IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC TUESDAY, THE 20TH DECEMBER 2011 / 29TH AGRAHAYANA 1933 WP(C).No. 29575 of 2011(V) ------------------------------- PETITIONER(S) : --------------------- M.T.AUGUSTINE, MENACHERY HOUSE, NEELESWARAM, KALADY - 683 584. BY ADV. SRI.B.GOPAKUMAR RESPONDENT(S) : ------------------------ 1. HINDUSTAN NEWSPRINT LTD., A GOVT. OF INDIA ENTERPRISES, REPRESENTED BY ITS MANAGING DIRECTOR, NEWSPRINT NAGAR - 686 616, KOTTAYAM DISTRICT. 2. THE GENERAL MANAGER (FDP), HINDUSTANT NEWWPRINT LTD., NEWSPRINT NAGAR, KOTTAYAM DISTRICT- 686 616. 3. DIVISIONAL FOREST OFFICER, THIRUVANANTHAPURAM - 695 001. SC SRI.V.KRISHNA MENON, FOR HNZ ADVS. SRI.E.K.MADHAVAN FOR R2 SRI.V.KRISHNA MENON FOR R2 SMT.P.VIJAYAMMA FOR R2 SMT.J.SURYA FOR R2 SMT.P.V.INGITHA FOR R2 THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20/12/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: AMV WPC NO.29575 OF 2011 (V) APPENDIX PETITIONER(S) EXHIBITS : P1. : COPY OF THE UNDERTAKING GIVEN BY 1ST RESPONDENT DTD: 02.09.2010. P2. : COPY OF THE PURCHASE ORDER NO.HNL/FD/ETA/10-11 DTD: 18.10.2010. P3. : COPY OF THE LETTER DTD: 17.06.2011 BY PETITIONER 2ND RESPONDENT. P3(A) : COPY OF THE LETTER BY 1ST RESPONDENT TO PETITIONER DTD: 23.07.2011. P4. : COPY OF THE LETTER BY PETITIONER TO THE 1ST RESPONDENT DTD: 25.07.2011. P5. : COPY OF THE LETTER NO.HNL/FDP/745W27/110903 DTD: 19.08.2011. P6. : COPY OF THE AMENDMENT TO PURCHASE ORDER NO.110903 DTD: 10.08.2011. P7. : COPY OF THE LETTER DTD: NIL BY PETITIONER TO 2ND RESPONDENT. P8. : COPY OF THE LETER NO.C52161/11 DT: 29.08.2011 BY DIVL.FOREST OFFICER, THENMALA. P9. : COPY OF THE LETTER NO.HNL/SBC/65 DT:08.11.2011 ISSUED BY 1ST RESPONDENT. RESPONDENTS' EXHIBITS : NIL /TRUE COPY/ P.A.TO JUDGE AMV ANTONY DOMINIC, J. --------------------------------------- W.P.(C) No.29575 of 2011 ---------------------------------------- Dated this the 20th day of December, 2011 JUDGMENT Prayer sought in this writ petition is to quash the steps taken by the respondents as per Ext.P3(a) to levy penalty on the petitioner and to direct the respondents to disburse the security deposit and retention money due under Ext.P2. 2. 1st respondent is a Government of India undertaking. Petitioner is an enlisted contractor of 1st respondent for extraction and supply of forest produce. Ext.P2 is a work order awarded to the petitioner, for the extraction and supply of 3800 metric tons of Acacia and 6000 metric tons of Mangium from Palode Range of Thiruvananthapuram Forest Division. In this purchase order it is inter alia stated thus: “Extraction and transportation of 9800 MT of Acacia/Mangium wood from Trivandrum Division, Palode range, 2001 Acacia Mangium Plantation at Kolachal in Peringamala (92.14 ha)(Acacia 3800 MT and Mangium 6000 MT) to Hindustan Newsprint Limited yard at Newsprint Nagar.” 3. After the issuance of work order on 18.10.2010, W.P.C. No. 29575 OF 2011 -2- petitioner submitted Ext.P3, dated 17.6.2011 to the company informing that he could supply only 8506 metric tons and that if the period of contract is extended, the balance quantity will also be supplied at the rate as agreed in Ext.P2. On receipt of Ext.P3 the company issued Ext.P3(a) dated 23.7.2011 informing the petitioner that the zonal in charge had proposed to enhance the work order quantity to 15,000 metric tons ( 10,000 metric tons Mangium and 5000 metric tons acacia) and that though the petitioner was called to attend negotiations with the tender committee, petitioner did not attend the same. 4. In Ext.P3(a) it is also stated that, subsequently the petitioner informed in writing his unwillingness to undertake the work in so far as the additional quantity is concerned. It is also stated that the petitioner was liable to clear the entire allotted area and supply the entire available material as agreed in Ext.P2. On that basis he was requested to communicate his willingness to extract and supply the entire materials at the agreed rate. He was also informed that his failure to agree to the proposal will render him liable to pay penalty as per contract conditions. W.P.C. No. 29575 OF 2011 -3- 5. In reply to Ext.P3(a), the petitioner issued Ext.P4 letter, where he did not give any commitment regarding the extraction and supply of additional quantity, but only agreed to supply maximum available quantity as per the work order, provided extension of time is granted. He also requested to the company to disburse the security deposit and retention amount. Soon thereafter, Ext.P5 letter was issued to the petitioner on 19.8.2011 whereby the company informed as follows: “As per Work Order cited above, the 2001 Acacia Mangium Plantation at Kolachal Peringamala (92.14 Ha) was contracted for extraction and transportation of during 2010- 11 season. As per terms of the contract the entire quantity of wood available in the coupe shall be extracted and transported before 31.05.2011. Out of 92.14 Ha. allotted for extraction, only 45 Ha was extracted and transported during the contract period. An area of 47 Ha remains un-extracted and your are liable to pay compensation as demanded by State Forest Department. The DFO, Thiruvananthapuram vide letter No.TA 6870/10, dtd.02.08.2011 demanded payment of ` 11,750/- towards liability for the unfelled area and ` 4,79,400/- towards production cost of 79,900 seedlings. A chalan for ` 4,91,150/- with currency till 22.08.2011 was also forwarded to us for remittance. You are requested to remit the amount as demanded by DFO. In case the payment is not made by you, it may be noted that we shall be W.P.C. No. 29575 OF 2011 -4- deducting the amount from your pending Bills/Security Deposit and remitted to the treasury.” 6. This was followed by Ext.P6 by which the company unilaterally amended Ext.P2 purchase order requiring the petitioner to extract and deliver 15,000 metric tons as against the agreed 9800 metric tons and that too at the rates that are applicable in Ext.P2. On receipt of Ext.P6, petitioner submitted Ext.P7 objection, but did not receive any response. However, his security deposit and retention amount have been withheld by the company. It is in these circumstances this writ petition has been filed. 7. A statement has been filed on behalf of the 2nd respondent. It is stated that as per the purchase order issued to the petitioner, 9800 metric tons was required to be extracted, transported and delivered before 31.5.2011 from an area of 92.14 Hectors. It is stated that out of this quantity, only 8506 metric tons was delivered by the petitioner and that for the breach committed, the petitioner is liable for consequences as provided in the work order. It is further stated that the W.P.C. No. 29575 OF 2011 -5- petitioner, as against the requirement of clear felling the entire area of 92.14 Hectors, he has clear filled only an area of 47 Hectors and that, therefore, the 1st respondent issued a chalan for ` 4,91,150/-(Rupees Four lakhs ninety one thousand one hundred and fifty only) which has to be realised from the petitioner. It is stated that, therefore, an amount of ` 5,00,000/- (Rupees Five lakhs only) has been withheld from the petitioner. Further it is contended that the quantity specified is only approximate and that it is entitled to revise the same as per the conditions of the contract between the parties. 8. In the counter affidavit it is further stated that in addition to ` 4,91,150/-(Rupees Four lakhs ninety one thousand one hundred and fifty), the 1st respondent company has also deducted an amount of ` 1,30,795/- which is the penalty for not supplying the agreed quantity as per Ext.P2. In other words the case of the company is that although the agreement as per the work order, the quantity specified was 9800 metric tons, such specification was only a rough estimate and that the actual quantity of wood available from 'coupe' is liable to be extracted, W.P.C. No. 29575 OF 2011 -6- transported and supplied by the contractor by clear felling. It is stated that in this respect petitioner committed breach and therefore, he is liable to make good the penalty to be paid to the Forest Department and also for short falling quantities. 9. I heard the counsel appearing for the petitioner and also the learned counsel appearing for respondents 1 and 2 and learned Govt. Pleader for 3rd respondent. Ext.P2 is the work order. As per this work order, the obligation of petitioner is to extract, transport and deliver 9800 metric tons from the 2001 Acacia Mangium plantation at Kolachal in Palode Range. This much of quantity is to be extracted from a 'coupe' having an area of 92.14 Hectors. In Ext.P3, petitioner has stated that for various reasons including non availability of workers he could supply only 8506 metric tons and requested for extension of time for the supply of balance quantity. It was at that stage that the company issued Ext.P3(a), dated 23.7.2011. In that communication, company said that it was proposed to enhance the work order quantity to 15,000 metric tons consisting of 10,000 metric tons of Mangium and 5,000 metric tons of Acacia W.P.C. No. 29575 OF 2011 -7- and that in spite of notice petitioner did not attended negotiations. It is in this letter that the company for the first time told the petitioner that if he does not agree for the work as per the amended purchase order, he will be liable for penalty as per the contract conditions. Consequently, company issued Ext.P6 amended purchase order. Thus ` 4,91,150/-(Rupees Four lakhs ninety one thousand one hundred and fifty) which has been demanded by the Forest Department was withheld from the amount payable to the petitioner only for non compliance of Exts.P3(a) and P6. 10. This act of the company is sought to be justified by the respondents referring to the conditions in Ext.P2 work order and according to them, as per work order conditions, contractor has the liability to clear fill the entire 'coupe'. It is also stated that it was specified in Ext.P2, terms and conditions, that the actual quantity of wood available from the 'coupe' may vary from the given estimated quantity and that the contractor is liable to complete the work. 11. However, I am not persuaded to accept this contention, W.P.C. No. 29575 OF 2011 -8- for the reason that, first of all, it is not a 'coupe' that was allotted to the contractor. On the other hand Ext.P2 itself shows that the obligation of contractor was to extract 9800 metric tons from a 'coupe' having an area of 92.14 Hectors. Therefore, it was a quantity specific work order and not an area specific work order. It is as against this, in Ext.P5, the company told the petitioner that within 92.14 Hectors allotted for extraction, petitioner extracted and transported only from 45 Hectors, which is not only a factually erroneous statement, but is contrary to the conditions in Ext.P2. Therefore, the premise on which penalty is levied on petitioner, that out of 92.14 Hectors allotted to the petitioner, he has extracted timber only from 45 Hectors is erroneous. 12. In so far as the contention of learned counsel for the company that the actual quantity specified in the work order is only an estimate and that the contractor has the liability to extract the entire quantity is concerned, although there is such a specification in Ext.P2, any variation on account of this clause could only be a marginal one and not a substantial one as in this case. That apart, if the revision was based on clause 2(a) of W.P.C. No. 29575 OF 2011 -9- Ext.P2, it was unnecessary for the company to have called petitioner for negotiations and issue an amendment to the purchase order. Therefore, I am inclined to think that, additional quantity was outside the scope of Ext.P2 purchase order. If it is so accepted, it has to be held that the petitioner could not have been made liable for the non extraction and supply of any quantity beyond 9,800 metric tons. 13. Respondents do have a case that out of 9,800 metric tons, petitioner supplied only 8,506 metric tons. From Ext.P3 letter of the petitioner dated 17.6.2011 it is seen that the petitioner also has confirmed this factual position and if there is any short fall in the quantity, respondents are entitled, making the petitioner liable for such short fall in terms of the conditions of purchase order. That action of respondent cannot be faulted 14. Therefore, the petitioner's contentions regarding the levy of penalty on him for his failure to extract quantity in excess of what is mentioned in Ext.P2 purchase order is upheld. However, if there was failure on the part of the petitioner to extract, transport and deliver the quantity stipulated in Ext.P2, W.P.C. No. 29575 OF 2011 -10- the company is entitled to levy penalty as condition of purchase order. In view of the above the writ petition is disposed of directing that the company shall pass fresh orders in the matter and amounts that are due to the petitioner will also be disbursed. This shall be done, as expeditiously as possible, at any rate, within four weeks of receipt of a copy of this judgment. ANTONY DOMINIC, JUDGE. Kp/-