State of Kerala and others v Shaji Uthup

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.ANIL KUMAR** **FRIDAY, THE 9[TH] DAY OF JULY, 2021/18TH ASHADHA, 1943** ## **RSA NO.433 OF 2005** **[AGAINST THE JUDGMENT AND DECREE DTD.08.10.2004 IN A.S. NO.145/2001 OF SUB COURT,THODUPUZHA, IDUKKI ARISING OUT OF JUDGMENT AND DECREE DTD.20.09.2000 IN O.S.NO.377/97 OF MUNSIFF'S COURT, DEVIKULAM]** ## **APPELLANTS/RESPONDENTS IN THE AS/DEFENDANTS IN OS:** 1 STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. 2 THE CHIEF CONSERVATOR OF FORESTS THIRUVANANTHAPURAM. 3 THE CONSERVATOR OF FORESTS THRISSUR CIRCLE, THRISSUR. 4 THE DIVISIONAL FOREST OFFICER MALAYATTOOR. BY SPL.GOVERNMENT PLEADER FOR FOREST OFFENCES SRI.SANDESH RAJA. ## **RESPONDENT/APPELLANT IN THE A.S./PLAINTIFF IN O.S.:** SHAJI UTHUP, S/O.UTHUP, CHENGAMANADU HOUSE, KALLADUKARA, KEERAMPARA VILLAGE, KOTHAMANGALAM TALUK. BY ADV SRI.UNNIKRISHNAN.V.ALAPATT THIS REGULAR SECOND APPEAL HAVING COME UP FOR ADMISSION ON 07.07.2021, THE COURT ON 09.07.2021 DELIVERED THE FOLLOWING: R.S.A.No.433 of 2005 **==> picture [21 x 9] intentionally omitted <==** ## **J U D G M E N T** This appeal is directed against the judgment and decree dated 8.10.2004 in A.S.145/2001 on the file of the Sub Court, Thodupuzha arising out of the judgment and decree dated 20.9.2000 in OS 377/1997 of the Munsiff's Court,Devikulam. The defendants 1 to 4 in O.S.No. 377/1997 are the appellants and the respondent is the plaintiff in the above case. The parties are hereinafter referred to as 'the plaintiff' and 'the defendant', according to their status in O.S.No. 377/1997, unless otherwise stated. 2. The plaintiff instituted the suit for declaration that he is not liable for the loss of damages caused to the defendants in re-auctioning of 1586 and 210 numbers of teak poles described in the plaint and also for recovery of an amount of Rs.66,570/- with interest. According to the R.S.A.No.433 of 2005 **==> picture [21 x 9] intentionally omitted <==** plaintiff, in the auction of teak poles conducted at Thundathil Range in Bhoothathankettu on 23.7.1996, he had bid 1897 numbers of class III teak poles, at the rate of Rs.660/- and 1041 numbers of class IV teak poles at the rate of Rs.192/-per pole. Out of the class III teak poles, he took delivery of 311 teak poles and the remaining poles were not taken possession as it were not available as per the specification fixed for the same. Later, on enquiry, the plaintiff came to know that the teak poles were removed from the lots and substituted with inferior quality poles. However, by letter dated 27.8.1997, he was informed that the said 1586 poles would be re-auctioned on 18.9.97 at his risk and costs. Though he made various representations stating that he is not liable to pay any amount as loss or damage, the representations were not considered by the R.S.A.No.433 of 2005 **==> picture [21 x 8] intentionally omitted <==** defendants. He had also paid the value of 1041 teak poles of class IV, but took possession of 831 poles. The remaining 210 poles were not available at site. On enquiry, he understood that those teak poles were removed from the site. He paid a sum of Rs.46,570/- for the 210 teak poles including the forest development tax at 5% and sales tax at 10%. He also deposited Rs.20,000/- towards Earnest Money Deposit. Since the defendants were responsible for supplying the above items as per the actual specifications, the present suit was filed for declaration and realization of money. 3. In the written statement filed, the defendants admitted that the plaintiff had bid various items of teak poles in the auction conducted on 23.7.1996 at Bhoothathankettu of Thundathil Range. It is admitted that R.S.A.No.433 of 2005 **==> picture [21 x 8] intentionally omitted <==** 210 class IV teak poles were not removed. He did not remit the value of 1586 IIIrd class poles within the grace period. On the written request of the plaintiff, currency of the chalan was extended by one month by the Range Officer and another one month by the Divisional Forest Officer. He was also liable to pay penal interest to the belated remittance at 18% for the first month and 24% for the second month. The plaintiff deliberately did not raise any compliant touching the quality and quantity of the items till the notice intimating the re-auction was served on him. The contention that 1586 teak poles were substituted with inferior quality poles is not true. Such a complaint cannot be entertained after the sale. As the plaintiff failed to remit the dues within the time, he became a defaulter. Hence, by letter dated 27.8.1997, he was informed that the unremoved R.S.A.No.433 of 2005 **==> picture [21 x 9] intentionally omitted <==** poles would be re-auctioned on 18.9.1997 at his risk and loss. Later, those teak poles were re-auctioned on 31.10.1995 as per the conditions of sale. The plaintiff is liable to pay the loss sustained by the Government in the reauction. It is admitted that he had remitted the value and taxes of 1041 class IV teak poles. He was also issued permits for removing the same, but he removed only 831 poles within the time. On his request, the currency of permit was extended for the remaining 210 poles. But, he failed to remove the same within six months and the same were put up for re-auction on 19.12.1997 as per clause 6(c) of the sale conditions. He, being a defaulter, the plaintiff is not entitled to get refund of the sale proceeds of the 210 poles. The plaintiff himself is responsible for the re-auction. As there was wilful laches on his part, he is liable to make good the R.S.A.No.433 of 2005 **==> picture [21 x 8] intentionally omitted <==** loss sustained by the Government. 4. The trial court framed four issues. During the trial of the case, PW1 was examined and marked Exts.A1 to A13 and C1 on plaintiff's side. There was no oral evidence for the defendant. After having heard both sides, the trial court dismissed the suit. Challenging the judgment and decree, the State preferred an appeal before the first appellate court. By the judgment dated 8.10.2004, the first appellate court set aside the judgment and decree of the trial court and granted a decree for realisation of Rs.46,570/together with future interest at 6% per annum from the date of suit till realisation and costs at proportionate rate from the defendants and their assets. Aggrieved by the above, this second appeal has been filed. 5. When this matter came up for admission on 6[th] R.S.A.No.433 of 2005 ..8.. January,2020, this Court admitted the case and formulated the following substantial question of law for consideration in this second appeal. “Has not the lower appellate court failed in its jurisdiction in not applying the ratio laid down by Full Bench of this Hon'ble Court in **Abdul Rahman** v. **Divisional Forest Officer** [1988 (2) KLT 290]?” When this appeal came up for consideration today, this Court formulated an additional substantial question of law as follows:- “Whether the finding of the first appellate court is perverse? If so, whether the plaintiff in the suit has not proved his claim to seek recovery of money by producing the terms and conditions of the original agreement between the parties?” 6. Heard the learned Special Government Pleader Sri.Sandesh Raja for the appellants and Mr.Unnikrishnan.V.Alappatt, learned counsel for the R.S.A.No.433 of 2005 ..9.. respondent. 7. The learned Special Government Pleader submitted that the plaintiff, having failed to take delivery of the teak poles, had violated the terms of the sale conditions and hence, he is not entitled to realise the value of the timber. He further contended that the first appellate court bifurcated a single contract of sale and having found that the plaintiff is not entitled for the Earnest Money Deposit, the first appellate court went wrong in granting a decree for part of the amount for the breach committed by the plaintiff. Relying on the decision reported in **Abdul Rahiman** v. **Divisional Forest Officer** [1988(2) KLT 290], the learned Government Pleader contended that the liability of the plaintiff is statutory and not contractual under Section 79 of the Kerala Forest Act. It is his case that the first appellate R.S.A.No.433 of 2005 **==> picture [28 x 9] intentionally omitted <==** court misdirected itself in upholding the claim as regards the return of 210 class IV poles after having found that the plaintiff had caused the breach of the contract. 8. Per contra, the learned counsel for the respondent submitted that the respondent had actually paid the entire amount of class IV poles; still 210 such poles were taken delivery and those items were not put up for reauction. According to the learned counsel for the respondent, these two circumstances alone are sufficient to hold that the respondent was earnest in taking delivery of class IV poles. Thus, it is submitted that there is no justification in denying the respondent, the right to realise the price of 210 numbers of class IV poles, which comes to Rs.40,320/- along with Rs.2,016/- as forest development tax and Rs.4,234/- towards 10% sales tax, altogether R.S.A.No.433 of 2005 **==> picture [28 x 8] intentionally omitted <==** Rs.46,570/-. The learned counsel for the respondent submitted that the decree of the trial court was reversed to this extent rightly by the first appellate court. 9. In an auction of teak poles conducted at Thundathil range, Bhoothathankettu on 23.7.1996, the plaintiff was the highest bidder, having serial nos. 2 and 3 allotted with lot nos.687/96 to 723/96 and 724/96 to 733/96 respectively as per the following schedule. |Sl.No.|Sp.Lot No.|Species|Qty.|Rates| |---|---|---|---|---| |2|687/96 to 723/96|TP III|1897|660| |3|724/96 to 733/96|TP IV|1041|192| 10. The fact that the plaintiff had paid the value of 311 teak poles out of 1897 poles and took possession of the same is admitted by both sides. It is also admitted that the plaintiff had remitted the value of entire 1041 teak poles and he had took possession of only 831 poles. In view of the R.S.A.No.433 of 2005 ..12.. above circumstances, the first appellate court appreciated the entire evidence on record and held in para 10 of the judgment as follows:- “10. As stated earlier, a similar view cannot be taken in respect of 210 numbers of class IV poles. Here admittedly he had made remittance, on time. It is also the admitted case that 831 poles were taken delivery by him. Though it was contended in paragraph six of the written statement that necessary permits were issued for the removal of the entire items, the Ext.A7 series, subsidiary pass Nos.1/96-97 in respect of 171 numbers, 4/96-97 for 170 numbers, 5/96-97 for 175 numbers, 12/96-97 for 200 numbers and 14/96-97 for 115 numbers show that subsidiary passes were issued only for 831 numbers of class IV poles. Although the main pass No.143/96-97 bears the details of 1041 poles, there is no evidence that the remaining 210 poles were removed on the lines noted above. It is also the admitted case that 210 poles were not lifted at all. Unlike in the case of class III poles, here he had remitted the value of the entire 1041 numbers of class IV poles. Still he could not remove the same for obvious reason that it were not supplied to him. After having paid for the entire poles, if it were made available to him, no doubt, he would have lifted the same.” ## 11. Clarifying the position, the first appellate court held in para 13 of the judgment as follows:- R.S.A.No.433 of 2005 ..13.. “13. As rightly pointed out by the appellants counsel, no satisfactory explanation is forthcoming from the respondents for the non-delivery of 210 numbers of class IV poles. It has to be thought that to that extent, the respondents had breached the agreement. There was no contention for the respondents that any amount once paid shall not be refunded. Therefore, consequent to the non-delivery of 210 number of class IV poles, the appellant is entitled to get back its price along with the associate remittances made by him. At the same time, the amount of Rs.20,000/- as E.M.D. was paid for the whole bid. The appellant has failed to take delivery of class III poles owing to his volitions. For that reason, he cannot claim back the E.M.D.” 12. On an appreciation of the entire evidence, it is clear that the respondent had actually paid the entire amount for class IV poles. However, 210 poles were not taken delivery and those items were not put for re-auction. Hence, the first appellate court was right in holding that the respondent has every right to realise the price of 210 numbers of class IV poles which comes to Rs.40,320/- along with Rs.2,016/- as forest development tax and Rs.4,234/- R.S.A.No.433 of 2005 **==> picture [28 x 8] intentionally omitted <==** towards 10% sales tax. It is true that the respondent has not produced the sale notification before this Court. However, the terms and conditions between the parties are not disputed by the respondent. The only contention is that he had actually paid the entire amount for class IV poles. Considering the fact that he had paid the entire amount for class IV poles, the appellants are bound to deliver all the poles to him. Those items were not put up for re-auction as well. In the circumstances, it is not just and proper to deny the relief to the plaintiff on the ground that the notification or original agreement between the parties was not produced before the court below. On a perusal of the entire evidence adduced in this case, it can be seen that certain facts were admitted by both parties and the first appellate court decided the first appeal purely based on the admissions R.S.A.No.433 of 2005 **==> picture [28 x 8] intentionally omitted <==** made by the parties and as well as on the admissions made in the pleadings. 13. It is well settled principle of law that 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 under Section 73 of the Contract Act is extended. In the decision reported in **Abdul Rahiman** v. **Divisional Forest Officer** [1988(2) KLT 290], the primary duty therefore is to fix the liability for the breach, particularly when the plaintiff accepted that on breach of the terms of the auction, to conduct a fresh auction, at his risk and loss and the plaintiff agreed to make good the loss, if any, sustained on resale. The legal position is not applicable in this case for the simple reason that the respondent had R.S.A.No.433 of 2005 **==> picture [28 x 9] intentionally omitted <==** actually paid the entire amount of class IV poles and from the total class IV poles, 210 such poles were not taken delivery and those items were not put for re-auction. The principle of unlawful enrichment is applicable to the State as well. The State has appropriated an amount of Rs.20,000/by way of earnest money. The first appellate court agreed with the trial court that the earnest money was for the entire transaction and not in respect of the part of the transaction. However, after paying the entire amount, it has come out in evidence that 210 poles were not lifted at all. It is not just and proper to penalise the plaintiff for the amount covered under the said poles. The State is duty bound to return the amount to the plaintiff as held by the first appellate court. The findings arrived at by the first appellate court are based on evidence and it cannot be treated as perverse as R.S.A.No.433 of 2005 **==> picture [28 x 8] intentionally omitted <==** contended by the learned Government Pleader. In view of the foregoing conclusions, this Second Appeal is dismissed as devoid of merits. There will not be any order as to costs. Pending applications, if any, shall stand closed. Sd/- **N.ANIL KUMAR, JUDGE** MBS/