Partly allowed

The Managing Director, Kerala Water Auth v. N.K.Mohammed

Kerala HC12 Apr 2018RFA/367/2007

Case brief

AI extract

What is this about?

In an appeal on a decree for money, the High Court upheld the lower court's judgment finding certain deductions illegal. The court reasoned that the defendants failed to prove their counter-claims or damages. The appeal was partly allowed solely to reduce the interest rate from 12% to 9% per annum.

What did the court decide?

Interest granted below reduced from 12% to 9% per annum; the rest of the decree is confirmed.

The Managing Director, Kerala Water Auth Vs… — Contract and Commercial Disputes | Kerala HC (2018)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE & THE HONOURABLE MR. JUSTICE P.SOMARAJAN

¶3

THURSDAY, THE 12TH DAY OF APRIL 2018 / 22ND CHAITHRA, 1940

¶4

RFA.No. 367 of 2007

¶5

AGAINST THE JUDGMENT IN OS 96/2001 of SUB COURT, MANJERI DATED 12/12/2006

¶6

APPELLANT(S)/DEFENDANTS 1 AND 2:

¶7

1 THE MANAGING DIRECTOR, KERALA WATER AUTHORITY, JALA BHAVAN, TRIVANDRUM. 2 THE EXECUTIVE ENGINEER, PUBLIC HEALTH DIVISION, KERALA WATER AUTHORITY,, MALAPPURAM.

¶8

BY ADVS. SRI.JOSEPH JOHN, SC, KERALA WATER AUTHORITY SRI.P.BENJAMIN PAUL, SC, KERALA WATER AUTHORITY

¶9

RESPONDENT(S)/PLAINTIFF::

¶10

N.K.MOHAMMED, 47 YEARS, S/O. MUKKARIKUTTY, NELLIKKUNNAN HOUSE,, MANGATTUPULAM P.O., KODUR AMSOM,, PERINTHALMANNA TALUK, MALAPPURAM DISTRICT.

¶11

R1 BY ADV. SRI.P.S.MURALI R1 BY ADV. SRI.T.R.RAVI

¶12

THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 20-02-2018, THE COURT ON 12-04-2018 DELIVERED THE FOLLOWING:

¶13

A.M. SHAFFIQUE & P.SOMARAJAN, JJ.

¶14

========================== RFA No. 367 of 2007

¶15

====================

¶16

Dated this, the 12^th day of April, 2018

¶17

J U D G M E N T

¶18

Shaffique, J.

¶19

The defendants in a suit for recovery of money are the appellants. OS No.96/2001 was filed by the respondent/plaintiff seeking for recovery of an amount of `38,49,923/- being the amount payable to him for the works undertaken by him for the defendants. Court below decreed the suit against which the appeal is preferred.

¶20

Before the Trial Court, plaintiff relief upon the oral testimony of PW1 and Exts.A1 to A14. The Executive Engineer, Kerala Water Authority was examined as DW1 on behalf of the defendants and and they relied upon Exts.B1 to B14.

¶21

The averments in the plaint disclose that the plaintiff had undertaken several works for the Kerala Water Authority. Despite completion of the work and preparation of final bill, payment was not made. Further, he had also made a claim for return of the security and retention amount of 10 lakhs, 50,000/- remitted as

¶22

RFA No. 367/07

¶23

-:2:-

¶24

security deposit for Class A registration under the department and also 2 lakhs for the extra item of work carried out by them. Since the amounts were not paid, plaintiff filed OP No.20077/1997 for a direction to effect payment. The High Court directed the claim to be considered. Since there was no further action, he preferred WA No. 342/1998 in which a direction had been issued to consider his representation within two months. Plaintiff also submitted a representation to the Managing Director, Kerala Water Authority. He thereafter received a reply which according to him contained false and frivolous contentions. According to the plaintiff, he had completed the entire work which had been narrated in the suit without any demur and therefore he was entitled for the suit claim. He made a demand for 52,60,985/-.

¶25

The defendants filed written statement denying the allegations raised. However, they admit the fact that plaintiff was an A class contractor who had undertaken various works in Malappuram District from 1984 onwards. According to them, the plaintiff had not attended the section office to take final measurement on the completed works and to accept the

¶26

RFA No. 367/07

¶27

-:3:-

¶28

measurements taken by the Assistant Engineers. He also did not return the balance materials for which the final bills were prepared. Further, he did not apply for extension of time for the works which were not completed within the stipulated period. It is further stated that final bills pertaining to 5 items were received in the Divisional Office. As per the directions issued by the High Court, plaintiff was asked to co-operate to take final measurements of the work that were completed and to return the department balance materials. Without cooperating with the defendants, plaintiff filed the suit. They also admit the fact that a representation was received from the first defendant on 31/7/1998 for which a reply was sent on 30/10/1998. It is stated that after preparation of final bill for all the works, the liability of the contractor is fixed as 1,94,768/- including the liability of 2,01,968/- paid in excess in work and pending recovery. They have also given the details of all the works in the written statement as A to T. It is stated that as per the said calculation, 9,73,100/- is due to the plaintiff in respect of various items. But for certain others, plaintiff has to pay 11,67,868/- to the first

RFA No. 367/07

-:4:-

defendant.

The Court below framed the following issues:-

¶33

“1) Whether the plaintiff is entitled to get any amount from the defendants as claimed by him in the plaint and if so, what is the quantum?

¶34

2) Whether plaintiff is liable to return any materials supplied by the defendants as alleged in the plaint?

¶35

3) What order as to reliefs and costs?”

¶36

On the basis of the evidence adduced, Court below found that the defendants did not dispute the works undertaken by the plaintiff except the work in respect of Amarambalam pump house. Defendants contended that they have withheld the security deposit, retention amount, cost of materials, recovery on the basis of Auditor General's objection and also loss of `2,70,000/- to be paid to the new contractor on termination of the work 'S'. Further amount had been deducted for bailing out water in connection with Kadalundi river which is described as item No.R. Court below found that there is no material or data available to the Court to assess the compensation as claimed in the written statement. However, the Court below placing reliance on the

¶37

RFA No. 367/07

¶38

-:5:-

¶39

judgments of the Apex Court in Union of India v. Rampur Distillery and Chemical Co. Ltd (AIR 1973 SC 1098) and Union of India v. Raman Iron Foundry (AIR 1974 SC 1265) observed that in the absence of any evidence to substantiate the alleged loss suffered by the defendants, it is not open for them to forfeit the security amount. Court below also placed reliance on the judgments in Brothers Chitty Fund v. Jacob Mathew (2004 (1) KLT 64) and S.S. Nair v. Travancore Devaswom Board (1987 (2) KLT 182) to contend that a suit on accounts by the plaintiff is not necessary and no evidence is to be adduced by the plaintiff in that regard. With reference to a contention that department materials were not returned back, it was observed that correspondence between the parties would show that there were no department materials to be returned. Further, there is no direct evidence adduced by the defendants with reference to the said disputed transaction. Court below also found that DW1 had no direct knowledge about the transaction alleged in the case. She took charge as Executive Engineer only on 21/8/2003 and can only place her evidence on the basis of the documents. To the

¶40

RFA No. 367/07

¶41

-:6:-

¶42

contention that the contractor was not co-operating with the measurement, it was found that in such event, it was open for the department to measure the work and finalise it which procedure has not been adopted. It is found that 19 items of work as shown in the plaint were completed long back and the defendant as DW1 was not in a position to show why the bills pertaining to the same were not finalised. It was also found that DW1 was unable to explain any infirmities in the details furnished by the defendants. Court below further found that when it is conceded by the plaintiff in the written statement, there is no necessity for further clarification in that regard. Plaintiff having produced all the records relating to the work, the Court below found that the decree can be granted in respect of works which had been admitted by the defendants. It was observed that when the bills were finally settled and the contractual amount was quantified by the defendants, the amount due was not disbursed on the ground that certain amount was to be realised from the plaintiff. Court below observed that if the defendants intend to recover any amount, they have to prove how such amounts became due

¶43

RFA No. 367/07

¶44

-:7:-

¶45

especially when the plaintiff have disputed the liability to pay. In the absence of any such proof, it is not open for the defendants to deny the payment. With reference to recovery of various amounts from the final bill due, Court below found that there was no materials to prove the said fact and they have not made a counter claim as such nor did seek set off. Therefore, their claim cannot be decided in the suit.

¶46

Court below therefore found that the deductions were illegal and in the absence of any further evidence to prove that the deductions were made pursuant to a contract between the parties, Court below had proceeded to pass a decree. While fixing the liability on the defendants, it was observed that the total amount payable as per the contract rate is 26,11,692/-. Further plaintiff was entitled to get the difference in respect of illegal deduction made by the defendants in respect of Kadalundi Weir which amounts to 7,65,844/-. Further, plaintiff was also entitled to get the unauthorized recoveries made on the basis of audit objection which would come to 1,06,787/- and 95,181/-. The deduction of `2,70,419/- for the Amarambalam work was also

¶47

RFA No. 367/07

¶48

-:8:-

¶49

found to be unjustified. Therefore, it was held that in addition to the contractual amount of 26,11,692/-, the illegally recovered sum amounting to 12,38,231/- was also to be paid and accordingly the amount payable was quantified at `38,49,923/-.

¶50

While impugning the aforesaid judgment, learned counsel for the appellants submitted that Court below had committed serious error of law in decreeing the suit. Various recoveries were made based on the contract between the parties and in such circumstances, the Court below was not justified in decreeing the suit as prayed for.

¶51

But it has to be seen that Court below had limited the claim of the plaintiff based on the admission made in the written statement. An amount of 26,11,692/- is directed to be paid based on the amount payable under different bills which are made on the basis of the admission contained in the written statement. Therefore the obligation to pay 26,11,692/- cannot be disputed. As far as the decree for further amount of 12,38,231/- is concerned, it comes under 4 different heads. A sum of 7,65,844/- is allegedly payable by the defendants in

¶52

RFA No. 367/07

¶53

-:9:-

¶54

respect of Kadalundi Weir.

¶55

The plaintiff at para 9 of the plaint has stated that the plaintiff was not at all liable to pay any amount to the defendants and no amount was recoverable from the plaintiff. In the notice sent by defendants, the claim was for `6,88,796/-. In the reply notice Ext.A7, the claim raised by the plaintiff was as under:-

¶56

(i) The cost of unreturned materials is `23,679/-

¶57

(ii) In respect of storage weir across the Kadalundi river, the work was not completed within specific period. Though it had to be completed on or before 17/3/1993, it was completed only in July, 1997. Due to extension of time of work, repeated pumping became necessary in every successive seasons and therefore the quantity exceeded which had been paid to the plaintiff considering the special situation of the work. But he was not entitled for any such payment. Therefore, he was not entitled to claim any enhanced rate.

¶58

(iii) On account of 17 works, there is a net liability of `2,56,277/-.

¶59

(iv) Anticipated liability on account of Amanambalam

¶60

RFA No. 367/07

¶61

-:10:-

¶62

construction of well-cum-pumphouse to be rearranged at his risk is at `2.10 lakhs

¶63

(v) For the work of WSS to Vazhikadav, the net liability will come to 20,551/-. Therefore the total liability was 6,88,796/-

¶64

In the written statement filed by the defendants, they admit that five final bills were seen and about 7 final bills were to be prepared. They have also given details of the 19 works mentioned in the plaint. After having given all the details pertaining to the work undertaken by the plaintiff, it is stated that the plaintiff was eligible to get a total amount of 9,73,100/- for certain works and he has to pay, 11,67,868/- for certain other works. Therefore, the net liability of the contractor for the 19 works will come to `1,94,768/- which includes the excess payment made to him. A perusal of the recoveries made from the plaintiff's bill would show that the same was not at all justifiable. Plaintiff had denied the recoveries. When there is dispute between the parties regarding the recoveries effected and a suit is filed by the plaintiff seeking the entire amount, it is the defendants obligation to prove that the recoveries were made in

¶65

RFA No. 367/07

¶66

-:11:-

¶67

terms of the contract and is not arbitrary. A party to a lis cannot be an “arbiter of it's own cause”, which is the settled legal position. Therefore, when the defendants admit that the plaintiff had carried out certain work and there is refusal to effect payment on the ground that plaintiff is liable to pay certain amount or rather the defendant can recover certain amounts from their final bills as damages, it is for the defendants to prove the said fact. If they claim any damages for the delay on the part of the plaintiff in carrying out the work, they have to pay Court fee for the said claim as well. In the case on hand, there is neither any proof nor have they raised any counter claim or set off.

¶68

The Trial Court had only taken note of the admitted amounts payable and found that certain recoveries were bad. When the Trial Court had considered the entire matter in detail and no perversity is found out in the finding of fact, we do not think that in exercise of appellate jurisdiction, we can interfere with the judgment of the Court below. In the result, we hereby sustain the judgment of the Court below.

¶69

Learned counsel for the appellants further submitted

¶70

RFA No. 367/07

¶71

that interest is awarded at the rate of 12% per annum from the date of suit till realisation. Apparently it is a commercial transaction. The money was due to the plaintiff as per the terms of the contract. At any rate, taking into account the prevailing rate of interest, the rate of interest stands reduced from 12% to 9% per annum.

¶72

In the result, this appeal is allowed in part reducing the interest granted by the Court below from 12% to 9% and in all other respects, the decree shall stand confirmed. The parties shall bear their own costs.

¶73

Sd/-

¶74

A.M. SHAFFIQUE, JUDGE

¶75

Sd/-

¶76

P.SOMARAJAN, JUDGE

¶77

¶78

//True Copy//

¶79