Allowed

State of Kerala v. a.K.Muhammed Kunhi

Kerala HC9 Jan 2009AS/60/1997

Case brief

AI extract

What is this about?

The Kerala High Court allowed the appeal by the State, holding that the Civil Suit (O.S. 413 of 1993) filed by a contractor was barred by limitation. The cause of action arose in 1989 upon contract termination. The court also set aside the injunction against revenue recovery proceedings.

What did the court decide?

O.S. 413 of 1993 dismissed; judgment of court below set aside; parties to bear respective costs.

State of Kerala Vs a.K.Muhammed Kunhi — Contract and Commercial Disputes | Kerala HC (2009)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MR. JUSTICE V.GIRI

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FRIDAY, THE 9TH JANUARY 2009 / 19TH POUSHA 1930

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AS.No. 60 of 1997()

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------------------OS.413/1993 of ADDL.SUB JUDGE,THALASSERY ....................

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APPELLANT(S)/DEFENDANTS IN O.S.413 OF 1993

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THE STATE OF KERALA, REP, BY THE SECRETARY TO GOVERNMENT, IRRIGATION DEPARTMENT, TRIVANDRUM.

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SUPERINTENDENT ENGINEER, PROJECT CIRCLE, CANNANORE-2.

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THE EXECUTIVE ENGINEER, PY.L.P DIVISION NO.2, CANNANORE -3.

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THE TAHSILDAR, REVENUE RECOVERY, KASARGOD.

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BY GOVERNMENT PLEADER SRI MATHEW VADAKKEL

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RESPONDENT(S):

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A.K.MOHAMMED KUNHI, S/O.HASSANKUTTY, P.W.D.CONTRACTOR, BEVINJE P.O. THEKKIL FERRY KASARGOD.

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ADV. SRI.A.P.CHANDRASEKHARAN (SR.) SRI.KODOTH PUSHPARAJAN FOR

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THIS APPEAL SUIT HAVING BEEN FINALLY HEARD ON 09/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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V.GIRI, J

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........................................... A.S.NO. 60 OF 1997 ............................................ DATED THIS THE 9TH DAY OF JANUARY, 2009

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JUDGMENT

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Defendants in O.S.413 of 1993 on the file of Sub Court, Thalassery are the appellants herein. The suit was filed for recovery of an amount of Rs.35,000/- stated to be the value of the work done by the plaintiff and also for return of the Earnest Money Deposit of Rs.3950/-. Plaintiff also prayed for interest @ 12% from 29.10.1992 till the date of payment and also for an injunction restraining the fourth defendant from initiating/continuing revenue recovery proceedings against the plaintiff. Defendants contested the suit. Court below, after trial, decreed the suit in part, granting the plaintiff decree for recovery of an amount of Rs.27,841/- plus Rs.3950/- with interest @ 12% per annum from the date of the suit till recovery as also cost. Court below also passed a decree of injunction restraining revenue recovery proceedings being taken against the plaintiff without adjudicating the claim put forward by the defendants. Defendants have come up in appeal aggrieved by the decree of the court below.

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Plaintiff was awarded the contract relating to the construction work of PY.L.P.Maisentry Canal from CH 8255 M to 8350 M of Mathodam distributory. The agreement was executed on

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AS 60/1997

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30.4.1986 and cost of the work was estimated at Rs.91,796/- including the cost of the departmental materials. Plaintiff had agreed to complete the work at 25% below the estimated rate less the cost of departmental materials. The work was to be completed within three months from the date of handing over the site. Plaintiff contended that he was entitled to get monthly payments for the work done on running account. He contended that department did not issue the cement and steel necessary for the work in time. Department also did not make monthly payments. Plaintiff had completed a substantial portion of the work viz, 70%. He was not paid any amount nor was he given the materials to complete the balance work. Finally, department terminated the contract at the risk and cost of the plaintiff on 18.7.1999. Plaintiff prayed for revocation of the order of termination. There was correspondence between the parties. Ultimately, he sent an Advocate's notice demanding payment for the work done by him. The balance work was retendered in 1992 and awarded in 1993. Revenue recovery proceedings were later initiated against the plaintiff for recovery of differential amount. It was at this juncture, the suit was instituted.

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Separate written statement was filed by defendants 1 and 2 and by third defendant. The contentions are similar. It was contended by the defendants that the suit is barred by limitation, that the work

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AS 60/1997

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in question was awarded on 30.4.1986 and had to be completed within three months from the date of handing over of the site which was done on 28.7.1986. In spite of repeated notices, plaintiff did not complete the work. Therefore ultimately, the contract had to be terminated on 18.7.1989. The work completed by the plaintiff was measured and its value was also determined. The remaining work had to be retendered and as per the terms of the agreement, it was retendered at the risk and cost of the plaintiff. What was sought to be recovered by the defendants is only difference between the amount that had to be paid to the subsequent contractor and the amount that was payable to the plaintiff, had he completed the work. Defendants are entitled to recover such amount, by recourse to the provisions of Revenue Recovery Act, both by reason of the provisions of the Act and by virtue of the terms of the agreement.

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The trial court raised the following issues:-

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Whether the suit is barred by limitation?

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Whether the defendant/department failed to perform their part of the contract?

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Whether the plaintiff has completed 70% of the work?

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Whether the plaintiff stopped the work without informing the defendants?

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AS 60/1997

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Whether the plaintiff applied for revocation of the termination order before the competent authority?

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Whether the plaintiff is liable for the excess cost sustained by the department?

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Whether the plaintiff is liable to return the unused cement to the department and if so the quantity thereof?

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Whether any amount is due to the plaintiff and if so the correct amount?

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Relief and cost?

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The court below found that the suit is not barred by limitation on the ground that though the order of termination was dated 18.7.1989 and the suit itself was filed only on 10.8.1993, it seems that according to the court below, plaintiff had sought for a revocation of the order of termination and that therefore the suit cannot be considered as having become time barred. I am afraid, the court below has not considered either the law on the point or the materials on record. Admittedly, the order of termination of the contract with the plaintiff was dated 18.7.1989. The termination order issued in terms of the agreement provided for a retender of the work at the risk and cost of the plaintiff. The order of termination put an end to the contractual relationship between the parties. The terms of the contract also provided for a forfeiture of the EMD. It also provided for

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AS 60/1997

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retender of the work by the Department. It is a fact that the work was retendered at the risk and cost of the plaintiff. This fact was not denied by the plaintiff also. It is also not disputed by the plaintiff that the remaining portion of the work was done by another Contractor (DW3) and the termination order itself provided for retender of the work at the risk and cost of the plaintiff. The proceedings for recovery of the differential amount was initiated only in 1992-1993 and that is only a consequence of the order of termination. In fact, the plaintiff was even given credit for the value of the work done as measured by the Department, as is seen from the averments in paragraph 8 of the written statement. Recovery by recourse to the provisions of Revenue Recovery Act was made only after giving credit to the plaintiff for the value of the work done by him as determined by the Department on a measurement of the same. Thus, the proceedings for recovery of the differential amount and forfeiture of the EMD were only in consequence of the order of termination, which was passed on 18.7.1989. If that be so, the cause of action for the plaintiff should be taken to have arisen on 18.7.1989. The suit was filed only on 10.8.1993. The period for filing of the suit is three years from the date on which cause of action arose. In the circumstances, the defendants were right to contend that the suit was barred by limitation. The reasons given by the court for holding against the

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AS 60/1997

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defendants in this regard are incorrect. I have no hesitation to come to the conclusion that the suit was clearly barred by limitation.

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For the sake of completion, I have considered the issue as to whether the suit is barred by limitation from another angle also. One of the reliefs prayed for by the plaintiff is recovery of the amounts towards the value of the work done. According to him, he did the work in the year 1986. At any rate, the entirety of the work done by him must have been well before 1989. Even it is assumed for argument sake that the work was completed just prior to the order of termination dated 18.7.1989, the suit for recovery of the amount towards the value of the work should have been instituted within three years from the date on which the work was completed and the amounts, according to the plaintiff, fell due. Even from this view of the matter, the suit filed on 10.8.1993 was obviously barred by limitation.

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I take note of the fact that the defendants, in spite of taking a plea of limitation, had given the plaintiff credit for the value of the work done by him, on the basis of the measurements done by the Department in terms of the agreement. Of course the cost of the departmental materials had to be deducted. This, the defendants were obviously entitled to, even as per the terms of the contract.

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Recovery proceedings under the Revenue Recovery Act were

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AS 60/1997

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initiated only for the amounts due to the Department after giving the plaintiff credit for the value of the work done by him. If that be so, obviously Department could not have been restrained from proceeding with such revenue recovery proceedings.

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The learned Government Pleader has rightly pointed out that issue No.2 whether the defendants failed to perform their part of the contract, was, as a matter of fact, found by the court below in favour of the defendants. Court below specifically found that the Department did supply the cement to the plaintiff in time but plaintiff did not complete the work. Court below found as follows:-

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“ When the whole case is considered, it

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could be seen that there is no failure on the part of the Department to perform their part of the contract but it is on the part of the plaintiff”.

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If this be so, court below should have been consistent with its reasoning as aforementioned and held that the termination of the contract is not, in any manner, unsustainable. The other steps taken by the Department are only consequential.

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On an overall consideration of the pleadings of the parties and materials on record, I am of the view that the judgment and decree of the court is clearly unsustainable. Accordingly appeal is

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AS 60/1997 8

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allowed. Judgment of the court below is set aside and O.S.413 of 1993 on the file of Sub Court, Thalassery will stand dismissed. In the facts and circumstances of the case, parties shall bear their respective costs.

V.GIRI, JUDGE

lgk/-

AS 60/1997

V.GIRI, J

A.S.60 OF 1997

JUDGMENT

9.1.2009

State of Kerala v. a.K.Muhammed Kunhi

Case brief

What is this about?

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State of Kerala v. a.K.Muhammed Kunhi

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