Ramky Infrastructure Limited vs Bengaluru Water Supply And ...
2021 Latest Caselaw 5913 Kant

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     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 10th DAY OF DECEMBER, 2021

                           BEFORE

     THE HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE

         WRIT PETITION NO.40691/2017 (GM-BWSSB)

BETWEEN:

RAMKY INFRASTRUCTURE LIMITED,
RAMKY HOUSE, SITE NO.25-30,
2ND CROSS, RAGHAVENDRA NAGARA,
HENNUR RING ROAD,
KALAYANA NAGARA POST,
BENGALURU - 560 043,
REPRESENTED BY ITS
AUTHORIZED SIGNATORY
MR. VENKATA MANIKANTH REDDY             ... PETITIONER

(BY SRI. SURESH BABU B.N. ADV.)

AND:

1.     BENGALURU WATER SUPPLY
       AND SEWERAGE BOARD,
       III FLOOR, CAUVERY BHAVAN
       BENGALURU - 560 009
       REPPRESENTED BY ITS CHAIRMAN

2.     THE CHIEF ENGINEER (PROJECTS)
       BENGALURU WATER SUPPLY
       AND SEWERAGE BOARD,
       III FLOOR, CAUVERY BHAVAN
       BENGALURU - 560 009.            ... RESPONDENTS

(BY SRI. K.B. MONESH KUMAR, ADVOCATE FOR R1 & R2)
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      THIS PETITION IS FILED UNDER ARTCLES 226 AND 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED:
13.04.2017 ISSUED BY THE RESPONDENT NO.2 VIDE ANNEXURE-A
AND ETC.,

    THIS PETITION COMING ON FOR PRELIMINARY HEARING - B
GROUP THIS DAY, THE COURT MADE THE FOLLOWING:


                              ORDER

The challenge to Annexure-A, marked to the petition,

essentially poses the following question:

Whether Bangalore Water Supply and

Sewerage Board, in the absence of any award/decree

fixing the liability on its contractor, can appropriate

and adjust the amount payable to contractor,

towards its claim for interim damages?

2. The answer to the question is firm 'no'. And the

reasons set out in this judgment are not far to seek.

3. The facts giving rise to this question and necessary

to answer the said question can be summarized as under :-

The 1st respondent-board entrusted the work of certain

underground drainage facility to the petitioner. Annexure-B

dated: 21.10.2015, is a certificate issued by 1st respondent-

board certifying the completion of work by the petitioner.

Annexure-C is another certificate issued on the same date, by

the 1st respondent-Board, to the effect that system is taken over

by the Board after completion of work. From these two

certificates referred above, it appears that work was

satisfactorily completed on 10.02.2014 and system is taken over

by the Board on 10.02.2014 itself.

4. These being the facts, an unfortunate incident took

place on 6th March 2017. Three persons deployed to fix the

issue of overflow in the drainage, died while carrying out the

repair work. This drainage admittedly was constructed by the

petitioner. According to respondents defective work carried out

by the petitioner and omission to take necessary precautionary

measures, before labourers were deployed to carry out repair

work, resulted in death of three labourers. On 7th March 2017,

complaint was lodged and FIR was also registered to probe into

the matter.

5. In the backdrop of above said incident, Annexure-A

the impugned notice dated: 13.04.2017, is issued by the 2nd

respondent. From the reading of Annexure-A, it is noticed that

2nd respondent acting on behalf of 1st respondent-board, is

alleging that the work carried out by the petitioner was

defective. It is also forthcoming from Annexure-A, that three

notices (dated 21.01.2016, 18.11.2016 and 02.03.2017) were

issued by the Board, calling upon the petitioner to rectify the

defects in the underground drainage. The copies of the notices

referred above are not produced by the respondents. The

petitioner, disputes the receipt of above said notices.

6. The respondents trace the cause of death of three

persons to the negligent act of the petitioner. Accordingly

issued notice at Annexure-A and claimed that the 1st respondent-

board is entitled to interim damages of Rs.1.00 crore. The last

paragraph of the impugned Annexure-A dated: 13.04.2017,

reads as under :-

"For all the above causes of defective works, negligence while executing the work has been noted with displeasure. Board is constrained to claim a

damage (sic) of Rs.1.00 Crore as interim relief for all the damages (sic) and negligence of your firm."

7. In response to the challenge to notice at Annexure-A

in this writ petition, respondents have filed statement of

objection. Paragraph No.7 of statement of objection, reveals

that 1st respondent-Board has adjusted Rs.1.00 Crore towards

interim damages, from the amount payable to the petitioner. In

paragraph No.8 of the statement of objection, it is further stated

that Rs.30.00 Lakhs is deducted from the amount payable to the

petitioner and the said amount of Rs.30.00 Lakhs is paid to the

family members of three persons who died in the accident

referred above. However it is not clear from the records placed

before the Court, as to whether Rs.30.00 Lakhs is paid from

Rs.1.00 Crore deducted or whether Rs.30.00 Lakhs is deducted

in addition to Rs.1.00 Crore which is *appropriated towards

interim damages. The relevant portion of the said statement of

objection is extracted hereunder:-

"............and hence it necessitated in deducting an interim damage (sic) of Rs.1.00 crore and stopped the payment of bills of the petitioner by adjusting the same towards interim damage.(sic).

*corrected vide court order dated 07/01/2022

8. The relevant portion of paragraph No.8 reads as

under :-

"......... and hence it necessitated in deducting a sum of Rs.30,00,000/- from the bills of the petitioner and paid compensation to the family members of deceased persons."

9. In the backdrop of the above said facts, legality of

Annexure-A is examined in this petition. Heard learned counsel

for the parties.

10. The learned counsel for the petitioner raised

following contentions.

a. Though Annexure-A is in the form of notice declaring

intention to claim Rs.1.00 Crore towards interim damages, the

respondents have withheld amount due to the petitioner in

respect of some other work carried out by the petitioner and

without there being any adjudication on the liability of the

petitioner, respondents have appropriated Rs.1.00 Crore towards

interim damages.

b. The work carried out by the petitioner is not

defective. No objection is raised in respect of the work when

completion certificate was issued in 2015.

c. Respondents have no authority to withhold the

amount payable to the petitioner in respect of some other works

carried out by the petitioner and same cannot be appropriated

towards liability which is yet to be adjudicated.

d. The unauthorized act of the respondents

appropriating Rs.1.00 Crore is made known to the petitioner only

when statement of objection is filed in this petition. There is no

adjudication either as to the allegation of negligence of the

petitioner or as to interim damages alleged to be payable to

respondents.

e. Assuming that the respondents are empowered to

decide on quantum of damages payable to the 1st respondent,

then also said action of appropriating of Rs.1.00 Crore towards

interim damages is erroneous as the petitioner was not all heard

before quantifying the damages.

f. The unfortunate death of three workers who died on

06.03.2017, cannot be attributed to the work carried out by the

petitioner as the work was completed satisfactorily in February

2014 itself. The learned counsel for the petitioner also referred

to Annexures-B and C, the certificates issued by the 1st

respondent/board certifying satisfactory completion of work

entrusted to the petitioner and urged that the cause of death of

three labourers cannot be linked to alleged defective

underground drainage work.

11. In addition to this, so far as payment of Rs.30.00

lakhs said to have been made to the family members of three

persons who died in the accident, the learned counsel for the

petitioner would submit that the petitioner will not claim said

amount of Rs.30.00 Lakhs. He would submit that the petitioner

has willingly agreed to pay the said amount on humanitarian

consideration without admitting the liability. It is his further

contention that the said amount of Rs.30.00 lakhs is paid by the

1st respondent-board from the amount payable to the petitioner.

Thus according to him, said payment it is nothing but payment

made by the petitioner. And on this basis, it is contended that

there is no monetary loss to the respondents towards payment

of Rs.30.00 Lakhs paid to the family members of labourers. And

based on the above said contentions it is urged that Annexure-A

be quashed.

12. On the other hand the learned counsel for the

respondents justifying the notice at Annexure-A, and subsequent

act of deducting and appropriating Rs.1.00 Crore towards interim

damages, would submit on the following lines.

     a.    That    on     account       of    negligent   act     and

sub-standard   work     carried   out    by   the   petitioner,   the

underground    drainage   was     not   properly    functioning   and

petitioner is bound to compensate the 1st respondent-board.

b. The death of the labourers is directly attributable to

the defective construction of underground drainage and omission

on the part of the petitioner in not taking proper safety

measures before labourers were deployed to carry out the repair

work. Thus according to respondents the petitioner is liable to

pay damages.

c. It is within the authority of 1st respondent-board to

assess the damages and appropriate the amount payable to the

petitioner towards damages payable to 1st respondent/board.

d. Since three labourers died in the manhole

constructed by the petitioner compensation of Rs.30.00 Lakhs is

paid to the dependents of deceased labourers and as such 2nd

respondent/board is entitled to deduct Rs.30.00 Lakhs from the

amount payable to the petitioner.

e. Alternatively it is urged that the Annexure-A dated:

13.04.2017, is only a notice and not an order fixing damages as

such as the petitioner is required to show cause to the said

notice. On this premise it is urged that the petition is premature.

13. On these grounds, the learned Counsel for the

respondent prayed to dismiss the writ petition.

14. This Court considered the rival contentions and

materials placed before it.

15. The claim of the respondents is based on alleged

tortious act committed by the petitioner. The person who claims

damages on account of tortious act of another or on account of

breach of any contract for that matter, has to establish the

tortious act or breach of contract as the case may be. On

establishing the same, the claimant is required to establish the

loss suffered on account of the tortious act or breach of contract.

On proof of these two facts, one is entitled to appropriate

damages to be quantified in accordance with law governing

damages. However there may be cases, where without proof of

actual loss one may be entitled to nominal damages on proof of

tortious act or breach of contract. Nevertheless even in such

cases, the proof of tortious act or breach of contract is a must.

These factors are to be established before the competent Court

or authority invested with the jurisdiction to decide such claim.

In the instant case no such exercise is carried out.

16. The 1st respondent-board after issuing notice at

Annexure-A, which only declares its intention to claim interim

damages of Rs.1.00 Crore, has not taken recourse to seek

remedy before competent Court/Authority to establish its claim

for damages. On the other hand, without any adjudication of

liability of the petitioner, 1st respondent/board has appropriated

damages of Rs.1.00 Crore from the amount payable to the

petitioner.

17. At this juncture, it is appropriate to quote two

fundamental principles of natural justice ingrained in our

jurisprudence namely:-

      a)      No one shall be judge in his own cause.

      b)      No one shall be condemned un-heard.

18. The act of the 1st respondent appropriating Rs.1.00

Crore from the account of petitioner, violates both the above

said principles of natural justice. The 1st respondent has played

all-in-one role of the Prosecutor and Judge. This is

impermissible.

19. Unless action is initiated in a manner known to law,

to recover alleged damages payable to the 1st respondent-board,

the Board cannot appropriate the amount belonging to the

petitioner towards its claim in the manner so done. The

procedure adopted by the Board is not only unknown to

jurisprudence in our country, but is also in gross violation of

principles of natural justice. Hence, Annexure-A though

contended to be a show cause notice, on account of subsequent

act has assumed the character and colour of unjust

award/decree. Hence, Annexure-A is liable to be quashed and

accordingly quashed.

20. It is relevant to state that Rs.30.00 Lakhs is said to

be paid by the 1st respondent to the family members of the

deceased labourers. The said amount is paid from the amount

of the petitioner lying with the 1st respondent. In other words,

Rs.30.00 Lakhs is paid by the petitioner and not by 1st

respondent-board. The 1st respondent, thus cannot claim that it

has suffered monetary loss of Rs.30.00 Lakhs and cannot lay a

claim over the said amount. Thus, the claim of 1st respondent-

board relating to loss of Rs.30.00 lakhs is untenable.

21. It is also noticed that petitioner has only prayed to

quash Annexure-A and has not sought any further specific relief

for refund of the amount. However, admittedly the 1st

respondent-board has appropriated the money payable to the

petitioner towards its claim for damages. Since this act of 1st

respondent-board appropriating the amount towards interim

damages is held to be illegal and without jurisdiction, the

consequential order for refund of the amount to the petitioner

shall follow even in the absence of specific prayer in the petition.

The necessary declaration is also granted to the effect that

appropriation of money payable to the petitioner towards interim

damages is illegal. Since amount is withheld and utilised by the

1st respondent-board without any authority of law, the board is

also bound to pay interest on the said amount. The rate of

interest payable shall be @ 5% p.a. which is the prevailing

interest rate charged by the nationalised banks.

22. If the direction for release of the amount is not

issued, it may lead to further litigation to recover the amount

referred above, which is not only undesirable but has to be

necessarily prevented. The Court's power to mould the relief in

appropriate cases, to meet the ends of justice is well recognized.

This case easily falls in the said category.

23. Accordingly, the following:-

ORDER

(i) The impugned notice bearing No.

BWSSB/CE(P)/ACE(CMC)/50/2017-18 dated 13.04.2017,

marked at Annexure-A issued by the 2nd respondent is

quashed.

(ii) The act of respondents withholding and

appropriating the money from the amount payable to

the petitioner is declared as illegal.

(iii) The 1st respondent-Board shall release the

amount withheld and payable to petitioner (except

Rs.30.00 Lakhs which is said to be paid to the family

of deceased three labourers) along with interest at the

rate of 5% per annum on the said amount, with effect

from 13.04.2017 till the date of payment to the

petitioner.

(iv) However, it is made clear that in this writ

petition, what is adjudicated is the legality of the

process through which the interim damages of Rs.1.00

Crore is sought to be recovered as damages. Thus the

right of the respondent-Board if any, against the

petitioner, to claim interim damages/damages from

the petitioner, in respect of claim made in the

Annexure-A is not decided in this petition.

(v) It is open to the 1st respondent-Board to

avail appropriate remedy, if advised in law, for alleged

breaches/wrong if any, committed by the petitioner in

connection with work referred in Annexure-A, If any

such action is initiated before competent

Court/Authority, such claim shall be adjudicated in

accordance with law, without being influenced by the

order quashing Annexure-A.

The writ petition is allowed. There is no order as

to cost.

Sd/-

JUDGE

Brn/hd