IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID WEDNESDAY, THE 28TH SEPTEMBER 2011 / 6TH ASWINA 1933 WP(C).No. 4132 of 2009(P) ------------------------- PETITIONER: --------------- ANIL ABBAS, PROPRIETOR, ELECTROMET TRADING CO., 198(1)/7, RAIL ROAD, ALUVA - 683 101. BY ADV. MS.AYSHA YOUSEFF MS.MOLLY JACOB RESPONDENT: --------------- PALA MUNICIPALITY, REPRESENTED BY ITS SECRETARY, PALA - 686 575. *ADDL.R2: M.M.ABBAS, MANAGER, ELECTROMET TRADING CO. 198(1)/7, RAIL ROAD, ALUVA - 683 101. *ADDL.R2 IS IMPLEADED AS PER ORDER DTD. 10.8.2010 IN I.A.NO.10212/10. ADV. MR.V.M.KURIAN FOR R1 MR.JOBI.A.THAMPI FOR ADDL.R2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06/09/2011, THE COURT ON 28/09/2011 DELIVERED THE FOLLOWING: WP(C).No. 4132 of 2009(P) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: QUOTATION NOTICE DTD. 4.12.2006 ISSUED FOR SUPPLY OF ELECTRICAL EQUIPMENTS. EXT.P2: SUPPLY ORDERS DTD. 1.9.2004 ISSUED TO THE PETITIONER. EXT.P2(a): SAUPPLY ORDER DTD. 10.12.2004 ISSUED TO THE PETITIONER. EXT.P3: SUPPLY ORDER DTD. 14.3.2006. EXT.P3(a): SUPPLY ORDER DTD. 14.3.2006. EXT.P3(b): SUPPLY ORDER DTD. 4.12.2006. EXT.P4: SUPPLY ORDER DTD. 2.1.2007. EXT.P4(a): SUPPLY ORDER DTD. 3.8.2007. EXT.P4(b): SUPPLY ORDER DTD. 6.12.2007. EXT.P5: BILL DTD. 22.1.2005. EXT.P5(a): BILL NO.121 DTD. 13.2.2007. EXT.P5(b): BILL NO.122 DTD. 13.2.2007. EXT.P5(c): BILL NO.136 DTD. 15.3.2007. EXT.P5(d): BILL NO.138 DTD. 24.3.2007. EXT.P5(e): BILL NO.046 DTD. 1.9.07. EXT.P5((f): BILL NO.084 DTD. 14.12.2007. EXT.P5(g): BILL NO.085 DTD. 21.12.2007. EXT.P5(h): BILL NO.144 DTD. 28.3.2008. EXT.P5(i): BILL NO.145 DTD. 28.2.2008. EXT.P5(j): BILL NO.150 DTD. 29.3.2008. EXT.P6: REPRESENTATION DTD. 14.11.2008. EXT.P6(a): REPRESENTATION DTD. 3.4.2008. EXT.P7: DETAILED REPRESENTATION DTD. 30.12.2008 ALONG WITH THE THE POSTAL RECEIPT. EXT.P7(a): ACKNOWLEDGEMENT CARD EVIDENCING THE RECEIPT OF THE REPRESENTATION. (CNTD...2) WP(C).No. 4132 of 2009(P) ::2:: EXT.P8: BANK STATEMENT OF SBI, ALUVA, REGARDING O.D.LOAN ACCOUNT OF ELECTROMET TRADING CO. EXT.P9: TEST REPORT DTD. 27.3.2009 OF SOPHISTICATED TEST AND INSTRUMENTATION CENTRE, COCHIN UNIVERSITY. EXT.P10: RECEIPT EVIDENCING REPLACEMENT OF 42 NUMBERS OF CFL BULBS ON 24.1.2008. EXT.P10(a): RECEIPT EVIDENCING REPLACEMENT ON 27 NOS. CFL BULBS ON 29.2.2008. EXT.P10(b): RECEIPT EVIDENCING REPLACEMENT OF 10 NOS AND 6 NOS. OF CFL BULBS ON15.5.2008. EXT.P10(c): RECEIPT EVIDENCING REPLACEMENT OF 25 NOS. AND 15 NOS. OF CFL BULBS ON 15.5.2008. EXT.P11: ENDORSEMENT ACCEPTING THE CFL ACCESSORIES ON 29.6.2007. EXT.P11(a): ENDORSEMENT ACCEPTING THE CFL ACCESSORIES ON 2.7.2007. EXT.P12: LETTER DTD. 26.10.2007 FROM THE SECRETARY, PALA MUNICIPALITY AND ACKNOWLEDGEMENT EVIDENCING RECEIPT OF THE SAME. EXT.P13: LETTER DTD. 6.6.2008 FROM THE SECRETARY, PALA MUNICIPALITY. EXT.P14: DETAILED REPLY SENT BY THE EPTITIONER TO THE RESPONDENT. RESPONDENTS' EXHIBITS: EXT.R1(a): QUOTATION DTD. 31.10.2005 AND SCHEDULE OF MATERIALS SUBMITTED BY SRI.M.MABBAS. EXT.R1(b): LETTER DTD. 9.8.2007 SENT BY SRI.M.M.ABBAS TO THE MUNICIPALITY. EXT.R1(c): TENDER DTD. 27.2.2007 SUBMITTED BY SRI.M.M.ABBAS, ELECTROMET TRADING COMPANY. EXT.R1(d): TENDER NOTIFICATION DATED 6.2.2007. EXT.R1(e): COUNCIL RESOLUTION NO.14 DTD. 14.3.2007. EXT.R1(f): LETTER DTD. 16.5.2008 SENT BY THE MUNICIPALITY TO SRI.M.M.ABBAS POINTING OUT HIS FAILURE. EXT.R1(g): LETTER DTD. 1.7.2008 SENT TO SRI.M.M.ABBAS, THE CONTRACTOR. // TRUE COPY // HARUN-UL-RASHID, J. ------------------------ W.P.(C).No.4132 Of 2009 ---------------------- Dated this the 28th day of September, 2011. J U D G M E N T The writ petition is filed seeking the following reliefs: i) To issue a writ of mandamus or any other writ, order or direction directing the respondent to pay an amount of Rs.4,75,364/- due to the petitioner from the respondent as per Ext.P5 to Ext.P5(J) bills towards supply of electrical equipments and EMD deposited during the period 2004-2008 amounting to Rs.49,964/- with interest @ 12% per annum within a time stipulated by this Court. ii) To declare that the respondent has no authority to withhold the amount of Rs.5,25,328/- which is due to the petitioner as per Ext.P5 to Ext.P5(J) bills towards the supply of electrical equipments and EMD deposit during the period 2004-2008. 2. The petitioner is the proprietor of Electromet Trading Company, Aluva. The 1st respondent Municipality accepted the tenders submitted by the petitioner for the supply of electrical equipments for the Municipality during the years 2004-05 to 2007-08. Every year the Municipality invited separate quotations for the supply of electrical equipments. True copies of the supply orders issued to M/s. Electromet Trading Company for the period 2004-05, 2005-06 and 2006-07 are marked as Exts.P2 series to ::2:: W.P.(C).No.4132 Of 2009 P4 series. It is not disputed that the petitioner supplied the items as per the supply orders on time. In the supply orders referred above, the respondent Municipality stated that payment will be effected on production of the bills. The petitioner submits that the condition incorporated in the supply orders that payment will be effected on production of the bill was an attractive fact which prompted the petitioner to deal with the Municipality. The said condition was complied with, when the earlier bills were produced for payment. When the bill dated 22.1.2005 for an amount of Rs.1,99,646/- was submitted for payment, the Municipality paid only Rs.1,75,000/- vide cheque No.670093 dated 12.4.2005 leaving a balance of Rs.24,464/-. It is averred that no reason has been stated for non-payment of the balance amount. Ext.P5 is the true copy of the bill dated 22.1.2005. Subsequently, the petitioner submitted the following bills during the period 2007- 2008. Bill No. Date Amount 121 13.2.2007 1,24,224.00 122 13.2.2007 16,998.00 136 15.3.2007 83,882.00 138 24.3.2007 4,275.00 ::3:: W.P.(C).No.4132 Of 2009 046 01.9.2007 33,188.00 084 14.12.2007 51,831.00 085 21.12.2007 37,461.00 144 28.3.2008 1,09,823.00 145 28.3.2008 2,460.00 150 29.3.2008 11,222.00 -------------------- 4,75,364.00 = = = = = = = = = The true copies of the bills are marked as Exts.P5(a) to P5(j). The total amount due as per 10 bills remaining unpaid is Rs.4,75,364/-. In addition to Exts.P5(a) to P5(j) bills, the Municipality retained a sum of Rs.49,964/- which is due to the petitioner towards EMD. The details of the EMD furnished by the petitioner, stated in paragraph 4 of the writ petition, are extracted below: EMD 22.10.04 24,464.00 EMD 28.10.05 4,500.00 EMD 24.12.05 5,000.00 EMD 13.12.06 5,000.00 EMD 23.02.07 10,000.00 EMD 02.11.07 1,000.00 ::4:: W.P.(C).No.4132 Of 2009 3. The petitioner submitted representations dated 5.5.2007, 14.11.2007, 24.3.2008, 3.4.2008, 15.5.2008 and 4.11.2008 requesting the respondent to pay the amount due to him. Exts.P6 & P6(a) are the copies of the representations dated 14.11.2007 and 3.4.2008. Ext.P7 is the representation dated 30.12.2008. 4. It is stated in the writ petition that for supplying the electrical equipments as per the supply orders issued by the Municipality, the petitioner had to avail loan from the State Bank of India, Aluva Branch and he is remitting the interest amount for the amount availed as loan. Ext.P8 is the copy of the bank statement regarding the loan account of Electromet Trading Company. It is pointed out by the petitioner that the electrical equipments were supplied during the period 2004-05 to 2007-08 as per specification without any default, that the Municipality never complained about the quality of the equipments supplied by the petitioner and therefore, there is no basis for withholding the amount due to the petitioner and that he is entitled to receive the amount immediately on supply of the goods. ::5:: W.P.(C).No.4132 Of 2009 5. The facts stated above are not disputed in the counter affidavit filed by the Municipality. The Municipality in its counter affidavit had not denied the material averments in the writ petition regarding the supply orders issued, items supplied, bills produced, amount due to the petitioner etc. In paragraph 3 of the counter affidavit it is stated that the Municipality has no agreement or transaction or commitment with the petitioner, that the Municipality has neither placed any order for supply of electrical goods with the petitioner nor he has made supply and therefore no amount is payable to the petitioner by the Municipality. According to the Municipality pursuant to the tender notifications issued by the Municipality, tenders were submitted by M.M.Abbas, as proprietor of Electromet Trading Company, that EMD was deposited by him and supply orders were issued to him periodically. In the light of the above said contentions, the petitioner filed I.A.No.10212/2010 for impleading M.M.Abbas, Manager, Electromet Trading Company. The impleading petition was allowed and M.M.Abbas was impleaded as additional 2nd respondent. ::6:: W.P.(C).No.4132 Of 2009 6. Sri.M.M.Abbas is none other than the father of the petitioner. He filed a detailed counter affidavit. In the counter affidavit, the additional 2nd respondent averred that he is the father of the petitioner; that he had entered into contract with the Municipality in his capacity as Manager of Electromet Trading Company for the supply of electrical goods and not as proprietor of Electromet Trading Company as contended by the Municipality. The additional 2nd respondent also submitted that from the supply orders, Exts.P2, P2(a), P3, P3(a), P4, P4(a) and P4(b), it can be seen that the supply orders were issued to Electromet Trading Company. It is also stated that Ext.P5 series bills were issued by the additional 2nd respondent for an on behalf of Electromet Trading Company. It is further stated that Exts.P6 and P6(a) representations were submitted by the additional 2nd respondent to the Municipality requesting to release the amount and that the aforesaid representations were submitted for and on behalf of Electromet Trading Company. 7. Exts.P2, P2(a), P3, P3(a), P4, P4(a) and P4(b), are the copies of the supply orders issued by the Municipality. The said records would show that the supply orders were issued to ::7:: W.P.(C).No.4132 Of 2009 Electromet Trading Company and not to the additional 2nd respondent as contended by the Municipality. Ext.P5 series are the copies of the bills issued to the Municipality during January, 2005 to March, 2008. Ext.P5 series would show that the additional 2nd respondent submitted Ext.P5 series bills for and on behalf of Electromet Trading Company. Ext.P6(a) is the representation dated 3.4.2008. The said representation was submitted by the additional 2nd respondent for and on behalf of Electromet Trading Company. In addition to Ext.P4 series supply orders and Ext.P5 series bills, the documents produced by the Municipality along with the counter affidavit as Exts.R1(a) to R1 (c) also would show that the additional 2nd respondent, M.M.Abbas, was acting for and on behalf of Electromet Trading Company as Manager and that the transaction was with M/s.Electromet Trading Company. Ext.R1(e) resolution of the Municipality would also go to show that the transaction is with M/s. Electromet Trading Company and not with M.M.Abbas in his individual capacity. He had signed Exts.R1(a) and R1(c) for and on behalf of Electromet Trading Company. The petitioner in the reply affidavit also stated that his father is the Manager of the ::8:: W.P.(C).No.4132 Of 2009 Proprietorship concern, namely, M/s.Electromet Trading Company and that he is the proprietor. Besides the above said materials, Ext.P7 is the representation dated 30.12.2008 submitted by the petitioner sent by registered post with acknowledge due. In Ext.P7 representation it is stated in page 1 that he is the proprietor and he requested the municipality to release the total sum of Rs.5,25,328/- with interest @ 18% per annum. In the representation it is stated that supply was done to the Municipality after availing a loan from the State Bank of India, Aluva Branch. Therefore he claimed interest @ 18% per annum. Ext.P7 is dated 30.12.2008. All these materials would show that the contention of the respondent Municipality that the petitioner has neither placed any order for supply of electrical goods nor made any supply, that no amount is payable to the petitioner etc. are without any substance and is averred purposefully with the object of defeating the claim of the petitioner. 8. In the counter affidavit filed by the Municipality, apart from the aforesaid technical contention, the Municipality did not deny the very fact of supply of electrical equipments consecutively for four separate years under separate tenders and ::9:: W.P.(C).No.4132 Of 2009 the amounts claimed by the petitioner under the bills forwarded is not due to Electromet Trading Company. The Municipality had not denied the averments regarding the amount due to the petitioner nor the details stated including the details of the bills, representations etc. 9. In the counter affidavit the further contention raised is that the person who supplied the equipments committed breach of contract by not making replacements during the guarantee period in spite of reminders which has caused great inconvenience to the Municipality. The Municipality has produced Ext.R1(g) communication dated 1.7.2008 addressed to the Manager, Electroment Trading Company stating that about 300 bulbs require replacement. In paragraph 8 of the reply affidavit filed by the petitioner it is stated that the petitioner has offered guarantee for one year for bulbs and one and half hear for other materials, that the bulbs supplied were tested by the respondent in its Sophisticated Test and Instrumentation Centre, Cochin University and that the petitioner have been replacing the defective items as and when information in this regard is received from the Municipality. In the same paragraph the date of ::10:: W.P.(C).No.4132 Of 2009 replacements and number of CFL bulbs replaced are stated in detail. From the facts and circumstances noticed, it is clear that there was no complaint about the non-replacement of bulbs during the years 2004-05 to 2006-07. Only on 27.8.2008, Ext.R1(g) letter was sent stating that 300 bulbs are in a damaged condition. If the Municipality has no complaint for the supply done during 2004-2007 they have no right to retain the amount demanded vide Ext.P5 and seven bills issued during February to December, 2007. The balance three bills relate to March, 2008. During subsequent months also the Municipality has not raised any complaint regarding the said bills demanding Rs.4,75,364/-. All on a sudden under Ext.R1(g) dated 1.7.2008 it is stated that 300 bulbs are liable to be replaced. At the same time, Exts.P11, P11(a) and P14 show that the petitioner replaced 125 bulbs during the period from 24.1.2008 to 19.6.2008. It appears that Ext.R1(g) letter is a letter created for the purpose of the case to make it appear that the bulbs were damaged within the guarantee period. According to the petitioner, the figure of 300 bulbs given in Ext.R1(g) letter is with the malafide intention for withholding the payment due to the petitioner. It is submitted by ::11:: W.P.(C).No.4132 Of 2009 the petitioner that Ext.R1(g) letter was never sent to the petitioner and it is a creation for the purpose of the case. It is also to be noted that the 1st respondent Municipality has not raised any dispute in the matter. Only in the counter affidavit filed, it is stated that the petitioner has not replaced the damaged bulbs and the Municipality has produced Ext.R1(g) letter along with the counter. Ext.P4(b) is the supply order dated 6.12.2007 for the period 2007-08. As per Ext.R1(f) the last supply order issued by the Municipality is dated 16.5.2006. In Ext.R1(f) the number of damaged bulbs is stated as one half of 1200. in Ext.R1(g) letter the number of damaged bulbs is stated as about 300 bulbs. In Ext.P14 letter addressed to the Secretary, Pala Municipality issued in June, 2008 it is stated that all the damaged bulbs till date is replaced. The writ petition was filed in February, 2009. The resolution of the Municipal Council referred in paragraph 6 of the counter affidavit was passed during the pendency of the writ petition. 10. As per the details furnished it is stated that 125 CFL bulbs were replaced between the period 24.1.2008 to 19.6.2008. Receipts evidencing replacements are produced and marked as ::12:: W.P.(C).No.4132 Of 2009 Exts.P10(a) to (c). It is also stated that one year guarantee of the bulbs expired by 2.7.2008. In Ext.P14 letter issued by the petitioner to the Municipality it is stated that replacements are made and that the materials for lighting the CFL lamps were given on 2.7.2007 and not on the dates mentioned in the letter. It is also averred in the reply affidavit that the resolution alleged to have been passed on 6.4.2009 is after filing of the writ petition to justify their action in not effecting payment due to the petitioner and that it is clear that Ext.R1(g) letter is one created for the purpose of the case and to make it appear that the bulbs were damaged within the guarantee period. It is stated in the reply affidavit that as on 19.6.2008 there were only 65 defective bulbs and that if there are more than that the same would have been returned on the dame day. Therefore, it is pleaded that a boosted figure has been given in Ext.R1(g) letter with malafide intention of withholding the payment due to the petitioner. 11. The contention raised by the 1st respondent Municipality in reply to the writ petition is without any bonafides. The supply ends with 31.3.2008. The Municipality had not taken any orders forfeiting the security deposit. That itself shows that ::13:: W.P.(C).No.4132 Of 2009 the Municipality is retaining the amount due to the petitioner without any valid reason. 12. The materials produced in this case would evidently show that the petitioner supplied the electrical equipments for which supply orders has been issued by the Municipality for the periods 2004-05 to 2007-08. It is not disputed that Rs.24,464/- is the balance amount remaining to be paid to the petitioner for Ext.P5 bill dated 22.1.2005. The amount due under 10 bills extracted in paragraph 2 of this judgment is also the amount payable to the petitioner. Under the said bills furnished during different periods from 30.7.2007 to 29.3.2008, the amount payable is Rs.4,75,364/-. According to the petitioner, a total amount of Rs.5,25,328/- is due to the petitioner for the supply of electrical equipments during the contract period. The amount payable to the petitioner is not disputed in the writ petition. Though the petitioner narrated in detail the transaction carried on by him with the Municipality the counter affidavit filed by the Municipality is silent about the said details. It is not disputed that the amounts are due towards supply of electrical equipments. The only contention raised is regarding replacement ::14:: W.P.(C).No.4132 Of 2009 of 300 bulbs. The said fact was stated in Ext.R1(g) letter dated 1.7.2008. Exts.P10(a) to (c) addressed to the Municipality would show that the petitioner had replaced many of the damaged bulbs. By Ext.P14 communication addressed to the Secretary, it is stated that during the period January to June, 2008, the aforesaid 125 bulbs were replaced. 13. The Municipality owes a duty to pay the amount due to the petitioner. There is no justification for not paying the amount till date though the electrical equipments were supplied during 2004-05 to 2007-08. The Municipality has no right to retain the amount due to the petitioner under the pretext that he had failed to replace certain number of bulbs which got defective during the guarantee period. In the counter affidavit also no reason has been stated for releasing the amount due to the petitioner though he submitted 7 bills during 2007 and the balance three bills during March, 2008. The maximum amount that can be retained by the Municipality is the price of the damaged bulbs. It is a fact that the records would show that the petitioner had availed loan from the State Bank of India for the purpose of conducting his business and therefore was compelled to pay the loan amount ::15:: W.P.(C).No.4132 Of 2009 with interest. There is no justification for the undue delay in making the payment. The petitioner has a case that Ext.R1(g) is a letter created for the purpose of the case to make it appear that the bulbs were damaged within the guarantee period. According to the petitioner, as on 19.6.2008 there were only 65 defective bulbs, and that if there were more than that the same would have been returned on the same day. It is also averred that a boosted figure has been given in Ext.R1(g) letter with a malafide intention of withholding the payment due to the petitioner. 14. In the aforesaid circumstances, this Court is of the view that the Municipality is duty bound to release the amount due to the petitioner. At the same time, the petitioner is bound to replace the damaged bulbs damaged during the guarantee period. The number of bulbs damaged is a fact in dispute. The Municipality can retain the price of the damaged bulbs till the damaged bulbs are replaced. On a modest estimate an amount of Rs.40,000/- can be retained by the Municipality till the damaged bulbs are replaced by the petitioner. If the parties continue to dispute the number of damaged bulbs, the question ::16:: W.P.(C).No.4132 Of 2009 as to how many bulbs are damaged during the guarantee period shall be decided by the Regional Director of Urban Affairs, Southern Region, Kollam. 15. This Court issued notice by speed post on 9.2.2009. After receipt of notice the respondent Municipality did not enter appearance in the case. Finding that this is a case where the petitioner has raised a claim for more than Rs.5 Lakhs, this Court directed the Deputy Director of Panchayaths/Municipalities having jurisdiction of the 1st respondent to enquire into the reason why the Secretary of the Municipality did not enter appearance in this case. The Regional Joint Director of Urban Affairs, Southern Region, Kollam enquired in to the matter and submitted a report. In paragraph 6 of the report the Regional Joint Director reported that there is something ‘fishy’ in the acts and conduct of the then Secretary and Section clerk in not taking vigilant steps for properly defending the case. It is also reported that there is ample evidence against the Secretary and the section clerk that they are not vigilant in ensuring that vakalath was filed for and on behalf of the Municipality to defend the case properly. ::17:: W.P.(C).No.4132 Of 2009 16. For the facts and circumstances stated above, the writ petition is allowed. This Court direct the 1st respondent Municipality to pay Rs.4,75,364/- due to the petitioner as per Exts.P5(a) to P5(j) bills towards supply of electrical equipments, Rs.49,964/- towards EMD during the period 2004-2008 and Rs.24,464/- being the balance amount payable vide Ext.P5 bill dated 22.1.2005. The said amount due as per Ext.P5 bill shall carry interest @ 9% per annum from the date of submission of Ext.P5 bill till the date of payment. The EMD of Rs.49,964/- shall also carry interest @ 9% per annum. The EMD during the period 2004-05 and 2006-07 shall carry 9% interest from the date of the respective EMDs become due till the date of refund. The amounts due shall be paid within one month from the date of receipt of a copy of this judgment. A sum of Rs.40,000/-, out of the amounts directed to be paid, shall be retained by the 1st respondent Municipality till the issue regarding replacement of bulbs is decided by the Regional Director of Urban Affairs, Southern Region, Kollam and till replacement if any to be made. ::18:: W.P.(C).No.4132 Of 2009 The Regional Joint Director of Urban Affairs, Southern Region, Kollam shall hear both sides and pass appropriate orders within a period of one month from the date of receipt of a copy of this judgment. HARUN-UL-RASHID, Judge. bkn/-