ORDER R.S. Garg, J. 1. By this petition under Article 226 of the Constitution of India, the petitioner seeks to challenge the correctness, legality, propriety and validity of the Revenue Recovery Certificate for an amount of Rs. 6, 63, 553/- and the memorandum of recovery issued by the respondent no. 2. 2. The facts, in nutshell, necessary for disposal of the petition, are that the petitioner, a Government contractor, entered in a contract with the respondent for completing certain construction work. Considering that there was some breach on part of the petitioner, the Executive Engineer of the Division rescinded the contract and gave the work to another debitable agency at the risk of cost of consequences of the petitioner. The petitioner, being aggrieved by the acts of the respondents, made an application to the Executive Engineer for settlement of the claim, but the said application was rejected and thereafter the petitioners approach to the Superintending Engineer also failed, therefore, the petitioner made an application to the Superintending Engineer for referring the matter to the Arbitration under clause 4.3.29.1 of the agreement. In accordance with the terms of the agreement, the Superintending Engineer would have been obliged to refer the matter to the Arbitrator, but because of the enforcement of M. P. Madhyastham Adhikaran Adhiniyam, the Superintending Engineer asked the petitioner to lodge his claim before the Arbitration Tribunal. The petitioner filed his claim before the Arbitration Tribunal on 19.4.92, but the Tribunal dismissed the claim as barred by limitation after rejecting petitioner's application filed under Section 5 of the Indian Limitation Act. It appears that the orders passed by the Arbitration Tribunal were challenged by the petitioner in civil revisions before this Court, but nobody knows about the fate of those proceedings. 3. After the work was concluded under the hands of the debitable agency, the Executive Engineer of the Division issued a notice to the petitioner for recovery of the amount. The petitioner contested the recovery and through his counsel vide notice-cum-reply dated 2.2.95 asked the Executive Engineer that he was not entitled to make any demand, and the claim was time barred because the State did not submit its claim before the M. P. Arbitration Tribunal within the prescribed period of limitation. The petitioner contested the recovery and through his counsel vide notice-cum-reply dated 2.2.95 asked the Executive Engineer that he was not entitled to make any demand, and the claim was time barred because the State did not submit its claim before the M. P. Arbitration Tribunal within the prescribed period of limitation. Even after receiving the reply from the petitioner, the State or the Executive Engineer did not lodge their claim before the Arbitration Tribunal, but proceeded to recover the amount under Section 155/156 of M. P. Land Revenue Code treating the said amount to be arrears of land revenue. The petitioner having received the notices from the Recovery Officer, has filed this petition. 4. Submission of learned counsel for the petitioner is that unless the question of breach is decided by an independent agency, the respondents are not entitled to recover any money from the petitioner. In his submission unless it is decided that who committed the breach, the State and its authorities would not be entitled to recover any money from the petitioner. His further submission is that the respondent-Executive Engineer was entitled under the law to rescind the contract, but the ground leading to rescission of the contract and breach on the part of the petitioner is still to the proved by the respondent / State. In his submission, if the petitioner is required to approach the Arbitration Tribunal, that is, an independent agency, for establishment of his claim, then the State which is also a common litigant cannot be allowed to exercise its sovereign powers for recovering the money without getting the dispute decided. His submission is that even if the State has paid excess money to the debitable agency, the petitioner can be held liable only if breach is found at his end. 5. Shri Seth, learned Dy. His submission is that even if the State has paid excess money to the debitable agency, the petitioner can be held liable only if breach is found at his end. 5. Shri Seth, learned Dy. Advocate General placing reliance upon paragraph 4.3.3 and its sub-headings, as contained in the agreement, submits that the Executive Engineer of the Division / the Divisional Officer has the right and authority to rescind the contract and a notice in writing to the contractor under the hand of the Divisional Officer would be deemed to be conclusive evidence and the authorities are entitled to measure up the work of the contractor and, to take such part thereof as shall be unexecuted out of the hands of the contractor, give the same to the debitable agency at the risk of defaulter contractor and can recover the money from such defaultee person. He submits that the contract bad to be rescinded because of the breach committed by the petitioner and as the authorities have a right to recover the extra money spent by the State Government, the present is not a case of damages, but is a case of recovery of the money which the State was required to spend because of the breach committed by the petitioner-contractor. He submits that there is a marked distinction between the 'damages' and 'extra expenses'. He submits that the petitioner having failed before the Arbitration Tribunal cannot turn round and say that he did not commit the breach nor the State is required to establish that the petitioner committed the breach. Submission of learned counsel for the State is that the petition deserves to the dismissed. 6. I have heard the parties at length. 7. For proper appreciation of the dispute, it would be necessary to refer to the terms of the agreement. Para 4.3.3 and its sub-headings read as under :- 4.3.3 Action when the contractor becomes liable for levy of penalty. 6. I have heard the parties at length. 7. For proper appreciation of the dispute, it would be necessary to refer to the terms of the agreement. Para 4.3.3 and its sub-headings read as under :- 4.3.3 Action when the contractor becomes liable for levy of penalty. In any case in which under any clause or clauses of this contract the contractor shall have rendered himself liable to pay compensation amounting to the whole of his security deposit (whether paid in one sum of deducted by installments) or committed a breach of any of the terms contained in clause 4.3.24 or in the case of abandonment of the work owning to the serious illness or death of the contractor or any other cause, Divisional Officer on behalf of the Governor of M. P. shall have power to adopt any one of the following courses, as he may deem best suited to the interest of Government; 4.3.3.1 To rescind the contract (of which rescission notice in writing to the contractor under the hand of the Divisional Officer shall be conclusive evidence), and in which case the security deposit of the contractor shall stand forfeited, and be absolutely at the disposal of Government. 4.3.3.2 To employ labour paid by Irrigation Department and to supply materials to carry out the works, or any part of the work, debiting the contractor with the cost of the labour and the price of the material (of the amount of which cost and price a certificate of the Divisional Officer shall be final and conclusive against the contractor) and crediting him with the value of the works done in all respects in the same manner and the same rates as if it had been carried out by contractor under the terms of his contract or the cost of the labour and the price of the materials as certified by the Divisional Officer whichever is less; the certificate of the Divisional Officer as to the value of the work done shall be final and against the contractor. 4.3.3.3 To measure up the work of the contractor, and to take such part thereof as shall be unexecuted out of the hands, and to give it to another contractor to complete in which case any expenses which may be incurred in excess of the sum which would have been paid to the original contractor, if the whole work had been executed by him (of the amount of which excess the certificate in writing of the Divisional Officer shall be final and conclusive) shall be born and paid by the original contractor and may be decuted from any money due to him by Government under the contract or otherwise, or from his security deposit, or the proceeds of sale thereof, or a sufficient part thereof. In the event of the above courses being adopted by the Divisional Officer, the contractor shall have no claim to compensation for any loss sustained by him by reason of his having purchased or procured any materials or entered into any engagements or made any advances on account of or with a view to the execution of the work or the performance of the contract. And in case the contract shall be rescinded under the provisions aforesaid, the contractor shall not be entitled to recover or be paid any sum for any work thereof or actually performed under this contract, unless and until the Sub-Divisional / Divisional Officer will have certified in writing the performance of such work and the value payable in respect thereof, and he shall only be entitled to be paid the value so certified. 8. Paragraph 4.3.29.1 of the agreement reads as under :- 4.3.29.1 Except where otherwise specified in the contract for contracts costing upto Rs. 8. Paragraph 4.3.29.1 of the agreement reads as under :- 4.3.29.1 Except where otherwise specified in the contract for contracts costing upto Rs. 50.00 lacs, the decision of the Superintending Engineer of the circle for the time being in respect of all questions and disputes relating to the meaning of the specifications, designs, drawing and instructions hereinbefore mentioned and as to the quality of the workmanship or material used on the work or as to any other question, claim or things whatsoever, in any way arising out of or relating to the contract designs, drawings, specification, estimates, instructions, orders, or these conditions or otherwise concerning the work of execution failure or execute the same, whether arising during the progress of the work or after the completion or abandonment thereof, shall be final provided that the Superintending Engineer before giving the decision in the matter give an opportunity of being heard to the parties to the contract. If any part to the contract is dis-satisfied with the final decision of the Superintending Engineer in respect of any matter, he may within 28 days after receiving notice of such decision give notice in writing to the Superintending Engineer requiring that the matter be referred to arbitration and furnishing detailed particulars of the dispute of difference and specifying clearly the point at issue. If any party fails to give such notice within the period of 28 days, as stipulated above the decision of the Superintending Engineer already given shall be conclusive, final and binding on the parties. In case an arbitration is to be held it shall be affected by an arbitrator to be appointed by the State Government, whose decision shall be conclusive, final and binding on all the parties. If the work under the contract has not been completed when a dispute is referred to arbitration, work shall continue during the arbitration proceeding if it is reasonably possible and no payment due to contract should be withheld on account of arbitration proceedings unless it is required by the arbitrator. 9. The Divisional Officer has been given the authority to rescind the contract. At the point of rescinding the contract, the Executive Engineer has to make up his mind, make a prime-facie observation and hold that the contractor engaged by the Dept. has committed the breach of the terms of the contract. 9. The Divisional Officer has been given the authority to rescind the contract. At the point of rescinding the contract, the Executive Engineer has to make up his mind, make a prime-facie observation and hold that the contractor engaged by the Dept. has committed the breach of the terms of the contract. If he records a prima-facie finding, then he is certainly entitled to rescind the contract, but this prima-facie finding by the Executive Engineer / Divisional Officer shall not be binding upon the contractor or the other party and he would always be permitted to challenge the acts of the Executive Engineer before a competent forum. If he proves before the competent forum that the findings recorded and the actions taken by the said Executive Engineer were illegal or contrary to law, then such Tribunal or the authority would always decide in favour of the contractor. If the authority holds that the finding recorded by the Executive Engineer was in accordance with law, then certainly claim of that said petitioner would be rejected. In the present case, no authority, Tribunal or Court till date have decided that who committed the breach of the terms of the contract. The petitioner's claim has been rejected on the ground of limitation. This rejection cannot be deemed to be a rejection on merits. The Tribunal has simply closed the doors on the face of the petitioner saying that as he did not approach right in time, even if he had some rights, the remedy was lost. 10. Para 4.3.3.3 says that the Divisional Officer shall be entitled to measure up the work of the contractor, and to take such part thereof as shall be unexecuted out of the hands, and to give it to other contractor to complete in which case any expenses which may be incorrect in excess of the sum which would have been paid to the original contractor,(sic) Seth, learned counsel for the respondents submits that this authorised the executive Engineer or the Department to recover the money which the Department was required to pay as extra expenses. Shri Chakraborty submits that this can only be recovered if some independent agency, Tribunal or Court records a finding that rescission of the contract was in accordance with law and not otherwise. Shri Chakraborty submits that this can only be recovered if some independent agency, Tribunal or Court records a finding that rescission of the contract was in accordance with law and not otherwise. In the opinion of this Court, after rescission of the contract, the Divisional Officer is certainly entitled to take out the unexecuted work out of the hands of the defaultee contractor, but it is to be proved that rescission was in accordance with law and was a result of breach of the terms committed by the contractor. Unless it is proved that the breach was committed by the contractor, none would be authorised to hold that rescission of the contract was in accordance with law. The Department / Executive Engineer may have a prima-facie opinion or may record a prima-facie finding that the contractor has committed the breach, therefore, the unexecuted work has to be taken out of his hands, but this prima-facie opinion or finding would certainly not bind the petitioner or a competent authority which can decide the dispute. Unless it is held that the breach was committed by the contractor, it cannot be held that rescission of the contract was final. 11. The right to recover the expenses suffered by the respondents would come into play only when it is proved that the rescission was in accordance with law and was a result of the breach of the contract or terms of the contract at the hand of the contractor. For the sake of repetition, it is again to be said that if the breach of the terms of the contract is not proved, the order of rescinding the contract would fall and consequently the right to recover the extra expenses would also not be available. 12. In the present case, it is not in dispute that the matter was referred to the Superintending Engineer who gave his decision, but before the matter could be referred to the Arbitrator in accordance with the term no. 4.3.29.1 of the contract, the said part of agreement became otiose and honest and the matter was required to be referred to or submitted before the Arbitration Tribunal. 4.3.29.1 of the contract, the said part of agreement became otiose and honest and the matter was required to be referred to or submitted before the Arbitration Tribunal. Be that as it may, it is not in dispute before me that the respondents themselves have examined the extent of the losses in forum of extra expenses; have decided the point of breach at their own level and never referred the matter either to the Arbitrator or to the Arbitration Tribunal. True it is that the agreement gives an authority to the respondents to recover the extra expenses from the defaultee contractor, but before such steps are taken, it must be proved that there was a default on the part of the contractor and he committed breach of the terms of the contract. 13. The crucial question now is who has to decide the question of breach of terms of the contract. 14. According to Shri Chakraborty, a third agency, Tribunal or Court has to decide the question of the breach of the contract because the respondent / State cannot be permitted to be a judge or arbitrator in its own case or cause, while Shri Seth, learned counsel for the respondents submits that in view of the terms of the agreement, the respondents are certainly entitled to decide all the questions relating to the terms of the contract. 15. In an almost identical situation, in the matter of State of Karnataka Vs. Shree Rameshwara Rice Mills, Thirthahalll (A. I. R. 1987 S. C. 1359), the Supreme Court has observed that a party to the dispute cannot be allowed to become an arbiter in its own case. In the said matter, the State alleged that the contractor committed a breach of the contract by not making the delivery of rice and demanded a payment of damages. The respondent of the said matter failed to pay the damages, the State initiated proceedings under the Revenue Recovery Act to recover the said amount. In the suit filed by the said respondent, an injunction was granted in his favour against the State. Being aggrieved by the said decision, the State preferred an appeal to the High Court and thereafter took up the matter to the Supreme Court. In the suit filed by the said respondent, an injunction was granted in his favour against the State. Being aggrieved by the said decision, the State preferred an appeal to the High Court and thereafter took up the matter to the Supreme Court. The questions submitted before the Supreme Court were whether the State was not competent to adjudicate upon the question whether the plaintiff committed breach of the contract and that the State was not competent to assess damages for any breach of the contract which was not admitted by the other side. 16. The Supreme Court, considering the matter in its entirety, observed as under :- On a consideration of the matter we find ourselves unable to accept the contentions of Mr. Iyengar. The terms of Clause 12 do not afford scope for a liberal construction being made regarding the powers of the Deputy Commissioner to adjudicate upon a disputed question of breach as well as to assess the damages arising from the breach. The crucial words in clause 12 are "and for any breach of conditions set forth hereinbefore, the first party shall be liable to pay damages to the second party as may be assessed by the second party". On a plain reading of the words, it is clear that the right of the second party to assess damages would arise only in the breach of conditions is admitted or if no issue is made of it. If it was the intention of the parties that the officer acting on behalf of the State was also entitled to adjudicate upon a dispute regarding the breach of conditions the wording of clause 12 would have been entirely different. It cannot also be argued that a right to adjudicate upon an issue relating to a breach of conditions of the contract would flow from or is inhered in the right conferred to assess the damages arising from a breach of conditions. The power to assess damages, as pointed out by the Full Bench, is a subsidiary and consequential power and not the primary power. The power to assess damages, as pointed out by the Full Bench, is a subsidiary and consequential power and not the primary power. Even assuming for argument's sake that the terms of of clause 12 afford scope for being construed as empowering the officer of the State to decide upon the question of breach as well as assess the quantum of damages, we do not think that adjudication by the officer regarding the breach of the contract can be sustained under law because a party to the agreement cannot be an arbiter in his own cause. Interests of justice and equity require that where a party to a contract disputes the committing of any breach of conditions the adjudication should be by an independent person or body and not by the other party to the contract. The position will, however, be different where there is no dispute or there is consensus between the contracting parties regarding the breach of conditions. In such a case the officer of the State, even though a party to the contract will be well within his rights in assessing the damages occasioned by the breach in view of the specific terms of clause 12. We are, therefore, in agreement with the view of the Full Bench that the powers of the State under an agreement entered into by it with a private person providing for assessment of damages for breach of conditions and recovery of the damages will stand confined only to those cases where the breach of conditions is admitted or it is not disputed. 17. From the judgment of the Supreme Court, it would clearly appear that interest of justice and equity require that where a party to the contract dispute committing of any breach of conditions, the adjudication should be by an independent person or body and not by the other party to the contract. 18. On face of this judgment, Shri Seth, learned counsel for the respondents now submits that in the matter of State of Karnataka, Supreme Court was considering a case of recovery of damages, while present is a case of recovery of excess expenses suffered by the State. 18. On face of this judgment, Shri Seth, learned counsel for the respondents now submits that in the matter of State of Karnataka, Supreme Court was considering a case of recovery of damages, while present is a case of recovery of excess expenses suffered by the State. In his submission, in a case where the State has to recover the damages, it may not be permitted to enter into the field of making the decision, but in a case where the State has suffered extra expenses because of the breach committed by the contractor / petitioner, the State certainly is entitled to recover the amount which was paid by the State to the debitable agency through which or under whose hands the work was got executed. In the opinion of this Court, the argument is not sustainable. The question for consideration simply is that who committed the breach. Unless it is decided that the petitioner committed the breach, the State would not be entitled to recover the amount spent in excess of the original contract amount. Everything would depend upon a finding as to who committed the breach. Should the task be given to a party to the contract, that is, the State and its officers, or should it be submitted to a third agency, arbiter, Court or Tribunal. If the task is handed over to the State Government, then it would certainly run contrary to the age old saying audi-alterm-partem. The principles of natural justice clearly provide that neither one should be condemned unheard nor a party should be a Judge or Arbiter in his own case or cause. If the State is given the authority to decide that who committed the breach, then possibility of a prejudice and bias cannot be ruled out. However, fair the authority is, it would always offend the principles "that justice should not only be done, but it should appear to have been done." If the State decided that who committed the breach, then this would again run contrary to the judgment of the Supreme Court in the matter of State of Karnataka. However, fair the authority is, it would always offend the principles "that justice should not only be done, but it should appear to have been done." If the State decided that who committed the breach, then this would again run contrary to the judgment of the Supreme Court in the matter of State of Karnataka. While appreciating clause 12 of the agreement of the said matter, the Supreme Court observed that on a plain reading of the words it would be clear the right of the second party to assess damages would arise only if the breach of conditions was admitted or if no issue was made of it. The Supreme Court further observed that even if the clause 12 afforded scope for being construed as empowering the officer of the State to decide upon the question of breach as well as assess the quantum of damages, that adjudication by the officer regarding the breach of the contract cannot be sustained under law because a party to the agreement cannot be an arbiter in his own cause and case. In the present case, the State is simply relying upon the actions of the Executive Engineer. According to them, the rescission of the contract was in accordance with law and as the State had to pay extra expenses, the State was entitled to recover the money. Unfortunately the actions of the State do not take into consideration as to who has to decide that who committed the breach of the terms. In the present case, the State certainly can recover the money provided a third party decides that because of the breach committed by the petitioner the State had to suffer extra expenses. Though the agreement does not give any power, right or authority to the State or its agency to decide the question of breach, but even assuming the State had such a power, then too, it could not decide the question as to who committed the breach nor would it be entitled to assess the quantum of extra expenses because in such a situation, State would be acting as an arbiter or a Judge in its own cause. 19. 19. Undisputedly, the question of the breach of the contract has not been decided by any competent authority, arbitrator, court or Tribunal and unless such a decision is given by such an authority, the State would not be entitled to recover the money. I must hasten to say that if a private party is required to approach the Court or Tribunal for establishment of his claim, then the State, though Almighty, must seek a proper decision on the dispute and should not decide its own case, take the authority in its own hands and proceed to recover the money through its own agency. 20. For the reasons aforesaid, the petition deserves to and is accordingly allowed. Annexure P/1, the Revenue Recovery Certificate, and Annexure P/2, the memorandum, deserve to and are accordingly quashed. No costs. Petition allowed