IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 16TH JUNE 2010 / 26TH JYAISTHA 1932 WP(C).No. 11072 of 2006(R) ----------------------------------------- PETITIONER(S): ------------------------ C.A. MUHAMMED IQBAL, CHIRAKUZHI HOUSE, NATTIKA BEACH P.O., THRISSUR DISTRICT. BY ADVS. SRI.P.K.SURESH KUMAR, SRI.K.P.SUDHEER. RESPONDENT(S): ---------------------------- 1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY, PUBLIC WORKS DEPARTMENT, THIRUVANANTHAPURAM. 2. THE CHIEF ENGINEER, NATIONAL HIGHWAY, THIRUVANANTHAPURAM. 3. THE SUPERINTENDING ENGINEER, N.H. CENTRAL CIRCLE, VYTTILA, KOCHI. BY GOVERNMENT PLEADER SRI. K. RAMESH THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16/06/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.11072/2006 R APPENDIX PETITIONER'S EXHIBITS: P1: COPY OF AGREEMENT NO.1/2002-2003/SE/NH/CC/KOCHI DTD. 30/12/2002 EXECUTED BETWEEN THE PETITIONER AND THE 3RD RESPONDENT. P2: COPY OF EXTENSION AGREEMENT NO.VI/SE/NH/CC/KOCHI DTD. 1/1/2005 TO EXT.P1 AGREEMENT. P3: COPY OF REPRESENTATION DTD. 26/07/2005 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. P4: COPY OF REPORT DTD. 6/08/2005 OF THE 3RD RESPONDENT. P5: COPY OF ORDER NO.W3.G2.3419/2000IV DTD. 29/03/2006 ISSUED BY THE 3RD RESPONDENT. P6: COPY OF G.O.(RT) NO.364/2001/PWD DTD. 26/03/2001 ISSUED BY PUBLIC WORKS (C) DEPARTMENT, GOVT. OF KERALA. P7: COPY OF G.O.(RT) NO.559/2005/PWD DTD. 9/06/2005 ISSUED BY PUBLIC WORKS (D) DEPARTMENT, GOVT. OF KERALA. RESPONDENT'S EXHIBITS: N I L /TRUE COPY/ P.A.TO JUDGE Kss S. SIRI JAGAN, J. - - - - - - - - - - - - - - - - - - - - - - - W.P.(C)No. 11072 of 2006 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 16th day of June, 2010 J U D G M E N T The petitioner took on the contract work of collecting toll from three bridges named Puduponnani, Chettuva and Varapuzha on NH 17. Ext.P1 agreement for the same was executed on 30.12.2002. The original period of contract expired on 29.08.2003. The same was extended up to 02.01.2006. Ext.P2 is the last agreement executed in respect thereof. As per Ext.P1, the schedule for payment of amounts collected is specifically detailed. Thereafter special conditions have been stipulated in respect of default or delay in payment, which are contained in Special Conditions No. 3(a) in i), ii) & ii (a). The petitioner has paid the amounts collected, though delayed with 12% interest. Thereafter the petitioner requested for exemption from payment of penal interest and penalty. By Ext.P4, the W.P.(C)No. 11072 of 2006 -2- Superintending Engineer forwarded his recommendation to the Chief Engineer, wherein he recommended that the reasons stated by the petitioner for delayed payment is genuine to some extent and therefore the collection of penal interest and penalty are not fully justifiable. However the Chief Engineer did not consider his recommendation. Consequently the Superintending Engineer was forced to issue Ext.P5, directing the petitioner to pay penal interest and penalty for the belated payment as per the agreement. Petitioner has filed this writ petition challenging the same seeking the following reliefs: “a) quash Exhibit P5 oder by the issue of a writ certiorari or other appropriate writ, order or direction. b) issue a writ of mandamus or other appropriate writ, order or direction commanding the respondents to refrain from realizing penal interest and penalty from the petitioner for the delayed payments made under Ext.P1 contract as their imposition is bad in law. c) declare that the Government is not entitled to impose any penal interest or penalty on the petitioner in respect of the periods not covered by Ext.P1 agreement. d) direct the respondents to drop all proceedings for the levy of penalty and penal interest against the petitioner in relation to the contract covered by Ext.P1 agreement.” W.P.(C)No. 11072 of 2006 -3- 2. A counter affidavit has been filed by the 3rd respondent wherein the contention raised is that this is a contract wherein the parties have mutually agreed upon the terms of the contract which are only is being enforced. Therefore according to the respondents there is no merit in the contentions raised by the petitioner. 3. I have considered the rival contentions in detail. The petitioner admits of some delay in payment of the amounts due. He has also paid 12% interest on the same. He has specifically stated the reasons for the delay which has been elaborately considered by the Superintending Engineer in Ext.P4 communication to the Chief Engineer, which reads thus: “I am submitting herewith a representation received from Sri.Muhammad Iqbal, contractor for collection of toll in N.H.17 for relieving from the payment of penalty and penal interest for the delay occurred in the payment of some installments. In this connection, I may report as follows: Sri.Muhammed Iqbal, contractor has taken the work of collection of toll for two reaches, viz; collection of toll for Kundannoor bridge in N.H.47A and for Puduponnani. Chettuva, Kottappuram and Varapuzha in N.H.17. Of the above two works, the contractor remitted all installments without delay for the work of collection of toll for Kundannoor bridge. But he failed to remit weekly installments without W.P.(C)No. 11072 of 2006 -4- delay for the work of collection of toll for the Puduponnani, Chettuva, Kottapuram, and Varapuzha bridge. As he had remitted the installments regularly the Ministry had given extension to his period of toll collection two times. The extension agreement has executed on the agreement that the contractor shall remit the kist amount at 10% more every year than what he had quoted in the previous year. Even though he had remitted the installments regularly in the first year delay was occurred in remitting certain installments later. This invited penal action of charging a fine to the tune of Rs.1,000/- per day of belated payment after 10th day of due date. In addition, he is liable to pay penal interest at the rate of 20%. At present, he had remitted the up-to-date installments as per the agreement. He had also remitted an amount of Rs.10,12,473/- towards interest for the delayed payments at the rate of 12% per annum. Thus the Government suffered no loss on this account. Now the contractor represented to relieve him from the payment of penal interest at the rate of 20% in addition to the interest already remitted and from the payment of fine at Rs.1,000/- per day of delayed payment as he had remitted the full kist amount and interest at 12% for the delayed remittance. He had also pointed out a number of reasons which was not expected at the time of quoting the tender, for the delayed payment. The reason pointed by the contractor for the delayed payment as the Gosri bridge which was declared as toll-free and because of the deviation from the policy of the Government, a large chunk of the traffic was diverted without passing through Varapuzha toll point. Moreover, the narrow portion of N.H.17 from Varapuzha to Edappally junction and the Edappally railway gate could be avoided by the commutes and this has resulted in the reduction of existing traffic. Moreover, the traffic to Cherai beach and Munambam Harbour has been diverted through Gosri Bridge. Further the occurrence of “Tsunami” affected traffic for two months since fishing, construction work in costal belts were practically affected during the period. Harthal, unexpected strike and exorbitant increase in cost of fuels also affected the toll collection. The reason stated by the agency is genuine to some extent. In view of the above facts, I am of opinion that as the contractor has remitted the installments and the interest of 12% as per contract condition, the penal interest and penalty W.P.(C)No. 11072 of 2006 -5- proposed are not fully justifiable. The representation submitted by the contractor needs consideration and is justifiable and hence recommended for further orders.” 4. Clause No.4 of the Ext.P1 agreement, provides thus: “4. In case of disputes under this deed to submit to the decision of the Superintending Engineer, National Highway Central Circle, Kochi whose decision shall be final and legally binding on the licensee.” 5. The very same Superintending Engineer who is to take a final decision regarding disputes between the parties had issued Ext.P4 recommending reduction in penal interest and penalty. It is settled law that when a person is to be imposed with a penalty then that should be based on a finding that there is contumacious conduct on the part of the person. A reading of Ext.P4 report of the Superintending Engineer would show that the delay caused by the petitioner in payment is not wholly without justification. On the opening of the new Goshree bridges would certainly affect the toll collection in at least one of the bridges. Apart from that when the Goshree bridges are W.P.(C)No. 11072 of 2006 -6- available, naturally persons going to Cherai, which is a tourist centre would opt the route through the Goshree bridges instead of going around through Paravoor. Therefore I do not think that, the petitioner can be wholly blamed for the situation. That being so, the respondents being Government entities, they should approach the issue in the right perspective, which has not been done in this case. 6. Accordingly, Ext.P5 is quashed. But even then, I am of opinion that the petitioner should pay some penalty. At this point of time, I do not think that, I should send the matter back to the 3rd respondent for reconsideration of that question. Taking into account the facts and circumstances, I feel that payment of 7% interest more in addition to the 12% already paid would be sufficient penalty instead of the penal interest and penalty as per clauses 3(a) in i), ii) & ii (a). Accordingly I dispose of this writ petition with a direction to the respondents to collect only 7% more interest on the delayed payments, meaning thereby, for the W.P.(C)No. 11072 of 2006 -7- delayed payments, the petitioner would be liable to pay a total of 19% interest including the 12% interest which he had already paid. The petitioner shall pay the amounts within two months, on receipt of which the respondent shall close the account of the petitioner. The writ petition is allowed as above. S. SIRI JAGAN JUDGE shg/