IN THE HIGH COURT OF KERALA AT ERNAKULAM
SA.No. 872 of 1996()
1. K.SOMON
... Petitioner
Vs
1. KULATHOOR PANCHAYAT
... Respondent
For Petitioner :SRI.PIRAPPANCODE V.SREEDHARAN NAIR
For Respondent : No Appearance
The Hon'ble MR. Justice HARUN-UL-RASHID
Dated :30/07/2010
O R D E R
HARUN-UL-RASHID, J.
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S.A.No.872 Of 1996
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Dated this the 30th day of July, 2010.
J U D G M E N T
The defendant in O.S.No.738 of 1991 on the file of the I
Additional Munsiff Court, Neyyattinkara, is the appellant. The
appeal is directed against the judgment and decree in A.S.No.138
of 1994 of the Sub Court, Neyyattinkara. The suit was filed by
the Kulathur Panchayath for damages. The trial court dismissed
the suit and allowed the counter claim. The lower appellate court
set aside the judgment and decree passed by the trial court and
decreed the suit and dismissed the counter claim. Parties
hereinafter are referred to as the plaintiff and defendant as
arrayed in the suit.
2. The plaintiff is the Kulathur Panchayath. Panchayath
auctioned the right to remove the sand from AVM canal for the
period 1990-91. The auction was conducted on 12.3.1990. The
defendant bid in auction the right to collect sand for an amount of
Rs.48,200/-. Bid was confirmed on 15.3.1990. The defendant
executed an agreement on 19.3.1990 pursuant to confirmation of
the bid. The terms in the agreement directs the defendant to
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deposit 1/3 of the bid amount on 19.3.1990 and the balance 2/3
to be paid on or before 15.6.1990 and 15.9.1990 in two equal
instalments. In violation of the provisions of the agreement it is
alleged that the defendant failed to produce the solvency
certificate and failed to remit the balance 2/3 of the bid amount.
The plaintiff’s case is that the terms in the agreement empowers
the plaintiff to cancel the auction and to re-auction the right if the
defendant violates the terms in the agreement and to realise the
loss if any sustained in the re-auction. The plaintiff issued notice
on 27.7.1990 demanding the balance amount due and directing
to produce the solvency certificate. It is stated that no reply was
sent by the defendant. Therefore another notice was issued on
22.8.1990. In that notice the defendant was asked to show
cause why re-auction shall not be conducted at the risk and cost
of the defendant. The defendant did not care to show cause and
failed to reply to the said notice as well. Therefore, the plaintiff
Panchayath decided to cancel the agreement and to re-auction
the right to collect the sand. It is further stated by the plaintiff
that re-auction was conducted on 18.9.1990. The bid amount on
re-auction is Rs.20,670/- and due to the re-auction plaintiff
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sustained a loss of Rs.11,463/-. Hence the suit was filed for
realisation of the said amount with interest at the rate of 12%.
3. In the written statement filed by the defendant the
execution of the agreement and proceedings of auction are
admitted. It is contended inter alia that the defendant was
unable to remove sand due to various reasons. On 5.4.1990 one
person filed O.S.No.536 of 1990 and obtained injunction against
the defendant and on 31.5.1990, another person filed
O.S.No.705 of 1990 and he also obtained injunction against the
defendant. On the basis of these two orders passed by the civil
court it is averred that the Panchayath had also informed the
defendant not to remove sand. In these circumstances, it is
contended that the agreement has become impossible for
performance, that the order of injunction restrained the
defendant from collecting sand, thereby the agreement has
become void and therefore the plaintiff is not entitled to realise
the amount based on the void agreement. The defendant raised
a counter claim seeking realisation of Rs.15,000/- and interest
stating that the plaintiff Panchayath is liable to return the money
deposited by the defendant with the plaintiff on 19.3.1990.
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4. The agreement was executed between the parties.
Ext.A3 is the agreement by which the defendant bid the right to
collect sand from AVM Canal for the period 1990-91. Defendant
had deposited Rs.16,067/- being the 1/3 of the total bid amount,
being the successful bidder in the auction conducted by the
Panchayath. The defendant agreed to deposit the balance 2/3 of
the bid amount in two equal instalments payable on 15.6.1990 &
15.9.1990. By virtue of one of the clauses in the agreement the
plaintiff reserved the right to cancel the auction and to re-auction
the right if the defendant violates the provisions in the
agreement. The agreement also provides that the plaintiff
Panchayath can realise the loss if any sustained in the re-auction.
Ext.A4 is the copy of the notice issued to the defendant directing
him to produce the solvency certificate. Ext.A6 is another notice
issued to the defendant to show cause why re-auction shall not
be conducted for violation of the terms in the agreement. Ext.A8
is the resolution of the Panchayath dated 28.8.1990 to cancel the
agreement and to conduct re-auction. Ext.A10 is the re-auction
notice dated 1.9.1990. Ext.A11 is the resolution of the
Panchayath dated 22.9.1990 to confirm the re-auction in favour
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of a third person for Rs.20,670/-. According to the plaintiff since
the defendant violated the terms of the agreement they are
compelled to resort to re-auction the right at a reduced amount
of Rs.20,670/- and thus sustained a loss of Rs.11,463/- which
the Panchayath is entitled to realise from the defendant with
interest.
5. The appellant/defendant brought to the notice of the
trial court as well as the appellate court that there were protest
from the local people public against collecting river sand from the
AVM Canal. The defendant also pointed out that two strangers
filed two suits as O.S.Nos.536/1990 & 705/1990 for permanent
injunction restraining the present defendant from collecting sand
from AVM Canal. The defendant also brought to the notice of the
court that the Panchayath informed the defendant that he shall
not remove sand in view of the prohibitory orders passed by the
civil court. The decrees and judgments of the said suits have
been produced by the appellant/defendant to substantiate his
contentions. Ext.B1 is the copy of the plaint in O.S.No.536/1990.
The prayer in that case is to restrain the defendant from dredging
sand from AVM Canal on the western side of the plaint schedule
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property. Ext.B2 is the judgment in the said suit. A decree was
passed in that suit in favour of the plaintiff restraining the
defendant from removing sand from the Canal on the western
side of the plaint schedule property. Ext.B3 is the interim order
passed in O.S.No.705/1990 filed by another stranger against the
present defendant. Exts.B7 & B8 are the judgment and decree in
O.S.No.705/1990. The interim order of injunction passed by the
court in O.S.No.705/1990 and O.S.No.536/1990 are dated
31.5.1990 and 6.4.1990 respectively.
6. It is pointed out by the learned counsel for the
appellant that the interim order passed by the court in both suits
remained in force till the suit was finally disposed of. The trial
court also found that there was stiff resistance to sand dredging
from the local public. Ext.A11 resolution dated 22.9.1990 passed
by the Panchayath shows that there was stiff resistance to sand
dredging from the local public. Therefore second auction was
conducted excluding portions included in the first auction in view
of the decision in O.S.No.536/1990 and because of the stiff
resistance of local public. The resolution of the Panchayath also
shows that the contentions of the defendant stands proved. The
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resolution shows that dredging of snad was being opposed by the
public in the locality. The trial court found that dredging of sand
had come to a stand still in view of the pendency of the suits and
the interim orders made wherein the Panchayath and the
appellant/defendant are parties to O.S.No.536/1990. The
appellant is the defendant in O.S.No.705/1990. The documents
produced evidently show that there was interim order of
injunction in force from 6.4.1990 & 31.5.1990 in the above said
two suits. The period during which the defendant was entitled to
collect river sand is for the period from 1.4.1990 till 31.3.1991.
The interim order of injunction passed in O.S.No.536 of 1990 is
dated 6.4.1990 and in O.S.No.705 of 1990 is dated 31.5.1990.
This shows that during the beginning period itself the defendant
was prevented from collecting river sand. The trial court also
found that the prohibitory orders remained in force until June,
1991 when the suit was finally disposed of. The trial court also
held that from Ext.A11, it appears that the agreement covers the
canal lying by the side of the property scheduled in O.S.No.536 of
1990. Ext.A10 notice of re-auction has specifically excluded the
said site, the area covering the interim injunction in O.S.No.536
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of 1990. The trial court concluded that the performance of
Ext.A3 agreement had become impossible in view of the
pendency of the two suits. The trial court also followed the views
expressed by the Apex Court regarding the principles relying on
Section 56 of the Contract Act and held that Ext.A3 agreement
has become void as far as the plaintiff and defendant are
concerned. The trial court also considered the counter claim filed
by the defendant claiming return of Rs.15,000/- deposited with
the plaintiff towards 1/3 of the bid amount. On the basis of the
decision in the suit, the trial court consequently held that the
defendant is entitled to realise Rs.15,000/- claimed in the counter
claim with 12% interest.
7. After considering the contentions raised by the
appellant, this Court is of the view that the reasons and
conclusions arrived at by the trial court dismissing the suit and
passing a decree in favour of the defendant is justified in the
facts and circumstances of the case. The lower appellate court
reversed the decree and judgment mainly referring to the decree
and judgment passed in the two suits, that in none of the
documents there is reference that the injunction order and decree
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of injunction passed were in respect of AVM canal for which
Ext.A3 agreement was entered into between the plaintiff and
defendant. The trial court examined the interim orders and the
decree and judgment passed in both suits and it is nobody’s case
that it does not relate to the portion of the canal from which the
plaintiff bit in auction the right to collect river sand. Even the
appellate court held that it is clear that there was some
obstruction for removal of sand as per Ext.A3 agreement, by the
suits filed by the strangers. The appellate court further held that
such obstruction does not mean that the defendant was fully
prevented from collecting sand when prohibitory orders are
issued by the civil court restraining the defendant from collecting
river sand from the area for which he bid in auction the right to
collect sand. The appellate court observed that it is not clear
from the interim orders and decree and judgment, up to what
extent he was prevented from collecting sand. One thing is clear
that he was obstructed from collecting sand from the area.
Therefore, the finding of the lower appellate court that so long as
there is no evidence from the defendant’s side to substantiate
his case of obstruction caused in performing the work, the only
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course open to the court is to accept the contentions of the
defendant. On the facts and circumstances discussed above the
plaintiff is not entitled to the reliefs in the suit. At the same time
the defendant is entitled to realise the amount claimed in the
counter claim being the amount deposited by him towards Ext.A3
agreement.
In the result, the appeal is allowed. The judgment and
decree passed by the lower appellate court is set aside and the
decree and judgment passed by the trial court is restored. There
will be no order as to costs.
HARUN-UL-RASHID,
Judge.
bkn/-