IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR FRIDAY, THE 15TH FEBRUARY 2008 / 26TH MAGHA 1929 SA.No. 29 of 1995(C) ------------------------------ AS.78/1991 of SUB COURT, KASARAGOD OS.188/1988 of ADDL.MUNSIFF, KASARAGOD .................... APPELLANTS/APPELLANTS/DEFENDANTS ------------------- 1. THE STATE OF KERALA, REP.BY THE DISTRICT COLLECTOR, KASARAGOD. 2. THE SUPERINTENDEING ENGINEER (B&R) NORTH CIRCLE, CALICUT. 3. THE SPECIAL DEPUTY TAHSILDAR (RR), KASARAGOD. 4. THE VILLAGE OFFICER, THEKKIL VILLAGE KASARAGOD TALUK. BY GOVERNMENT PLEADER SRI.L.G.SURESHBABU RESPONDENTS: RESPONDENT/ PLAINTIFF ------------------------ B.M.MOHAMMAD, THROUGH THE NEXT FRIEND SMT.K.A.FATHIMABI HIS WIFE AGED 47 YEARS, HIS WIFE RESIDING AT BENDAD, THEKKIL FERRY P.O., THEKKIL VILLAGE, KASARAGOD TALUK. BY ADV.SRI.P.G.PARAMESWARA PANICKER SRI.P.GOPAL THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 15/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.SASIDHARAN NAMBIAR,J. =========================== S.A. NO. 29 OF 1995 =========================== Dated this the 15th day of February, 2008 JUDGMENT Defendants in O.S.188/1988 on the file of Munsiff Court, Kasaragod are the appellants. Respondent is the plaintiff. Respondent was admittedly the contractor who had submitted a tender for the work of improvements to Paleri- Ottakandam road . The tender submitted by respondent to execute the work 5% below the estimate rate less cost of materials, being the lowest was accepted by second respondent Superintending Engineer. Ext.A2 agreement was executed pursuant to the acceptance of the tender on 17.6.1981. As per Ext.A2 agreement the work is to be completed by 14.6.1982. It is admitted case that the work was not completed and the contract was terminated under Ext.B9 proceedings dated 16.5.1986. Appellants thereafter issued Ext.B11 registered notice to the respondent calling upon S.A.29/1995 2 him to pay Rs.2,32,391/- stating that the balance work had to be rearranged through retender and the contract was terminated at the risk of the respondent and the liability is provisionally worked out at Rs.2,32,391/-. As per the said letter dated3.8.1987 respondent was called upon to pay the amount within twenty days. On the failure of respondent to pay the amount, revenue recovery proceedings were initiated. Ext.A4 demand notice under section 7 of Revenue Recovery Act was served on respondent directing him to pay the amount of Rs.2,32,391/- as arrears, due to the loss sustained by Government in the contract. Ext.A5 notice prior to the attachment of land, as provided under section 34 of Revenue Recovery Act, was also served. At that stage respondent instituted O.S.188/1988 seeking a decree for injunction, through his wife as his next friend contending that he is mentally ill. It was contended that before the expiry of the period provided under the contract there was an unfortunate incident in the S.A.29/1995 3 house of the respondent during the marriage celebration of his daughter and one of the invitees was stabbed to death at the time of marriage ceremony and as a result respondent suffered severe mental agony and he became a manaic depressive and was being treated by various doctors. It is for that reason suit was instituted through his wife as his next friend. According to respondent, because of his mental illness, the contract could not be completed and though the contract was terminated, he is entitled to get back 1 ½ lakhs from the Department as per the contract and appellants are not entitled to claim the amount demanded in Ext.B11, without quantifying the loss if any sustained. It was contended that the claim made in Ext.B11 is illegal and for realisation of that amount revenue proceedings cannot be initiated and revenue recovery proceedings are illegal and arbitrary and he is entitled to a decree for injunction. Appellants resisted the suit contending that though under the contract S.A.29/1995 4 respondent had to complete the work before 14.6.1982, he did not complete the work and though the period was subsequently extended upto 31.5.1985, even before the expiry of the extended period, he did not complete the work and therefore under Ext.B9 proceedings the contract was terminated on 16.5.1986. It was contended that the balance work was retendered and rearranged immediately, as the work is to be completed as is an important road and Department sustained a loss of Rs.2,32,391/-. It was contended that as per the provisions of Ext.A2 agreeement, respondent is bound to pay the loss sustained by the Department as the contract was terminated at his risk. It was also contended that respondent was not suffering from any mental illness and he has no such case before the termination of the contract and the failure to complete the work was not the alleged mental illness and as respondent did not complete the work, work had to be rearranged and he is liable to pay the amount demanded as it was the S.A.29/1995 5 loss caused. It was contended that the Department is competent to quantify the damages and the loss claimed is the actual loss sustained by the Government for rearrangement of the work and respondent is not entitled to a decree for injunction restraining appellants from realising the amount under Revenue Recovery Act. 2. Learned Munsiff on the evidence of Pws.1 to 3, DW1 and Exts.A1 to A13 and B1 to B11 found that though the evidence of PW1 and PW3 the doctor establish that appellant was treated by the doctor, PW3 there is no evidence to prove that he was suffering from any serious mental ailment during the period when the contract was terminated or that the work could not be completed because of his mental illness. Learned Munsiff found that though it was contended by appellants that the work was retendered and rearranged and the amount claimed under Ext.B11 is the actual loss sustained, Ext.B11 shows that it is only a provisional claim and no evidence was adduced to prove the details of the S.A.29/1995 6 retender or the loss sustained. It was found that without quantifying the actual damage sustained, appellants are not entitled to proceed under Revenue Recovery Act for realisation of the amount claimed under Ext.B11 and granted a decree for injunction restraining appellants from proceeding under the Revenue Recovery Act and attaching the properties or bringing the property for sale for the amount claimed. Appellants challenged the judgment before Sub Court,Kasaragod in A.S.78/1991. Respondent on his part filed a cross objection challenging the finding of trial court rejecting his case of mental illness basing the cause for failure to execute the work. Learned Sub Judge on reappreciation of the evidence found that finding of the trial court that respondent did not establish that he was suffering from serious mental illness during the period of contract is perfectly correct and in accordance with law. It was further found that though appellants contended that the work was retendered and rearranged, no S.A.29/1995 7 document was produced to establish that fact. It was also found that though Ext.A2 provides for payment of loss to the Government, if any sustained, for non-completion of the work, without quantifying the loss so sustained, revenue recovery proceedings cannot be initiated. Therefore confirming the findings of the learned Munsiff, appeal was dismissed. It is challenged in the second appeal. 3. Appeal was admitted formulating the following substantial questions of law. 1. Whether Government is at liberty to determine the loss sustained on account of retender whether the claim is sustainable on the basis of available data. 2. Whether any procedural formalities are required for quantifying the loss sustained. S.A.29/1995 8 4. Learned Government pleader appearing for appellants and learned counsel appearing for respondent were heard. 5. The argument of the learned Government pleader is that respondent did not dispute the fact that he did not complete the work. It was also pointed out that respondent did not dispute the fact that work has to be rearranged. It was argued that when the contract had to be terminated for the failure of the respondent to execute the work even within the extended period provided under the agreement and Department sustained loss by rearranging of the work, Department is entitled to realise the loss so sustained and a decree for injunction restraining appellants from realising the amount cannot be granted. It was also argued that when the Government is entitled to realise the amount so due by recourse to the provisions of Kerala Revenue Recovery Act, courts below should not have granted the decree for injunction. 6. Learned counsel appearing for respondent S.A.29/1995 9 argued that even if the Department is entitled to realise the amount legally due under the provisions of Revenue Recovery Act, without proper quantification of the loss sustained, the amount as claimed in Ext.B11 cannot be realised by recourse to revenue recovery proceedings. It was pointed out that Ext.A4 and A5 notices were issued under the provisions of Revenue Recovery Act for realisation of the amount claimed under Ext.B11, and as seen from Ext.B11 the amount is not the final assessment of the loss sustained, but only a provisional assessment and without finalising the actual amount, for the tentative amount claimed, revenue recovery proceedings cannot be initiated. It was also argued that eventhough DW1 was examined, he did not give any evidence with regard to the details of the retender or the loss sustained and inspite of the fact that records are available with the Department to show how the remaining work was completed and for what amount the work was retendered and for what amount the S.A.29/1995 10 agreement was executed for the uncompleted work, appellants cannot claim that they are entitled to the amount demanded under Ext.B11. It was argued that revenue recovery proceedings cannot be intiated except for the amount legally due and as the amount claimed is not the amount legally due, decree granted by the courts below is perfectly correct. 7. True, Ext.A2 mandates that respondent has to complete the work within the period provided under the agreement or the extended period. It is also admitted case that under Ext.A2 agreement executed on 17.6.1981, the work has to be completed before 15.6.1982. The period was further extended upto 31.5.1985. Even after the expiry of the extended period, respondent did not complete the work. Thus the contract was terminated. The remaining work was completed by retendering the work. As provided under Ext.A2 agreement, respondent is liable to pay the loss sustained by the Department for not completing the work as S.A.29/1995 11 agreed in Ext.A2. The loss sustained by the Government could be realised by recourse to revenue recovery proceedings. But before proceeding for realisation of the amount under the provisions of Revenue Recovery Act, Department has to fix the actual loss sustained. 8. Eventhough it was pleaded in the written statement that because of the urgency of completing the work, after termination of the contract under Ext.B9, the work was retendered and rearranged, no document was produced to show what was the estimate for the balance work not completed under Ext.A2 agreement or what was the amount for which the retender was submitted by the contractor accepted by the department and agreement executed. No evidence was adduced to show for what amount the contract was executed for completing the remaining work. There is no reason why these material documents were not produced before the courts below to justify the quantum of loss. 9. Ext.B11 notice shows that Rs.2,32,391/- S.A.29/1995 12 was demanded as the loss sustained not based on estimation of the actual loss sustained. Ext.B11 itself shows that it was only a provisional estimate. As rightly argued by learned counsel appering for respondent, without finally settling the actual loss sustained and the liability of respondent, appellants are not entitled to proceed under the provisions of Revenue Recovery act. Exts.A4 and A5 establish that the amount sought to be recovered under the provisions of Revenue Recovery Act is actually the amount demanded in Ext.B11 and not the final assessment of the loss sustained by the Department. If that be so, even if it is taken that appellants are entitled to quantify the damage, after fixing the loss sustained, without a final assessment of quantification of the loss revenue recovery proceedings cannot be initiated. It is in such circumstance, courts below granted the decree. 10. I do not find any reason to interfere with the concurrent decree granted by the courts below. S.A.29/1995 13 The appeal is dismissed. But the dismissal of the suit will not affect the right of the Department to quantify the damages including the amount due to the appellants and realise the actual amount legally due, if any, from the respondent in accordance with law. M.SASIDHARAN NAMBIAR JUDGE tpl/- M.SASIDHARAN NAMBIAR, J. --------------------- S.A.NO.29 /1995 --------------------- JUDGMENT 15th February,2008