Allowed

The Superintending Engineer v. K.a.Joy

Kerala HC7 Jan 2020WA/1605/2016

Case brief

AI extract

What is this about?

This writ appeal challenged a High Court judgment that declined interest on an amount due from a terminated government contractor. The Supreme Bench interpreted Section 6 of the Kerala Revenue Recovery Act, 1968 to apply to contractual arrears as 'engagement' and allowed the government to recover interest, permitting payment via instalments.

What did the court decide?

The writ appeal allowed; the learned single Judge's judgment set aside; liberty granted to recover interest; petitioner permitted to pay outstanding interest in 5 equated monthly instalments.

The Superintending Engineer Vs K.a.Joy — Public Procurement and Tenders | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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TUESDAY, THE 07TH DAY OF JANUARY 2020 / 17TH POUSHA, 1941

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WA.No.1605 OF 2016

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AGAINST THE JUDGMENT IN WPC 7447/2013 DATED 10-08-2015 OF HIGH COURT OF KERALA

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APPELLANTS/RESPONDENTS IN W.P.(C):

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1 THE SUPERINTENDING ENGINEER, PWD, MUVATTUPUZHA 686 661.

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2 THE EXECUTIVE ENGINEER, OFFICE OF THE CIVIL ENGINEER, EDAMALAYAR IRRIGATION PROJECT DIVISION, ANGAMALY 683 572.

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3 THE VILLAGE OFFICER, MANICKAANGALAM 683 574.

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4 THE VILLAGE OFFICER, KALADY 683 574.

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5 THE DEPUTY TAHSIDAR (R.R) TALUK OFFICE, ALUVA

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6 THE CHIEF ENGINEER, PROJECT-II, IRRIGATION, TRIVANDRUM 695 001.

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7 STATE OF KERALA, REP. BY THE ADDITIONAL SECRETARY TO GOVERNMENT, WATER RESOURCES (MP) DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM.

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BY SRI. SURIN GEORGE IPE, SR. GOVERNMENT PLEADER

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RESPONDENT/PETITIONER IN W.P.(C):

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K.A.JOY

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KOLENCHERRY HOUSE, NEELESWARAM P.O, KALADY VIA, MANICKAMANGALAM.

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R1 BY ADV. SRI.PHILIP J.VETTICKATTU R1 BY ADV. SRI.VINEETH KURIAKOSE

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THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 07-01-2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W.A.No. 1605/2016

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: 2 :

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Dated this the 7^th day of January, 2020.

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JUDGMENT

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Shaji P. Chaly, J

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This writ appeal is filed by the respondents in W.P.(C) No. 7447 of 2013 against the judgment dated 10.08.2015, whereby interest, on the amount due to the Government, on account of the contract awarded was declined by the learned single Judge. The subject issue in the writ petition was the termination of contract awarded to the writ petitioner, on 28.06.1982 and on account of the termination, the appellants have raised a demand to remit an amount of Rs.3,32,550/- presumably in terms of the contract and the relevant provisions of PWD manual in respect of awarding contracts by the Government. Initially, Ext.P2 notice was issued raising the demand for principal amount only, and no demand was raised for interest. The said demand was challenged before this Court by filing OP No. 10188 of 1983, which was dismissed. Eventhough an appeal was preferred by the writ petitioner, it was also dismissed as per judgment dated 19.06.1990 in W.A. No.

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W.A.No. 1605/2016 : 3 :

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348 of 1990, however leaving open the liberty of the writ petitioner to approach the Civil Court challenging the termination of contract. Apparently, the writ petitioner filed O.S. No. 532 of 1990 before the Additional Sub Court, North Paravur and the said suit was decreed declaring that the termination was illegal. Aggrieved, the State filed an appeal as A.S. No. 98 of 1996 before this Court and in the said appeal, the judgment and decree of the Subordinate Judge's Court was set aside and the suit was dismissed. Thereafter, Ext.P6 demand notice and Ext. P7 recovery notices were issued wherein the amount claimed was Rs.15,10,104/- inclusive of interest. It was challenging the said demand that the writ petition in question was filed primarily on the ground that in the original revenue recovery demand i.e., Ext.P2, no demand for interest was raised. Further, it is contended that the amount is claimed as damages and there is no determination of liability and therefore, the liability itself is questionable. Anyhow, from the judgment of the learned single Judge, it is evident that the writ petitioner was prepared to pay the principal amount, and it was submitted before the learned single

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W.A.No. 1605/2016 : 4 :

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Judge that already an amount of Rs.5,00,000/- was deposited. The learned single Judge, thereupon, held that normally the interest could be levied based on the determination of liability and for the delay in payment, and further observed that the writ petitioner made a request before the Superintending Engineer to waive interest, which was rejected as per Ext.P14. However, relying upon Ext.P12, a communication issued in the year 2011 in a similar situation against one P.O. Paulose, the learned single Judge found that the Superintending Engineer only demanded principal amount without claiming interest and therefore, the recovery against the petitioner towards the interest will be discriminatory. It is this portion of the judgment that is under challenge in the writ appeal.

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We have heard Sri. Surin George Ipe, the learned Senior Government Pleader and Sri. Philip J Vettickattu, the learned counsel appearing for the respondent/writ petitioner and have perused the pleadings and documents on record.

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The learned Government Pleader basically addressed the arguments relying upon Section 6 of the

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W.A.No. 1605/2016 : 5 :

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Kerala Revenue Recovery Act, 1968 ('the Act, 1968' for short) dealing with “the interest on arrears of public revenue due on land”, which stipulates that “arrears of public revenue due on land shall bear interest at the rate of 12 per cent per annum or at such other rate as may be notified by the Government from time to time in the Gazette.” Harping upon the said provision, learned Senior Government Pleader contended that eventhough there is no specific provision made in the contract entered into by and between the parties for recovery of interest against any amount due to the Government on account of the termination of the contract, the aforesaid statutory provision will have to be read into the contract, since the Government or any authority functioning under the Government is entitled to enter into a contract overlooking a statutory provision.

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On the other hand, the learned counsel appearing for the respondent, Sri. Philip J. Vettickattu, has submitted that the amount due under a contract will not be governed by 'the arrears of public revenue due on land' and therefore, Section 6 of the Act, 1968 will not apply to the

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W.A.No. 1605/2016 : 6 :

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facts and figures available in the case at hand.

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The learned counsel has also taken us to Section

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2(a) of the Act, 1968 dealing with the definition of 'the arrears of public revenue due on land', which defines that “means the whole or any portion of any kist or instalment of such revenue not paid on the day on which it falls due according to the kistbandy or any engagement or usage.”

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The contention advanced by the learned counsel is that none of the eventualities contemplated under 'the arrears of public revenue due on land' will come into play so as to invoke the powers to demand interest as is contemplated under Section 6 of the Act, 1968.

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We have appreciated the rival contentions made across the Bar. In our considered opinion, 'the arrears of public revenue due on land' as defined under Section 2(a) of the Act, 1968 deals also with 'engagement, other than kistbandy'. The word 'engagement' is not defined under the Act, 1968. The word 'engagement' is defined under the Black's Law Dictionary, 9^th Edition to mean 'a contract or agreement involving mutual promise'. It is an admitted fact that the amount has fallen due from the writ petitioner on

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account of a contract entered into by the writ petitioner with the Government. Therefore, the issue is squarely covered under 'the arrears of public revenue due on Land'. We are also of the opinion that whatever be the terms of the contract, if any amount had fallen due from the writ petitioner on account of the contract, necessarily the provision contained under the Act, 1968 will come into play and therefore, Section 6 has come into play, when the amount had fallen due from the writ petitioner on account of the contract entered into by and between the parties. This is exactly the question considered by the Apex Court in the judgment in Clariant International Ltd. v. Securities & Exchange Board of India¹ and paragraphs 30 and 31 are relevant to the context, which read thus:

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“30. Interest can be awarded in terms of an agreement or statutory provisions. It can also be awarded by reason of usage or trade having the force of law or on equitable considerations. Interest cannot be awarded by way of damages except in cases where money due is wrongfully withheld and there are equitable grounds therefor, for which a written demand is mandatory.

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In the absence of any agreement or statutory provision or a mercantile usage, interest payable can be only at the market rate. Such interest is payable upon establishment of totality of circumstances justifying exercise of such equitable jurisdiction. (See Municipal Corpn. of Delhi v. Sushila Devi, SCC para 16 [(1999) 4 SCC 317]”

1 (2004) 8 SCC 524

W.A.No. 1605/2016

: 8 :

We are also informed by the learned Government Pleader, Sri. Surin George Ipe, that demand was raised towards interest against Mr. P.O. Paulose after the writ petition was disposed of and the same was recovered. So much so, we are of the considered opinion that merely because the demand was not raised for interest against yet another contractor, that cannot be a binding precedent for a Court to consider the question as to whether the demand for interest raised by the Government against the writ petitioner was in accordance with law. We are satisfied that the issue was raised by the writ petitioner before the Superintending Engineer itself, which was declined and merely because when a demand was raised originally, no interest was demanded, that will not detain the Government from demanding interest at a later point of time.

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That being the legal and factual situation, we are of the considered opinion that the appellants are entitled to succeed in the writ appeal and the writ appeal is accordingly allowed and the judgment of the learned single Judge is set aside. Needless to say, the appellants are at

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liberty to proceed with the demand for recovering the interest. However, we feel that an opportunity can be provided to the writ petitioner to pay outstanding amount of interest in reasonable equated monthly instalments. Accordingly, we permit the petitioner to pay the interest amount outstanding in 5 equated monthly instalments starting from 27.01.2020 and on the corresponding dates of the successive four months. However, if any of the instalments is violated, the appellants will be at liberty to proceed with the recovery and to recover the amount in lump and in accordance with law.

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sd/-

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S. MANIKUMAR, CHIEF JUSTICE.

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sd/-

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SHAJI P. CHALY, JUDGE.

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W.A.No. 1605/2016 : 10 :

The Superintending Engineer v. K.a.Joy

Case brief

What is this about?

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The Superintending Engineer v. K.a.Joy

Case brief

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