Joy v. Superintending Engineer — 1990 DIGILAW 162 (KER)

Judgment :- The prayer in the Original Petition is to quash Ext.P9 revenue recovery notice issued under S.34 of the Revenue Recovery Act and to restrain the second and 3rd respondents, namely, the Deputy Tahsildar and Village Officer from proceeding with the collection of the amount shown in Ext.P9. The amount shown in Ext.P9 is Rs.3,32,550/-, and it is stated as due because of the re-arrangement of the work of construction of causeway at Perumthodu, which the petitioner was bound to execute according to the agreement. 2. The petitioner is a P.W.D. Contractor. Pursuant to the tender notice dated 10-8-1980 issued by the first respondent inviting tenders for execution of the work of causeway Perumthode of the Idamalayar project, the petitioner submitted his tender which was accepted on 16-10-1980. Agreement was executed on 12-11-1980 and in terms of the agreement the work should be completed within 12 months of the date of handing over the site to the contractor. The rate of progress also is shown in the agreement in default of which a penalty of Rs.50/- per day or I%of the work remained to be done will be imposed. The rate of progress shown is 25% of the work to be completed within 3 months, 50% within six months, 75% within 9 months and 100% within 12 months of the handing over of the site. According to the petitioner there was delay in handing over the site and the petitioner, after partial handing over the site commenced the work in January 1981. But soon after commencement of the work labour trouble started. Therefore the work could not be completed. While the petitioner was prepared to resume the work the Assistant Engineer on 24-9-1982 directed the petitioner to attend the work of taking final measurement from which the petitioner understood that the work has been terminated by the Department. The Executive Engineer, thereafter, on 19-7-1983 intimated the petitioner that due to the re-arrangement of the work an amount of Rs.332550/- is lost to the Government and the petitioner has to pay the said sum within 7 days failing which revenue recovery proceedings would be launched. The contention of the petitioner was that the respondent did not issue notice intimating the petitioner that he was proposing to terminate the contract and further that he is proposing to ret ender the remaining work. The contention of the petitioner was that the respondent did not issue notice intimating the petitioner that he was proposing to terminate the contract and further that he is proposing to ret ender the remaining work. The amount demanded by Ext.P9 is said to be therefore illegal. Ext.P9 stated to be illegal on the ground that in the agreement executed under Article 229(1) there is no provision authorizing the first respondent to collect the amount by way of revenue recovery proceedings. The contract also did not contain provision authorizing the respondent to complete the contract by re-arrangement at the cost of the petitioner. There is also the contention that the respondent can recover only the damage actually suffered. 3. In the counter-affidavit filed on behalf of the first respondent it is stated that the site for the causeway portion was handed over to the petitioner on 8-1-1981 and acknowledgment in the prescribed form also obtained by the concerned Assistant Engineer in this regard. If the petitioner had any complaint regarding the handing over o of the site and Clause 58 of the MDSS he could have backed out from the contract with immunity after 60 days. under the agreement 25% of the work has to be completed within 3 months of the handing over the site. But the petitioner achieved only 9% progress. Even though the entire portion of the site required for the whole work was not handed over to the petitioner on 8-1-1981 the site handed over was sufficient to achieve 80% of the quantum of work. Only the land for approach road had not been handed over on 8-1-1981 because that had to be got transferred from the Forest Department. The respondents also taken prompt steps to transfer the land for approach road also. The respondents, taking a lenient view, issued a series of notices dated 28-7-1981,19-9-1981 and 30-11-1981 to resume the work, but the petitioner was not inclined to do the work. The work has to be completed on 8-1-1982. Therefore on 24-2-1982 also notice was sent. Ultimately on 4-5-1982 a final notice was sent to the petitioner by registered post requiring him to resume the work failing which, it was stated that the contract would be terminated at his risk and cost. Even for this notice there was no response and therefore the first respondent hade to terminate the contract by proceedings dated 28-6-1982. Ultimately on 4-5-1982 a final notice was sent to the petitioner by registered post requiring him to resume the work failing which, it was stated that the contract would be terminated at his risk and cost. Even for this notice there was no response and therefore the first respondent hade to terminate the contract by proceedings dated 28-6-1982. These proceedings were sent to the petitioner by registered post with acknowledgment due but it was retuned undelivered by the Post and Telegraph Department stating that the addressee was continuously absenting himself from the station. The Department tried its best to serve the notice on the petitioner and in his absence to serve on his relatives; but the relatives also refused to receive the order. The petitioner was directed to attend taking final measurement on 24-9-1982, 6-10-1982, 22-4-1983, and 16-6-1983 and ultimately by Ext.P8 dated 19-7-1983. The petitioner was informed that due to re-arrangement of the work an amount of Rs.3, 32,550/- is to be recovered from the petitioner as loss sustained by the Government. How this amount is arrived at is given in paragraph 7 of the counter-affidavit of the first respondent as under: "The amount has been arrived at as follows This amount has been worked out on the basis of specific provision contained under clauses 2 and 13 of the agreement entered into between the parties. It is, thereafter, the revenue recovery notice; Ext.P9 to recover the amount was issued. 4. Even though at the bar the case was argued at great length I feel the fate of this case also should not be different from the Full Bench decisions reported in Abdul Rahiman v. D.F.O., 1988 (2) KLT 290. Admittedly there is a tender notice issued which was accepted by the petitioner. Thereafter there was a contract entered into on 12-11-1980 and major portion of the site was handed over on 8-1-1981. Going by that date the work had to be completed on 8-1-1982 after recording satisfactory progress of the work at 25% within 3 months, 50% within 6 months, 75% within 9 months and 100% within one year. If the work is not completed there is provision in the contract to get the balance work done at the cost of the petitioner and recover the cost from him. How the balance cost had to be computed is also mentioned in the agreement. If the work is not completed there is provision in the contract to get the balance work done at the cost of the petitioner and recover the cost from him. How the balance cost had to be computed is also mentioned in the agreement. The amount is quantified giving adequate opportunity to the petitioner to participate in the computation proceedings. But he did not co-operate. In the circumstances the loss caused to the Government was computed and intimated to the petitioner. On failure to pay the amount revenue recovery proceedings started. 5. It is now well settled that when the contract entered into even if by the State is non-statutory, the rights are not governed by the constitutional provisions but by the legally valid contractual provisions. No writ or order can be issued under Article 226 of the Constitution as to compel the authorities to remedy a breach of contract pure and simple. In Bareilly Development Authority v. Ajay Pal Singh, AIR 1989 SC 1076 the Supreme Court held: "21. There is a line of decisions where the contract entered into between the State and the persons aggrieved is non-statutory and purely contractual and the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution of India so as to compel the authorities to remedy A breach of contract pure and simple: Radhakrishna Agarwal v. Steteoml Ar (1977) 3 SCR 249: (AIR 1977 SC 1496), Premji Bhai Parmar v. Delhi Development Authority (1980) 2 SCR 704: (AIR 1980 SC 738 and D.F.O. v. Biswanath Tea Company Ltd, (1981) 3 SCR 662: (AIR 1981 SC 1368). 22. 22. In view of the authoritative judicial pronouncements of this Court in the series of cases dealing with the scope of interference of a High Court while exercising its writ jurisdiction under Article 226 of the Constitution of India in cases of non-statutory concluded contracts like the one in hand we are constrained to hold that the High Court in the present case has gone wrong in its finding that there is arbitrariness and unreasonableness on the part of the appellants herein in increasing the cost of the houses/flats and the rate of monthly installments and giving directions in the writ petitions as prayed for." For enforcement of a contractual right civil suit is the appropriate remedy and the parties should not be ordinarily permitted to invoke the extraordinary jurisdiction under Article 226 of the Constitution. The Division Bench of this Court so held in the judgment in W. A. 356 of 1989 and SLP10281 of 1989 filed against the said judgment was dismissed by the Supreme Court on 16-10-1989. Apparently realising this limitation to jurisdiction the petitioner himself specifically averred in paragraph 8 of the Original Petition thus: "The petitioner in this O.P. is not questioning any contractual obligation or matters arising under the contract or requesting the court to interpret a term in the contract. The petitioner is only questioning the authority of the first respondent to issue and take steps to realize damages coming not under the contract". 6. The main contention raised in the Original Petition by the petitioner is that ' there is no provision in the contract enabling the respondents to get the balance work executed at the risk and cost of the petitioner and there is no provision for recovering the amount due under the contract by resort to revenue recovery proceedings. Since in a contract made under Article 299(1) of the Constitution of India nothing could be implied, in the absence of a provision enabling the respondents to get the work executed at the risk and cost of the petitioner and get the amount so computed recovered by revenue recovery proceedings, the demand and revenue recovery proceedings, namely, Ext.P5 and P9 are vitiated and without jurisdiction, is the short submission. The Original Petition proceeds on the basis that there is no provision in the contract to the effect that on failure to complete the contract the first respondent will be entitled tore-arrange the work at the risk and cost of the contractor and the contractor will be liable for the difference between the amount of contract and the amount of the re-arranged work. It also proceeds on the basis that there is no clause enabling the Government to recover the amount by revenue recovery proceedings and without such a specific power the Department cannot invoke the provisions of the Revenue Recovery Act. 7. The assumption made in the writ petition regarding the absence of provision in the contract enabling the first respondent to get the work executed at the risk and cost of the petitioner and further enabling the first respondent to realize the amount invoking the provisions of the Revenue Recovery Act appears to be erroneous. In the counter-affidavit filed on behalf of the first respondent it is stated that clause 2 of the conditions of the contract, clause 46 of the special conditions and clause 13 of the notice inviting tenders which form part of the agreement are the enabling provisions under which the first respondent has caused Exts.P5 and P9 to be issued. CIause 2 of the conditions of contract, clause 13 of the notice inviting tenders and clause 46 of the special conditions are extracted herein: "2. CIause 2 of the conditions of contract, clause 13 of the notice inviting tenders and clause 46 of the special conditions are extracted herein: "2. In every case in which under any clause or clauses of this contract the contractor shall have' rendered himself liable to damages amounting to the whole of his security deposits, the Executive Engineer shall have power either to rescind the contract altogether or to have the work completed without further notice at the contractor's risk or expense as he may deem best suited to the interest of the Government and the contractor shall have to claim compensation for any loss that may accrue from any materials he may have collected or engagements he may have entered into, on account of his work, and in the latter case the Executive Engineer shall have power to deduct whatever amount may be expended on the completion of the work, from any sums that may he due or become due from the Government to the contractor on account of this or any other work or recover such sums from him and his assets movable and immovable under the provisions of the Revenue Recovery Act for the time being in force as if they were arrears of land revenue or 01 her wise as Government may choose. And in case the contract shall he rescinded under the provisions aforesaid the contractor shall not be entitled to recover or he paid any sum for any work (heretofore actually performed under this contract unless and until the Executive Engineer shall have certified the performance of such work and the value thereof, and he shall only be entitled to he paid the value so certified." "13. Before commencing work or within a week after the date when the acceptance of the tender has been intimated to him the tendered shall deposit a sum sufficient to make up the balance of 4% of the probable value of the contract which together with the amount of earnest money deposited shall be treated as security for the proper fulfillment of the same and shall execute an agreement for the work in the P. W. schedule Form. If he fails to do this or in the case of P.W. contracts maintain a specified rate of progress (to be specified in each case in the tender schedule) the earnest money and security deposit shall be forfeited to Government and fresh tenders shall be called for or the matter otherwise disposed of. If as a result of such measures due to the default of the tendered to pay the requisite deposit, sign contracts or take possession of the work any loss to Government results, the same will be recovered from him as arrears of revenue, but should it be a" savings to Government, the original contractor shall have no claim whatever to the difference. Recoveries on this or any other account will be made from the sum that may be due to the contractor on this or any other subsisting contracts or under the Revenue Recovery Act or otherwise the Government may decide". "46. All sums due to the Government under or by virtue of this contract shall be recoverable first from the security furnished by the contractor and if the same is found insufficient, such deficit amount shall be recoverable under the provisions of the Revenue Recovery Act for the time being in force as though the same were arrears of land revenue or in any other manner as the Government may deem fit". Clause 48 of the special conditions states that the tender notice and Form No.63 notice inviting tender shall form part of the agreement. Therefore, on a reading of the contractual provisions I hold that there are provisions in the contract to get the balance work done at the risk and cost of the contractor, for quantifying the amount and recovering the same by revenue recovery proceedings. 8. The site in this case has been handed over on 8-1-1981, which was sufficient to carry out 80% of the work as mentioned in paragraph 16 of the counter-affidavit. But the petitioner achieved only 9% prioress within the first three months. The delay cannot be attributed to the fact that a small 1 portion of the site has not been handed over on 8-1-1981. If the petitioner had a case that the work could not be done because of non-availability of the site he had power under the contract itself to withdraw from the contract after 50 days from the date of execution of the agreement. If the petitioner had a case that the work could not be done because of non-availability of the site he had power under the contract itself to withdraw from the contract after 50 days from the date of execution of the agreement. This admittedly he has not done. As stated earlier notices were issued for completion of the work on 28-7-1981,19-9-1981,30-11-1981 and 24-9-1982. According to the agreement the work had to be completed on 8-1-1983. Therefore a final notice was also issued on 4-5-1981, requiring him to resume the work failing which it is stated the contract would be terminated at his risk and cost. Since no response was shown to this notice the contract was terminated as 28-6-1982. Notices were issued for taking measurement for ascertaining the amount and notice of retender dated 6-10-1982 was also given to the petitioner. The amount was quantified according to the agreement, the details of which are given in the counter-affidavit, which is already extracted. If there is a valid contract, then the question of breach, determination of the liability under that agreement etc. will be governed by the contract itself. The rights and obligations of the parties inter se cannot form subject matter of writ petition under Article 226 of the Constitution. There is a valid termination of the contract and the principle laid down in 1988(2) KLT 290 referred to earlier applies to this case. 9. Realising this limitation, counsel for the petitioner advanced an ingenious argument and he has stated that there is no valid contract at all in this case as the contract has not been entered as provided under Article 299 of the Constitution of India. Under Article 299(1) of the Constitution all contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Government by such persons and in such manner as he may direct or otherwise. 10. Ext.P1, it is argued, is executed between the petitioner on the one part and the Superintending Engineer for and on behalf of the Governor of the State of Kerala on the other part. 10. Ext.P1, it is argued, is executed between the petitioner on the one part and the Superintending Engineer for and on behalf of the Governor of the State of Kerala on the other part. Therefore, petitioner's counsel contended that the agreement is void as the same has not been expressed to be made by the Governor but only on behalf of the Governor. Counsel referred to the decisions reported in State of Karnataka v. Rameshwara Rice Mills, AIR 1987 S.C. 1359, Bihar E.g.f.Co.Op.Soc. v. Siphuhi Singh, AIR 1977 S.C. 2149 and Abdul Rahiman v. D.F.O, 1988 (2) KLT 290 for the proposition that Article 299 of the Constitution inquires the contract to be made in exercise of executive power of the State to satisfy ihiec conditions, namely, (1) it must be expressed to be made by the President or the Governor of the State as the case may be (2) it must be executed on behalf of the President or the Governor as the case may be and (3) its execution must be by such persons and in such manner as he may direct or authorize. It is also pointed out that failure to comply with any of the conditions will nullify the contract and render it void and unenforceable. When this Article moved in the Constituent Assembly of India during the debate Shri H.V.Kammath explained that the Article only means that executive action of the Government of India or of a State shall be expressed to be taken in the name of the President or of the Governor. The Article lies down that all contracts made in the exercise of the executive powers of the Union shall be expressed to be made - the words used are "expressed to be made" - by the President etc. Neither the President nor the Governor actually makes the contract. Whatever contract is entered in to or made by the Union or the State is expressed as having been made in the Name of the President or the Governor Everything done in the Union or the State is done for the people or by the people. But whatever is done is expressed as having been done by the President or the Governor. It is only a constitutional or legal formula for enabling certain contracts to be made effective or to be given effect to. But whatever is done is expressed as having been done by the President or the Governor. It is only a constitutional or legal formula for enabling certain contracts to be made effective or to be given effect to. Otherwise, if every contract is signed by the people of the Union or people of the State then, in' Constitutional law, before the High Court or the Supreme Court it will make no meaning whatsoever. Somebody will have to sign it in law (See Constituent Assembly of India, Vol. 8 page 895). 11. The Government Pleader on behalf of the respondents referred to various decisions: Chatturbhuj Vithaldas v. Mores war Parashram, AIR 1954 S.C. 236, Union of India v. Rallia Ram, AIR 1963 S.C.1685, New Marine Coal Co. v. Union of India, 1964 S.C.152, Karamshi v. State of Bombay, AIR 1964 S.C.1714, and Timber Kashmir Pvt. Ltd. v. Conservator of Forests AIR 1977 S.C.151, and submitted that the words "expressed" and "executed" in Article 299(1) will only suggest that there should be a formal deed executed on behalf of the Governor. If there is such a written instrument then there is a valid contract. He specially referred to paragraph 8 of the decision in Union of India v. N.K. Private Limited, AIR 1972 S.C. 915 which reads: "The crucial question which arises for determination is whether there was a concluded contract, and if there was one, whether the mandatory requirements of Article 299 of the Constitution for entering into a valid and binding contract have been satisfied? It is now settled by this Court that though the words "expressed" and "executed" in Art.299 (I) might suggest that it should be by a deed or by a formal written contract, a bindng contract by tender and acceptance can also come into existence if the acceptance is by a person duly authorized on this behalf by the President of India. A contract whether by a formal deed or otherwise by persons not authorized by the President cannot be binding and is absolutely void." I need not consider this aspect of the case in detail as the matter is now well settled by series of decisions of the Supreme Court of India. The latest is in State of Punjab v. Om Prakash Baldev Krishnan, J.T. 1988 (3) SC 616. The latest is in State of Punjab v. Om Prakash Baldev Krishnan, J.T. 1988 (3) SC 616. In that case the Executive Engineer signed the contract but nowhere in the contract it was offered or accepted or expressed to be made in the name of the Governor. Sabyasachi Mukharji J., as he then was, referred to the decisions in State of Bihar v. Mis. Karam Chand Thapar & bros. Ltd., 1962(1) SCR 827, Seth Bikhraj Jaiparin v. Uniut i of India, 1962 (2) SCR 680, Union of India v. RalliaRarn, 1964 (3) SCR 164, Mulamcliand v. State of M.P.,1968 (3)SCR 214, Timber Kashmir Pvt. Ltd. v. Conservator of Forests, Jammu, 1977(1) SCR 937, Bihar E.g.f. Coop. Society Ltd. v. Sinabi Singh, 1978 (1) SCR 375 and Union of India v. Mis. Hanuman Oil Mills Ltd. 1987 Suppl. SCC 84 and came to the conclusion that in order to satisfy Art.299 of the Constitution the contract entered into must satisfy three conditions, namely, (i) it must be expressed to be made by the Governor (2) it must be executed and (3) the execution should be by such persons and in such manner as the Governor might direct reauthorize. The object of indicating these provisions was stated to be that the State should not be saddled with liability for unauthorized contracts and therefore the contracts must show on their face that these were made by the Government and executed on his behalf in the prescribed manner by the prescribed authority. The Supreme Court also referred to the decision in Timber Kashmir case 1971 (1) SCR 937, wherein it was held that if contracts were signed by the Conservator of Forests in compliance with an order of the Government, the provisions of S.122(I) of the Jammu & Kashmir Constitution corresponding to Art.299 (I) of the Constitution of India cannot be said to have been infringed. In that case the contracts were executed on behalf of the Government of Jammu & Kashmir. But in that case no agreement was actually signed. The Executive Engineer had required the contractor after offer and acceptance to attend the office within 10 days to sign the agreement which was under preparation and no such agreement was signed. Therefore the Supreme Court held that no contract has been signed while noting the law on the subject as aforesaid. 12. The Executive Engineer had required the contractor after offer and acceptance to attend the office within 10 days to sign the agreement which was under preparation and no such agreement was signed. Therefore the Supreme Court held that no contract has been signed while noting the law on the subject as aforesaid. 12. I have referred to these decisions only because the same have been. Referred to and the question was argued. But on examining the pleadings in the case I find no such question has been raised in the Original Petition, even though both the parties advanced arguments. The question whether there had been a concluded contract in accordance with Art.299(I) of the Constitution is not a point raised in the Original Petition. The validity of the agreement on account of the violation of Art.299 in that the agreement has not been made in the name of the Governor even though executed for and on behalf of the Governor has not been raised. In paragraph 2 of the Original Petition itself it is stated "The first respondent accepted I he tender of the petitioner and as a result the petitioner entered into a contract with the first respondent on 12th November, 1980 between the petitioner and the first respondent for and on behalf of the Governor." It is not stated that the agreement is vitiated in that the contract has not expressly stated that the same is made by the Governor and therefore there was no opportunity to The respondents to controvert this factual aspect. But from the file produced by the Government relating to the contract I find that Article of Agreement is made on 12-11-1980 between the petitioner, a Government Contractor, and FIX, the Governor of Kerala and the same is signed by the contractor and the Superintending Engineer for and on behalf of the Governor. The words "expressed to be made" and the word "executed" only suggest that there must be a deed of contract in writing executed by a person duly authorized and is not supposed to be an oral contract. In the circumstances of the case I find no infirmity in the contract and in Ext.P5. Exts.P5 and P9 are not liable to be quashed on any of the grounds mentioned in the Original Petition. The Original Petition is dismissed without prejudice to the rights, if any, of the respective parties under the contract. In the circumstances of the case I find no infirmity in the contract and in Ext.P5. Exts.P5 and P9 are not liable to be quashed on any of the grounds mentioned in the Original Petition. The Original Petition is dismissed without prejudice to the rights, if any, of the respective parties under the contract. No costs.