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2018 Supreme(Online)(KER) 28664
HIGH COURT OF KERALA
SHAJI P.CHALY, J
JYOTHY BIO GAS & RURAL SOCIAL SERVICE – Appellant
Versus
KOLLAM CORPORATION Advocate - SRI M K CHANDRA MOHAN DAS,SC,KOLLAM MPT SRI M K CHANDRA MOHAN DASSCKOLLAM MPT – Respondent
WRIT PETITION (CIVIL) 27055/2011
A party in a contractual dispute must be afforded an opportunity to present their case before any adverse action or claim of damages is taken against them.
Headnote:
Contract - Bio-gas Plant - Kerala Municipality Act - Sections Related to Dispute Resolution - The court emphasized the necessity for a fair hearing in contract disputes, ruling that the absence of provisions allowing for liquidated damages due to the lack of notice was inadequate for the respondent's claims.
Fact of the Case:
The petitioner, a registered society, entered into an agreement with the respondent Corporation for constructing bio-gas plants. After project completion, disputes arose regarding payment and the performance of the plants, particularly concerning their capacity.
Finding of the Court:
The court found that the petitioner had completed the work as per the agreement and had not been given a proper hearing regarding the respondent's claims of defects. It ruled in favor of the petitioner by ordering a hearing on the matter.
Issues: Whether the respondent was entitled to liquidated damages without providing the petitioner an opportunity to be heard regarding the alleged defects in the work completed.
Ratio Decidendi: The court highlighted that adequate notice and an opportunity for the petitioner to respond to claims of defects are essential before imposing damages or taking adverse actions.
Final Decision: The writ petition was disposed of with a direction for the respondent to hear the petitioner on the claims raised.
JUDGMENT
This writ petition is filed by the petitioner seeking the following reliefs:
“i) Issue a writ of mandamus or order or direction directing the respondents to disburse the balance amount of Rs.7,31,419/- with 12% interest to the petitioner as per Ext.P3;
ii) Issue a writ of mandamus and call for the records leading to Exts.P11 and P14 and quash the same by issuing a writ of certiorari; and iii) Such other writ, direction or order this Hon'ble Court deem fit and proper for the circumstances in this case”.
2. Petitioner is a registered society and it has 15 years experience in the field of making and servicing of bio-gas plants. The respondent Corporation invited tenders for construction of two 60 cubic metre “Deen Bandhu Modal Bio-gas Plants”. Petitioner submitted quotation, quoting Rs.29,70,000/-. The said quotation was accepted. On 19.07.2007, petitioner and the respondent entered into Ext.P5 agreement, by which it was agreed to complete the work within 90 days from the date of receipt of technically and commercially clear work order. In terms of the agreement, the respondent has to depute one of their engineers at the work site and the plants will be running operational for one year, among other conditions. According to the petitioner, the work was completed of two bio-gas plants under the supervision of the Engineer of the respondent on 17.10.2007. Petitioner has maintained the plants in running operational condition for one year as per the agreement. On raising the bills, the respondent has paid only an amount of Rs.23,55,806/- by four instalments, and the balance remaining is Rs.7,14,194/- plus cost of the Pressure gauge at Rs.17,325/-, which was installed in accordance with the directions issued by the Ombudsman for Local Self Government Institutions.
3. The respondent has filed a detailed counter affidavit, refuting the allegations and claims and demands raised by the petitioner, and reiterated the stand adopted in Ext.P14 communication dated 18.05.2009, whereby petitioner was directed to rectify the defects in the plant within the time period specified thereunder .
4. A reply affidavit is filed by the petitioner, reiterating the stand adopted in the writ petition and stating that the work carried out by the petitioner was in terms of the agreement with the supervision of the official of the respondent Corporation, as is agreed upon in Ext.P5 agreement.
5. I have heard learned counsel for the petitioner and the learned Standing Counsel for the Corporation and perused the pleadings and the documents on record.
6. The fact discussion made above would make it clear that the claim raised by the petitioner is in respect of a work that was carried out in the year 2007. It is also an admitted fact that, substantial amounts under the contract were paid to the petitioner. However, some disputes arose with respect to the nature of the construction carried out by the petitioner and the capacity of the Bio-gas Plants. According to the petitioner, there is no scope for raising such disputes, since parties are bound by the terms and conditions contained under Ext.P5 agreement. As per Clause 5 of the said agreement, 50% of the total cost after completion of the dome structure of the plant was agreed to be paid and the balance 50% after completion of the work and successful trial run for 3 days.
7. It is the case of the petitioner that, having completed the trial run for three days and furthermore for a period of one year, the respondent is not at liberty to turn around and contend that the plant is not of the specification as provided under Ext.P5 agreement. It is also pointed out that, as per Clause 1 of the agreement, it is agreed upon by and between the parties that the petitioner is to set up 60 cubic metre 'Deen Bandhu' model bio-gas plant 2 Nos, Soakpit and Filtering bed 2 Nos., 2.5 K.V.A generator 1 No., Light Post 20 Nos., etc. etc. The contention advanced by the respondent is that, consequent to violation of the agreement con
