Binu And Company vs The District Collector
2021 Latest Caselaw 8802 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM

                               PRESENT

          THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V

   WEDNESDAY, THE 17TH DAY OF MARCH 2021 / 26TH PHALGUNA, 1942

                       WP(C).No.732 OF 2020(N)


PETITIONER:

               BINU AND COMPANY,
               PEZHUMTHURUTH, PERUMON P.O., KOLLAM - 691 601,
               REPRESENTED BY ITS PROPRIETOR S.S.BINU.

               BY ADVS.
               SRI.S.SREEKUMAR (SR.)
               SRI.P.MARTIN JOSE
               SRI.P.PRIJITH
               SRI.THOMAS P.KURUVILLA
               SRI.AJAY BEN JOSE
               SRI.MANJUNATH MENON
               SHRI.HARIKRISHNAN S.

RESPONDENTS:

      1        THE DISTRICT COLLECTOR,
               KOLLAM, DISTRICT COLLECTOR OFFICE, CIVIL STATION,
               KOLLAM - 691 013.

      2        TAHASILDAR/AUTHORIZED OFFICER (REVENUE RECOVERY),
               TALUK KACHERY, KOLLAM - 691 001.

      3        KERALA STATE ROAD TRANSPORT CORPORATION,
               TRANSPORT BHAVAN, FORT, THIRUVANANTHAPURAM,
               PIN - 695 023, REP. BY ITS CHAIRMAN
               AND MANAGING DIRECTOR.

      4        THE CHAIRMAN AND MANAGING DIRECTOR,
               KERALA STATE ROAD TRANSPORT CORPORATION, TRANSPORT
               BHAVAN, FORT, THIRUVANANTHAPURAM, PIN - 695 023.

               R3 & R4 BY ADV. SRI.P.C.CHACKO(PARATHANAM)

               SMT MABLE C KURIAN, GP

     THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD           ON
17.03.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C).No.732 OF 2020(N)                 2




                                   JUDGMENT

Instant petition is filed challenging Exts P12 and P13 notices issued

under Section 7 and 34 of the Revenue Recovery Act,1968 and also for a

further direction to quash Ext.P19 notice issued by the 4th respondent calling

upon the petitioner to make payment of a sum of Rs.38,79,447/- towards

loss sustained to the 3rd respondent, the Kerala State Road Transport

Corporation (KSRTC).

2. The facts which led to the challenge raised as aforesaid can be

briefly stated at the outset itself.

In the year 2013, the 3rd respondent invited a tender for the supply

of ER WCR tubes of different dimensions and sizes. The petitioner submitted

his tender which was accepted by the 4th respondent and Ext.P1 supply

order was issued. Ext.R3(c) is the agreement entered into between the

petitioner and the 3rd respondent on the basis of which, 8520 tubes

weighing a total of 55,640 kgs was supplied to the 3rd respondent.

Immediately thereafter, Ext.P3 notice was issued informing the petitioner

that out of the total number of 4034 pipes supplied by him weighing about

27230 kgs, 225 pipes were found to be damaged. The petitioner was called

upon to replace 225 pipes or to refund the value. On receipt of the said

communication, Ext.P4 letter was issued by the petitioner informing of his

willingness to refund the value of 225 pipes. However, without responding

to the said letter, Ext.P5 letter was issued calling upon the petitioner herein

to replace 40,279 Kgs of tubes. In response, the petitioner issued Ext.P6

informing that his liability was limited to the value of 725 pipes weighing

about 4865 kgs and worth Rs.2,85,040/-. However, the 4th respondent by

Ext.P7 notice called upon the petitioner to pay a sum of Rs.20,64,946/-

being the value of damaged pipes. He submitted Ext.P8 explanation and

offered his willingness to return a sum of Rs.71,046/- being the balance

amount after adjusting the loss suffered to respondent Nos.3 and 4 from the

security amount deposited by the petitioner. Thereafter, Ext.P10 notice was

issued on 31.12.2014 warning the petitioner that he would be blacklisted if

he failed to pay the amount detailed in Ext.P7. In response, Ext.P11 notice

was issued by the petitioner requesting that he may not be blacklisted and

seeking to reconsider the entire disputes. Immediately thereafter, contending

that the respondents have failed to consider the petitioner's explanation

before blacklisting the concern, W.P.(C) No.7909 of 2015 was preferred

before this Court. While the Writ Petition was pending, proceedings under

the Revenue Recovery Act was initiated and the impugned notices were

issued. When this matter was brought to the notice of the learned Single

Judge, by Ext.P15 judgment dated 13.12.2019, the matter was disposed of

ordering a joint inspection with the hope that the parties would be able to

amicably resolve the dispute. Pursuant to the judgment, a joint inspection

was conducted and Ext. R3(i) is the report. On the side of the petitioner, an

expert Engineer was also present. The expert Engineer prepared Ext.P18,

consolidated report, a copy of which was forwarded to the respondents. The

expert Engineer had opined that the unilateral act on the part of the

respondents in rejecting the quality of pipes supplied by the petitioner was

not governed by their quality or usefulness but rather was a result of the

selective whims and fancies of certain officials who were swayed by

extraneous considerations and instigations. The expert also opined that

rejection of pipes was done with the sole aim to harass, discredit and to

cause pecuniary loss to the petitioner. The petitioner states that the 4th

respondent without considering the consolidated report submitted by the

expert Engineer, issued Ext.P19 demand notice demanding a sum of

Rs.38,79,447/- being the alleged loss sustained by the Corporation. The

initiation of revenue recovery proceedings and also the issuance of Ext.P19

time barred notice pursuant to the joint inspection conducted by the parties

are under challenge in this writ petition.

3. In the counter affidavit filed by the respondents 3 and 4, it is

contended that the petitioner had agreed while executing Ext.R3(c)

agreement that the goods supplied by him shall be of the best quality and

workmanship. However, on inspection, it was found that the goods supplied

did not match the assurance given by the petitioner. It is stated that if

during the period of 12 months from the date of supply of the goods, it was

found that the goods did not conform to the description and quality, the

Corporation was entitled to reject the goods. It is further stated that the

work managers from various depots had reported that the goods did not

conform to the specifications and it was in the said circumstances that the

petitioner was asked to take back the goods or to pay the value. The split up

details of the damaged pipes were given to the petitioner and he had also

agreed to reimburse the value of a certain quantity. According to the

respondents 3 and 4, pursuant to the joint inspection ordered by this Court,

an inspection was conducted and it was found that the total value of

defective materials together with interest after deducting the amounts paid

by way of security was Rs.39,79,447/- as on 28.1.2020. It is contended that

the petitioner cannot claim that Ext.P19 notice is time barred as it was issued

pursuant to the joint inspection ordered by this Court.

4. I have considered the submissions advanced.

5. The dispute between the parties is with regard to the quality of

pipes supplied by the petitioner pursuant to Ext.P1 supply order and

Ext.R3(c) agreement entered into between the parties on 10.12.2013. The

sole question is whether one of the contracting parties can say that the other

party is a defaulter and quantify the damages and recover the same by

recourse to proceedings under the Revenue Recovery Act. The petitioner

has seriously disputed that he is a defaulter. He disputes the very liability to

pay the amount determined by the respondents 3 and 4. It has to be borne

in mind that during the earlier round of litigation, this Court after taking note

of the nature of dispute, and the initiation of revenue recovery proceedings,

had ordered a joint inspection of the materials to make an attempt to resolve

the dispute. However, it appears that the rift has widened and the

respondents 3 and 4 have come up with Ext.P19 demand notice wherein

their demand was for a sum of Rs.38,79,447/- being the loss sustained to

the Corporation due to the supply of low quality of materials by the

petitioner herein. The petitioner relies on a report of the expert Engineer,

whose services were sought by him during the joint inspection. In the

report, some scathing remarks are made by the expert Engineer.

6. It is by now settled that it is not within the province of one of

the contracting parties to decide as to who is in breach and fix the quantum.

This is not one of those cases where the defaulting party admits that he is in

default and agrees to pay a liquidated sum by way of damages to the party

who is not in breach.

7. In the case on hand, the 3rd respondent is one of the

contracting parties and by issuing Ext.P19, they are seeking to realize a sum

of Rs. 38,79,447/- towards the alleged loss sustained to the 3rd respondent.

When the petitioner disputes the liability and when he contends that he is

being victimized by the officers of the Corporation, the 4th respondent

cannot be a Judge on his own cause and cannot be its own arbiter to

determine the liability and quantum of damages.

8. The Apex Court in State of Karnataka v. Rameshwara Rice

Mills, Thirthahalli1 had occasion to lay down the principles in the following

lines:

"The terms of Clause.12 do not afford scope for a liberal construction being made regarding the powers of the Deputy Commissioner to adjudicate upon a disputed question of breach as well as to assess the damages arising from the breach. The crucial words in Clause.12 are and for any breach of conditions set forth hereinbefore, the first party shall be liable to pay damages to the second party as may be assessed by the second party". On a plain reading of the words it is clear that the right of the second party to assess damages would arise only if the breach of conditions is admitted or if no issue is made of it. If it was the intention of the parties that the officer acting on behalf of

1 (AIR 1987 SC 1359)

the State was also entitled to adjudicate upon a dispute regarding the breach of conditions the wording of Clause.12 would have been entirely different. It cannot also be argued that a right to adjudicate upon an issue relating to a breach of conditions of the contract would flow from or is inhered in the right conferred to assess the damages arising from a breach of conditions. The power to assess damages, as painted out by the Full Bench, is a subsidiary and consequential power and not the primary power. Even assuming for argument's sake that the terms of Clause.12 afford scope for being construed as empowering the officer of the state to decide upon the question of breach as well as assess the quantum of damages, we do not think that adjudication by the officer regarding the breach of the contract can be sustained under law because a party to the agreement cannot be an arbiter in his own cause. Interests of justice and equity require that where a party to a contract disputes the committing of any breach of conditions the adjudication should be by an independent person or body and not by the other party to the contract. The position will, however, be different where there is no dispute or there is consensus between the contracting parties regarding the breach of conditions. In such a case the Officer of the State, even though a party to the contract will be well within his rights in assessing the damages occasioned by the breach in view of the specific terms of Clause.12

9. As held by the Apex Court, interest of justice and equity require

that where a party to a contract disputes his liability, the adjudication should

be by an independent person or body and not by the other party to the

contract. The only exception is when there is a consensus between the

contracting parties with regard to breach of conditions.

10. In that view of the matter, I quash Exts.P12 and P13 as

premature. The petitioner shall reply to Ext.P19 notice. If the dispute is not

resolved to the satisfaction of the respondents 3 and 4, the matter is

required to be adjudicated in accordance with law in a court of law or by an

independent adjudicatory body in full compliance with the principles of

natural justice.

This writ petition is disposed of.

Sd/-

RAJA VIJAYARAGHAVAN V

JUDGE NS

APPENDIX PETITIONER'S EXHIBITS:

 EXHIBIT P1           TRUE COPY OF SUPPLY ORDER DATED
                      11/10/2013 ISSUED BY THE 4TH RESPONDENT
                      TO THE PETITIONER.

 EXHIBIT P2           TRUE COPY OF NOTE DATED 21/01/2014
                      PREPARED BY ASSISTANT CONTROLLER, CHIEF
                      STORES, PAPPANAMCODE.

 EXHIBIT P3           TRUE COPY OF LETTER DATED 27/01/2014
                      ISSUED BY THE 3RD RESPONDENT TO THE
                      PETITIONER.

 EXHIBIT P4           TRUE COPY OF REPLY DATED 10/02/2014
                      ISSUED BY THE PETITIONER TO THE 3RD
                      RESPONDENT.

 EXHIBIT P5           TRUE COPY OF LETTER DATED 04/03/2014
                      ISSUED BY THE 4TH RESPONDENT TO THE
                      PETITIONER.

 EXHIBIT P6           TRUE COPY OF EXPLANATION DATED 14/03/2014
                      ISSUED BY THE PETITIONER.

 EXHIBIT P7           TRUE COPY OF NOTICE DATED 13/05/2014
                      ISSUED BY THE 4TH RESPONDENT.

 EXHIBIT P8           TRUE COPY OF EXPLANATION DATED 29/05/2014
                      TO EXHIBIT P7 SUBMITTED BY THE
                      PETITIONER.

 EXHIBIT P9           TRUE COPY OF LETTER DATED 20/06/2014
                      ISSUED BY THE REGIONAL WORKSHOP, EDAPPAL
                      OF RESPONDENTS 3 AND 4 TO THE PETITIONER.

 EXHIBIT P10          TRUE COPY OF FINAL NOTICE DATED
                      31/12/2014 ISSUED BY THE 4TH RESPONDENT
                      TO THE PETITIONER.

 EXHIBIT P11          TRUE COPY OF DETAILED EXPLANATION DATED
                      10/01/15 SUBMITTED BY THE PETITIONER TO
                      THE 4TH RESPONDENT.

 EXHIBIT P12          TRUE COPY OF DEMAND NOTICE DATED
                      30/11/2019 UNDER SECTION 7 OF THE REVENUE




                      RECOVERY ACT.

 EXHIBIT P13          TRUE COPY OF DEMAND NOTICE DATED
                      30/11/2019 UNDER 42 SECTION 34 OF THE
                      REVENUE RECOVERY ACT.

 EXHIBIT P14          TRUE COPY OF REPLY DATED 05/12/2019 TO
                      EXHIBIT P12 AND P13 NOTICES.

 EXHIBIT P15          TRUE COPY OF JUDGMENT DATED 13/12/2019 IN
                      W.P.(C) NO.7909 OF 2015 OF THIS HON'BLE
                      COURT.

 EXHIBIT P16          TRUE COPY OF LETTER DATED 01/01/2020
                      ISSUED BY THE 3RD RESPONDENT TO THE
                      PETITIONER.

 EXHIBIT P17          TRUE COPY OF LETTER DATED 06/01/2020
                      ISSUED BY THE PETITIONER TO EXHIBIT P16.

 EXHIBIT P18          TRUE COPY OF THE CONSOLIDATED REPORT
                      DATED 31/01/2020 ALONG WITH COVERING
                      LETTER DATED 3/2/2020 ISSUED BY THE
                      PETITIONER

 EXHIBIT P19          TRUE COPY OF THE DEMAND NOTICE DATED
                      28/1/2020 ISSUED BY THE 4TH RESPONDENT

 RESPONDENTS EXHIBITS:

 EXHIBIT R3 A         TRUE COPY OF THE SHORT TENDER NOTICE
                      DATED 25.7.2013 ISSUED BY THE 3RD
                      RESPONDENT

 EXHIBIT R3 B         TRUE COPY OF THE PURCHASE ORDER DATED
                      11.10.2013 ISSUED BY THE 3RD RESPONDENT

 EXHIBIT R3 C         TRUE COPY OF THE AGREEMENT EXECUTED DATED
                      10.12.2013 BETWEEN THE PETITIONER AND 3RD
                      RESPONDENT

 EXHIBIT R3 D         TRUE COPY OF THE COMMUNICATION DATED
                      17.2.2014 ISSUED BY THE MECHANICAL
                      ENGINEER, KSRTC REGIONAL WORKS SHOP
                      EDAPPAL TO THE CONTROLLER OF PURCHASE AND
                      STORES, KSRTC THRIUVANANTHAPURAM.

 EXHIBIT R3 E         TRUE COPY OF THE REPORT DATED 18.2.2014
                      ISSUED BY THE WORKS MANAGER, REGIONAL




                      WORKSHOP, MAVELIKKARA TO THE CONTROLLER
                      OF PURCHASE AND STORES
                      THIRUVANANTHAPURAM.

 EXHIBIT R3 F         TRUE COPY OF THE REPORT DATED 17.2.2014
                      ISSUED BY THE WORKS MANAGER, ALUVA TO THE
                      EXECUTIVE DIRECTOR, VIGILANCE CHIEF
                      OFFICE, THIRUVANANTHAPURAM

 EXHIBIT R3 G         TRUE COPY OF THE REPORT DATED 15.2.2014
                      SENT BY THE WORKS MANAGER, REGIONAL
                      WORKSHOP, KOZHIKODE TO THE EXECUTIVE
                      DIRECTOR, VIGILANCE.

 EXHIBIT R3 H         TRUE COPY OF THE NOTE DATED 21.2.2014
                      ISSUED BY THE ASSISTANT CONTROLLER (S AND
                      CI) TO THE CONTROLLER OF PURCHASE AND
                      STORES.

 EXHIBIT R3 I         TRUE COPY OF THE JOINT INSPECTION REPORT
                      SIGNED BY THE PETITIONER AS WELL AS THE
                      REPRESENTATIVES OF THE 3RD RESPONDENT