Dismissed

M.I. Abdul Azez v. Rehabilitation Plantations Ltd.

Kerala HC2 Sept 2019WP(C)/1641/2016

Case brief

AI extract

What is this about?

The court dismissed a writ petition challenging a quantification of damages and revenue recovery notice. It held that where breach of contract is admitted, the entitled party need not await adjudication by an outside agency to fix quantum of damages. The writ was dismissed, and the remedy of filing a civil suit for factual disputes was left open.

What did the court decide?

The relief sought against Ext.P4 (quantified damages) and Ext.P6 (revenue recovery notices) was declined.

M.I. Abdul Azez Vs Rehabilitation… — Contract and Commercial Disputes | Kerala HC (2019)

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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 SHAJI P.CHALY

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MONDAY, THE 02ND DAY OF SEPTEMBER 2019 / 11TH BHADRA, 1941

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WP(C).No.1641 OF 2016(E)

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PETITIONER:

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M.I. ABDUL AZEZ AGED 65 YEARS S/O.M.B.IBRAHIM RAWTHER,PROPRIETOR-MADATHIL RUBBERS,MADATHIL HOUSE, KANJIRAPPALLY P.O., KOTTAYAM 686 507

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BY ADVS. SRI.LIJI.J.VADAKEDOM SMT.REXY ELIZABETH THOMAS SRI.RAJEEV JYOTHISH GEORGE

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RESPONDENTS:

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1 REHABILITATION PLANTATIONS LTD REGD. OFFICE AT PUNALUR - 691 305,KOLLAM REPRESENTED BY ITS MANAGING DIRECTOR

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2 MANAGING DIRECTOR REHABILITATION PLANTATIONS LTD., REGD. OFFICE AT PUNALUR - 691 305,KOLLAM

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3 DEPUTY TAHSILDAR(R.R) TALUK OFFICE-KANJIRAPPALLY,KANJIRAPPALLY PO, KOTTAYAM DISTRICT - 680 509

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4 VILLAGE OFFICER - KANJIRAPPALLY, TALUK OFFICE ,KANJIRAPPALLY, KANJIRAPPALLY PO,KOTTAYAM DISTRICT - 686 513

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R1 BY ADV. SMT.MARIAM MATHAI SRI.SAJI VARGHESE R3 & R4 BY SRI.B.VINOD,SENIOR GOVERNMENT PLEADER

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30-082019, THE COURT ON 02-09-2019 DELIVERED THE FOLLOWING:

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WP(C).No.1641 OF 2016(E)

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JUDGMENT

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This writ petition is filed by the petitioner

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seeking to quash Ext.P4 quantification and demand raised by the 1^st & 2^nd respondents directing the petitioner to pay a sum of Rs.7,96,535/- within 30

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days of the acceptance of the order, failing which, revenue recovery proceedings will be initiated to recover the amount with interest at the prevalent bank rate without further notice and consequential recovery

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notices issued under sections 7 & 34 of the Kerala Revenue Recovery Act. Basic material facts for the disposal of the writ petition are as follows;

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Petitioner submitted his tender for the

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purchase of 43 MT crumb rubber notified for sale by the 1^st respondent - Rehabilitation Plantations Ltd.

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Bid of the petitioner was accepted in the auction conducted on 1.7.2014. Petitioner failed to lift 40MT of crumb rubber out of 43 MT sold and consequent to

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which 2^nd respondent initiated proceedings to fix damages against the petitioner without adjudication, evident from Ext.P1 show cause notice. Against Ext.P1 notice petitioner submitted Ext.P2 reply, therein petitioner pointed out that, the letter of acceptance

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WP(C).No.1641 OF 2016(E) 3

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issued by the company is delayed for a period of two weeks. In the meantime, the market price of the crumb rubber has fallen down. Petitioner has also submitted that, the company withheld an amount of Rs.1,03,000/due to the petitioner, which also resulted in nonlifting of the product. It is further pointed out that, the product itself was found to be of low

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quality which resulted in purchasers brought to the factory refusing to lift the same. Therefore, according to the petitioner, 1^st respondent - the contracting party instead of fixing the liability and damages against the petitioner - the counter party to the contract, ought to have got the issue adjudicated by the civil court. So also instead of doing so, 2^nd respondent Managing Director issued Ext.P4

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proceedings, by which damages of Rs.11,71,735/- is

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fixed against the petitioner and after adjustments of amounts available with the respondent, petitioner was

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directed to pay the amount as is shown in Ext.P4. The point raised by the petitioner is that, as per the law

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laid down by the Apex Court in State of Karnataka v.

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Sree Rameshwara Rice Mills [AIR 1987 SCC 1359], one of

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the contracting parties to a contract cannot fix

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WP(C).No.1641 OF 2016(E) 4

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liability against his counter part to the contract unilaterally by alleging breach but has to get the issue decided by adjudicating forum i.e., a court or Arbitral Tribunal. Other contentions are also raised.

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First respondent has filed a detailed counter

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affidavit justifying its stand by raising demand as per Ext.P4 and initiating consequential action as per Ext.P6 recovery notices under the Kerala Revenue Recovery Act, 1968.

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I have heard learned counsel for petitioner Sri.Liji J.Vadakedom, learned counsel appearing for 1^st and 2^nd respondents Smt.Mariam Mathai and learned Senior Government Pleader Sri.B.Vinod and perused the pleadings and documents on record.

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The question emerges for consideration is

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whether the quantification done by the 2^nd respondent can be sustained under law, since 2^nd respondent was

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one of the contracting parties ? I am of the

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considered opinion that, petitioner has not disputed the termination of contract by the 2^nd respondent. It is also not disputed that, the authority is vested with powers under the contract entered into by and

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between the parties to quantify the damages in case of

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WP(C).No.1641 OF 2016(E) 5

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failure on the part of the petitioner to comply with the terms and conditions of the agreement. Admittedly, petitioner has not complied with the terms and conditions of the contract. It was thereupon that the contract was terminated and after issuing notice the damages were fixed. The issue was considered by a Full Bench of this court in Abdul Rahiman v. Divisional Forest Officer [1988(2)KLT 290(FB)] and it was held that where breach of contract is admitted i.e., where there is no dispute that the contract has broken by one of the parties, the Government as the party entitled to claim compensation for the breach need not wait for a determination by any outside agency as to whether there was any breach of contract and in that event the question of damages alone remains to be considered. It is also held thereunder that, a sum can be named in the contract as the amount to be paid in case of breach, an amount in liquidation of the claim for compensation and the contract can thus provide for liquidated damages in the event of breach and the Government claiming that amount as compensation for the admitted breach committed by the other party to the contract, need not seek the aid of court or any

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WP(C).No.1641 OF 2016(E) 6

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outside agency for the fixation of the quantum of damages. Similarly, if the contract itself provides that, one party shall be liable to pay damages to the second party as may be assessed by the second party, the assessment by the 2^nd party, in case the breach is admitted, is binding on the 1^st party and there is no more any necessity for a further quantification of the damages by any outside agency and the party assessing the damage can straight away seek to recover the amount and if that party is the Government, it can have recourse to the remedy available under the Kerala Revenue Recovery Act.

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Same is the situation in the judgment cited by the petitioner referred to above. In that view of the matter, I do not think, the question raised by the petitioner that, 2^nd respondent cannot unilaterally fix the damages cannot be sustained. Therefore, the relief

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sought for by the petitioner against Ext.P4 and consequential Ext.P6 revenue recovery notices are declined. However, learned counsel for petitioner submitted that, there is dispute with respect to the factual issue of the quantity of crumb rubber. Anyhow that is a subject matter to be adjudicated by a civil

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WP(C).No.1641 OF 2016(E) 7

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court since various factual circumstances are to be elicited before entering into any finding in that aspect and if petitioner has such a case the remedy available to the petitioner was to file civil suit and to get the issue adjudicated.

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In that view of the matter, the writ petition is dismissed, however, I make it clear, if the petitioner is aggrieved with respect to the quantity of crumb rubber that was made available for lifting, the remedy of the petitioner to approach the civil court is left open but in accordance with law.

Sd/-

SHAJI P.CHALY

Smv 5.9.2019

JUDGE

WP(C).No.1641 OF 2016(E)

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APPENDIX

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PETITIONER'S EXHIBITS:

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EXHIBIT P1 EXHIBIT P1 COPY OF THE SHOW CAUSES NOTICE DATED 29/9/2014 ISSUED BY THE 2ND RESPONDENT

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EXHIBIT P2 EXHIBIT P2 COPY OF THE REPLY DATED 13/10/2014 ISSUED TO THE 2ND RESPONDENT

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EXHIBIT P3 EXHIBIT P3 COPY OF THE COMMUNICATION DATED 5/11/2014 ISSUED BY THE 2ND RESPONDENT

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EXHIBIT P4 EXHIBIT P4 COPY OF THE PROCEEDINGS DATED 31/7/2015 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER

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EXHIBIT P5 EXHIBIT P5 COPY OF THE REPLY DATED 14/9/2015 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT

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EXHIBIT P6 EXHIBIT P6 COPY OF THE REVENUE RECOVERY NOTICE UNDER SECTION 7 AND 34 OF THE KERALA REVENUE RECOVERY ACT ISSUED BY THE 3RD RESPONDENT DATED 7/12/2015

M.I. Abdul Azez v. Rehabilitation Plantations Ltd.

Case brief

What is this about?

What did the court decide?

M.I. Abdul Azez v. Rehabilitation Plantations Ltd.

Case brief

What is this about?

What did the court decide?

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