"Court Expects It Will Do The Right Thing": Orissa HC Expresses Faith On State Forest Department In A 'Force-Majeure' Dispute

In an interesting matter, the Orissa High Court has expressed faith on the Odisha Forest Department Corporation Ltd. in a dispute concerning a 'force-majeure' clause of a tender agreement. While denying the clause to be a 'mandate', a Single Judge Bench of Justice Arindam Sinha remarked, "The petitioner has prayed for consideration as a result of devastation caused by super cyclone. Opposite party no. 1 is an authority under article 12 of the Constitution of India. Court expects it will do the right thing." Factual Background: The petitioner had submitted tender for obtaining lease of cashew plantation lot situated in Tangi under Jajpur Road Division. The lease was on basis of crop year commencing 1st October to next 30th September in years 2019-2021. The lot was taken in February, 2019, but the super cyclone 'Fani' happened on 3rd May, 2019. The plantation was destroyed. The petitioner could not harvest any crop in crop year commencing 1st October, 2019 or following years. He took lease of an existing plantation but the plantation itself was destroyed by the super cyclone. Further, for the cashew plants to grow again and yield crop, it would have been beyond the aggregate period of lease. Therefore, the petitioner has impugned memo dated 17th January, 2020 issued by opposite party no. 1. The said memo rejected representation dated 8th May, 2019 of the petitioner. Contentions of the Parties: Mr. Dayananda Mohapatra, counsel for the petitioner, submitted that there was frustration of contract. He prayed direction for consideration be made. He relied on Section 56 of the Contract Act and judgment of the Supreme Court in Satyabrata v. Mugneeram, AIR 1954 SC 44. Mr. P.K. Pattnaik, senior counsel on behalf of the opposite party no. 1, argued that the agreement contains an 'arbitration clause'. He, thus, contended that the allegation of frustration cannot be decided in the writ petition. For that purpose, he relied on judgment of the Apex Court in Union of India v. M/s Puna Hinda, AIR 2021 SC 4187. Observations of the Court: The Court held that so far as Clause 3 of the tender terms and conditions is concerned, mention of force-majeure does not gain significance since the clause requires acceptance by the tenderer on inspection of the plantation. The super cyclone, being force-majeure, happened after inspection of the lot was taken by petitioner. Thus, it could not have been of information to be obtained on inspection, prior to the allotment. However, Clause 18 made it clear that claim for refund of royalty in part or full, on account of, inter alia, force-majeure will not be entertained. The said Clause of the tender, the Court observed, reserves discretion to opposite party no. 1 in the matter of claim made for refund of royalty in part or full on account of, inter alia, force-majeure. This is because the clause says that the claim will not be entertained. Having observed the aforesaid, the Court clarified that the Clause does not prevent opposite party no. 1 from considering such a claim. Hence, the discretion was and is with it. Consideration made on whether or not to exercise the discretion does not appear from impugned memo. The Clause 18 cannot be accepted as a mandate, preventing the consideration. As the opposite party no. 1 is an authority under Article 12 of the Constitution, the Court expected it to take the right decision after reconsidering the representation made by the petitioner. Case Title: Basanta Kumar Sahoo v. Odisha Forest Department Corporation Ltd. & Ors. Case No.: WP(C) No. 3251 of 2020 Order Dated: 20 April 2022 Coram: Justice Arindam Sinha Counsel for the Petitioner: Mr. Dayananda Mohapatra, Advocate Counsel for the Respondents: Mr. P.K. Pattnaik, Senior Advocate Citation: 2022 LiveLaw (Ori) 52Click Here To Read/Download Order

"Court Expects It Will Do The Right Thing": Orissa HC Expresses Faith On State Forest Department In A 'Force-Majeure' Dispute

Jyoti Prakash Dutta

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