Anil Narayan vs Travancore Devaswom Board on 24 March, 2022

[Cites 16, Cited by 0]

Kerala High Court

Anil Narayan vs Travancore Devaswom Board on 24 March, 2022

The petitioner is running a hotel in four rooms (hall of the ground floor) of Kalangara Memorial Building owned by the 1st respondent Travancore Devaswom Board, near Anandavalleeswaram Temple, on the strength of Ext.P1 lease deed dated 01.05.2017. The petitioner has been issued with Ext.P2 communication dated 28.07.2021 of the 4 th respondent Assistant Devaswom Commissioner, wherein it is stated that he has defaulted rent for the last one year and therefore, he should remit the arrears of rent together with penal interest, within seven days from the date of receipt of that communication. On receipt of Ext.P2, the petitioner submitted a reply. The petitioner has filed this writ petition under Article 226 of the Constitution of India, seeking a writ of certiorari to quash Ext.P2. The petitioner has also sought for a declaration that he is not liable to pay rent to the 1 st respondent for the rooms leased out vide Ext.P1 lease agreement, for the period during which he was forced to close down his hotel consequent to the directions issued by the State Government, -3- W.P.(C). No. 26607 of 2021 by invoking the provisions of the Epidemic Disease Act, 1897, due to Covid pandemic. The further relief sought for is a writ of mandamus commanding the respondents to permit the petitioner to remit the rent for the rooms leased out to him vide Ext.P1 lease agreement, excluding the period during which he could not open the hotel due to the restrictions imposed by the State Government.

2. On 25.11.2021, when this writ petition came up for admission, the learned Standing Counsel for Travancore Devaswom Board sought time to get instructions and file statement.

3. On 13.12.2021, a statement has been filed by the learned Standing Counsel, on behalf of the respondents, opposing the reliefs sought for in this writ petition, wherein it is stated that the arrears of rent as on November, 2021 comes to Rs.28,64,326/-. The petitioner has filed reply affidavit dated 04.01.2022.

4. On 09.03.2022, when this writ petition came up for consideration, the learned Standing Counsel for Travancore Devaswom Board submitted that a statement showing arrears of rent with interest at the rate of 12%, as provided in clause -4- W.P.(C). No. 26607 of 2021

(ii) of Ext.P1 lease deed, shall be filed by 15.03.2022.

5. The learned Standing Counsel has filed an additional statement dated 15.03.2022, producing therewith Annexure R1(b) showing the revised arrears of rent payable by the petitioner after deducting the arrears due to Covid-19 pandemic for a period of three months and re-calculating the rate of interest as 12% instead of 18%. As per the said statement, the total arrears of rent including March 2022 comes to Rs.26,70,844/-. Adding Rs.2,97,414/- towards interest, the total arrears payable comes to Rs.29,68,258/-.

6. Heard the learned counsel for the petitioner and also the learned Standing Counsel for the respondents.

7. The learned counsel for the petitioner would contend that on account of the closure of the Temple in question due to outbreak of Covid-19 pandemic, the petitioner could not run the hotel from March, 2020 to October, 2020 and thereafter, from March, 2021 to September, 2021. In such circumstances, the petitioner is not liable to pay rent to the 1 st respondent Board for the period during which the hotel was closed down due to the restrictions imposed by the Government of Kerala. Therefore, interference is warranted on -5- W.P.(C). No. 26607 of 2021 Ext.P2 notice issued by the 4th respondent Assistant Devaswom Commissioner. Per contra, the learned Standing Counsel for the Travancore Devaswom Board would contend that the petitioner is legally bound to pay monthly rent in terms of the conditions stipulated in Ext.P1 lease agreement and in case of default, he is liable to pay interest for delayed payment at the rate of 12% prescribed in clause (ii) of Ext.P1 lease deed dated 01.05.2017. The contention of the petitioner that he is not liable to pay rent for the period during which the hotel was closed down due to the restrictions imposed by the State Government is legally untenable in view of the law laid down by the Apex Court in Travancore Devaswom Board v. Thanath International [(2004) 13 SCC 44].

8. 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 -6- W.P.(C). No. 26607 of 2021 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.

9. 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.

10. In Suresan Nair T.S. and others v. Travancore Devaswom Board and others [2021 (6) KHC 837], 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 -7- W.P.(C). No. 26607 of 2021 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.

11. In Suresan Nair T.S. (supra), 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 -8- W.P.(C). No. 26607 of 2021 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.

12. In Suresan Nair T.S. (supra), the Division Bench -9- W.P.(C). No. 26607 of 2021 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 -10- W.P.(C). No. 26607 of 2021 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.

13. 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 -11- W.P.(C). No. 26607 of 2021 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 -12- W.P.(C). No. 26607 of 2021 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 -13- W.P.(C). No. 26607 of 2021 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)

14. 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 -14- W.P.(C). No. 26607 of 2021 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.

15. In Harikumar G. (supra), 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 -15- W.P.(C). No. 26607 of 2021 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.

16. 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 -16- W.P.(C). No. 26607 of 2021 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.

17. 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 -17- W.P.(C). No. 26607 of 2021 prejudiced by such a claim at all and the matter ought not to be left to a separate suit.

18. 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 -18- W.P.(C). No. 26607 of 2021 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.

19. In Sabarimala Vyapari Vyavasayi Ekopana Samathi v. Travancore Devaswom Board [2020 (5) KLT Online 1058],a 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 -19- W.P.(C). No. 26607 of 2021 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 -20- W.P.(C). No. 26607 of 2021 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."

20. In Sabarimala Vyapari Vyavasayi Ekopana Samathi, the Division Bench noticed that, in the light of the decision in Thanath International [(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 -21- W.P.(C). No. 26607 of 2021 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.

21. 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 rent in terms of Ext.P1 agreement for the period -22- W.P.(C). No. 26607 of 2021 during which he was forced to close down the hotel consequent to the directions issued by the State Government due to spread of Covid-19 pandemic. In view of clause (ii) of Ext.P1 lease deed dated 01.05.2017, the petitioner is liable to pay interest at the rate of 12% per annum for delayed payment of monthly rent. As per the additional statement filed by the respondents, the amount liable to be paid by the petitioner comes to Rs.29,68,258/-. Therefore, the petitioner has to make payment of the aforesaid amount.

22. The learned counsel for the petitioner would submit that considering the situation prevailing in the State on account of Covid-19 pandemic, the petitioner may be granted reasonable time to remit the aforesaid dues in monthly instalments.

Having considered the submissions made by the learned counsel on both sides, we deem it appropriate to dispose of this writ petition after declining interference on Ext.P2 notice issued by the 4th respondent Assistant Devaswom Commissioner, for the aforesaid reasons and by permitting the petitioner to remit the entire amount of Rs.29,68,258/- due towards the arrears of rent in two instalments, the first -23- W.P.(C). No. 26607 of 2021 instalment payable on or before 12.04.2022 and the second instalment on or before 12.05.2022. In case of default, the Travancore Devaswom Board shall initiate coercive steps against the petitioner in terms of Ext.P1.

Sd/-

ANIL K.NARENDRAN, JUDGE Sd/-


                                     P.G. AJITHKUMAR, JUDGE


AV/24/3
                                  -24-
W.P.(C). No. 26607 of 2021



                   APPENDIX OF WP(C) 26607/2021

PETITIONER EXHIBITS

Exhibit P1               TRUE COPY OF THE LEASE DEED DATED
                         01.05.2017.

Exhibit P2               TRUE COPY OF THE NOTICE ISSUED BY THE
                         4TH RESPONDENT DATED 28.07.2021.

Exhibit P3               TRUE COpY OF THE INFORMATION FURNISHED
                         BY THE MUNICIPAL CORPORATION, KOLLAM
                         DATED 12.01.2021.

Exhibit P4               TRUE COPY OF THE REPRESENTATION
                         SUBMITTED BY THE PETITIONER TO THE 2ND
                         RESPONDENT.



RESPONDENTS' ANNEXURES

ANNEXURE R1(a)           TRUE COPY OF THE DETAILS OF THE RENT
                         ARREARS DUE FROM THE PETITIONER TO
                         THESE RESPONDENTS.

ANNEXURE R1(b)           TRUE COPY OF THE REVISED RENT ARREARS

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