High Court of KeralaSingle JudgeWrit petition dismissed; no relief granted to r...
REENA ENGINEERING AND CONTRACTING COMPANY LTD. v. KERALA WATER AUTHORITY and others
Case / Petition Number:WP(C) No.451/2022
Case Details & Bench
- Court
- High Court of Kerala
- Hon'ble Judges
- N. Nagareesh
- Judgment Date
- 2022-03-03
- Court Decision / Holding
- Consequently, the writ petition is dismissed. The court held that the express terms of the contract, including the non-revision clause (Clause 8), cannot be ignored, and that the pandemic did not amount to a force majeure that would justify revising rates. The court refused to foreclose the contract but left open the possibility for the petitioner to pursue their claims before higher authorities or other fora.
- Final Disposition
- Writ petition dismissed; no relief granted to revise rates or foreclose the contract, though petitioner may pursue higher authorities or other forums.
Parties to the Case
Appellants / Petitioners
- REENA ENGINEERING AND CONTRACTING COMPANY LTD.
Respondents
- KERALA WATER AUTHORITY
- THE SUPERINTENDING ENGINEER, OFFICE OF SUPERINTENDING ENGINEER, KERALA WATER AUTHORITY, PH CIRCLE (MALAPPURAM)
- THE EXECUTIVE ENGINEER, OFFICE OF THE EXECUTIVE ENGINEER, KERALA WATER AUTHORITY, PROJECT DIVISION, MALAPPURAM
- ADDL.R4 THE CHAIRMAN, KERALA WATER AUTHORITY, JALA BHAVAN, VELLAYAMBALAM, THIRUVANANTHURAM
Legal Representation & Advocates
Counsels for Petitioners
- • P. SHANES
- • METHAR
- • N. KRISHNA PRASAD
Counsels for Respondents
- • Georgie Johny
Case Synopsis & Summary
The petitioner, Reena Engineering and Contracting Company Ltd., challenges Ext.P24 and seeks a rate revision for the KIIFB–WRD project Manjeri suburban drinking water supply, arguing that delays in obtaining road-cutting permissions, procurement hold-ups, and Covid-19 induced price escalations rendered the original bid rates outmoded. The project, awarded in January 2021 for approximately ₹35.31 crore, required laying DI and PVC pipelines across 131 km, with 18 months allotted for completion. The petitioner stockpiled materials in reliance on approvals that were delayed or not granted; RA bills were raised but not paid, leading to supplier cancellations and cost disputes. A MoU for road cutting was finally executed only on 27.09.2021 after tender opening, by which time material costs had surged due to the pandemic. The petitioner contends that rate revision is warranted under the prevailing market and government orders (DSR 2016/DSR 2018; GO/RT orders) and seeks either payment at revised rates or foreclosure without liability. The respondents maintain an express contract clause (Clause 8) prohibiting rate revision and argue payments depend on fund availability; the tender and work order bar modification of rates. The court rejects the petition, holding that express terms cannot be ignored, force majeure does not apply, and foreclosure cannot be ordered. The petition is dismissed, with a note that relief may be pursued before higher authorities or other forums.
Provisions of Law Cited
Clause 8 (Contract terms)DSR 2016DSR 2018G.O.(P) 375/15/FIN dated 24.08.2015G.O.(RT) No.9386/2018/FIN dated 13.11.2018G.O.(RT) No.5502/2020/FIN dated 25.09.2020
Legal Doctrines & Maxims
- Force majeure
- Impossibility of performance
- Express terms of a contract cannot be ignored
Submissions & Arguments
Contentions of Appellants / Petitioners
The petitioner contends that delay in obtaining permissions, stockpiling materials, and pay delays forced a change in market conditions; rate revision is warranted under the context of Covid-19 impacts and government orders suggesting price relief; failure to pay RA bills and supplier cancellations demonstrate prejudice; the MoU for road cutting, though executed late, reflects ongoing impediments to timely completion.
Contentions of Respondents
The respondents argue that the contract expressly fixes rates and disallows any revision (Clause 8); payments are contingent on funds availability; a large portion of the work could have been completed without road-cutting permission; the contract cannot be altered by writ petition; Covid-era price fluctuations do not amount to force majeure under the contract; express terms govern.
Cited Precedents (4)
| Case Name | Citation | Treatment | Explanation |
|---|---|---|---|
| Harikumar G. v. Travancore Devaswom Board, Thiruvananthapuram and others | 2021 KHC 130 (DB) | Positive | Cited to support the principle that express terms of a contract cannot be ignored. |
| Easun Engineering Company Limited v. Fertilisers and Chemicals Travancore Limited and another | 1991 KHC 2374 | Distinguished | Court distinguishes this case and finds it inapplicable to the facts, particularly on force majeure/fundamental change. |
| Satyabrata Ghose v. Mugneeram Bangur and Company and another | AIR 1954 SC 44 | Mentioned Only | Cited in the discussion but not relied upon for the decisive reasoning. |
| Energy Watchdog v. Central Electricity Regulatory Commission and others | (2017) 14 SCC 80 | Distinguished | Counsel relied on it for force majeure rationale, but the court did not apply its doctrine to justify a rate revision. |
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Extracted Judgment Text
Exact text extracted from official judgment records.
## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
## **PRESENT**
**THE HONOURABLE MR.JUSTICE N.NAGARESH**
**THURSDAY, THE 3[RD] DAY OF MARCH 2022 / 12TH PHALGUNA, 1943**
**WP(C) NO. 451 OF 2022**
## **PETITIONER:**
**REENA ENGINEERING AND CONTRACTING COMPANY LTD., 602, SHIV TOWER, PATTO PLAZA, PANAJI, GOA-403 001, REPRESENTED BY ITS MANAGING DIRECTOR.**
**BY ADVS. P.SHANES METHAR N.KRISHNA PRASAD**
## **RESPONDENTS:**
- **1 KERALA WATER AUTHORITY, JALA BHAVAN VELLAYAMBALAM, THIRUVANANTHAPURAM-695 033, REPRESENTED BY ITS MANAGING DIRECTOR.**
- **2 THE SUPERINTENDING ENGINEER, OFFICE OF SUPERINTENDING ENGINEER, KERALA WATER AUTHORITY, PH CIRCLE (MALAPPURAM), MALAPPURAM-676 505.**
- **3 THE EXECUTIVE ENGINEER, OFFICE OF THE EXECUTIVE ENGINEER, KERALA WATER AUTHORITY, PROJECT DIVISION, MALAPPURAM-676 505.**
- **ADDL.R4 THE CHAIRMAN, KERALA WATER AUTHORITY, JALA BHAVAN, VELLAYAMBALAM, THIRUVANANTHAPURAM 695033. (ADDL.R4 IS IMPLEADED AS PER ORDER DATED 21.02.2022 IN IA NO. 2/2022)**
**BY ADV GEORGIE JOHNY**
**THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
W.P.(C) No.451/2022
: 2 :
## **N. NAGARESH, J.**
`````````````````````````````````````````````````````````````
## W.P.(C) No.451 of 2022
````````````````````````````````````````````````````````````` _Dated this the 3[rd] day of March, 2022_
## **J U D G M E N T**
~ ~ ~ ~ ~ ~ ~ ~ ~
Petitioner is a contracting company. The petitioner seeks to quash Ext.P24 and to direct the respondents to grant rate revision for the work undertaken by the petitioner. The petitioner prays that in the alternative, the respondents be directed to foreclose the contract without imposing risk and cost on the petitioner.
2. The petitioner states that the 2[nd] respondentSuperintending Engineer of the Kerala Water Authority floated e-tender for the project named “KIIFB–WRD–025–25 –Manjeri suburban drinking water project – improvement and augmentation of UWSS to Manjeri Municipality including
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water supply arrangements to Payyanad Thadamparambu area–Package II-laying clear water pumping main, clear water gravity main and distribution system”. The petitioner, who quoted ₹35,30,98,850/-, was awarded the work as per Ext.P2 dated 20.01.2021. Ext.P3 work order was issued on 25.01.2021. The work was to be completed within 18 months from the date of work order.
3. The petitioner executed Ext.P4 agreement on 18.02.2021. The petitioner states that they placed orders for materials to proceed with the work as per Ext.P5. Purchase orders were made on 15.03.2021 as per Ext.P6. The petitioner alleges that on 26.03.2021, as per Ext.P7, they requested the 3[rd] respondent to arrange necessary permissions from PWD for digging roadside trenches for pipe laying. On 10.05.2021, the petitioner again submitted Ext.P8 request to obtain PWD permission. There was no response. The petitioner, by Ext.P9 representation dated 27.05.2021, again requested the 3[rd] respondent to permit the petitioner to start the work.
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4. The petitioner states that the respondents failed to obtain necessary road cutting permission even after four months. The petitioner by the time had purchased and stocked materials. The petitioner therefore raised Ext.P10 RA Bill on 10.05.2021. By Ext.P12, the petitioner was informed that the respondents have initiated steps for obtaining road cutting permission on 03.03.2021 itself. In the meanwhile, DI pipes costing ₹8.32 Crores were supplied by M/s. Kissan Mouldings Ltd. The RA Bill for purchase of DI pipes was not honoured by the respondents. M/s. Kissan Mouldings Ltd. was demanding payment, as PVC pipes ordered were ready for delivery on payment of bills for supply of DI pipes already effected.
5. The petitioner therefore requested for payment of RA bill, but at the same time continued with the work, wherever the site was hindrance free. The petitioner’s bill was certified, but not paid. Due to non-payment, M/s. Kissan Mouldings Ltd. cancelled the Supply Order on 27.07.2021, as per Ext.P18. In spite of Ext.P18, the respondents did not
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settle the bill nor arrange for hindrance free site to proceed with the contract work. The Supplier in the meanwhile demanded a new supply order at revised rates for supply of pipes.
6. The MoU on road cutting permission was at last executed as per Ext.P22, after 239 days of opening of tender, on 27.09.2021. According to the petitioner, by this time, the rates of materials increased 300 times on account of Covid-19 pandemic and the rates quoted in the bids lost relevance. Had the respondents paid the petitioner's bill in time, materials could have been procured at original lower rates. The petitioner therefore submitted Ext.P23 request dated 04.10.2021 seeking payment at the prevailing KWA rates or market rates. The request was rejected as per Ext.P24 letter dated 25.10.2021 of the 3[rd] respondent.
7. The petitioner states that the present rate hike is a temporary phenomena owing to breakage in supply chains due to pandemic and the prices will revert back soon. The KWA has ordered revision of rates and to follow DSR 2018.
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The work undertaken by the petitioner was at DSR 2016. The work was delayed solely due to the lapses on the part of the respondents and therefore the petitioner is entitled to the benefit of Ext.P28 Government Order dated 24.08.2015. The petitioner therefore submitted Ext.P29 representation dated 08.11.2021 seeking rate revision. The respondents have not responded to Ext.29. The petitioner therefore seeks to quash Ext.P24 communication and to direct the respondents to effect rate revision.
8. Respondents 1 to 3 resisted the writ petition filing statement. Under the contract, it is the joint liability of the Contractor and the KWA to get appropriate sanction from the related authority, contended the respondents. The tender document and the work order explicitly stated that rates for the work will not be revised at any rate. The tender document further stated that payments will be made as per availability of funds for the Scheme.
9. The Standing Counsel for the respondents submitted that the total length of pipe laying was 131 Km.
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and only 21 Km. of it required permission from PWD. The petitioner could have completed the work in the remaining 110 Km., which was not done. In fact, the petitioner did not execute the work for the reason that the petitioner had not stocked sufficient materials in time. The petitioner was paid ₹5.8 Crores on 14.09.2021. The petitioner has already been paid ₹6.8 Crores. As per Clause 8, no rate revision is permissible. In the judgment of this Court in _**Harikumar G. v.**_
_**Travancore Devaswom Board, Thiruvananthapuram and others** [2021 KHC 130 (DB)],_ it has been held that express terms of a contract cannot be ignored.
10. It has to be noted that the agreement in question was executed during the period of Covid-19 pandemic, pointed out the Standing Counsel for the respondents. Therefore, the petitioner cannot be heard to contend that unexpected events due to pandemic warrant a rate revision, argued the Standing Counsel.
11. I have heard the counsel for the petitioner and the Standing Counsel for the respondents.
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12. The petitioner was awarded the work as per Ext.P2 dated 20.01.2021. Ext.P3 work order was issued on 25.01.2021. The work was to be completed within 18 months from the date of work order. The arguments of the petitioner are that:
(1) The MoU for cutting road for laying of pipelines was signed only on 27.09.2021, after a period of 239 days of opening tender, which has delayed the execution;
(2) The petitioner had purchased DI pipes from M/s. Kissan Mouldings Ltd. and stocked, but the respondents refused to honour RA bill and consequently, the Supplier cancelled the remaining Purchase Orders of the petitioner and they will now supply only on the basis of a fresh purchase order, at enhanced rates.
(3) Due to the delay in execution of the work which is due to the delay in obtaining road cutting permission, the material costs have increased 300 times and hence the original rates quoted by the petitioner have become irrelevant. Hence, revision of rates is warranted.
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(4) The KWA has now adopted DSR 2018 rates. Ext.P27 G.O. dated 25.09.2020 of the Finance (Industries & Public Works-B) Department of Government of Kerala has permitted hike in price of bitumen to the contractors. The petitioner is entitled to similar benefits.
(5) If the respondents are not willing to revise the rates, then the petitioner should be permitted to foreclose the contract without risk and cost of the petitioner.
As regards delay in executing MoU for road cutting, it has to be noted that as per the terms of the agreement, it is the joint responsibility of the Contractor and the KWA to obtain such permissions. Whether the petitioner has discharged their part of duties in obtaining road cutting permission is a question of fact, which cannot be adjudicated in these writ proceedings.
13. The pipe laying work undertaken by the petitioner was for a length of 131 Km. According to the respondents, permission for road cutting was required only for a portion of the work, 21 Km. and that the petitioner could have executed
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larger portion of the work without any such permission, which has not been done by the petitioner. The petitioner would, however, argue that the pipes to be laid were of a high dimension and it could not have been done anywhere without obtaining road cutting permission. This is also a disputed question of fact. With the materials available on record, this Court will not be justified in arriving at a factual finding as to who and what caused the delay in execution of the work.
14. It is an admitted position that there are clear terms in the contract that bills will be honoured depending on the availability of funds and that under no circumstances, rates will be revised. When the contract includes a clause providing that the bills will be settled depending on the availability of funds, the petitioner cannot argue that the delay in payment of RA Bill resulted in cancellation of purchase orders made by the petitioner and hence rates should be revised.
15. The learned counsel for the petitioner, relying on the judgment of the Hon'ble Madras High Court in _**Easun**_
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_**Engineering Company Limited v. Fertilisers and Chemicals Travancore Limited and another** [1991 KHC 2374]_ , contended that after execution of the agreement if a fundamentally different situation arises unexpectedly, the contract ceases to bind the parties at that point. The learned counsel also relied on the judgment in _**Satyabrata Ghose v. Mugneeram Bangur and Company and another** [AIR 1954 SC 44]_ and contended that no one can be directed to perform a task which is inherently impossible. The cost of materials has increased unexpectedly due to pandemic situation and it being a _force majeure_ event, the petitioner is entitled to relief, contended the counsel relying on the judgment in _**Energy Watchdog v. Central Electricity**_ . _**Regulatory Commission and others** [(2017) 14 SCC 80]_
16. The question of _force majeure_ will not apply to the case, since the petitioner has executed the agreement after the advent of Covid-19 pandemic. For the same reason, it cannot be held that a fundamentally different situation has arisen. As stated earlier, this Court, in these writ
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proceedings, cannot adjudicate as to on which party's act/omission, the delay has been occurred in obtaining road cutting permission. Going by the facts of the case, it cannot also be held that the contract now is a task impossible of performance. In the circumstances, judgment relied on by the petitioner would not be of any assistance to the petitioner.
17. The petitioner urges that the KWA has now adopted DSR 2018 and hence the respondents can revise the rates accordingly, taking into consideration the facts of the case. The rates accepted by the petitioner were based on DSR 2016. The agreement between the petitioner and the respondents is that there will not be any revision of rates. Therefore, the petitioner cannot legally contend that the petitioner is entitled to get a revision of rates.
18. As pointed out by the Standing Counsel for the respondents, when there is an express term in the contract that rates will not be revised, the same cannot be ignored. Ext.27 G.O. issued by the Finance (Industries & Public
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Works-B) Department, Government of Kerala is not intended to apply to the Kerala Water Authority. Therefore, the petitioner cannot claim any right based thereon. In the facts and circumstances of the case, this Court will not be justified in directing the respondents to foreclose the contract.
Consequently, the writ petition is dismissed. This judgment will not, however, preclude the petitioner from pursuing their claims before higher authorities or before any other Forum.
Sd/-
**N. NAGARESH, JUDGE**
aks/28.02.2022
W.P.(C) No.451/2022
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## **APPENDIX OF WP(C) 451/2022**
## **PETITIONER'S EXHIBITS**
|**Exhibit P1**|**TRUE COPY OF THE RELEVANT**|**EXTRACT OF**|**EXTRACT OF**|
|---|---|---|---|
||**THE**<br>**NOTICE**<br>**INVITING**||**TENDER**|
||**NO.SE/PHC/MPM/62/2020-21**||**DATED**|
||**10.11.2020.**|||
|**Exhibit P2**|**TRUE COPY OF THE **|**PROCEEDINGS**||
||**NO.KWA/HO/PIU(2)/KIIFB/TD-**|||
||**6.MANJERI(PK-2)/2020 DATED**|**20.01.2021**||
||**OF THE 1ST RESPONDENT.**|||
|**Exhibit P3**|**TRUE COPY OF THE WORK ORDER**||**DATED**|
||**25.01.2021.**|||
|**Exhibit P4**|**TRUE COPY OF THE WORKS **|**AGREEMENT**||
||**NO.SE/PHC/MPM/52/2020-21**||**WORKS**|
||**CONTRACT DATED 18.02.2021.**|||
|**Exhibit P5**|**TRUE COPY OF THE PURCHASE ORDER**||**DATED**|
||**22.02.2021 PLACED BY THE PETITIONER TO**|||
||**SRIKALAHASTHI PIPES LTD.**|||
|**Exhibit P6**|**TRUE COPY OF THE PURCHASE ORDER**||**DATED**|
||**15.03.2021 TO KISSAN MOULDING LIMITED.**|||
|**Exhibit P7**|**TRUE COPY OF THE LETTER **||**DATED**|
||**26.03.2021 SUBMITTED BY THE**|**PETITIONER**||
||**BEFORE THE 3RD RESPONDENT.**|||
|**Exhibit P8**|**TRUE COPY OF THE LETTER **||**DATED**|
||**10.05.2021 SUBMITTED BY THE**|**PETITIONER**||
||**BEFORE THE 3RD RESPONDENT.**|||
|**Exhibit P9**|**TRUE COPY OF THE LETTER **||**DATED**|
||**27.05.2021 SUBMITTED BY THE**|**PETITIONER**||
||**BEFORE THE 3RD RESPONDENT.**|||
|**Exhibit P10**|**TRUE COPY OF THE RA BILL**|**NO.1**|**DATED**|
||**10.05.2021**<br>**SUBMITTED**|**BY**|**THE**|
||**PETITIONER.**|||
|**Exhibit P11**|**TRUE COPY OF THE LETTER **||**DATED**|
||**28.05.2021**<br>**SUBMITTED**|**BY**|**THE**|
||**PETITIONER.**|||
W.P.(C) No.451/2022
## : 15 :
|**Exhibit P12**|**TRUE COPY OF THE LETTER NO.DB-**|**TRUE COPY OF THE LETTER NO.DB-**|
|---|---|---|
||**PD/17808/MSDWP/KIIB=FB-17-18**|**DATED**|
||**03.06.2021 OF THE 3RD RESPONDENT.**||
|**Exhibit P13**|**TRUE COPY OF THE LETTER **|**DATED**|
||**09.06.2021 OF THE PETITIONER.**||
|**Exhibit P14**|**TRUE COPY OF THE LETTER **|**DATED**|
||**30.06.2021 OF THE PETITIONER ADDRESSED**||
||**TO 3RD RESPONDENT.**||
|**Exhibit P15**|**TRUE COPY OF THE LETTER **|**DATED**|
||**13.07.2021 OF THE PETITIONER TO THE**||
||**3RD RESPONDENT.**||
|**Exhibit P16**|**TRUE COPY OF THE ORDER NO.DB1-**||
||**PD/17808/MSDWP/KIIF**<br>**17-18**|**DATED**|
||**12.07.2021 OF THE 3RD RESPONDENT.**||
|**Exhibit P17**|**TRUE COPY OF THE LETTER **|**DATED**|
||**28.07.2021 OF THE PETITIONER TO THE**||
||**ASSISTANT ENGINEER,**||
|**Exhibit P18**|**TRUE COPY OF THE COMMUNICATION**||
||**NO.KML/22/390 DATED 27.07.2021 OF**||
||**KISSAN MOULDING LIMITED.**||
|**Exhibit P19**|**TRUE COPY OF THE LETTER **|**DATED**|
||**30.07.2021 OF THE PETITIONER ADDRESSED**||
||**TO THE 3RD RESPONDENT.**||
|**Exhibit P20**|**TRUE COPY OF LETTER DATED 01.09.2021**||
||**OF THE PETITIONER.**||
|**Exhibit P21**|**TRUE COPY OF THE FORM CB3 FOR AN**||
||**AMOUNT OF RS.5,80,20,146/-**||
|**Exhibit P22**|**TRUE COPY OF THE MOU DATED 27.09.2021.**||
|**Exhibit P23**|**TRUE COPY OF THE LETTER **|**DATED**|
||**04.10.2021 OF THE PETITIONER ADDRESSED**||
||**TO THE 3RD RESPONDENT.**||
|**Exhibit P24**|**TRUE**<br>**COPY**<br>**OF**<br>**THE**<br>**LETTER**||
||**NO.SE/PHC/MPM/DBI/20180/2020**|**DATED**|
||**25.10.2021 OF THE 3RD RESPONDENT.**||
|**Exhibit P25**|**TRUE COPY OF THE QUOTATION **|**DATED**|
||**19.10.2021.**||
|**Exhibit P26**|**TRUE COPY OF GOVERNMENT **|**ORDER**|
||**NO.GO(RT)**<br>**NO.9386/2018/FIN**|**DATED**|
||**13.11.2018.**||
|**Exhibit P27**|**TRUE COPY OF GOVERNMENT **|**ORDER**|
||**NO.GO(RT)**<br>**NO.5502/2020/FIN**|**DATED**|
||**25.09.2020.**||
## W.P.(C) No.451/2022
: 16 :
**Exhibit P28 TRUE COPY OF THE GO(P) NO.375/15/FIN DATED 24.08.2015. Exhibit P29 TRUE COPY OF THE REPRESENTATION DATED 08.11.2021 SUBMITTED BY THE PETITIONER BEFORE THE 3RD RESPONDENT.**