M/s. Neelankantan Brothers Construction Private Limited vs Divisional Engineers (NII) No. 11, Division Madurai-2, The Collector of Madras, Chepauk, Madras-5 and The Tashsildar, Mylapore-Triplicane Division, Madras-4

Kanakaraj, J.—The appellant filed Writ Petition No. 5624 of 1984 seeking a writ of Certiorari to quash the order of the Tahsildar dated

28.8.1984. The said proceedings of the Tashildar says that the work of widening and strengthening of certain pavements had been entrusted to the

appellant in the following reaches.

KM 37/6-55/0

KM 55/0-65/0

KM 65/0-77/0

KM 90/0-88/4

KM 95/0-106/0

KM 105/0-115/0

KM 115/0-125/0

KM 125/0-134/0

KM 134/0-145/4

The contracts were terminated because of the alleged default on the part of the appellant and the work was entrusted to certain other agencies.

Consequently, the Tahsildar proceeds to say that the Government had incurred an extra cost to the tune of Rs.57,71,473-06. It was also stated

that a further sum of Rs.5.52.004/- was recoverable as being the balance amount of mobilisation advance and interest thereon upto September.

1983. The total amount is evaluated as follows:

Extra Cost involved for completing the balance Work Through other agencies 57,71,473.06

Balance amount of mobilisation advance recoverable from the contractors 5,52,004.00

Balance amount of interest the recoverable for the balance amount of mobilisation advance as on 6,60,994.35

30.9.83

72,84,471.41

Finally the Tahsildar demanded the payment of entire sum of Rs. 72.84.471-41 within 15 days from the date of receipt of the notice failing which

he threatened to invoke the Tamil Nadu Revenue Recovery Act for realising the said amount. The contention of the appellant in the writ petition

was that the Revenue Recovery Act cannot be invoked unilaterally by determining the compensation or damages by the Revenue authorities

without the same being determined by a court or Arbitrator. A learned single Judge of this Court, by judgment dated 23.7.1993. rejected the

contention of the appellant relying on certain clauses in the contract for forfeiture and partial determination and also on the clauses in the agreement

providing for reference of any dispute to an arbitrator. The learned Judge seems to hold that there was really no dispute and characterises the

proceedings taken by the appellant in O.P.No.:9 of 1990 on the file of Sub Court. Madurai as follows:-

Resortment to proceedings of such a nature in a belated fashion beyond the period prescribed together is nothing but a camouflaged device for

making it appear that the amount sought to be recovered by initiation of proceedings under RR Act is neither admitted, nor undisputed in rather a

frantic bid to frustrate the action so initiated and to such a device, the Court cannot be expected to fall a prey, in the facts and circumstances of the

case. when especially as already indicated, the partial determination and consequent assessment of escalated cost of completion of work at the

instance of other agencies at the risk of the company, as had been specifically provided under the terms of the agreement, had attained the stage of

finality, in the sense of the sum to be paid by the company having been quantified in the specified sum by the act of company in not disputing such

escalation and cost of additional work by way of reference to arbitration, forthwith as provided for in the agreement.

Before proceeding with the consideration of the points urged by the learned counsel for the appellant, we have to notice two important facts which

have arisen after the filing of the writ petition. The Government of Tamil Nadu represented by the Divisional Engineer. National Highways, had filed

a suit O.S. No: 670 of 1992 on the file of Sub Court. Madurai for recovery of a sum of Rs.2,17.150/- being a part of the demand made in the

Tahsildar''s letter dated 28.2.1984. Recently the Government of Tamil Nadu has also filed a suit O.S. No. 1424 of 1995 on the file of the High

Court. Madras (1) for recovery of a sum of Rs.64.30.312-97 with subsequent interest at 18% per annum and (2) for recovery of a sum of

Rs.3,50,711.75 with interest thereon and (3) for recovery of a sum of Rs.7.62.529/- with subsequent interest thereon. We have verified from the

parties that the two suits more less cover the entire demand of the Tahsildar in the letter dated 28.2.1984. Thus the necessity for resorting to the

Revenue Recovery Act has really come to an end.

That apart, in our view, the decisions of the Supreme Court and our own High Court clearly lay down the proposition that where damages are

recoverable under a contract and there is dispute regarding the quantum of damages, one party to the contract cannot determine the quantum of

damages by itself unilaterally and claim the same from the other party by resorting to the Revenue Recovery Act. We have only to cite the

judgment of the Supreme Court in State of Karnataka Vs. Shree Rameshwara Rice Mills, Thirthahalli, The following passage in the said judgment

amply supports view taken by us.

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 condition. 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"".

We are therefore, in agreement with the view of the Full Bench that the powers of the State under an agreement entered into by it with a private

person providing for assessment of damages for breach of conditions and recovery of the damages will stand confined only to those cases where

the breach of conditions is admitted or it is not disputed.

A Division Bench of our High Court as early as in the year 1974 in Commissioner of Civil Supplies v. V. Sethuraman reported in 1974 T.L.N.J.

observed as follows:-

It is a well established proposition of construction that an authority which is entrusted with only powers or execution cannot assume for itself a

Jurisdiction to resolve anterior disputes by adjudication. Judicial Power to decide civil disputes should not be confused with execution entrustment

of recovery powers of a summary character as an expedient for quick recovery on grounds of State necessity. Section 52 being first an enabling

Summary recovery process, it cannot extend to and cover jurisdiction for finding a solution of a dispute and then applying the summary process

recovery u/s 52.

Merely because a contract provides for a liability for any deficiency in delivery, it does not follow that once the loss is found ipso facto the liability

to compensate arises. This only means that the Government will have to institute suits, if they so think tit, to establish the liability and its quantum

against each of the respondents.

This view of the Division Bench of this Court has again been reiterated by a recent judgment of a Division Bench of this Court in M.P. Abdul

Hameed and Co. Vs. The Tamil Nadu Civil Supplies Corporation Ltd. and Another,

For all the above reasons, we are not inclined to accept the view taken by the learned single judge and hold (hat the letter dated 28.2.1984 of

the Tahsildar cannot be enforced against the appellant by resorting to the Revenue Recovery Act. It is always open to the respondents to file a civil

suit and indeed they have filed such suits in this regard and therefore, no prejudice is caused to the respondents. In this view of the matter, this writ

Appeal is allowed. The impugned order of the Tahsildar is quashed subject to the right of the Government to recover the same in the civil

proceedings. No Costs.