, is difficult to digest. If that was the case, in compliance of the spirit of Ext.P1 agreement, the petitioners ought to have offered the amounts received to the 3rd respondent, which has not been done. The argument that the petitioners have not committed 2024:KER:84263 W.P.(C) No.20310/2024 : 11 : any default in repayment of loan is also of no serious consequence. The petitioners have obviously violated the terms of the contract/agreement.
In the circumstances, I find no merit in the writ petition. The writ petition is therefore dismissed.
Sd/-
N. NAGARESH, JUDGE aks/11.11.2024 2024:KER:84263 W.P.(C) No.20310/2024 : 12 : APPENDIX OF WP(C) 20310/2024 PETITIONERS' EXHIBITS:
Exhibit P1 TRUE COPY OF THE LOAN AGREEMENT DATED 02.02.2023 EXECUTED BY THE 2ND PETITIONER ON BEHALF OF THE 1ST PETITIONER WITH THE 3RD RESPONDENT Exhibit P2 TRUE COPY OF THE LOAN RECALL NOTICE NO.475657/1592/2024 DATED 06.05.2024 ISSUED BY THE 3RD RESPONDENT Exhibit P3 TRUE COPY OF THE REPLY NOTICE DATED 17.05.2024 ISSUED BY THE PETITIONERS TO THE 2ND RESPONDENT Exhibit P4 TRUE TRUE COPY OF THE POWER OF ATTORNEY EXECUTED BY THE PETITIONERS IN FAVOUR OF THE 3RD RESPONDENT DATED 04.02.2023 Exhibit P5 TRUE COPY OF THE DEMAND/DEBT ACKNOWLEDGMENT NOTICE ISSUED BY THE 3RD RESPONDENT AGAINST THE 1ST PETITIONER IN LOAN NO.060508810 DATED 01.04.2024 Exhibit P6 TRUE COPY OF THE DEMAND/DEBT ACKNOWLEDGMENT NOTICE ISSUED BY THE 3RD RESPONDENT AGAINST THE 1ST PETITIONER IN LOAN NO.060508812 DATED 01.04.2024 Exhibit P7 TRUE COPY OF THE REQUEST TO THE FIRST RESPONDENT BY THE THIRD RESPONDENT DATED 29.05.2024.
Exhibit P8 TRUE COPY OF THE DEMAND NOTICE DATED 31.07.2024 SEND TO THE PETITIONERS BY THE 3RD RESPONDENT.
Exhibit P9 TRUE COPY OF THE LETTER AFFIRMING THE REQUEST OF THE KFC TO TRANSFER THE BILL AMOUNTS TO THE ACCOUNTS MAINTAINED AT FEDERAL BANK DATED 29.05.2024.
2024:KER:84263 W.P.(C) No.20310/2024 : 13 : Exhibit P9(a) TRUE COPY OF THE LETTER AFFIRMING THE REQUEST OF THE KFC TO TRANSFER THE BILL AMOUNTS TO THE ACCOUNTS MAINTAINED AT FEDERAL BANK DATED 29.05.2024.
Exhibit P10 TRUE COPY OF THE SIMILAR LETTER DATED 20.06.2024 WAS ISSUED AFFIRMING THE REQUEST OF THE KFC TO TRANSFER THE BILL AMOUNTS TO THE ACCOUNTS MAINTAINED AT FEDERAL BANK.
RESPONDENTS' EXHIBITS:
Exhibit R2(a) TRUE COPY OF THE LETTER NO KFC/KKD/1562/2023 DATED 03/02/2023 ISSUED BY THIS RESPONDENT TO THE 1ST RESPONDENT.
Exhibit R2(b) TRUE COPY OF THE ACCEPTANCE LETTER NO.
2132/D6/2022/PHC/KKD(1) DATED
07/02/2023 ISSUED BY THE 1ST
RESPONDENT.