w w w . L a w y e r S e r v i c e s . i n



M/s. G.J. Eco Power Pvt. Ltd., A Company Incorporated Under The Companies Act Having Its Registered Office, Kakkanad, Represented by Its Director, James Adai v/s The Cochin Municipal Corporation, Represented by Its Secretary, Cochin & Others

    WA. Nos. 1685 of 2020 & 1579 of 2021

    Decided On, 03 February 2022

    At, High Court of Kerala

    By, THE HONOURABLE CHIEF JUSTICE MR. S. MANIKUMAR & THE HONOURABLE MR. JUSTICE SHAJI P. CHALY

    For the Appearing Parties: George Varghese (Perumpallikuttiyil), A.R. Dileep, Manu Srinath, P.J. Joe Paul, Sudheesh Kumar, Standing Counsel (B/O), P.U. Shailajan, K. Janardhana Shenoy, SC, Renjith Thampan, Sr. Advocate General, S. Kannan, Senior G.P., P. Wilson, Sr. Advocate.



Judgment Text

Shaji P. Chaly, J.

1. The captioned writ appeals are filed challenging the judgment of the learned single Judge dated 10.11.2020 in W.P.(C) No. 11850 of 2020. W.A. No. 1685 of 2020 is filed by the writ petitioner; whereas, W.A. No. 1579 of 2021 is filed by the Kochi Municipal Corporation, the third respondent in the writ petition, basically contending that the issues raised by the Municipal Corporation were not properly appreciated by the learned single Judge. W.A. No. 1685 of 2020 is treated as the lead case and the parties and exhibits are referred to as in the said writ appeal.

2. The subject issue relates to the cancellation of a contract awarded to the appellant, a company incorporated under the Companies Act, by the Corporation of Kochi. The State Government has cancelled the approval given for executing the contract, for the implementation of the Waste-to-Energy Project at Brahmapuram, Ernakulam District as per Ext. P28 Government Order dated 30.04.2020. Thereafter, the Secretary, Kochi Municipal Corporation- 2nd respondent, issued Ext. P29 notice dated 04.05.2020, terminating the concession agreement executed by and between the appellant and the Kochi Municipal Corporation. Even though representation was made requesting to cancel Ext.P28 and to protect the project, the State Government, as per Ext.P34 order dated 05.06.2020, passed a fresh order on the basis of a direction issued by a learned single Judge of this Court as per Exhibit P32 Judgment in W.P.(C) No.9872 of 2020 dated 30th May 2020, reiterating the order in Ext.P28, having found that the concessionaire i.e. the appellant, is unable to implement the project even if more time is allowed. It was, thus, challenging the legality and correctness of the aforesaid proceedings, the writ petition was filed.

3. The paramount contentions advanced by the appellant in the writ petition as well as the appeal are that; Exts. P28, P29 and P34 impugned orders/notice are illegal, arbitrary and violative of principles of natural justice and the same were issued without any authority; that even though a letter of award was issued on 08.01.2016 and the concession agreement was executed on 17.02.2016, the site was not handed over; that the first respondent, in its decision dated 25.07.2016, only resolved to hand over 8 Hectares of land in Puthencruz village, Ernakulam District, to the appellant; and that the sketch of the site was forwarded to the appellant as per Ext. P3 proceedings dated 24.06.2017, and the appellant has received the same only on 26.02.2018.

4. It is also contended that out of the total extent of the land allotted measuring 809.4 Ares, only an extent of 257.6 Ares alone was dry land and the rest was paddy/wetland covered under the Kerala Conservation of Paddy land and Wetland Act, 2008 ('Act, 2008' for short) and therefore, it was impossible and impracticable to implement the project in the land identified by the Kochi Municipal Corporation; that only after much discussion and deliberations, and after the Amendment Ordinance of 2017, the State Government issued Ext. P4 order dated 03.02.2018 exempting the land from the provisions of the Act, 2008. It was further contended that even in Ext. P4, there was a condition to construct a Water Conservation Area (pond) in an extent of 55.18 Ares of land, and further directed not to obstruct the natural flow of water, and since the entire land was essential for the project the land exempted for the construction of the water conservation area has to be compensated.

5. It was further submitted that it was only as per Ext. P6 dated 09.08.2018, the State of Kerala permitted the Kochi Municipal Corporation to hand over another extent of 3.44 acres of land after exempting from the provisions of the Act, 2008 and that even though the concession agreement was executed on 17.02.2016, the extent of the land to be allotted was finalised only on 09.08.2018 as per Ext. P6 order of the State Government, and when the sketch was handed over on 19.11.2018. According to the appellant, by virtue of Article 5 of the concession agreement, an independent Engineer has to be appointed to monitor the entire work, and the procedure for appointment of an independent Engineer is provided in Article 5.1(a) of the Concession agreement; however, the Kochi Municipal Corporation has not communicated the list of Engineers to the appellant as contemplated under Article 5.1(a); that there was no financial bid called for the selection of the independent Engineer till date and therefore, there was total violation of Article 5 of the concession agreement. That apart, it is submitted that though by virtue of Article 3.1(a)(vii), the appellant has to furnish a financing plan, and financing documents for the project and thereby demonstrate the financial close, it could not be achieved due to the recalcitrant attitude of the respondents in handing over the land in contemplation of the agreement which was the essence of the contract.

6. According to the appellant, even though various financial institutions/investors were interested in the project and ready to finance, the collateral security can only be from the income generated from the energy and by virtue of a licence/agreement/ concession agreement, the financiers were not willing to part with the money and all the financial institutions insisted that the licence agreement shall be converted into a lease agreement so as to enable them to provide necessary finance and therefore, the appellant approached the Kochi Municipal Corporation and the State Government for conversion of the concession agreement into a lease agreement.

7. It is also the case of the appellant that the State Level Advisory Committee on Waste Management, represented by the Chief Secretary, State of Kerala, the 4th respondent, having been satisfied with the necessity of converting the concession agreement into a lease agreement, requested the State Government to take necessary steps to execute a lease agreement, evident from Exts.P9 and P10 minutes dated 12.12.2018 and 29.04.2019 respectively; that even though the Kochi Municipal Corporation, in its meeting held on 29.04.2019, resolved to reject the request for the execution of lease agreement, the State Government accepted Exts.P9 and P10 recommendations of the 4th respondent, the State Level Advisory Committee, and issued Ext. P22 order dated 16.01.2020 cancelling Ext. P10 resolution of the Kochi Municipal Corporation dated 29.04.2019 and directing it to execute the lease agreement.

8. Therefore, the contention advanced by the appellant is that the State Government as well as the State Level Advisory Committee understood the necessity of executing a lease agreement and that the Government was not satisfied with the rejection of the request for the execution of the lease agreement by the Kochi Municipal Corporation. Therefore, the contention advanced is that the bona fides of the appellant in implementing the project is very well reflected from the conduct of the State Government as well as the State Level Advisory Committee.

9. The sum and substance of the contentions, relying upon the stand of the Government and the State Level Advisory Committee, is that had the Kochi Municipal Corporation complied with Ext. P22 Government Order dated 16.01.2020 and executed the lease agreement, without any delay, the appellant could have initiated the activities of financial close immediately; and that it was because of the recalcitrant attitude of the Kochi Municipal Corporation, having not executed the lease agreement, the appellant was virtually prevented from achieving the financial close.

10. The further case of the appellant is that, a major factor attributed for the delay is the non formulation of the mechanism for payment of energy charges beyond what is fixed by the Kerala State Electricity Regulatory Commission, and even though by Ext. P23 order dated 31.01.2020 the State Government ordered that 25% of the expenses over and above the average power tariff fixed by the Kerala State Electricity Regulatory Commission for the energy produced from the Waste to Energy plant at Brahmapuram should be paid to the concessionaire by the Government from the major infrastructure development scheme and that the remaining 75% by Kochi Municipal Corporation by way of collection of user fee from households/institutions/participating LSGIs/utilising 15% of the plan fund to be set apart compulsorily for waste management/by locating other means etc., no decision has been taken by the Kochi Municipal Corporation with regard to the payment of 75% of the energy charges and therefore, there was utter confusion with regard to the payment of the energy charges by the first respondent.

11. Therefore, it is the predominant contention that, under the aforesaid circumstances the demand in Ext. P23 Government Order dated 31.01.2020 to achieve the financial close within 30 days, was illegal and beyond perception of the agreement executed by and between the parties.

12. It is also contended by the appellant that the direction of the Kochi Municipal Corporation to execute the lease agreement was on 16.01.2020 and therefore, Ext. P23 order of the Government dated 31.01.2020 calling upon the appellant to achieve the financial close within 30 days is illegal and arbitrary. That apart, it is submitted that the appellant has submitted Ext. P25 reply dated 27.02.2020 explaining the delay in achieving the financial close. But, even after receipt of Ext. P25, the State Government has not taken any steps to see that the first respondent executes a lease agreement enabling the appellant to satisfy the financial institution with regard to its repayment capacity. It was in the aforesaid background the appellant had submitted Ext. P25 representation dated 27.02.2020 to the State Government which passed Ext. P34 order declining the request made therein. These are the basic background facts available before us to consider the case put forth by the appellant.

13. The State Government has filed a detailed counter affidavit in the appeal disputing the allegations and the claims and demands raised by the appellant. According to the State Government, it was by virtue of the Government Order, G.O. (Ms.) No. 260/2013/LSGD dated 20.07.2013 that the State Government accorded sanction to instal the solid waste management plant at Brahmapuram based on the Thermal Technologies (Waste to Energy Project) and thereupon, the Kerala Industrial and Technical Consultancy Organization Ltd. (KITCO) was appointed as the transaction advisor for the implementation of the project. Consequent thereto, the appellant had participated in the tender process and by Ext. P1 Government Order dated 04.01.2016, the Government of Kerala approved the project of the appellant, submitted by the KITCO for a total cost of Rs.295 Crores, subject to the conditions enumerated therein. It is also submitted that consequently, orders and agreements were executed by and between the Kochi Municipal Corporation and the appellant. The paramount contention advanced by the State Government is that as per Article 3 of the concession agreement executed on 17.02.2016, the award of the concession shall be subject to the satisfaction of the waiver of the conditions precedent, enumerated in the agreement, and going by Article 3.1(a)(vii) of the concession agreement, the concessionaire shall furnish its financing plan and financing documents for the project and demonstrate financial close. Further, it is stated that as per clause 3.1(b) of the concession agreement, the authority shall hand over physical possession of the project site for the purpose of the project and that as per Article 3.2 of the concession agreement, the conditions precedent shall be complied within 180 days of the date of agreement i.e., 17.02.2016, wherein it is stipulated that each party shall promptly inform the other party, in writing, as to when the conditions precedent for which it is responsible, have been satisfied.

14. It is pertinently pointed out that by virtue of Article 3.3. of the concession agreement, any conditions precedent as contemplated in Articles 3.1(a) and 3.1(b) of the concession agreement may be waived by the authority at any point of time in its sole discretion. Relying upon Article 21.8 of the concession agreement, it is submitted that no waiver of any term or condition or breach thereof by any party thereto shall be valid, unless expressed in writing and is signed by such party and communicated to the other. Therefore, according to the State Government, there is no implied waiver or any waiver by way of conduct, and to the knowledge of the State Government, the Kochi Municipal Corporation has not waived any of the conditions precedent as contemplated under Article 21.8 of the concession agreement.

15. Relying upon Article 3.6 of the concession agreement, it is contended that if the conditions precedent are not complied with within the time, including the extended time, if at all any, the concession agreement shall be liable to be terminated, and by virtue of the provisions of Article 3 of the concession agreement, the party in default has to compensate the other party of the agreement by way of liquidated damages at the rate mentioned therein.

16. Therefore, it is submitted that in the event of termination of the agreement, a remedy is clearly prescribed as per the terms of the concession agreement and the parties, therefore, have to adhere to the terms and conditions of the agreement executed by and between the parties. That apart, it is pointed out that as is evident from Ext. P3 order of the Kochi Municipal Corporation dated 24.06.2017 and Exts. P4 and P6 orders of the State Government dated 03.02.2018 and 09.08.2018 respectively, the project site having an extent of 8 Hectares of land comprised in Survey Nos. 30,35, 36, 37, 45 and 56 of Block No. 37 of Puthencruz Village was handed over to the appellant. Therefore, it is contended that the authority has satisfactorily complied with its condition precedent as is contemplated under Article 3.1(b) of the concession agreement and has intimated the same to the concessionaire.

17. So much so, it is submitted that, even though Exhibit P8 request of the appellant dated 29.02.2016 to execute the lease agreement in respect of the concession agreement was declined by the Kochi Municipal Corporation, since the implementation of the project is of utmost public importance in pursuance to the policy of the State Government, the State Government, by Ext. P22 order dated 16.01.2020 directed the Kochi Municipal Corporation to execute the lease agreement as is sought for by the appellant. But, the appellant and the first respondent, Kochi Municipal Corporation, has not acted upon Ext. P22 Government Order and no lease agreement or deed was executed by and between the said parties.

18. It is also contended that as on the date of Ext. P22 Government Order, though substantial time has elapsed, the appellant did not inform the authority in writing as to whether the appellant had satisfied or complied with the conditions precedent, in contemplation of Article 3.1(a) of the Concession agreement, more particularly those contained under Article 3.1(a)(vii). Instead, the appellant had approached the State Government and informed that the appellant requires the mechanism for payment to meet the expenses over and above the tariff fixed by the Kerala State Electricity Regulatory Commission to overcome the hurdles for achieving the financial close and it was based on the said request, the State Government, by Ext. P23 dated 31.03.2020, formulated a mechanism for payment to meet the expenses over and above the power tariff to the appellant.

19. That apart, it is pointed out that since the appellant had not attained the financial close, the State Government directed the appellant to achieve the financial close within 30 days from the date of Ext. P23, however, with a rider that necessary action shall be initiated to terminate the concession agreement, on the concessionaire failing to do so. Anyhow, on receipt of Ext. P23, the appellant submitted Ext. P25 representation before the Government inter alia informing that the appellant requires 100% State Government Guarantee for debt fund approval of NABARD, so as to achieve the financial close.

20. Apart from the same, the appellant has also sought for a further relaxation of time, which are outside the scope, ambit and purview of the concession agreement and that the matter was considered by the State Level Advisory Committee, in its meeting held on 13.03.2020, and observed that since the appellant has not achieved the financial close, the concession agreement cannot be converted to lease agreement. Therefore, it is submitted that it was in the above background that the State Government has issued Ext. P28 order dated 30.04.2020 cancelling Ext. P1 approval granted to the project and thereby, directing the Kochi Municipal Corporation to terminate the concession agreement with a further direction to float a RFP for Brahmapuram project. Other contentions are also raised by the State Government justifying its stand adopted in Ext. P28 order impugned in the writ petition.

21. W.A.No. 1579 of 2020 is filed by the Kochi Municipal Corporation basically contending that the learned single Judge was not correct in finding that the writ petition itself is not maintainable, since the subject matter is in regard to the contractual aspects and disputed questions of facts and no public interest is involved in the matter. That apart, it is also contended that the writ petition is barred by the principles of res judicata and the appellant company is estopped from filing a writ petition, since it has filed W.P.(C) No. 9872 of 2020 seeking the similar reliefs; however, the same was disposed of by this Court without granting the reliefs sought for and directing the State Government to take a decision in the representations submitted by the appellant. Therefore, it is submitted that the reliefs sought for in the said writ petition are deemed to be declined, and they cannot be resurrected by filing a fresh writ petition.

22. We have heard learned Senior Counsel for the appellant Sri. P. Wilson assisted by Adv. George Varghese Perumpallikuttiyil, learned Senior Advocate Sri. Ranjit Thampan for the Corporation of Kochi and the learned Senior Government Pleader Sri. S. Kannan for the State Government, and perused the pleadings and materials on record. 23. The paramount contention advanced by the learned Senior Counsel for the appellant is that since the project site agreed upon as per Article 1.1 of the concession agreement was not physically handed over to the appellant, it cannot be found fault with for not attaining the financial close in contemplation of Article 3.1(a)(vii). It is also contended that in order to secure financial assistance from the financial institutions, a lease has to be executed by the Kochi Municipal Corporation with the approval of the State Government, which situation was realised by the State Government evident from Ext. P22 order. However, the Government, later, resiled from the same, without assigning any reasons. It is also the case of the appellant that the purpose of Article 3.1(b) is a condition precedent to be performed by the Corporation so as to compel the appellant to comply with the conditions precedent under clause 3.1(a)(vii) of the concession agreement; that as per Ext. P3 dated 24.06.2017, the Corporation only forwarded the boundary fixed survey sketch to the appellant and out of the total land measuring 809.4 Ares allotted, only 257.6 Ares was dry land and the balance was wet land guided by the provisions of the Act, 2008; and therefore, exemption from the Government was necessary even for taking possession of the land for the project. It is further argued that the Government has issued Ext. P4 order dated 03.02.2018 exempting the land from the purview of the Act, 2008 with a deduction of 55.18 Ares.

24. It is further contended that the above aspects would show that the Kochi Municipal Corporation has not complied with Article 3.1(b) by handing over the possession of the land and hence, financial close has been deemed to be achieved. That apart, it is submitted that when the State Government, as per Ext. P22 Government Order, cancelled the decision of the Kochi Municipal Corporation in regard to the request made by the appellant for the execution of the lease agreement and directed to execute a lease agreement in respect of the concession agreement, according to the learned Senior Counsel, the concession agreement has become redundant and unenforceable.

25. It is further submitted that the State Level Advisory Committee, the 4th respondent, was satisfied with the necessity of executing the lease agreement for the implementation of the project and recommended to the Government to that effect as per Exts. P9 and P10 decisions, in which the Secretary of the Kochi Municipal Corporation was a party and therefore, the Municipal Council was not entitled to retract from the decision taken by the State Level Advisory Committee; and in fact, the Government has acted upon the decisions taken by the State Level Advisory Committee and after understanding the intrinsic aspects preventing the appellant from proceeding with the project alone, Ext. P22 order was issued cancelling the decision taken by the Kochi Municipal Corporation declining the request for the execution of a lease agreement.

26. It is also contended that Ext. P28 order issued by the State Government and Ext. P29 notice issued by the Kochi Municipal Corporation withdrawing the approval and cancelling the contract is in violation of Article 16 of the concession agreement, in view of the covenants contained under Article 16.1 providing a methodology for the termination procedure by issuing notice in writing of at least not less than 90 days and not more than 180 days. Therefore, it is submitted that in the instant case, there was lack of compliance of the procedure by the State Government as well as the Kochi Municipal Corporation and therefore, the entire action of the State Government as well as the Kochi Municipal Corporation are arbitrary, illegal and violative of the principles of natural justice, liable to be interfered with by this Court under Article 226 of the Constitution of India.

27. In that regard, the learned Senior Counsel has relied upon the judgment of the Apex Court in Vice-Chairman & Managing Director, City and Industrial Corporation of Maharashtra Ltd. vs. Shirir Realty Pvt. Ltd. (2022 (1) KHC SN 4 (SC), wherein it is held that providing effective natural justice to parties to a contract or awardee of tender is necessary to maintain Rule of Law. He has also relied upon the decision of the Hon'ble Apex Court in ABL International Ltd. v. Export Credit Guarantee Corporation of India (2004) 3 SCC 553, wherein it is held that in an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.

28. In regard to the contentions raised by the respondents that the writ petition in question is barred by the principles of res judicata, it is submitted that the learned single Judge, as per Ext. P32 judgment in W.P.(C) No. 9872 of 2020, has made an open remand of the issues at dispute, while directing the State Government to pass orders on Ext.P31 representation, in which a review of all the impugned orders were sought for. Therefore, it is contended that when the State Government has passed a fresh order, acting upon the representation, a fresh cause of action arose and therefore, the principles of res judicata would not be attracted. In that regard, the learned Senior Counsel has relied upon the judgment of the Apex Court in Asgar and others v. Mohan Varma and Others [2020 (16) SCC 230], wherein it is held that in deciding as to whether a matter might have been urged in the earlier proceedings, the court must ask itself as to whether it could have been urged and in deciding whether the matter ought to have been urged in the earlier proceedings, the court will have due regard to the ambit of the earlier proceedings and the nexus which the matter bears to the nature of the controversy. Other contentions are also raised to canvas the proposition that the impugned orders are not sustainable under law, justifying interference of the writ court.

29. On the other hand, the learned Senior Counsel for the Corporation of Kochi addressed arguments basically relying upon clause 3 of the concession agreement. It is also pointed out that the contention advanced by the learned Senior Counsel for the appellant that the termination procedure was not followed in contemplation of clause 16, is not sustainable for the reason that it is applicable when a termination is made otherwise than in accordance with the other provisions of the agreement, but shall not include expiry of agreement due to efflux of time in a normal course. That apart, it is pointed out that the said clause clearly specifies various methods in regard to the termination of the agreement, especially the termination of the agreement due to efflux of time in a normal course. It is also pointed out by the learned Senior Counsel for the Kochi Municipal Corporation that the mandatory requirement of financial close contained under clause 3.1(a)(vii) is an independent covenant from the other provisions of the agreement and also a condition precedent and therefore, the appellant is not entitled to advance arguments by making it adaptable to other provisions of the agreement.

30. It is also the contention of the learned Senior Counsel that the appellant company has failed to achieve the milestones in accordance with the provisions of the concession agreement and in spite of an opportunity given to the appellant, it has not made any earnest efforts to make the project of State Government as well as the Municipal Corporation a reality. That apart, it is contended that there was no agreement entered into by and between the parties for the execution of the lease agreement in order to secure financial support from the financial institutions by mortgaging the leasehold rights and therefore, the contention advanced by the learned Senior Counsel for the appellant, relying upon the orders passed by the State Government in regard to the lease agreement, cannot be sustained under law.

31. It is further pointed out that the benefits under the electricity tariff were offered by the Government as per Ext. P23 Government Order dated 31.01.2020 on condition that, appellant achieves the financial close within 30 days from the aforesaid date and therefore, the appellant is not entitled to make out a case relying upon such benefits offered by the State Government. Arguments were advanced by the learned Senior Counsel that the present writ petition is barred by the principles of res judicata, relying upon various judgments of the Apex Court.

32. The State has also filed an argument note, basically supporting the contentions advanced by the Kochi Municipal Corporation and relying upon the relevant clauses of the concession agreement.

33. We have evaluated the rival submissions made across the Bar. In fact, along with the writ appeal, the entire concession agreement is produced: whereas, in the writ petition only the material portion of the concession agreement was produced. Since the predominant contention advanced by the learned Senior Counsel for the appellant is that the impugned orders are violative of the principles of natural justice and arbitrary and illegal, our primary endeavour is to find out as to whether the learned single Judge has committed any jurisdictional error in the matter of considering the aforesaid legal position.

34. Before going into the intricacies of the concession agreement executed by and between the parties, we are of the considered opinion that the circumstances leading to the issuance of Ext. P28 Government Order dated 30.04.2020 is required. The Government has taken note of the factual circumstances leading to the execution of the concession agreement and other aspects and it is stated therein that the Director of the appellant, as per letter dated 11.10.2018, requested that the company requires the balance of payment mechanism to meet the expenses over and above the power tariff fixed by the Kerala State Regulatory Commission to overcome the hurdles for achieving the financial close.

35. Therefore, it is stated that, it was accordingly that the State Government issued an order dated 31.01.2020 satisfying the mode of payment of the expenses over and above the power tariff fixed by the Kerala State Electricity Regulatory Commission. But, it is clearly specified that it was ordered so on condition that the appellant achieves the financial close within 30 days from the date of order and failing which it was strictly cautioned that action will be initiated to terminate the concession agreement in accordance with the terms and conditions of the agreement. The Government has also noted that in spite of the due consideration shown and further time granted to achieve the financial close, the appellant Company did not make any offer to comply with the directions issued by the Government.

36. It was thereupon that the Government verified the relevant covenants contained in the concession agreement and arrived at the conclusion that the approval granted to the project is required to be cancelled and the Secretary of the Kochi Municipal Corporation was directed to terminate the concession agreement following the procedure laid down in Article 16 of the agreement. Therefore, on a deep seated analysis of Ext. P28 impugned Government Order, it is unequivocal that the Government has considered every minute aspects before taking a decision, and at present there was no other alternative for the Government than to withdraw the approval granted to the project submitted by the appellant.

37. Now coming to Ext. P29 notice of termination dated 04.05.2020 issued by the Kochi Municipal Corporation, what we could gather is that even after 1400 days of execution of the agreement, the concessionaire i.e., the appellant, could neither submit the financial close, nor specify the source of funds required for the completion of the project. Therefore, the Cochin Municipal Corporation doubted the capacity of the appellant to complete the project. The Corporation was also of the opinion that relaxation and additional support like conversion of agreement and Government guarantee etc., which are not part of the concession agreement, show that the appellant is not having sufficient financial resources in order to carry on with the project. Therefore, the Corporation found that since the appellant failed to achieve the financial close as per Article 3.3. of the concession agreement within 180 days from the date of agreement or within the extended period, Article 3.6 will automatically apply as the conditions therein are not waived by the authority and therefore, the agreement stand cancelled by virtue of the imperative nature of Article 3.6 of the concession agreement.

38. Therefore, relying upon the procedure prescribed under Article 3 of the agreement, it is contended that the termination procedure contemplated under Article 16 of the concession agreement is not at all required.

39. Now coming to Ext. P34 order dated 05.06.2020 passed by the State Government on the basis of the directions issued by a learned single Judge of this Court in Ext. P32 judgment dated 13th May, 2020 in W.P.(C) No. 9872 of 2020, the Government considered the entire aspects put forth by the appellant, relying upon the terms and conditions of the concession agreement. However, it was found that the concessionaire i.e. the appellant, cannot implement the project even if more time is allowed and it was accordingly that the Government declined the review of its Ext. P28 order.

40. Therefore, on an analysis of the orders impugned by the appellant in the writ petition, it is clear that the Government has taken into consideration the entire aspects under the concession agreement and the circumstances leading to the withdrawal of the approval, and cancellation of the contract by the respective authority. It is also evident from Ext. P23 order dated 31.01.2020 that the Government has granted a further 30 days' time from the date of the said order to the appellant to achieve the financial close and on failure of the same only, the termination of the concession agreement was proposed.

41. It is an admitted fact that the appellant failed to achieve the financial close within the extended period and it was thereupon that Ext. P28 order was passed by the State Government withdrawing the approval and consequently, termination order was passed by the Kochi Municipal Corporation.

42. Insofar as the concession agreement executed by and between the parties is concerned, it is executed by and between the Kochi Municipal Corporation and the appellant in order to satiety the requirement of the Municipal Solid Waste (Management and Handling) Rules, 2000, whereby it is made mandatory; for every municipal authority to implement a Scientific Solid Waste Management System, wherein the Municipal solid waste is duly processed and only inorganic waste and processed residues are disposed in a landfill.

43. Therefore, the introductory clause of Annexure A concession agreement shows that the timely completion of the project was a vital requirement. 'Financial close' is defined under the agreement to mean, the date on which the Financing Documents providing for Financial Assistance by the Lenders, Equity Documents and the documents in respect of debt, if any, committed by the Consortium have become effective and the concessionaire has access to such financial assistance. 'Financing Documents' are defined under the agreement to mean, collectively, the documents executed in favour of or entered into with the lenders, by the Concessionaire in respect of the Financial Assistance relating to the financing (including any refinancing) of the Actual Project Cost and includes any document providing security for the Financial Assistance.

44. 'Conditions precedent' is defined to mean the conditions prescribed in Article 3 of the agreement.

45. Therefore, on an analysis of the terminologies employed under the agreement as to the financial close, financial documents and the conditions precedent, it is clear that the entire responsibility in the matter of achieving the financial close as a condition precedent is upon the appellant.

46. Now we proceed to consider the impact of Article 3 of the concession agreement dealing with the conditions precedent. Article 3.1 clearly specifies that the award of the concession shall be subject to the satisfaction or waiver of the conditions precedent delineated therein. Article 3.1(a)(vii) clearly specifies that; furnishing its Financing Plan and Financing Documents for the Project and demonstrating financial close is upon the appellant; however provided that financial close shall be deemed to be achieved, if the only conditions pending for achieving financial close are those which are required to be fulfilled by the Authority under Article 3.1(b) thereunder.

47. Article 3.1(b) clearly specifies a condition precedent, which shall be satisfied by the authority by handing over the physical possession of the project site for the purpose of the project. 'Authority' is defined under the concession agreement to mean, Kochi Municipal Corporation. Therefore, subject to the handing over the physical possession of the project site for the purpose of the project, the financial close had to be achieved by the appellant within 180 days of the date of agreement. 'Project site' is defined under the concession agreement to mean the land handed over to the concessionaire by the authority for the project, out of the 8 (eight) Hectares of land earmarked at Brahmapuram as shown in the Drawing No.TS-35SP DRG 01 001 for the processing and disposal of MSW (more fully described in Schedule-I).

48. Therefore, it is clear from the description of project site that; it is the handing over to the concessionaire ie. the appellant by the Kochi Municipal Corporation the land from and out of 8 Hectares of land earmarked at Brahmapuram as shown specifically in the drawing.

49. On a perusal of Schedule 1 attached to the concession agreement, it is clear that the project is proposed to be developed at Brahmapuram, wherein the Kochi Municipal Corporation owns about 110 acres of land lying adjacent to the Brahmapuram Diesel Power Plant and the site area is 8 Hectares of land earmarked at Brahmapuram as shown therein specified above and attached in Article 9 dealing with 'payments to the authority'.

50. Therefore, it is clear that the obligation created as per Article 3.1(b)(i) is satisfied by the authority i.e., the Kochi Municipal Corporation at the time of execution of the concession agreement itself. Therefore, the contention advanced by the appellant that only a portion of the land remained as dry was alone handed over, and the major portion of the land coming under the provisions of the Act, 2008 was not handed over, and it was actually handed over after the exemption order issued by the Government cannot be sustained. We do not find much force in the said contention, because no such issue was raised and pursued by the appellant any time before the cancellation of the approval and termination of the agreement .

51. On a perusal of Section 10(1) of the Act, 2008, it is clear that notwithstanding anything contained in Section 3, the Government may grant exemption as per the provisions of the Act, only if such conversion or reclamation is essential for any public purpose and shall notify in the official Gazette. It is true that a procedure is contemplated to exempt the paddy field for conversion or reclamation. However, when the authority had handed over the land with the approval of the State Government to the appellant, the appellant is not entitled to turn around and contend that the land handed over has adverse consequences to utilise or convert the same for the purpose of the project.

52. Moreover, the Government, the authority or the public have not raised any manner of objection with respect to the hand over of the land by the Kochi Municipal Corporation to the appellant, much less an objection against utilisation of a paddy field for other purposes. Above all, it is clear from Schedule 1 of the agreement that the project site is a portion of the larger extent of land already in the possession of the Kochi Municipal Corporation.

53. Therefore, in our considered opinion, merely because the exemption order was handed over by the Government after completing the formalities prescribed under Section 10 of the Act, 2008 at a later point of time, that did not detain the appellant from utilising the land for the implementation of the project in any manner of, whatsoever, nature added to the fact that the land was handed over with the approval of the State Government.

54. Now, coming to Article 3.6 of the concession agreement dealing with the compliance of the conditions precedent, it is clear that in the event of the conditions precedent are not complied with within the time (including the extended time, if any) in terms of Articles 3.2 to 3.5, the agreement shall be liable to be terminated and if such termination is on account of the failure of the concessionaire to comply with the conditions precedent, the Bid security shall stand forfeited; however if such termination is on account of failure of the authority, the authority shall be obliged to return the Bid Security/Performance Security; but it is clarified that except for the payment as stipulated in the foregoing Articles 3.4 and 3.5 and forfeiture in Article 3.6, each party thereto shall have no claims against the other for costs, damages, compensation or otherwise. Articles 3.3 to 3.5 are relevant to the context and they read thus:

"3.3 Any of the Conditions Precedent set forth in Articles 3. l(a) may be waived fully or partially by the Authority at any time in its sole discretion or the Authority may grant additional time for compliance with these conditions and the Concessionaire shall be bound to ensure compliance within such additional time as may be specified by the Authority. Any of the Conditions Precedent set forth in Articles 3.1 (b) may be waived fully or partially by the Concessionaire at any time in its sole discretion.

3.4 If the Concessionaire has fulfilled all the Conditions Precedent under Article 3.1(a) including the furnishing of the Bank Guarantee and has not waived or extended the time under Clause 3.3 above, and if the Authority has failed to fulfill the conditions Precedent to be fulfilled by it under Article 3.1(b) and which are within the power of the Authority, the Authority shall be liable to pay liquidated damages in a sum calculated at the rate of 0.1% (zero point one percent) of the Performance Security for each day's delay until fulfillment of the Conditions Precedent subject to a maximum of 5% (five percent) of the figure mentioned in the Performance Security furnished by the Concessionaire. In such event, having regard to the quantum of damages, the time for the performance shall be deemed to have been extended by the number of days for which the liquidated damages is paid and if, after the extended period the Authority is still not in a position to comply with the Conditions Precedent, then the agreement shall be liable to be terminated as provided for in Clause 3.6 below;

3.5. If the Authority has fulfilled all the Conditions Precedent under Article 3.1(b) and has not waived or extended the time under Clause 3.3 above, and if the Concessionaire has failed to fulfil the Conditions Precedent to be fulfilled by it under Article 3.1(a) and which are within the powers of the Concessionaire, the Concessionaire shall be liable to pay liquidated damages in a sum calculated at the rate of 0.1% (zero point one percent) of the Performance Security for each day's delay until fulfillment of the Conditions Precedent subject to a maximum of 5% (five percent) of the figure mentioned in the Performance Security furnished by the Concessionaire. In such event, having regard to the quantum of damages, the time for the performance shall be deemed to have been extended by the number of days for which the liquidated damages is paid and if, after the extended period the Concessionaire is still not in a position to comply with the Conditions Precedent, then the agreement shall be liable to be terminated as provided for in Clause 3.6 below,"

55. Therefore, on a conjoint reading of the definition given in the concession agreement, the significant provisions discussed above and Article 3 of the concession agreement, it is clear that the liability cast upon the appellant as well as the Kochi Municipal Corporation under Article 3 of the agreement is independent of the other provisions of the concession agreement and the parties were duty bound to attain the targets fixed therein, irrespective of the other covenants agreed upon by and between the parties.

56. Yet another feature that is significant to be discussed is Article 6, dealing with the project implementation. Article 6.3 dealing with construction phase, stipulates that the concessionaire shall promptly commence and complete the works, including installation of equipment in accordance with the Project Schedule and shall also obtain from the independent Engineer a certificate as to the completion of the construction of Project Facilities and Services in accordance with the provisions of the agreement not later than 18 months from the date of commencement of the concession period. Concession agreement is dated 17th day of February, 2016.

57. Therefore, it is clear that a time bound action from the part of the concessionaire was an essential condition of the contract by and between the parties, failing which termination was axiomatic in terms of the termination clause contained under Article 16 of the agreement, due to efflux of time. Article 6.4 deals with obligations of the concessionaire and Article 6.4(b) makes it clear that the concessionaire shall, at its cost, expenses and risk make such financing arrangements as would be necessary to implement the project and to meet all of its obligations under the agreement, in a timely manner.

58. Article 6.4(c) makes it clear that the concessionaire shall give notice to the authority within 7 days of any material modification or change to any of the Financing Documents and or any equity documents and shall simultaneously therewith also furnish copies of such modified/amended documents to the authority. The proviso thereto makes it clear that no such modification/amendment will be made if it in any manner, whatsoever, has the effect of imposing an additional financial obligation or increasing the financial obligation of the authority in addition to that contemplated under the financing document provided on financial close, without the prior written consent of the authority. It was further made clear thereunder that any such modifications/amendments made without the prior written consent of the authority will not be enforceable against the authority.

59. We are relying upon the said Article for the basic reason that the concession agreement as it remains, is a licence deed, and there is no covenant executed by and between the parties that in future a lease agreement would be executed by and between the parties so as to enable the appellant to mortgage the leasehold rights and secure the financial facilities from any financial institution. Therefore, the contention advanced by the appellant that it was due to the failure on the part of the Kochi Municipal Corporation that the property could not be mortgaged and finance secured from willing financial institutions, has no force of law in absentia of any such imperatives in the agreement. Such a contention, in our view, is also clearly outside the spirit of the agreement executed by and between the parties, and therefore the attempt of the appellant to make out a case from a totally strange resource cannot be sustained at all legally and factually.

60. Again, coming to Article 15 dealing with events of default, Article 15.1 specifies that the event of default shall mean either concessionaire event of default or the authority event of default or both as the context may admit or require. Clause (a) thereto describes the concessionaire event of default, which stipulates that the concessionaire shall not be considered to be in breach of its obligations under the agreement, nor shall it incur or suffer any liability if and to the extent performance of any of its obligations under the agreement is affected by or on account of (I) force majeure event, subject to Article 14.7; (ii) the Authority Event of Default; (iii) compliance with the instructions of the independent Engineer/the authority or the directions of any Government Authority other than instructions issued to a consequence of a breach by the concessionaire of any of its obligations thereunder; and (iv) closure of the Project Facilities or part thereof with the approval of the Independent Engineer/the authority.

61. Therefore, it can be seen that the appellant cannot be heard to say that there was any such intervening event to hold that the concessionaire shall not be considered to be in breach of its obligations under the agreement. So much so, under the sub-head thereto, the events that constitute an event of default by the concessionaire are delineated and they read thus:

a) the Concessionaire's failure to perform or discharge any of its obligations in accordance with the provisions of this Agreement.

b) the Performance Security is not maintained in terms of the provisions thereof.

c) construction at the Project site is abandoned for a period more than 90 (ninety) days during the Construction Phase:

(i) The Concessionaire has failed to adhere to the Construction Requirements and such failure, in the reasonable estimation of the Independent Engineer, is likely to delay achievement of Date of Commercial Operations beyond 90 (ninety) days of the Scheduled project Completion Date… "

62. On a consideration of the specifications made thereto, it is clear that the concessionaire's failure to perform or discharge any of its obligations in accordance with the provisions of the agreement shall be treated as an event of default. Therefore, there are clear provisions contained under the concession agreement to deal with and tackle the situations that occur during the currency of the agreement executed by and between the parties.

63. Now coming to Article 16 dealing with termination of the concession agreement, it enables the parties entitled to terminate the agreement on account of a Force Majeure Event or on account of an event of default shall do so by issue of a notice in writing (“Termination Notice”) to

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the other party and simultaneously deliver a copy thereof to the lenders. Therefore, it is clear that under the aforesaid two circumstances alone, Article 16 comes into play and thereby, the procedure mandated thereunder would operate in the matter of termination of the agreement. This we say because, the paramount contention advanced by the Kochi Municipal Corporation is that the termination procedure contained under the said article of the concession agreement would not come into operation for the basic reason that the appellant has not attained the financial close as is undertaken under the agreement. 64. Taking into account the aforesaid factual and legal aspects, and the specific contractual terms and conditions entered into by and between the parties, we are of the opinion that since the appellant has not achieved the financial close, the Government was at liberty to withdraw the approval given to the Kochi Municipal Corporation to execute the concession agreement and the Kochi Municipal Corporation consequently was at liberty to take a decision with respect to the termination of the agreement. It is clear from the impugned Government Order as well as the notice of the Kochi Municipal Corporation that the termination was made due to the failure on the part of the appellant to achieve the financial close in contemplation of the concession agreement executed by and between the parties which is a condition precedent. Therefore, we have no doubt in our mind to hold that when there are specific, imperative and mandatory conditions in a contract obligating a party to discharge a condition precedent to proceed with the contract, the said consenting party has to discharge the said essential condition which is the essence of contract. 65. We are also of the view that even the Government has extended the period to achieve the financial close as per Ext. P23 order dated 31.01.2020 by a period of 30 days and had rendered an opportunity to achieve the financial close. But, in spite of the same, the appellant has not made any effort. It is also clear from the concession agreement that the appellant was liable to pay the electricity tariff in accordance with the tariff fixed by the Kerala State Electricity Regulatory Commission. However, the concession was extended as per Ext. P23 order, subject to the condition that the appellant achieves the financial close within 30 days prescribed under the said order. Admittedly, the appellant was unable to attain the financial close and therefore, the arguments advanced by the appellant relying upon the concession made in Ext. P23 order cannot be sustained under law., especially due to the fact that it was not at all a part of the concession agreement. 66. The contention advanced by the appellant that no opportunity was provided to the appellant before the withdrawal of the approval and termination of the agreement, also cannot be sustained for the reason that the representation submitted by the appellant before the Government was considered elaborately by the Government and Exhibit P23 order was passed by the Government after taking into account the entire pros and cons involved in the subject matter and also granting adequate time to achieve the ‘Financial Close’. 67. Moreover, as per the direction issued by a learned single Judge in Ext. P32 judgment , the Government reconsidered the matter and has issued Ext. P34 order impugned, after providing an opportunity of hearing in the representation of the appellant, and also hearing the Kochi Municipal Corporation. 68. Therefore, we find that the conclusion arrived at by the learned single Judge in the impugned Judgment to decline the prayers sought for by the appellant to quash the impugned orders/notice is in accordance with law and require no interference, since we find that there was no manner of illegality, arbitrariness or other legal infirmities justifying interference in a writ proceeding under Article 226 of the Constitution of India. 69. Now coming to the appeal filed by the Kochi Municipal Corporation, we are of the considered opinion that the learned single Judge had to enter into the findings contained thereunder in the process of identifying as to whether there was any illegality, arbitrariness or violation of the principles of natural justice, thus creating cause of action for filing a writ petition. We are also of the view that, in so far as the contention that Ext. P32 judgment rendered by the learned single Judge would create res judicata in the filing of the writ petition in question, the same cannot be sustained for the basic reason that the learned single Judge directed the State Government to reconsider the withdrawal of the approval by taking into account the representation submitted by the appellant and it was after hearing the parties and re-appreciating the entire documents and the terms and conditions of the concession agreement, it has arrived at the independent findings in Exhibit P34, and therefore, the appellant, if aggrieved, was at liberty to challenge the said Government Order as of right, since it creates a new cause of action and in that process, the previous order of the State Government ie., Exts. P28 order and Ext. P29 termination notice of the Kochi Municipal Corporation, were also liable to be challenged. Therefore, we do not find any merit in the appeal filed by the Kochi Municipal Corporation. Upshot of the above discussion is that both the appeals are dismissed.
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