IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE ACTING CHIEF JUSTICE MR.J.B.KOSHY & THE HONOURABLE MR. JUSTICE V.GIRI THURSDAY, THE 1ST JANUARY 2009 / 11TH POUSHA 1930 WA.No. 2977 of 2007() --------------------- {IN WPC.27984/2006 OF THIS COURT} .................... APPELLANT(S): PETITIONER ------------------------------------------------ P.V.GEORGE, S/O.VARGHESE, PUTHAYATH HOUSE, KOLAGAPPARA P.O., SULTHAN BATHERY, WAYANAD DISTRICT. BY ADV. SRI.GRASHIOUS KURIAKOSE RESPONDENT(S): RESPONDENT --------------------------------------------------- POOTHADY GRAMA PANCHAYATH, REPRESENTED BY ITS SECRETARY, POOTHADY PANCHAYATH OFFICE, KENICHIRA P.O., SULTHAN BATHERY, WAYANAD DISTRICT. ADV. SRI.P.C.SASIDHARAN THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ALONG WITH W.A.NO.756 OF 2008 ON 01/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J.B.KOSHY, Ag.C.J. & V.GIRI, J. ------------------------- W.A.No.2977 of 2007 & 756 of 2008 ------------------------- Dated this the 1st day of January, 2009. JUDGMENT GIRI, J. These writ appeals arise out of the common judgment dated 4.7.2007 in W.P.(C)Nos.27984/06 and 33228/06. 2. The appellant in W.A.No.2977/07, instituted W.P. (C)No.27984/06 contending that he was the contractor entrusted with the construction of a shopping complex cum bus stand, by the respondent-panchayat. A revised estimate for the work in question was made for an amount of Rs.60 lakhs. By April, 2006, 90% of the work had been completed. Ext.P3 will show, that the bill had been passed for an amount of Rs.40,54,126/-. The appellant was prevented from further proceeding with the construction on account of an order of injunction, Ext.P6, passed by the Debt Recovery Tribunal, Ernakulam in an original application filed by the South Indian Bank Limited, which claimed a prior mortgage over the W.A.No.2977/07 & 756/08 :: 2 :: property created by the erstwhile owners. The panchayat declined to pay even the amounts due for the work already completed and hence the writ petition praying for a direction to the panchayat to pay the petitioner the amounts due to him for having executed the work as per Ext.P1 agreement and the supplemental agreement. 3. In the counter affidavit filed by the panchayat, it took the stand that though it is true that the petitioner was entrusted with the work in question, payment of the actual amounts due can be made only after verification of the extent of the work done. It was pointed out that the panchayat had already made a payment of Rs.32,50,000/-. The property has been taken possession of by the Debt Recovery Officer, on behalf of the South Indian Bank Limited and it would not now be appropriate for the panchayat to be directed to pay further amounts to the contractor. 4. W.A.No.756/08 was instituted by the panchayat challenging the proceedings before the Debt Recovery Tribunal, Ernakulam, initiated by the South Indian Bank Limited, the 1st respondent therein. The contention taken up is that the panchayat was not a party to the proceeding before a certificate W.A.No.2977/07 & 756/08 :: 3 :: was issued and that therefore, the Debt Recovery Tribunal had no jurisdiction to proceed against the panchayat after issuance of a certificate. It is further contended that the Debt Recovery Officer had proclaimed the property for sale without considering the objections of the panchayat. 5. The learned single Judge heard both these writ petitions together. Insofar as the writ petition filed by the panchayat is concerned, the learned single Judge held that in view of the mortgage, the Recovery Officer can attach and sell the property purchased by the panchayat, which is the subject matter of a mortgage in favour of the bank. But taking note of the contention that the defaulter has other valuable properties, the Recovery Officer was directed to proclaim other properties of the defaulter for sale in the first instance, sell the said properties first and proceed against the property in question only if the liability is yet to be recovered. 6. Insofar as the writ petition field by the contractor is concerned, the learned single Judge observed that the panchayat cannot wriggle out of its contractua; liability merely because the property was subject to a mortgage, but on the premise that the W.A.No.2977/07 & 756/08 :: 4 :: claim pertains to a contract, the petitioner was relegated to a civil suit. 7. As stated above, the contractor has filed W.A.No.2977/07 and the panchayat has filed W.A.No.756/08. 8. We heard counsel on both sides. 9. The fact that the appellant in W.A.No.2977/07 was entrusted with the task of putting up a construction in the property purchased by the panchayat, is not a matter in dispute. That Ext.P1 agreement and supplemental agreement was executed between the contractor and the panchayat is also not a matter in dispute. The fact that the panchayat finds itself in trouble on account of an imperfect title over the property is not a matter which can be held against the contractor for denying him the payment due for the work completed by him. A precise assessment of the value of the work done may not be possible in these proceedings before this court. But, we take note of the fact that Ext.P3 extract of the bill contains the signature of the Assistant Executive Engineer, Local Self-Government Department, Sulthan Bathery and the correctness of Ext.P3 has not been specifically disputed by the panchayat. The panchayat only takes W.A.No.2977/07 & 756/08 :: 5 :: up a stand that an evaluation of the work completed is required before further payments can be made to the contractor. There can be no objection to the panchayat conducting a verification of the work completed and causing an assessment of the same to be made, before finally passing the bills submitted by the contractor. But, we are of the view, in view of Ext.P3, that it will only be appropriate that the amounts, as certified therein is actually paid before relegating the parties to the civil court. 10. We have already taken note of the fact that the contractor has been paid an amount of Rs.32,50,000/-. This is not denied by the appellant. In the circumstances, there will be a direction to the respondent/panchayat in W.A.No.2977/07 to pay the appellant an amount of Rs.8,04,126/- {Rs.40,54,126/- as certified in Ext.P3 minus Rs.32,50,000/- already paid}. This amount shall be paid within two months from the date of receipt of a copy of this judgment. 11. Learned counsel for the appellant prays for interest for delayed payment. It is open to the appellant to move the civil court, on the claim of interest and for further amounts, if any, due for the work already completed. We make it clear that it will W.A.No.2977/07 & 756/08 :: 6 :: be open to the panchayat to take up such contentions as are available to it, both with regard to the claim for interest and with regard to the claim for further amounts by way of the value of the work completed. It will also be open to the panchayat to file a counter claim, if so advised, and if otherwise maintainable in law. 12. Insofar as W.A.No.756/08 is concerned, we are of the view that the interests of the panchayat, to the extent possible, has been safeguarded by the directions issued by the learned single Judge. It cannot be said that the proceedings before the Debt Recovery Tribunal, at the instance of the South Indian Bank Limited, is without jurisdiction. Admittedly, the bank is a mortgagee and it is not disputed that the mortgage was executed prior to the purchase effected by the panchayat. Learned single Judge has directed the Debt Recovery Officer to bring the property purchased by the panchayat for sale only after exhausting the proceedings against the other properties belonging to the defaulter. This, in our view, safeguards the interests of the panchayat. We further make it clear that in the event of the decree holder-bank deciding to proceed against the property purchased by the panchayat, for recovery of any further W.A.No.2977/07 & 756/08 :: 7 :: amounts due to the contractor after exhausting the process against the other properties belonging to the defaulter, it will be open to the panchayat to submit its objections to the proposal for sale of the property. It will also be open to the panchayat to take up the contention that it had put up a building in the property and the said building need not be treated as an accretion to the mortgaged property. If such a contention is taken up, the Debt Recovery Officer shall refer to the same before proceeding to proclaim the property for sale. Subject to the above directions, the writ appeals are disposed of. Sd/- (J.B.KOSHY) ACTING CHIEF JUSTICE Sd/- (V.GIRI) JUDGE sk/ //true copy// P.S. to Judge