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2019 DIGILAW 301 (AP)

D. Raju v. APSRTC, Vijayawada

2019-11-02

D.V.S.S.SOMAYAJULU

body2019
ORDER : D.V.S.S. Somayajulu, J. 1. This writ petition is filed by the petitioner, who is a Contractor, against respondent Nos. 1 to 2 seeking a relief that the action of respondent Nos. 3 and 4 in not returning the Earnest Money Deposits and to pay the bill amounts as illegal, arbitrary and consequently direct the respondents 1 to 4 to make all the payments due including the monthly bills retained and also the EMD amount. 2. This Court has heard Sri M. Lakshmi Narayana, learned Counsel for the petitioner and Sri P. Durga Prasad, learned Standing Counsel appearing for respondent Nos. 1 to 4. The 5th respondent is added as a party. Notice was served, proof of service is filed vide USR No. 42704. Despite service, he did not appear. 3. The short and simple question involved in this writ petition is whether the respondents are entitled to retain the Earnest Money Deposit and the bill amounts payable to the petitioner in the facts and circumstances of the case. Petitioner's case: 4. The petitioner's case in brief is that he was appointed as a Contractor on outsourcing basis for cleaning, sweeping, washing etc., of the buses belonging to the respondents. The works included sweeping, washing and mopping of Metro buses and ordinary buses, sweeping, washing of low floor buses and lastly chemical wash to the seat fabrics and interiors of the Ultra Deluxe and other Luxury vehicles of the respondents. The factum of award of contracts, the work being done over a period of time etc., are not in dispute. The contracts were entered into from 2012 onwards and continue till about 2018. The contention of the petitioner is that despite the work being executed as per the schedule and the completion of the contract periods, the EMD amounts of the three contract, which are Rs. 36,806/-, Rs. 3,34,777/- and Rs. 67,050/- were withheld. Apart from this, the first respondent has also failed to pay bill for services rendered in sweeping, washing of low floor buses. 5. The writ petition has been filed questioning the inaction of the respondents in failing to pay the money due and also for not giving a reason to the petitioner for the retention/failure to pay. It is also submitted that the respondents have served the letter dated 10.7.2018 directing him to appear before the Chief Security Inspector. 5. The writ petition has been filed questioning the inaction of the respondents in failing to pay the money due and also for not giving a reason to the petitioner for the retention/failure to pay. It is also submitted that the respondents have served the letter dated 10.7.2018 directing him to appear before the Chief Security Inspector. The petitioner's grievance is that the Chief Security Inspector has been making some illegal demands and as he was not a party to the contract, the petitioner has refused to appear before him. The said Chief Security Inspector is arrayed as respondent No. 5 in this writ petition. Despite notice, respondent No. 5 did not appear. 6. The petitioner's grievance is that no notice was given to him nor were any reasons furnished for the non-payment. Therefore, he argues that a writ is maintainable and he is entitled to seek a monetary relief from the respondents. Respondents submissions: 7. The learned Standing Counsel for the respondents submits that as the present contract is a non-statutory contract, a writ is not the proper relief and that the rights and obligations of a party involving disputed questions cannot be decided in this writ. He also points out that the petitioner has an effective alternative remedy of approaching the civil Court. Lastly, the learned Counsel for the respondent submits that the bills raised by the petitioner were kept pending, because certain irregularities were noticed in his contracts. He points out that a sum of Rs. 61,000/- was the monetary loss that is caused to the respondent-Corporation and therefore, the money was withheld. Learned Counsel also submits that the petitioner was asked to appear before the Chief Security Inspector, but as he did not appear, despite an opportunity, the respondents had no choice but to terminate the contract, forfeit the security deposits also blacklist the petitioner. 8. Learned Counsel relied upon Clauses 27, 28 to 31 and 34 to 37 of the contract dated 1.9.2012 for the purpose of justifying the actions of the respondents. The clauses are also more or less similar in all the three contracts. Learned Counsel relied on these clauses to advance his arguments on the right of the respondents to forfeit the deposit. Determination: 9. This Court after hearing both the learned Counsel notices that the contracts in question are non-statutory in nature. The clauses are also more or less similar in all the three contracts. Learned Counsel relied on these clauses to advance his arguments on the right of the respondents to forfeit the deposit. Determination: 9. This Court after hearing both the learned Counsel notices that the contracts in question are non-statutory in nature. The plea of an effective alternative remedy being available, no doubt sounds attractive, but, when the actions of a State do not meet the tests laid down by the Hon'ble Supreme Court of India in a number of leading judgments, a writ is definitely maintainable. For the sake of good order, the following judgment of the Hon'ble Supreme Court on this issue is Harbanslal Sahnia and others v. Indian Oil Corpn. Ltd., Para 7 of the judgment read as follows: 7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case inspite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in atleast three contingencies: (i) where the writ petition seeks enforcement of any of the Fundamental Rights; (ii) where there is failure of principles of natural justice or, (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act and is challenged [see Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and others, AIR 1999 SC 22 : 1998 (6) ALD (S.C.S.N.) 20]. The present case attracts applicability of first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings. 10. In the case on hand, as rightly pointed out by the petitioner, the alleged loss, if any, is only Rs. 61,000/- and no reason is given for the forfeiture of the entire amount. Compensation can only be recovered for the actual loss that is caused. 10. In the case on hand, as rightly pointed out by the petitioner, the alleged loss, if any, is only Rs. 61,000/- and no reason is given for the forfeiture of the entire amount. Compensation can only be recovered for the actual loss that is caused. No reasons are forthcoming why the entire amount has been forfeited. The link between the so-called enquiry and the forfeiture is also not clearly established. Hence, this Court holds that a writ is maintainable. 11. Apart from this, this Court by looking into the conditions notices that the clauses relied upon do not really support the action of the respondents. Clause 28 of the contract deals with the refund of security deposits on expiry of the licence period. Clause 29(a) deals with the forfeiture in the event of non-commencement of the work or breach of any of the other terms of the contract. Clause 30(b) deals with the forfeiture in case of non-submission of the deed of licence. Clause 31 deals with forfeiture in case of failure to execute the contract. Clause 34 deals with the damages to the premises or the property of the Corporation by the Contractor or his agents. Clause 35 deals with violation of breach of terms and conditions of the contract including unsatisfactory maintenance of the contract. Clause 37 deals with forfeiture in case of the contractor terminating the contract. Therefore, this Court is of the opinion that these clauses which are relied upon by the learned Standing Counsel do not really apply to the facts and circumstances of this case. 12. The law in relation to security deposit/EMD has been settled in 1970 itself in the leading judgment of Maula Bux v. Union of India, AIR 1970 SC 1955 . The same was followed later in following cases like Union of India (UOI) v. Rampur Distillery and Chemical Co. Ltd., AIR 1973 SC 1098 . In these cases, Hon'ble Supreme Court of India clearly held that earnest money/security deposit can only be forfeited to the extent of the loss caused. It cannot be used as a wind fall or to make a gain. Ltd., AIR 1973 SC 1098 . In these cases, Hon'ble Supreme Court of India clearly held that earnest money/security deposit can only be forfeited to the extent of the loss caused. It cannot be used as a wind fall or to make a gain. In the case on hand, on the basis of some alleged loss, which is not really borne out by any of the documents filed, the entire amount due to the petitioner in the form of deposits in the three contracts and the work done in October and November, 2017 were held back. The total loss even if this accepted to be correct, is only Rs. 61,000/-. This Court finds absolutely no reason for the retention of the money by the respondents beyond this alleged loss. Section 74 of the Contract Act, 1872 (for short 'the Act') deals with this. Sections 73 to 75 occur in Chapter- VI of the Act, which deals with compensation. Hence, this Court is of the opinion that compensation can only be claimed if loss is caused. If loss is not caused and/or if loss is not proved; forfeiture is not automatic. 13. The question that now survives is-is the petitioner entitled to any relief? 14. In ABL International Ltd. and others v. Export Credit Guarantee Corporation of India Ltd., (2004) 3 SCC 553 , the Hon'ble Supreme Court of India clearly held that in certain cases, the writ Court can also direct the refund of the amounts and pass a money decree also. Drawing sustenance and support from the said decision, this Court therefore directs that all the amounts that are withheld namely, (excepting the Rs. 61,000/-), the Earnest Money Deposits under the first agreement, dated 1.7.2019, second agreement, dated 1.9.2019 and the third agreement, dated 1.7.2019 alongwith monthly bill payment in the month of October, 2017 and payment for 9 days work in November, 2017 as detailed in the writ affidavit should be refunded to the petitioner within six weeks from the date of receipt of a copy of this order. 15. The petitioner is also given liberty to file an appropriate proceeding in a civil Court to challenge the withholding of amount of Rs. 61,000/-, if he so advised. Since this involves disputed questions of fact namely, the loss caused to the respondents-Corporation etc., this Court is not entering into that area of controversy. 15. The petitioner is also given liberty to file an appropriate proceeding in a civil Court to challenge the withholding of amount of Rs. 61,000/-, if he so advised. Since this involves disputed questions of fact namely, the loss caused to the respondents-Corporation etc., this Court is not entering into that area of controversy. The respondent-Corporation is at liberty to raise all its defences in the proceedings, if any, commenced by the petitioner for recovery of Rs. 61,000/-. 16. Hence, this writ petition is partially allowed directing the above payments. No order as to costs. 17. As a sequel, the miscellaneous applications, if any pending, shall stand closed.