Konathala Venkata Surya Prakash vs. The State Of Andhra Pradesh

Held

The Court held that the petitioner's contention of suffering financial loss due to the pandemic did not justify the default in payment of the lease amount, as business activities generally resumed after the initial lockdown period in 2020. Consequently, the Court found no illegality in the endorsement issued by the respondent municipality demanding payment of the lease amount. Therefore, the declaration sought by the petitioner could not be made. However, acknowledging the petitioner's expressed financial difficulties, the Court granted reasonable time for payment. The petitioner was directed to pay 50% of the balance arrear amount (Rs.22,84,562/-) within four weeks from the date of the order. The remaining balance of Rs.22,84,562/- was to be paid in four equal monthly installments within four months thereafter. The respondent was at liberty to proceed as per law if the petitioner defaulted on this revised payment schedule. The Court expressly left undecided the merits of the petitioner's claim for remission.

Facts

The petitioner was awarded a contract for collecting "Aseel" from markets, parks, and slaughterhouses of the Greater Visakhapatnam Municipal Corporation for a period of one year from 01.04.2021 to 31.03.2022, for a lease amount of Rs.67,25,000/-. The petitioner incurred significant losses due to the COVID-19 pandemic and failed to pay the lease amount as per the agreement. The petitioner submitted representations on 22.01.2022 and 27.01.2022 seeking remission in license fee, execution of deed, and extension of the lease period. Without considering these representations, the 3rd respondent Municipality issued an endorsement on 04.02.2022, demanding payment of the balance arrear amount of Rs.45,69,125/- (which included lease amount, GST, and Swach Bharat Cess) within seven days, failing which legal action would be taken. The petitioner filed the present Writ Petition challenging this endorsement.

Key Issues

1. Whether the petitioner is justified in defaulting on the payment of the lease amount due to financial losses suffered during the COVID-19 pandemic, and if the impugned endorsement demanding payment is illegal? (Question of law and fact, turning on principles of contract law and pandemic-related relief). Petitioner's contention: The petitioner argued that significant financial losses were incurred due to the COVID-19 pandemic, which prevented timely payment of the lease amount. They sought remission and consideration of their representations. The demand for immediate payment without considering these factors was unjust. Revenue/State's contention: The respondent (Visakhapatnam Municipal Corporation) contended that the petitioner had to pay arrears of lease amount. The Court did not find justification in the petitioner's claim of financial loss due to the pandemic, noting that business activities largely continued except for a two-month lockdown in 2020. Therefore, the endorsement demanding payment was not illegal.