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1987 DIGILAW 652 (KER)

AMMINI AMMA v. VAIKOM MUNICIPALITY

1987-12-16

BHASKARAN NAMBIAR, MALIMATH

body1987
Judgment :- 1. Vaikom Municipality, the contesting respondent owns a premises which was being utilised for lodging purposes by the Municipality. It decided to give the privilege of conducting lodging houses in the said premises for which purpose it conducted an auction. The appellant being the highest bidder, she was given the said privilege for three years 1981-82,1982-83 and 1983-84 subject to the stipulation regarding payment of the licence fee as provided in the agreement Ext. P1 On the ground that that appellant has committed some default is payment of rent, a notice was issued and the appellant took the stand that at least 4 rooms were not in a habitable condition and that the understanding was that all the rooms should be inhabitable condition. As there is a breach on the part of the Municipality in giving all the rooms in a habitable condition, the appellant took the stand that she has suffered loss. She however offered to pay the arrears of rent and to hand over possession without any further liability on her part. Ultimately the appellant paid the entire amount due up to 31-3-1983 and handed over possession on 30-4-1983 A notice was issued by the municipality under R.32(1) of the Taxation Rules as per Ext. RI (a) requiring the appellant to pay certain amount by way of damages, interest, water charges and miscellaneous expenses. The appellant gave a reply disowning her liability for the same. The appellant was then served with a demand notice as per Ext. P6 issued under R.32(1) of the Taxation Rules wherein it is stated that the movable properties of the appellant would be sold by distraint on the commission of default on the part of the appellant is not paying the amount of damages etc. claimed in the notice issued to her. It is in this background that the appellant approached this court for an appropriate relief in O. P. No. 7907/83. 2. The principal contention of the learned counsel for the appellant was that the breach has been committed by the respondent-municipality in not performing its part of the contract viz., of giving all the rooms in a habitable condition and that therefore there is frustration of the contract and that the appellant is not liable for any damages. 2. The principal contention of the learned counsel for the appellant was that the breach has been committed by the respondent-municipality in not performing its part of the contract viz., of giving all the rooms in a habitable condition and that therefore there is frustration of the contract and that the appellant is not liable for any damages. It is only for the purpose of buying places that the appellant, though not liable to pay the arrears claimed by the municipality, paid all the arrears upto 31-3-1984 and also delivered possession on 30-4-1983. It is in this background that it was contended that the municipality cannot be an arbiter in its own case for the purpose of assessing the damages payable by the appellant and recovering the same under R.32(1). The learned single judge not having accepted the case put forward by the appellant the original petition was dismissed and hence this appeal. 3. It is no doubt true that Clause.12 of Ext. P1. the agreement between the parties, provides that if j by breach of the terms and conditions of the agreement, the municipality has to re-auction the right to conduct the lodge and if thereby any loss is caused to the municipality, the licensee and her sureties and their properties will be liable for such loss. In this case damages have been claimed from the appellant by the municipality having regard to the low amount of licence fees realised as a result of re-auctioning the premises, after the appellant banded over possession of the same to the municipality on 30-4-1983. It was contended by the learned counsel for the municipality that this is a case in which the appellant has agreed to pay the damages and that therefore the authorities are entitled to recover the amount by invoking R.32(1) of the Taxation Rules. It was contended by him that the question of assessment of damages has not arisen in this case. He also submitted that the very fact that the appellant has paid the entire amount of arrears due up to 31-3-1983 and has voluntarily delivered possession makes it clear that she has agreed to abide by the claim of the municipality so far as the damages are concerned. Though the appellant has agreed to pay damages as stipulated in Clause.12 of the agreement Ext. Though the appellant has agreed to pay damages as stipulated in Clause.12 of the agreement Ext. P1, there is no agreement in regard to the quantum of damages, nor is there an agreement on the question as to who must be regarded as being guilty of the breach of contract. The appellant took the stand in her reply to the notice that the contract stood frustrated because of the breach committed by the municipality in not providing all the rooms in a habitable condition. Therefore the stand of the appellant is that it is the municipality that was responsible for committing the breach of the contract in not giving possession of all the rooms in a habitable condition. It is in this background that she has taken the stand that payment of arrears up to. 31-3-1983 was only for the purpose of buying peace and not conceding the claim of the municipality in regard to its entitlement to properties or in regard to quantum of damages. We have no hesitation in rejecting the contention of the learned counsel for the respondent that this is a case in which there is an agreement in regard to the payment of damages. There is no agreement in regard to the question as to whether the appellant is guilty of breach of contract and as to whether the appellant has therefore become liable for damages. There is also no agreement in regard to the quantum of damages payable by the appellant. That being the position, the question is as to whether S.386 of the Kerala Municipalities Act can be involved in this case. The said section reads: "386. There is also no agreement in regard to the quantum of damages payable by the appellant. That being the position, the question is as to whether S.386 of the Kerala Municipalities Act can be involved in this case. The said section reads: "386. Recovery of sums due as taxes All costs, damages, penalties, compensation, charges, fees (other than school fees), expenses, rents (not being rents for lands and buildings demised by the municipal council), contributions and other sums which under this Act or any other law or rules or bye-laws made thereunder or under any contract in respect of water supply or drainage made in accordance with this Act, the rules or bye-laws are due by any person to the council, may, if there is no special provision in this Act for their recovery be demanded by bill as provided in the rules in Schedule II and recovered in the manner provided therein." Rule 32(1) of the Taxation and Finance Rules provides that if the amount due on account of any tax together with the demand notice fee and the cost of service of the notice is not paid within fifteen days from the service of the notice and if the person from whom the tax is due has not shown cause to the satisfaction of the Commissioner why it should not be paid, the Commissioner may recover by distraint under his warrant and sale of the movable property of the defaulter, the amount due on account of the tax together with the demand notice fee and cost of service, warrant fee and the distraint fee and with such further sum as will satisfy the probable charges that will be incurred in connection with the detention and sale of the property so distrained. It is necessary to point out that R.32 empowers the recovery of any amount of tax and other sums specified therein. So far as S.386 of the Act is concerned, it provides for recovery of the amount in accordance with the rules specified in Schedule II. There is no other specific provision under the Act for recovery of the same. It includes recovery of damages as rightly pointed out by the learned counsel for the respondent. So far as S.386 of the Act is concerned, it provides for recovery of the amount in accordance with the rules specified in Schedule II. There is no other specific provision under the Act for recovery of the same. It includes recovery of damages as rightly pointed out by the learned counsel for the respondent. But then it has to be pointed out that the damages contemplated therein is damages which is not disputed or damages which have already been quantified in an appropriate manner by an independent authority. S.386 does not empower any authority to assess the damages payable on the breach of contract. The Supreme Court bad occasion to consider a claim for damages under a similar contract which was sought to be recovered under the provisions of the Revenue Recovery Act in AIR, 1987 SC. 1359 between State of Karnataka v. Rameshwara Rice Mills, Thirthaballi. The Supreme Court has pointed out that the powers of the State Government under an agreement entered into by it with a private person providing for assessment of damages for breach of conditions of the agreement and recovery of the damages is confined only to those cases where the breach of conditions is admitted or it is not disputed. Thus it becomes clear that the provisions of S.386 of the Kerala Municipalities Act read with S.32(1) of the Taxation Rules can be invoked for recovery of damages if the damages are admitted or not disputed. In other words, where the damages are disputed the same has to be determined by adjudication by an independent authority and not by one of the parties to the contract itself. That being the position, following the principle laid down by the Supreme Court in the aforesaid case it has to be held that the claim for damages by the municipality having been disputed in this case, it cannot proceed to recover the same by invoking the provisions of R.32 of the Taxation and Finance Rules contained in schedule II. The municipality can. recover the same amount by resorting to the ordinary remedy of filing a suit in accordance with law. For the reasons stated above this appeal is allowed, the judgment of the learned single judge is set aside, Ext. P6 is quashed and the respondent is restrained from recovering the amount claimed under R.32(1) of Schedule II of the Taxation and Finance Rules. For the reasons stated above this appeal is allowed, the judgment of the learned single judge is set aside, Ext. P6 is quashed and the respondent is restrained from recovering the amount claimed under R.32(1) of Schedule II of the Taxation and Finance Rules. We would however like to make it cleat that this does not preclude the respondent from recovering the amount due to it in accordance with law. No costs. Allowed.