N.A. Sathyan S/o Achukutty v. State of Kerala and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR** **FRIDAY ,THE 31ST DAY OF AUGUST 2018 / 9TH BHADRA, 1940** ## **SA.No. 238 of 1999** **AGAINST THE JUDGMENT AND DECREE DATED 16.10.1998 IN AS 137/1994 of 1ST ADDL.DISTRICT COURT, THRISSUR** **AGAINST THE JUDGMENT AND DECREE DATED 19.12.1992 IN OS 559/1986 of 1ST ADDL.SUB COURT, THRISSUR** ## **APPELLANT/RESPONDENT/PLAINTIFF:** **1 N.A.SATHYAN S/O ACHUKUTTY, EX.P.W.D.CONTRACTOR, NEDUKKAPILLY HOUSE, P.O.NEERIKODU, VIA ALWAYE** **BY ADVS. SRI.K.RAMACHANDRAN SRI.K.MANU RAJ** ## **RESPONDENTS/APPELLANTS/DEFENDANTS:** **1. STATE OF KERALA** **2. THE SUPERINTENDING ENGINEER IRRIGATION CENTRAL CIRCLE, THRISSUR** **3. THE DISTRICT COLLECTOR, ERNAKULAM** **4. THE SUPERINTENDING ENGINEER PROJECT CIRCLE, MUVATTUPUZHA** **BY GOVERNMENT PLEADER, SRI.P.M.SATHISH, R1 TO R4** **THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 31.08.2018 ALONG WITH S.A.NO.258/1999, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** SA.Nos. 238 & 258 of 1999 2 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR** **FRIDAY ,THE 31ST DAY OF AUGUST 2018 / 9TH BHADRA, 1940** ## **SA.No. 258 of 1999** **AGAINST THE JUDGMENT AND DECREE DATED 16-10-1998 IN AS 138/1994 of 1ST ADDL.DISTRICT COURT, THRISSUR** **AGAINST THE JUDGMENT AND DECREE DATED 19-12-1992 IN OS 561/1986 of I ADDL.SUB COURT, THRISSUR** ## **APPELLANT/RESPONDENT/PLAINTIFF:** **1 N.A.SATHYAN S/O ACHUKUTTY, EX.P.W.D.CONTRACTOR NEDUKKAPPILLY HOUSE, P.O.NEERIKODUKKARA VIA ALWAYE,** **BY ADVS. SRI.K.RAMACHANDRAN SRI.K.MANU RAJ** ## **RESPONDENTS/APPELLANTS/DEFENDANTS:** **1. THE STATE OF KERALA** **2. THE SUPERINTENDING ENGINEER IRRIGATION CENTRAL CIRCLE, THRISSUR** **3. THE DISTRICT COLLECTOR, ERNAKULAM** **4. THE SUPERINTENDING ENGINEER, PROJECT CIRCLE, MUVATTUPUZHA** **BY GOVERNMENT PLEADER, SRI.P.M.SATHISH, R1 TO R4** **THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 31.08.2018, ALONG WITH S.A.NO.238/1999, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** SA.Nos. 238 & 258 of 1999 3 ## **JUDGMENT** **These second appeals arise from O.S Nos. 559 and 561 of 1986 on the files of the Court of the Subordinate Judge, Thrissur. The said suits as also the appeals preferred against the decisions therein were disposed of by common judgments. The second appeals are also therefore disposed of by this common judgment. The parties are referred to in the judgment as they appear in the suits.** **2. The parties to the suits are one and the same. The plaintiff in the suits is a contractor. The State of Kerala and its officers are the defendants. The plaintiff entered into two different contracts with the defendants for construction of two stretches of a seawall. The plaintiff has not constructed the seawalls covered by the contracts. The case set out by him in the plaints is that the contracts were entered into on the assumption that the stones required for execution of the works are available at the quarry mentioned in the contracts; that the said stones were not available at the** SA.Nos. 238 & 258 of 1999 4 **quarry mentioned in the contracts and that as the contracts were entered into under the impression that the stones are available at the quarry mentioned in the contracts, the same are void. It is alleged by the plaintiff in the plaints that nevertheless, the contracts were terminated by the defendants alleging breach on his part and works have been rearranged and also that steps are being taken thereupon to recover the loss claimed to have been sustained by the State while rearranging the works from the plaintiff. The plaintiff, therefore, prayed in the suits for decrees declaring that the contracts and its termination are void and also for injunction restraining the defendants from recovering any amount from him towards loss claimed to have been sustained by the State for rearranging the works.** **3. The suits were contested by the defendants. According to them, in terms of the contracts, it was obligatory for the plaintiff to arrange the stones required for execution of the works; that the contractors who were assigned the works relating to the remaining stretches of the seawall have completed the works; that** SA.Nos. 238 & 258 of 1999 5 **the works were rearranged since the plaintiff has not executed the works entrusted to him and that insofar as the works were rearranged, the plaintiff is liable to compensate the State in terms of the contracts for the loss sustained by it in that connection.** **4. The trial court found that it was obligatory for the plaintiff to arrange the stones required for the execution of the works in terms of the contracts and that therefore the contracts were valid and not void as contended by the plaintiff. Consequently, the declaratory reliefs claimed in the suits were declined. Nevertheless, it granted the plaintiff decrees restraining the defendants from recovering the loss claimed to have been sustained by the State while rearranging the works on the ground that the defendants, who are parties to the contracts, cannot quantify the loss and that the loss, if any, sustained by the State in a case of this nature needs to be quantified by an external agency. The defendants challenged the decisions of the trial court in appeals. The plaintiff raised cross objections in the appeals challenging the decisions of** SA.Nos. 238 & 258 of 1999 6 **the trial court in declining the declaratory reliefs claimed in the suits. The appellate court, on a reappraisal of the materials on record, allowed the appeals and dismissed the cross objections as also the suits. The plaintiff is aggrieved by the decisions of the appellate court. Hence, these second appeals.** **5. Heard the learned counsel on either side.** **6. Exhibits B1 and B2 are the agreements entered into by the plaintiff with the defendants for execution of the works. The plaintiff has no case that he has executed the works covered by the contracts. The case of the plaintiff, on the other hand, is that the contracts are void as the same were entered into on the mistaken assumption that stones required for execution of the works are available at the quarry mentioned in the contracts. It was on that basis that the plaintiff has claimed the reliefs in the suits. Placing reliance on the terms of the notice inviting tenders, which forms part of the contracts, the courts below found that it was not obligatory for the defendants to ensure presence of the stones at the quarry mentioned in the contracts; that in** SA.Nos. 238 & 258 of 1999 7 **terms of the contracts it was for the plaintiff to supply the stones for the execution of the works from the available sources and that the contracts are therefore not void. In other words, the courts below found concurrently that the contracts were valid and enforceable. I am in respectful agreement with the aforesaid findings rendered by the courts below. Even otherwise, the question whether the contracts are void or not being a pure question of fact, this court cannot interfere with the said factual findings, unless it is established that the same are perverse. It is not demonstrated by the plaintiff before this Court that the factual findings arrived at by the courts below on the said question are perverse. The learned counsel for the plaintiff, placing reliance on the documents produced by the plaintiff indicating the nonavailability of the stones of the requisite sizes at the quarry mentioned in the contracts, contended that the findings on the said question are unsustainable in law. In so far as it is found that the plaintiff was obliged to execute the works by procuring the stones from available sources, the** SA.Nos. 238 & 258 of 1999 8 **plaintiff cannot be heard to contend that the findings rendered by the courts below on the said question are unsustainable on the ground that stones were not available at the quarry mentioned in the contracts.** **7. The question remains to be considered is as to whether the appellate court is justified in holding that the plaintiff is not entitled to even the decree of injunction granted to him by the trial court. As noted, injunction was sought by the plaintiff on the basis that the contracts are void. The trial court granted the injunction sought by the plaintiff not because that the contracts are void, but for the reason that the loss, if any, sustained by the State in a case of this nature while rearranging the works needs to be quantified by an external agency. There is no dispute to the fact that the time prescribed in the contracts for execution of the works, was over when the suits were instituted. The plaintiff has no case that he has executed the works covered by the contracts. The case of the plaintiff is only that the contracts are void. Insofar as the said case the plaintiff is found against and insofar as it is** SA.Nos. 238 & 258 of 1999 9 **admitted that the works were not executed, a case of this nature is liable to be treated as a case where the plaintiff admits breach of contract. In** _**Abdul Rahiman v. Divisional Forest Officer [1988 (2) K.L.T. 290]**_ **, a Full Bench of this Court, overruling the earlier decision of this Court in** _**Chellappan v. Executive Engineer [1979 K.L.T. 53]**_ **, held as follows:** _**“When a contract is broken, the party who suffers by such breach is entitled to receive from the party who has broken the contract, compensation for any loss or damage caused to him thereby. This principle of S.73 of the Contract Act equally applies where one of the contesting parties is the Government. It is the breach of the contract that gives rise to the cause for damages. The primary duty therefore is to fix the liability for the breach. Assessment of damages is only an incidental or subsidiary function. The liability to pay damages is thus fastened where there is breach of contract.**_ _**However, when a dispute arises as to whether the contract has been broken or not, that dispute cannot be settled by one of the parties to the contract, for, he cannot be an arbiter in his own cause. The dispute may**_ SA.Nos. 238 & 258 of 1999 10 _**have to be referred to an arbitrator or the matter has to be settled in a Court of law. This principle applies to the Government also as a party to the contract.**_ _**Where the breach of the contract is admitted, i.e., where there is no dispute that the contract has been 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. In that event, the question of damages alone remains to be considered. 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. 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 outside agency for the fixation of the quantum of damages. Similarly, if the contract itself provides that “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 second party,**_ SA.Nos. 238 & 258 of 1999 11 _**in case the breach is admitted, is binding on the first part and there is no more any necessity for a further quantification of the damages by any outside agency. 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.” (underline supplied)**_ **8. The contracts do not prescribe the amount payable by the plaintiff in liquidation of the claim of the defendants for compensation in the event of breach. As held by this Court in** _**Abdul Rahiman**_ **(** _**supra**_ **), in a case where the breach of contract is admitted, and if the contract provides that one party shall be liable to pay damages as assessed by the other party, there is no need to quantify the damages by an outside agency. In the light of the said decision of the Full Bench, the question is whether the terms of the contracts do authorise the defendants to assess the damages. It is seen that the appellate court answered the said question in favour of the defendants relying on clause 32 of the** SA.Nos. 238 & 258 of 1999 12 ## **special conditions attached to the contracts. The said clause reads thus:** _**“The Executive Engineer shall also have power to ensure up the work of the contractor and to take such part thereof as shall be unexecuted out of his hands and to give it to another contractor to complete in which case any expense which may be incurred in excess of the whole work has been executed by him, the amount of which excess, the certificate in writing of the Divisional Officer shall be final and conclusive, be borne and paid by the original contractor and may be deducted from any money due to him by Government under the contractor otherwise from his security deposit of the proceeds of sale thereof or a sufficient part thereof.”**_ **9. A reading of the aforesaid term of the contracts indicates beyond doubt that if the works are not executed by the plaintiff and the same are rearranged on account of the said reason, the plaintiff is liable to pay to the State by way of damages the additional expenditure incurred by the State in this connection. In the light of the said term of the contract, I do not think that it is necessary for an external agency to** SA.Nos. 238 & 258 of 1999 13 **quantify the loss sustained by the State while rearranging the works entrusted to the plaintiff. In the light of the decision aforesaid, according to me, the defendants are entitled to realise from the plaintiff the additional expenditures incurred while rearranging the works entrusted to the plaintiff without recourse to any other proceedings. The appellate court, in the circumstances, is right in declining the plaintiff the relief of injunction sought in the suits.** **The second appeals, in the circumstances, are devoid of merit and the same are accordingly dismissed.** **Sd/-** **P.B.SURESH KUMAR** **JUDGE** **SKS**