WA Nos. 2303 and 2385 of 2007 (The Secretary, Vadavukadu Puthen Cruze Grama Panchayath v. K.K. Karim; The Fertilizers and Chemicals Travancore Ltd. v. The General Manager, FACT (CD))

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** ## **THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE** **& THE HONOURABLE MR. JUSTICE N.K.BALAKRISHNAN** **TUESDAY, THE 12TH JULY 2011 / 21ST ASHADHA 1933** **WA.No. 2303 of 2007()** **------------------------------AGAINST THE JUDGEMENT/ORDER IN WPC.11931/2006 Dated 20/08/2007** **....................** ## **APPELLANT(S): RESPONDENT NO.1** **----------------------------------------------------** **THE SECRETARY, VADAVUKADU PUTHEN CRUZE GRAMA PANCHAYATH, PUTHENCRUZE, ERNAKULAM DISTRICT.** **BY ADV. SRI.M.P.MADHAVANKUTTY** ## **RESPONDENT(S): PETITIONER AND RESPONDENTS 2 AND 3** **--------------------------------------------------------------------------------------** **1. K.K.KARIM, AGED 51 YEARS,** **S/O. V.K.KUNJUMARAKKAR, KOCHUPUTHENPARAYIL, ENGINEERING CONTRACTOR, KARIMUGAL, ERNAKULAM DISTRICT.** **2. THE FERTILIZERS AND CHEMICALS TRAVANCORE LTD., UDYOGAMANDAL, REP. BY ITS CHAIRMAN AND MANAGING DIRECTOR, SRI. GOPALAPILLAI.** **3. N. RAJASEKHARAN, THE GENERAL MANAGER, FACT (CD), AMBALAMEDU.** ## **R1 BY ADVS. SRI.H.SIVARAMAN,** **SRI.MATHEW CHERIAN.** **R2 & R3 BY SRI.A.M.SHAFFIQUE, SENIOR ADVOCATE** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 14/06/2011, ALONG WITH WA NO. 2385 OF 2007 THE COURT ON 12/07/2011 DELIVERED THE FOLLOWING:** **tss** **PIUS C.KURIAKOSE & N.K.BALAKRISHNAN, JJ. ---------------------------------------------------W.A.Nos.2303 and 2385 of 2007 ---------------------------------------------------Dated this the 12th day of July, 2011** ## **Judgment** ## **Balakrishnan, J.** The Secretary, Vadavukadu Puthen Cruze Grama Panchayat, the first respondent in W.P.(C).No.11931 of 2006, is the appellant in W.A.No.2303 of 2007. Respondents 2 and 3 in that writ petition, the Fertilizers and Chemicals Travancore Ltd. (F.A.C.T.), Udyogamandal and its General Manager are the appellants in W.A.No.2385 of 2007. The first respondent in these appeals is the contractor who was the lowest tenderer and who was awarded the repair work of the roads inside the township of the second respondent, the FACT. It was contended that the second respondent-Company requested the appellant-Panchayat to do the repair works of the road inside their township since the company was unable to undertake the work in view of their financial difficulties. By Ext.P2, the Government of Kerala permitted the Panchayat to do the repair work. Being the lowest tenderer, the first respondent was awarded the work. A sum of Rs.60,000/- was deposited by first respondent as Earnest Money **W.A.Nos.2303 and 2385 of 2007** 2 Deposit(E.M.D.). It was contended by the first respondent that he had purchased the materials for Rs.3 lakhs and also bitumen for Rs.4,39,566/- from M/s.Kochi Refineries Ltd and all those materials were unloaded in the company compound and did five days work from 8.2.2006 to 13.2.2006, but, on 14.6.2006 the first respondent and his employees were prevented from entering the company compound for repair work and so the work could not be completed. It was alleged that there was dispute between the appellant-Panchayat and the FACT. As per the contract, the first respondent was to carry out the repair work and so the first respondent approached this court by filing writ petition directing the appellant-Panchayat and the company to permit the first respondent to complete the tarring work. An alternative prayer was also made to pay the first respondent a sum of Rs.7.5 lakhs as damages. 2. The appellant-Panchayat and respondents 2 and 3 filed counter affidavits denying the allegations contained in the writ petition. The appellant-Panchayat contended that there was no obstruction on the part of the Panchayt from carrying out the work. They contended that respondents 2 and 3 were at fault. 3 **W.A.Nos.2303 and 2385 of 2007** The writ petition was resisted by the appellant mainly on the ground that the dispute raised in the matter is a dispute arising out of a contract and if there was a breach of contract, the remedy of the first respondent-Contractor was to approach the competent civil court, claiming damages, if any, sustained. Since the main dispute was as to the maintainability of the writ petition, according to the appellant, it was not necessary to point out other factors relating to the breach of contract, the dispute regarding the amount claimed etc. 3. Respondents 2 and 3 contended that since the company was producing various fertilizers and chemicals which are hazardous in nature, public were not permitted to enter the company premises due to security reasons. It was further contended that the Panchayat can have no right or claim over the roads situated within the company premises, but the Panchayat wanted to have control over the roads and to enable the public to use the roads situated within the company premises which was objected to by the company for the reasons already stated. Since the Panchayat wanted to open the gate of the company for the use of the public and since it was not permissible, respondents 2 4 **W.A.Nos.2303 and 2385 of 2007** and 3 prevented the employees of the contractor to enter into the company premises. Respondents 2 and 3 also disputed the value of the materials unloaded and also the liability to pay the amount claimed by the first respondent-contractor. 4. As per the impugned judgment, the learned Single Judge found that the appellant and respondents 2 and 3 did not specifically controvert the averments in the writ petition and accepted the averments as proved. It was hence held by the learned Single Judge that it would be totally unjust to relegate the contractor to the remedy by way of suit at this point of time. It was also found that since there was no fault whatsoever on the part of the contractor and since he has proved with some amount of certainty that he had in fact spent an amount of Rs.7,39,566/as value of the materials brought in by the contractor, he is entitled to get that amount. The learned Single Judge directed the appellant-Panchayat to pay 50% of the amount claimed to be paid to the first respondent-contractor. The remaining 50% was directed to be paid by the company (respondents 2 and 3). Regarding the inter se liability between the appellant and the respondents 2 and 3, it was left to be decided in appropriate 5 **W.A.Nos.2303 and 2385 of 2007** proceedings. The Panchayat was also directed to refund the security amount of Rs.60,000/- to the contractor. 5. Mr.M.P.Madhavankutty, learned counsel appearing for the appellant-Panchayat in W.A.No.2303/07 would submit that the impugned order is unsustainable in view of the fact that the whole case is founded on contract, its breach thereof and the quantification of the damages alleged to have been sustained by the first respondent and so the proper remedy of the contractor was to file a suit before the competent civil court for appropriate reliefs. It is argued by the learned counsel for FACT the appellants in W.A.No.2385 of 2007 that there was absolutely no privity of contract between the first respondent-Contractor and the company and as such it is incomprehensible how the company can be mulcted with the liability to pay any amount to the contractor. If there was no privity of contract between the company and the contractor, how could the company be directed to pay 50% of the amount alleged to have been sustained as damages by the contractor even before determining the liability of the company. It is also argued on behalf of the company that if by the act or omission on the part of the company the 6 **W.A.Nos.2303 and 2385 of 2007** Panchayat had sustained any damages, the proper remedy of the Panchayat would be to sue the FACT for that purpose and so long as there was no contract between the FACT and the first respondent-Contractor, the order passed by the learned Single Judge cannot be sustained at all. 6. The short question that arises for consideration is whether the writ petition filed by the first respondent-Contractor claiming damages for the breach of contract alleged by him is maintainable under Article 226 of the Constitution. 7. Mr.Madhavankutty, learned counsel appearing for the Panchayat relied on the decision of the Supreme Court in **State of Bihar v. Jain Plastics & Chemicals Ltd.** [ (2002) 1 SCC 216]. That was a case where the learned Single Judge of the High Court observed that, that court felt no difficulty in deciding the question of facts on the basis of the affidavit evidence and so the learned Judge found it not necessary, evidence as required in a civil suit, in deciding the question of fact which is needed for disposal of the writ petition. The apex court held that the order passed by the High Court is illegal and erroneous. It was further held that even though many matters could be decided after 7 **W.A.Nos.2303 and 2385 of 2007** referring to the contentions raised in the affidavits and counter affidavits, that would not be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. It was also held that whether the alleged non-supply of road permits by the appellants as alleged in that case would justify breach of contract by the respondent therein would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. It was also held by the apex court: “Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a court exercising prerogative of issuing writs.” Mr.Madhavankutty would submit that the aforesaid decision would squarely apply to the facts of this court since the facts dealt with in that case are almost identical. The above decision was followed by the Supreme Court in **Orissa Agro Industries Corporation Ltd. v. Bharati Industries** (AIR 2006 S.C. 198). 8 **W.A.Nos.2303 and 2385 of 2007** Mr.Madhavankutty would submit that the facts of this case are also identical to the facts of the case on hand. In the case on hand it was alleged by the first respondent-Contractor that he had unloaded articles worth Rs.3 lakhs and had also purchased bitumen of a value of Rs.4,39,566/-. But the actual work carried out by the first respondent was not evidenced by any measurement book. According to the appellant-Panchayat, if the work had been carried out, it should have been got measured by the Engineer of the Panchayat and the measurement should have been entered in the measurement book and that should have been got certified or countersigned by the concerned officer of the Panchayat. Simply because it was stated by the petitioner that he had done five days work, that will not prove what actually was the work done by the first respondent. Learned counsel submitted that five days work might as well be the work of unloading of materials including bitumen. It is further submitted by the learned counsel for the appellant-Panchayat that admittedly the first respondent is a contractor doing contract work at several places. The copy of the bill produced by the petitioner cannot be accepted to hold that the bitumen so **W.A.Nos.2303 and 2385 of 2007** 9 purchased by him was unloaded in the compound of the FACT or that the bitumen so unloaded was used for road repair work. According to the appellant, the bitumen so purchased or covered by the bill could have as well been taken to other work sites and used for carrying out similar work elsewhere. At any rate, unless it is proved that the quantity of bitumen covered by the bill was actually used for the tarring of the roads as per the contract, the first respondent cannot contend that he is entitled to the value of the bitumen covered by the bill. The learned counsel further submits that if the bitumen had not been used or if it is a case where the only part of a bitumen had been used, there could be no difficulty to take it back and be used at other work places and so the first respondent cannot contend that he is entitled to get the value of the entire bitumen covered by the bill as if the bitumen had been used for tarring of the roads as per the contract. Learned counsel would also submit that there would be entries in the registers of the company, namely, gate pass register etc. showing the materials brought to the company compound and also as to the materials taken out of the compound. It is further contended that it is not the usual practice 10 **W.A.Nos.2303 and 2385 of 2007** to bring the entire materials for carrying out entire contract work at a time since it is usual that the materials required for executing part of the work would be brought to the site first and when that part of the work is over or almost completed, the materials for the second reach, third reach etc. would be brought to the site. Therefore, according to the appellant, these are not matters to be proved by filing affidavits. When the first respondent contends that there was a breach of contract, the primary duty is on the first respondent to prove the breach. If the breach is proved, then the question of quantification of damages has to be done. It is equally important to fix liability depending on the extent of breach of contract. Some times there may also be cases where the complainant/plaintiff party also would be at fault, though that may be of a lesser degree. There is no guarantee or certainty that the entire materials alleged to have been brought to the compound were actually used for tarring work nor is there sufficient material to hold that materials or bitumen of that much quantity and value were actually brought to the compound. In such circumstances, the proper course for the contractor, alleging breach of contract was to move the 11 **W.A.Nos.2303 and 2385 of 2007** competent civil court for appropriate reliefs. 8. It is also submitted by the learned counsel for the appellant-Panchayat that the conduct of the contractor can be discerned from the allegations made by the first respondent in the letter given to the Panchayat. Ext.R1(a) is the decision taken by the Panchayat pursuant to the representation given by the first respondent-Contractor. The contractor claimed that in order to complete the work, a fresh estimate was to be prepared giving an addition of Rs.5 lakhs over and above the amount covered by the earlier contract. Therefore, according to the appellantPanchayat the first respondent was finding out one excuse or other for rescinding the contract and to claim damages from the Panchayat. Anyway, it is not necessary to delve deep into those aspects since those are matters to be adjudicated upon, if a proper suit is filed before the competent civil court. 9. Sri.Sivaraman the learned counsel for the first respondent-Contractor would support the impugned judgment and would submit that Panchayat and the company (FACT) cannot take a stand just like private individuals. Learned counsel submits that having entrusted the work to the contractor, the 12 **W.A.Nos.2303 and 2385 of 2007** Panchayat and the company should have respected the contract and should have ensured the working condition so as to carry out the work as agreed upon by the contractor. The first respondent could not carry out the work as the company gate was closed preventing the workers from entering into the compound. The fact that materials were unloaded in the FACT compound was not seriously disputed by the Panchayat or by the FACT the learned counsel, submits. But the dispute was inter se, between the Panchayat and the FACT and so there was no necessity for relegating the issue to a civil court. Learned counsel for the appellant-Panchayat would submit that the learned Judge proceeded on the premise that the entire bitumen covered by the bill was unloaded and used by the contractor for carrying out the tarring work inside the FACT compound. To come to such a conclusion, there is no reliable material. Similarly, according to the learned counsel, even if granite pieces for a sum of Rs.3 lakhs were purchased by the first respondent-contractor, there is no legal evidence to hold that the entire materials alleged to have been purchased were unloaded inside the company compound or those materials were used for road repair work. Those were **W.A.Nos.2303 and 2385 of 2007** 13 aspects to be proved by the entries in the measurement book certified by the responsible officers of the company and the Panchayat. Learned counsel for the appellants would submit that even if the contractor's allegation that the materials including bitumen were unloaded in the compound were acceptable, still there was no difficulty for the contractor to take back those materials. Tthere is no acceptable evidence to show that the entire materials were used for tarring work. Since those are matters to be proved by evidence, documentary and oral, according to the appellants, the learned Single Judge was not justified in virtually granting a decree in favour of the first respondent. 10. In **Har Shankar v. The Deputy Excise and Taxation Commissioner** (AIR 1975 SC 1121) it was held by the apex court: “Analysing the situation here, a concluded contract must be held to have come into existence between the parties. The appellants have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for 14 **W.A.Nos.2303 and 2385 of 2007** impeaching contractual obligations.” The argument that was advanced on behalf of the contractor was that whenever a State or its agents or officers dealing with the citizen, either when making a transaction or, after making it, acting in exercise of powers under the terms of a contract between the parties, there is a dealing between the State and the citizen which involves performance of certain legal and public duties. The appellant, on the other hand, would contend that if such a proposition is accepted, then every case of a breach of contract by the State or its agents or its officers would call for interference under Article 226 of the Constitution. The learned counsel further submits that unless and until the breach involves violation of certain legal and public duties or violation of statutory duties to the remedy of which the petitioner is entitled by issuance of a writ of mandamus, mere breach of contract cannot be remedied by the court in exercise of its powers under Article 226. Following the Constitution Bench decision of the Supreme Court in **Hari Shankar's** case (supra), the Supreme Court in **Radhakrishna Agarwal v. State of Bihar** (AIR 1977 S.C. 1496) held: 15 ## **W.A.Nos.2303 and 2385 of 2007** “ In the cases before us the contracts do not contain any statutory terms or obligations and no statutory power or obligation which could attract the application of Art.14 of the Constitution is involved here. Even in cases where the question is of choice or consideration of competing claims before an entry into the field of contract facts have to be investigated and found before the question of a violation of Art.14 could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and crossexamination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Art.226 of the Constitution. Such proceedings are summary proceedings reserved for extraordinary cases where the exceptional and what are described as, perhaps not quite accurately, “prerogative” powers of the Court are invoked. We are certain that the cases before us are not such in which powers under 16 **W.A.Nos.2303 and 2385 of 2007** Art.226 of the Constitution could be invoked.” Since the dispute involved in this case is founded on the alleged breach of contract, we have no hesitation to hold that the remedy of the first respondent-Contractor is to approach the civil court since his grievance cannot be remedied under Article 226 of the Constitution. 11. As observed earlier, since the issue involves questions of fact which are to be proved only in a properly instituted suit, we hold that the impugned judgment is liable to be set aside. The apportionment of liability made as per the impugned judgment is also assailed by the appellant. The learned counsel for the appellants in W.A.No.2385 of 2007 has reiterated the submission that as there was no privity of contract between the FACT and the first respondent-Contractor, the impugned judgment cannot be sustained. If the Panchayat had sustained any loss or damage on account of the alleged obstruction caused in the work entrusted to the first respondent-Contractor, that is a matter to be adjudicated upon in a separately instituted suit and till then the company (the appellants in W.A.No.2385/07) cannot be saddled with any liability. **W.A.Nos.2303 and 2385 of 2007** 17 12. As we have already found that the impugned judgment cannot be sustained for the reason that the dispute involves complicated questions concerning breach of contract and the quantification of the loss or damages occasioned to the complainant-party, it is only to be decided in a properly instituted civil suit. 13. It has come out in evidence that a sum of Rs.60,000/was deposited by the first respondent with the appellantPanchayat. If the said amount has already been not returned to the first respondent-Contractor, the appellant-Panchayat shall repay the same within two months from this date. Similarly, since from the pleadings and admissions it would appear that the first respondent-Contractor had taken some material to the FACT compound and had done work inside the compound for about five days, we find it just and proper that the appellant-Panchayat is directed to pay Rs.1 lakh to the first respondent-Company which should be paid within two months from this date. The actual quantification of the loss or damage shall be determined in a properly instituted suit. If the first respondent is so advised, he can file a suit before the competent civil court without delay. 18 **W.A.Nos.2303 and 2385 of 2007** 14. The learned counsel for the first respondent contractor would submit that the period between the filing of the Writ Petition till this date may be allowed to be excluded while computing the period of limitation for filing of the suit as provided under Section 14 of the Limitation Act. If a suit is filed by the first respondent before the competent Civil Court, that court will duly take note of the fact that the first respondent-contractor was prosecuting the writ petition before this court. While deciding the question whether the contractor was prosecuting the matter with due diligence so as to allow exclusion of the period aforesaid under Section 14 of the Limitation Act, that court will further take note of the fact that in fact relief was granted to the contractor as per the impugned judgment. 15. In the result, both appeals are allowed. The judgment impugned in these appeals is set aside. If the sum of Rs.60,000/- (Rs.Sixty Thousand) deposited by the first respondent as security deposit, if not already repaid, shall be returned to the 1[st] respondent within two months from this date. The appellant Panchayat shall also pay a sum of Rs.1,00,000/(Rs.One lakh ) to the first respondent within two months from **W.A.Nos.2303 and 2385 of 2007** 19 this date. The said amount shall be adjusted towards the amount that may be ultimately found due to the contractor/1[st] respondent. Parties are directed to suffer their respective costs. ## **PIUS C.KURIAKOSE, JUDGE.** **N.K.BALAKRISHNAN, JUDGE.** Srd/mns **W.A.Nos.2303 and 2385 of 2007** 20