KSCC Ltd and T.T. Sunny v KITCO and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **MONDAY, THE 20[TH] DAY OF FEBRUARY 2023 / 1ST PHALGUNA, 1944 WP(C) NO. 39592 OF 2022** ## **PETITIONER/S:** KERALA STATE CONSTRUCTION CORPORATION (KSCC) LIMITED AND T.T.SUNNY, AGED 80 YEARS JOINT VENTURE, REPRESENTED BY T.T. SUNNY, S/O. THOMAS, AGED 80 YEARS, PWD CONTRACTOR, THANDEKKAD HOUSE, P.O. MEENANGADI, WAYANAD DISTRICT, PIN-673591. BY ADVS. K.V.PAVITHRAN JAYANANDAN MADAYI PUTHIYAVEETTIL ADARSH KURIAN JITHIN S SUNDARAN ## **RESPONDENT/S:** 1 KERALA INDUSTRIAL AND TECHNICAL CONSULTANCY ORGANIZATION LTD. (KITCO) REPRESENTED BY MANAGING DIRECTOR, KITCO LTD., FEMITHS, P.B. NO. 4407, PUTHIYA ROAD, NH BYPASS, VENNALA, KOCHI-682028. 2 GENERAL MANAGER, KITCO LTD.,, P.B. NO. 4407, FEMITHS, PUTHIYA ROAD, NH BYPASS, VENNALA, KOCHI-682028. 3 DIRECTOR, SCHEDULED TRIBES DEVELOPMENT DEPARTMENT, VIKAS BHAVAN, THIRUVANANTHAPURAM, PIN-695001. 4 PROJECT COORDINATOR, KITCO LTD., FEMITHS, P.B. NO. 4407, PUTHIYA ROAD, NH BYPASS, VENNALA, KOCHI-682028. 5 STATE OF KERALA REPRESENTED BY THE SECRETARY, SCHEDULED TRIBES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM695001. BY ADVS. Gopikrishnan Nambiar M K.JOHN MATHAI(K/413/1984) JOSON MANAVALAN(J-526) KURYAN THOMAS(K/131/2003) W.P.(C) Nos.39592 & 41443 of 2022 **==> picture [16 x 8] intentionally omitted <==** PAULOSE C. ABRAHAM(MAH/58/2006) ## **OTHER PRESENT:** GP RIYAL DEVASSY; RAJEEV JYOTHISH GEORGE **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20.01.2023, ALONG WITH WPC 41443/2022, THE COURT ON 20.02.2023 DELIVERED THE FOLLOWING:** W.P.(C) Nos.39592 & 41443 of 2022 -3- ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT** ## **THE HONOURABLE MR.JUSTICE V.G.ARUN** **MONDAY, THE 20[TH] DAY OF FEBRUARY 2023 / 1ST PHALGUNA, 1944** ## **WP(C) NO. 41443 OF 2022** ## **PETITIONER/S:** T.T.SUNNY ., AGED 80 YEARS S/O. THOMAS, PWD CONTRACTOR, THANDEKKAD HOUSE, P.O. MEENANGADI, WAYANAD DISTRICT, PIN 673 591. BY ADVS. JAYANANDAN MADAYI PUTHIYAVEETTIL RANJITH VARGHESE K.L.VARGHESE (SR.) ## **RESPONDENT/S:** 1 KERALA INDUSTRIAL AND TECHNICAL CONSULTANCY ORGANISATION LTD., (KITCO), REPRESENTED BY THE MANAGING DIRECTOR, MM GARDENS, P.B. NO. 1820, CHURCH LANDING ROAD, NEAR KERALA FINE ARTS HALL, ERNAKULAM- 682 016. 2 DIRECTOR, SCHEDULED TRIBES DEVELOPMENT DEPARTMENT, VIKAS BHAVAN, THIRUVANANTHAPPURAM, PIN - 695 001. 3 STATE OF KERALA REPRESENTED BY THE SECRETARY, SCHEDULED TRIBES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695 001. 4 THE KERALA STATE CONSTRUCTION CORPORATION LTD. 30/1521-A, BAY UNDER THE BRIDGE, PONNURUNNI, VYTTILA, ERNAKULAM, KERALA 682 032. BY ADVS. Gopikrishnan Nambiar M K.JOHN MATHAI(K/413/1984) JOSON MANAVALAN(J-526) KURYAN THOMAS(K/131/2003) PAULOSE C. ABRAHAM(MAH/58/2006) W.P.(C) Nos.39592 & 41443 of 2022 **==> picture [16 x 8] intentionally omitted <==** RAJA KANNAN(K/356/2008) ## **OTHER PRESENT:** GP RIYAL DEVASSY; RAJEEV JYOTHISH GEORGE **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20.01.2023, ALONG WITH WPC 39592/2022, THE COURT ON 20.02.2023 DELIVERED THE FOLLOWING:** W.P.(C) Nos.39592 & 41443 of 2022 -5- ## **JUDGMENT** Dated this the 20[th] day of February, 2023 The Scheduled Tribe Development Department of the Government appointed KITCO as the Consultant for its project- “Construction of model residential school at Thirunelli, Wayanad”. The KITCO in turn invited e-tenders from interested bidders. The estimated amount for the project was fixed as Rs.19 Crores and the period of completion, as 18 months. The work was awarded to the joint venture of Kerala State Construction Corporation Limited (KSCC Ltd) and T.T.Sunny/petitioner. The agreement between KITCO and T.T.Sunny was executed on 17.03.2016. As the contractor was not able to complete the work within the stipulated period of 18 months, the period of contract was extended four times, _vide_ supplemental agreements dated 05.01.2018, W.P.(C) Nos.39592 & 41443 of 2022 -6- 26.5.2019, 31.03.2021. Finally, on 27.11.2021, the period was extended up to 31.05.2022, reserving the employer's right to levy the fine/penalty and liquidated damages, after assessing the penalty and liquidated damages, if applicable, based on the prevailing Government orders. 2. As the work was not completed even within the time granted under the 4[th] supplemental agreement, the KITCO sent communication dated 15.09.2022 to the petitioner, one among the partners of the joint venture, threatening to invoke the penal Clauses viz; Clauses 2.31.05 and 2.31.06, of the general conditions of contract and to terminate the contract forthwith, if need be, as per Clause 2.32.01. The petitioner sent reply dated 01.11.2022 to the General Manager, KITCO explaining that the delay in completing the project was for reasons beyond the petitioner’s W.P.(C) Nos.39592 & 41443 of 2022 **==> picture [16 x 8] intentionally omitted <==** control like, inaccessibility to the project site situated within reserved forest, frequent wild elephant attack, inclement weather, damage caused to the stored materials by the floods of 2018 and 2019 etc. Yet another aspect highlighted by the petitioner was the inordinate delay in sanctioning the part bills, which had affected his financial capacity. The petitioner therefore requested to extend the time for completion up to 30.04.2023. 3. Apprehending that the KITCO may proceed to terminate the contract by invoking the penal Clauses, the petitioner approached this Court in W.P.(C) No.39592 of 2022. Pending that writ petition, the contract was terminated by the KITCO and that fact intimated to the petitioner under registered letter dated 12.12.2022. The petitioner was also informed that the security deposit, performance bank guarantee, earnest money deposit and 2.5% of the executed value of W.P.(C) Nos.39592 & 41443 of 2022 -8- the part bills having been forfeited, nothing was payable to the petitioner and the balance work will be done at the petitioner’s risk and cost. On receipt of the letter of termination, petitioner submitted a detailed representation requesting to withdraw from the action and permit him to complete the work, which had reached its final stage. In the absence of a positive response to the request, W.P.(C) No.41443 of 2022 is filed seeking the following reliefs; _“i) A writ of certiorari or any other writ or order be passed calling for all the records leading to Exhibit P-1 and quash the same._ _ii) A writ of mandamus or any other appropriate writ, order or direction be issued, directing the Respondents from desisting all follow up actions pursuant to Exhibit P-1 order of termination including rearrangement of balance work._ _iii) Issue a writ of mandamus or any appropriate writ order or direction calling upon the Respondents to allow the Petitioner to continue and complete the work granting extension of time up to 30.04.2023, barring_ W.P.(C) Nos.39592 & 41443 of 2022 -9- _unforeseen developments and release of surplus amounts retained with the Respondents._ _iv) Direct the 1st Respondent not to encash Ext. P-10 bank guarantee dated 03.09.2022 for Rs. 50 lakhs which had to be furnished as performance guarantee (additional) unnecessarily over and above the 5% Security Deposit as per the agreement._ _v) Issue a writ of mandamus or any appropriate direction, directing the Respondents to take immediate steps to release the pending payment of 13th and 14th RA Bills aggregating to Rs. 75,68,027/- as evident from Exhibits P-5 and P-6 and release the same forthwith._ _vi) Issue a writ of mandamus or any appropriate direction, directing the Respondents to take immediate steps to release pending payments on account of extra /additional items and additional quantities of work done with immediate approval of the revised estimates which is still pending._ _vii) Issue a writ of mandamus or any appropriate direction, directing the Respondents to take steps for immediate measurement of balance works done and record the same for settlement of accounts in a time bound manner since Petitioner has to meet huge liabilities to its bankers, the Federal Bank Ltd. Sulthan Bathery and other financiers including material suppliers and labourers.”_ ## W.P.(C) Nos.39592 & 41443 of 2022 -10- 4. Although petitioner filed a withdrawal memo in W.P.(C) No.39592 of 2022 in the light of the subsequent developments, it was opposed by the KITCO and hence, kept pending. 5. When the writ petitions were taken up for final hearing, the learned Standing Counsel for the KITCO raised preliminary objection as to maintainability of the writ petitions based on the following grounds; - (i) The contract having been awarded to a joint venture between KSCC Ltd and the petitioner, the writ petitions at the instance of one partner of joint venture is not maintainable. More so, since the KSCC Ltd arrayed as a respondent in W.P.(C) No. 41443 of 2022. - (ii) KITCO does not fall within the meaning of 'State' or 'other authority' under Article 12 of the Constitution of India. In _**K.J.Johnson v.**_ _**Kerala Industrial and Technical Consultancy and**_ W.P.(C) Nos.39592 & 41443 of 2022 -11- ## _**others [ILR 1992 (1) Kerala 809],**_ this Court has categorically held that the KITCO is not a State within the meaning of Article 12. Hence, no relief can be granted exercising the power under Article 226. (iii) Even otherwise, contractual disputes, which are non-statutory in nature, cannot be resolved in a writ petition under Article 226. (iv) At any rate, the disputed questions of fact like, who among the contracting parties is at fault and whether the contractor is liable to compensate the employer or the employer’s responsible to honour part bills, are beyond the purview of disputes that can be resolved through writ petitions. 6. In answer to the objection as to maintainability, learned Senior Counsel appearing for the petitioner submitted that, even though the contract was awarded to a joint venture, from the stage of agreement itself, the petitioner was ## W.P.(C) Nos.39592 & 41443 of 2022 -12- being addressed as the contractor and all communications, including the letter of termination, are addressed to the petitioner. Therefore, the petitioner has the _locus standi_ to challenge the action on his own. 7. It is assertively submitted that there are no disputed questions of fact involved since the KITCO had extended the term of contract four times, without imposing penalty, being conscious of the difficulties faced at the site and the efforts taken by the petitioner to complete the work. The only question is whether the term of contract ought to could have been extended up to 30.04.2023, considering that the petitioner had completed 80% of the work. Reliance is placed on the Apex Court decision in _**M.P.Power Management Company Limited , Jabalpur v Sky Power Southeast Solar India Private Limited and others [2022 SCC**_ _**OnLine SC 1591]**_ to contend that the contours of W.P.(C) Nos.39592 & 41443 of 2022 -13- Article 226 with respect to contractual matters has expanded over the years and the moot question to be considered is whether public interest will be subserved by the court interfering in a matter, rather than relegating the parties to an alternate forum. 8. Learned Standing Counsel for the KITCO submitted that, merely because communications are addressed to the petitioner, that does not confer the petitioner with any legal right to challenge the termination on his own, in respect of a contract awarded to a joint venture. The writ petition will not be maintainable, even if filed by the joint venture, KITCO being a company incorporated under the Companies Act, 1956 with no Government or Public Sector undertaking holding more than 50% share. Moreover, KITCO is not a body established under any specific statute. The decision cited by the Senior Counsel is not applicable since the discussion and the W.P.(C) Nos.39592 & 41443 of 2022 -14- findings therein is with respect to contracts to which State is a party. The petitioner’s claim of having completed more than 80% of the work is false. Except constructing a skeletal structure, no other work has been done by the contractor. The employer having lost faith in the contractor, it will be inappropriate for this Court to issue a writ of mandamus requiring the employer to continue the work with the same contractor. 9. Learned Government Pleader contended that the inordinate delay in completing the construction of a school for tribal students, is against public interest and intervention by this Court will result in the project getting further delayed. 10. Learned Standing Counsel for KSCC Ltd submitted that the Corporation had taken a decision to participate in tenders for Government projects by entering into joint venture with firms and individuals. The proposal was sent to ## W.P.(C) Nos.39592 & 41443 of 2022 -15- the Government for approval. Pending approval from the Government, the Corporation entered into a joint venture with the petitioner and was awarded the subject work. Thereafter, the Corporation was kept in the dark about execution of the agreement and the construction activities undertaken by the petitioner. The Government, in the meanwhile, advised the Corporation not to proceed with the system of joint venture participation. Hence, the Corporation is no longer interested in the contract and do not wish to be dragged into the current dispute. 11. I do find substance in the objection as to maintainability based on the petitioner’s _locus standi,_ he being a partner of the joint venture which is awarded the contract. In my view, even if the petitioner can claim an independent cause of action, there is no justification in arraying his JV partner, the ## W.P.(C) Nos.39592 & 41443 of 2022 -16- KSCC Ltd as the respondent in the writ petition, without seeking any relief against that entity. At the same time, it is doubtful whether KITCO can raise such an objection. A perusal of the documents reveals that, except in the original and supplemental agreements, wherein the contractor is shown as KSCC Ltd and T.T Sunny JV, in all other communications, the KITCO has addressed the petitioner as the contractor. This gives rise to a doubt whether KSCC Ltd was only a name lender, for satisfying the tender conditions and ensuring award of contract to the petitioner. Added to this is the stand of the KSCC Ltd, a fully owned Government Company that, in spite of being a JV partner, it was not aware about the fate of the tender and the work undertaken by the contractor. The suspicion gets fortified by the causal statement in the writ petition that, even though the work order was issued in the joint name of the KSCC Ltd and the petitioner, the KSCC ## W.P.(C) Nos.39592 & 41443 of 2022 -17- Ltd has practically withdrawn from the very commencement of the work and hence, the entire burden had to be taken over by the petitioner. In my opinion, the circumstances under which the KSCC Ltd had participated in the tender as JV partner and had later withdrawn is a serious matter that should engage the attention of the authorities at the highest level, followed by appropriate action. I say this because the ultimate sufferers of such casualness are the tribal community, who were promised a school near to their residence, but are made to wait endlessly. 12. As regards the objection based on the contention that KITCO does not fall within the ambit of Article 12 and is therefore not amenable to the jurisdiction of the writ court, the KITCO is well supported by the decision in _**Johnson**_ ( _supra_ ). I had occasion to consider the very same W.P.(C) Nos.39592 & 41443 of 2022 -18- objection in _**North Stone Builders and Developers**_ _**Pvt Ltd v KITCO Ltd (WP(C) No.30515 of 2021 judgment dated 02.08.2022)**_ . After careful analysis of dictum in _**Johnson**_ , it was held as under; _“I am in respectful agreement with the above findings. KITCO is a Company offering consultancy services in architectural, engineering, technical, management and financial sectors. The services of the respondent is not confined to Government or governmental agencies alone. Merely because its Articles of Association provide for submission of annual returns, balance sheet and profit and loss Account to the State Government, that does not lead to an inference that the State is having deep and pervasive control over the affairs of the respondent.”_ Coming to the argument of the learned Senior Counsel, based on _**M.P.Power Management Company Limited** (supra)_ , it is to be noted that the erudite discussion in that judgment and the conclusions were primarily focused on the scope ## W.P.(C) Nos.39592 & 41443 of 2022 -19- of interference under Article 226 against the termination of a contract, which is not statutory in nature, and the offending party is the State. In that context, the Apex Court held that, the mere fact that relief is sought under a contract which is not statutory will not entitle the respondent State to ward off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is _per se,_ arbitrary. Here, the employer is not the State or its instrumentality. Hence, the principle has no application. 13. Yet another contention urged by the Senior Counsel, based on the same judgment, is that the writ courts can interfere in contractual matters when public interest is involved. No doubt, public interest is involved in the subject contract. But the question is how far the contracting parties have acted in furtherance of ## W.P.(C) Nos.39592 & 41443 of 2022 -20- the public interest. In this case, the agreement was entered on 17.03.2016 with a contract period of 18 months. It may be true that due to various factors it became impossible to complete the work within the period. Hence, the employer was justified in granting reasonable extensions. But, by no stretch of imagination can the extension of more than four years be termed as ‘reasonable'. A contractor, who failed to complete the work even within that extended period, cannot base on public interest in support of his claim for further extension. For the aforementioned reasons, the writ petitions are dismissed. **==> picture [380 x 12] intentionally omitted <==** expressing anguish at the manner in which the work of a project intended to benefit the tribal students is being dealt with. The apparent dereliction of duty of all concerned has resulted in the tribal youth of Wayanad being denied their W.P.(C) Nos.39592 & 41443 of 2022 **==> picture [23 x 8] intentionally omitted <==** fundamental right to education. I sincerely hope that the Government will take emergent action to ensure completion of the construction at the earliest and make the school functional without further delay. Sd/- **V.G.ARUN JUDGE** Scl/ W.P.(C) Nos.39592 & 41443 of 2022 -22- ## **APPENDIX OF WP(C) 39592/2022** |PETITIONER EXHIBITS|PETITIONER EXHIBITS| |---|---| |Exhibit P1|TRUE COPY OF THE LETTER OF AWARD OF| ||THE WORK DATED 02.03.2016 OF THE 1ST| ||RESPONDENT AND THE NECESSARY PARTS OF| ||THE AGREEMENT DATED 17.03.2016 ENTERED| ||INTO, THEREUPON.| |Exhibit P2|TRUE COPY OF LETTER DATED 29.3.2016 OF| ||THE PETITIONER REQUESTING TO ACCEPT| ||THE PENDING BILL FOR RS.1.17 CRORES,| ||IN LIEU OF SECURITY DEPOSIT.| |Exhibit P3|TRUE COPY OF 1ST SUPPLEMENTARY,| ||AGREEMENT EXTENDING TIME OF COMPLETION| ||UPTO 26.5.2019.| |Exhibit P4|TRUE COPY OF THE 4TH SUPPLEMENTAL| ||AGREEMENT DATED 27.11.2021, EXTENDING| ||TIME OF COMPLETION UPTO 31.5.2022.| |Exhibit P5|TRUE COPY OF LETTER DATED 01.10.2022| ||OF THE BANK ADDRESSED TO 1ST| ||RESPONDENT INFORMING THE GRANTING OF| ||BANK GUARANTEE FOR RS.50/- LAKHS.| |Exhibit P6|TRUE COPY OF LETTER DATED 11.10.2022| ||OF THE PETITIONER REQUESTING TO| ||RELEASE THE AMOUNTS DUE TO THE| ||PETITIONER, SINCE BANK GUARANTEE IS| ||ACCEPTED.| |Exhibit P6(A)|TRUE COPY OF LETTER DATED 20.10.2022| ||OF THE PETITIONER TO THE HON'BLE| ||MINISTER FOR INDUSTRIES DEPARTMENT| ||REQUESTING TO RELEASE THE EXCESSLY| ||REMITTED RS.52,96,627/- TOWARDS| ||SECURITY DEPOSIT, TO THE PETITIONER.| |Exhibit P7|TRUE COPY OF LETTER DATED 15.9.2022 OF| ||THE 2ND RESPONDENT, WARNING OF| ||TERMINATING OF CONTRACT.| |Exhibit P8|TRUE COPY OF LETTER DATED 01.11.2022,| ||POINTING OUT THE DELAY IN THE PAYMENT| ||OF EACH PART BILL, AND OWING TO| ||IMPEDIMENTS CAUSING THE DELAY IN| ||COMPLETION, AND REQUESTING TO EXTEND| ||PERIOD OF COMPLETION UPTO 30.4.2023.| W.P.(C) Nos.39592 & 41443 of 2022 -23- ## **APPENDIX OF WP(C) 41443/2022** |PETITIONER EXHIBITS|PETITIONER EXHIBITS| |---|---| |Exhibit P1|TRUE COPY OF THE LETTER OF TERMINATION| ||DATED 12.12.2022 RECEIVED BY EMAIL ON| ||12.12.2022 ISSUED BY THE 1ST| ||RESPONDENT.| |Exhibit P2|TRUE COPY OF THE REPLY LETTER NO.| ||KITCO/74/2021 DATED 16.12.2022 SENT BY| ||THE PETITIONER THROUGH EMAIL.| |Exhibit P3|TRUE COPY OF THE REPLY LETTER NO.| ||KITCO/75/2021 DATED 16.12.2022 SENT BY| ||THE PETITIONER THROUGH EMAIL.| |Exhibit P4|TRUE COPY OF THE WORK ORDER DATED| ||02.03.2016.| |Exhibit P5|TRUE COPY OF THE LETTER DATED| ||01.11.2022.| |Exhibit P6|TRUE COPY OF THE LETTER DATED| ||16.11.2022.| |Exhibit P7|TRUE COPY OF THE RELEVANT PAGES OF THE| ||GENERAL CONDITIONS OF CONTRACT AND NIT| ||FORMING PART OF THE AGREEMENT.| |Exhibit P8|TRUE COPY OF LETTER DATED 11.10.2022| ||FURNISHED BY THE PETITIONER TO THE| ||GENERAL MANAGER OF THE 1ST RESPONDENT.| |Exhibit P9|TRUE COPY OF LETTER DATED 20.10.2022| ||FURNISHED BY THE PETITIONER TO THE| ||MINISTER FOR INDUSTRIES.| |Exhibit P10|TRUE COPY OF THE PERFORMANCE GUARANTEE| ||(ADDITIONAL) FURNISHED BY THE| ||PETITIONER TO THE 1 RESPONDENT.| |Additional|TRUE COPY OF REVISED ESTIMATE SENT FOR| |Exhibit P 11|APPROVAL A YEAR BEFORE| |Additional|TRUE COPIES OF PHOTOGRAPHS OF THE| |Exhibit P 12|BUILDINGS AT THE PRESENT STAGE| |Additional|TRUE COPIES OF PHOTOGRAPHS OF THE| |Exhibit P 13|MATERIALS AT SITE AND THE OTHER| ||ARRANGEMENTS MADE|