COMMISSIONER, CORPORATION OF THE CITY OF BANGALORE v. K. N. VASUDEVA MURTHY (DECEASED) BY L. RS
2001-07-02
A.V.SRINIVASA REDDY, G.C.BHARUKA
body2001
DigiLaw.ai
( 1 ) THE Commissioner, Bangalore City Corporation (in short 'the Corporation') has preferred this intra-Court appeal. The Corporation has been established under Section 3 of the Karnataka Municipal Corporations act, 1976 (in short the 'act' ). He is aggrieved by the order of the learned single Judge who has directed the appellant to pay interest at Bank rate on Rs. 39,53,096. 50 for the period 1-10-1981 to 10-3-1994 as recommended by an Expert Committee which on calculation would have come to more than Rs. 84 lacs. This direction has been issued pursuant to an alleged concession given by the Counsel appearing for the Corporation in the writ proceedings. ( 2 ) THE present appeal filed by the Corporation was earlier dismissed on 23-8-1995. An LA. filed for recalling the same was also rejected by an order dated 10-11-1995. Against the said two orders, the Corporation preferred Civil Appeal Nos. 3520 and 3521 of 1998 before the Supreme court, which were allowed by an order dated 28-7-1998 (Commissioner, corporation of the City of Bangalore, Bangalore v K. N. Vasudeva Murthy (dead) through L. Rs and Others ). The operative portion of the order of the Supreme Court is to the following effect:"after considering the rival submissions and bearing in mind the huge public amount involved in this case and also the circumstances attending to the disposal of the matters before the learned single Judge and the Division Bench, we are of the view that the division Bench should have considered the question whether the statement made before the learned Single Judge (extracted supra) by the Counsel for the Corporation amounted to an unqualified concession and, therefore, no further question arose. Even assuming that there was a qualified concession, whether the circumstances brought out in the memorandum of grounds required any consideration specially when the Division Bench disposed of the writ appeal on merits in the absence of Counsel for the appellant- corporation. We set aside the impugned orders of the Division bench and remand the matter to the High Court. We deliberately refrained from considering the merits at this stage for obvious reasons. The High Court will restore on its file the Writ Appeal (Fr) No. 1056 of 1995 (W. A. No. 2825 of 1995) and dispose of the same in accordance with law".
We deliberately refrained from considering the merits at this stage for obvious reasons. The High Court will restore on its file the Writ Appeal (Fr) No. 1056 of 1995 (W. A. No. 2825 of 1995) and dispose of the same in accordance with law". ( 3 ) THE original respondent, late K. N. Vasudevamurthy (who died on 4-6-1995 and is now being represented by his L. Rs) was a contractor for the Corporation. The Corporation entered into a contract with him for construction of a storm-water drain. The said contract was approved by the Government under its letter dated 8-5-1975. It was for an estimated sum of Rs. 14. 55 lakhs. As per the terms of the contract, it was required to be executed within four months. Admittedly, it was not done so. The contesting parties i. e. , the Corporation and the contractor have their own say regarding reasons for non-execution of the contract within the stipulated period. There is a serious dispute relating to the facts in this regard. The contract was ultimately terminated by the Corporation on 29-12-1978. This termination of the contract was duly approved by the government as well, under its letter dated 30-9-1979. On this very date, the execution of the remaining part of the contract was handed over to another contractor M/s. J. K. Constructions. ( 4 ) THE respondent-contractor raised his claim in relation to the extra work which was entrusted to him. Keeping in view the nature of the claim made by the contractor, the administrator of the appellant-Corporation constituted an Expert Committee to consider the acceptability of the claim but for one or the other reason, the claim could not be settled. Though in the contract entered into between the parties, there was a clause for arbitration but the contractor neither invoked the said clause nor approached the Civil Court for adjudication of his claim. ( 5 ) AFTER a lapse of almost eleven years from the date of termination of the contract, the contractor filed a representation dated 11-1-1990 before the Chief Minister of the State with a request that he should constitute a Technical Committee for settlement of the claim of the petitioner before the Corporation. Acting on this representation, the Chief Minister's secretariat required the Commissioner of the Corporation to submit his note for perusal of the Chief Minister.
Acting on this representation, the Chief Minister's secretariat required the Commissioner of the Corporation to submit his note for perusal of the Chief Minister. ( 6 ) THE original file produced by the Additional Government Advocate also shows that one Sri G. S. Basavaraj, Member of Parliament, had also written a letter dated 22-1-1990 addressed to the Chief Minister supporting the claim of the contractor, which was promptly responded by the Chief Minister under his letter dated 6-2-1990 assuring that the secretaries of the respective Government Departments have already been asked to look into the matter and take necessary action. ( 7 ) THEREAFTER, the governmental pressure was exerted on the Commissioner of the Corporation to send his report. The file further shows that pursuant to such pressurisation, the Commissioner of the Corporation requested the Government to revive the Technical Committee constituted by the Corporation back in 1978 for redressal of the grievance of the contractor. ( 8 ) THE Government file further discloses that after receipt of the said report from the Corporation, one Sri G. S. Shivananjappa, MLA, requested the Chief Minister to constitute a Technical Committee of the persons suggested by him. The Committee was accordingly constituted. This Committee went into the details of the contract and passed interim orders for payment of Rs. 39,04,995. 00. The then Commissioner of the corporation, by accepting the said interim orders made payments to the tune of Rs. 30 lakhs in the following manner: SI. No. Cheque No. Date Amount Rs. 1. 82587 23-6-1992 5,00,000 2. 82619 10-8-1992 5,00,000 3. 82626 17-8-1992 5,00,000 4. 82690 3-12-1992 5,00,000 5. 82706 6-1-1993 10,00,000 Total 30,00,000 ( 9 ) AS per the orders of the then Commissioner, the final report of the above Committee was submitted to the Government for its approval on 8-12-1993. As per the Government Order No. VNE:17:mny:92, dated 23-12-1993 the balance of Rs. 9,04,985. 00 was paid by a cheque dated 9-3-1994. The Committee in its report at Annexure-A also recommended for payment of interest. But since the Commissioner did not pay the interest as per the recommendations, the contractor filed the writ petition on 1-6-1994 which came to be allowed by the learned Single Judge on 16-12-1994.
9,04,985. 00 was paid by a cheque dated 9-3-1994. The Committee in its report at Annexure-A also recommended for payment of interest. But since the Commissioner did not pay the interest as per the recommendations, the contractor filed the writ petition on 1-6-1994 which came to be allowed by the learned Single Judge on 16-12-1994. ( 10 ) THE impugned order of the learned Single Judge shows that though the writ petition was listed for orders on a memo, but the same was heard on merits with the consent of the Counsels appearing on behalf of both sides. One of the grounds taken before the Supreme court, and which has been duly noticed by their Lordships, was that though time was sought for filing a statement of objection but the learned Single Judge did not permit the same and proceeded on the basis of the so-called concession given by the Counsel appearing for the Corporation. ( 11 ) THE learned Single Judge ultimately held that. "in the facts and circumstances of this case and particularly in view of the report of the Expert Committee being accepted by the government, there is no need to seek the approval of the Standing committee of Works, Taxation and Finance. The respondent since accepted the report of the Expert Committee is liable to pay interest on the amount claimed by the petitioner in accordance with the provisions of the Karnataka Municipal Corporations Act". ( 12 ) THE impugned order passed by the learned Single Judge gives rise to various important questions of law as have even been noticed by the Supreme Court. The questions are:i. Whether the concession given by the Counsel for the Corporation was unqualified and would have been made the basis for granting the relief to the respondent-contractor?ii. Whether the concession given by the Counsel for the Corporation was binding on it, even if it is found to be opposed to the provisions contained in the Karnataka Municipal Corporations act and the Rules framed thereunder?iii. Whether the writ petition was maintainable for enforcement of pecuniary liability, that too for grant of interest, which according to the appellant, was hopelessly barred by limitation?iv.
Whether the writ petition was maintainable for enforcement of pecuniary liability, that too for grant of interest, which according to the appellant, was hopelessly barred by limitation?iv. Whether the acceptance of the Expert Committee's report by the Government also binds the Corporation for making payments to a contractor?v. Whether in a case where there is dispute between the parties in respect of a money claim, the prerogative writ jurisdiction of this court can at all be exercised?re: Question No. I ( 13 ) THE alleged concession given by the learned Counsel for the Corporation at the Bar has been noticed by the learned Single Judge in the impugned order in the following terms. "smt. B. L. Hemavathi, learned Counsel appearing for respondent 2 would not dispute that the 2nd respondent is liable to pay interest as recommended by the Expert Committee and the approval is being sought from the Standing Committee of the Works, Taxation and Finance". ( 14 ) FROM the above stand taken by the learned Counsel for the Corporation, it is clear that she had not given any concession of any nature regarding the Corporation's liability to pay interest. Her statement can at best be taken as her personal view with regard to entitlement of the contractor to get interest. But she had very clearly stated before the learned Single Judge that this matter was under examination by the standing Committee, which has to take final decision in the matter. But the learned Single Judge negatived her plea by holding that since the state Government has accepted the report of the expert committee, therefore under the provisions of the Act, the Corporation is bound to pay the interest. Therefore, we are of the considered view that neither any unqualified concession was given by the Counsel for Corporation for grant of interest nor it was permissible on her part to do so. Re: Question No. II ( 15 ) ANSWER to this question is self-evident. It is well-settled in law that even if any concession was given by the learned Counsel for the corporation, the same being clearly opposed to the statutory provisions contained under the Corporation Act, it was not binding on the Corporation. In the case of Tripura Goods Transport Association and Another v commissioner of Taxes and Others, it has been held by the Supreme court that.
In the case of Tripura Goods Transport Association and Another v commissioner of Taxes and Others, it has been held by the Supreme court that. "an Advocate appearing on behalf of the State cannot undertake that the State will do something contrary to the Statute". 15-A. The records further reveal that learned Counsel for the Corporation was not instructed to take any such stand. As of fact, as already noticed above, the case was placed under "orders" and time was sought for filing statement of objections and therefore there was no occasion for seeing instructions for alleged concession. As of fact, as we have already noticed, the learned Single Judge has in fact not proceeded on the basis of the alleged concession. The learned Single Judge has categorically held that since opinion of the Expert Committee had been accepted by the Government, therefore approval of the Standing Committee was of no consequence. Re: Question Nos. III and IV ( 16 ) IN the present case, the contract was terminated on 29-12-1978, which was duly approved by the Government on 30-9-1979. After almost 11 years of the termination of the contract, the respondent-contractor filed a representation before the Chief Minister. Under Article 18 of the first Schedule to the Limitation Act, 1963, the period of limitation prescribed for the price of the work done by the plaintiff for the defendant at his request, where no time has been fixed for payment, is three years from the date the work is done. Section 18 of the Limitation Act was admittedly not available to the respondent-contractor for extension of the period of limitation since the Corporation had not acknowledged the liability within the prescribed period for a suit for the purpose. Further, the Government had no authority under the Act either to acknowledge any liability on behalf of the Corporation nor it could have forced the corporation to concede to any disputed liability. It is further to be borne in mind that on the date of filing the writ petition, the suit for recovery of interest in question had also become barred for the reason that if the suit for recovery of principal is barred then remedy for recovery of interest is also barred.
It is further to be borne in mind that on the date of filing the writ petition, the suit for recovery of interest in question had also become barred for the reason that if the suit for recovery of principal is barred then remedy for recovery of interest is also barred. This aspect of the law has been laid down by the Privy council in the case of Cheang Thye Phin v Lam Kin Sang, wherein it has been held that. "it seems to their Lordships to follow that there being no independent contract to pay interest, the interest is a mere accessory of the principal and if the principal is irrecoverable so is the interest on it". ( 17 ) SIMILAR view has been expressed by the High Court of Saurashtra in the case of Mochi Mulji Valji v Acharya Dolatram Chatrabhuj, that"if a suit for the principal becomes barred then the present suit which is for interest on that principal also becomes barred". ( 18 ) WE respectfully agree with the view taken by the Courts above and in view of the law laid down by the Supreme Court in the case of State of Madhya Pradesh and Another v Bhailal Bhai , the present writ petition was not maintainable. The Supreme Court has clearly enunciated that "though there is no limitation prescribed for filing a writ petition under Article 226 of the Constitution, the maximum period fixed by the legislature as the time within which a suit for similar relief has to be filed can be taken as the reasonable period for approaching the high Court". Re: Question No. V ( 19 ) SECTION 182 of the Act lays down general provisions relating to contracts. Clause (c) of sub-section (2) of this section, which is relevant for the present purpose, reads as under. "182. General provisions relating to contracts. (1) xxx xxx xxx (2) Subject to the rules made in this behalf, the following provisions shall apply with respect to the making of contract for any of the purposes of this Act, namely.
Clause (c) of sub-section (2) of this section, which is relevant for the present purpose, reads as under. "182. General provisions relating to contracts. (1) xxx xxx xxx (2) Subject to the rules made in this behalf, the following provisions shall apply with respect to the making of contract for any of the purposes of this Act, namely. (a) xxx xxx xxx (b) xxx xxx xxx (c) any contract involving any expenditure exceeding such limits as may be specified in the rules shall not be made by the Commissioner unless the requirement regarding the procedure to be followed has been followed, and unless the authority which is competent to accord sanction has accorded such sanction and where the sanction to be accorded is by the government unless such sanction has been accorded by the Government". ( 20 ) CLAUSE (b) of Rule 6-A of the Karnataka Municipal Corporations Rules, 1977 reads as under. "6-A. Restriction on the power to make contracts. (1) (a) xxx xxx xxx (b) Any variation of the contract involving an expenditure which exceeds 5 per cent over the expenditure involved in the original contract shall require sanction of the Standing Committee if the original contract has been made by the Commissioner of the Corporation; if the original contract has been made with the sanction of the Standing Committee and of the Government if the original contract has been made after obtaining the sanction of the Corporation". ( 21 ) IN the present case, the Standing Committee of the Corporation had passed resolution dated 3-9-1994 (Annexure-C to the Commissioner's affidavit filed on 28-6-2001) whereunder it had taken serious objection about the manner in which the proceedings before the Expert committee was conducted by the then Commissioner and payments were made to the contractor without sanction of the Standing Committee. The ultimate paragraph of the resolution reads as under. "the original estimated list and the file concerned and the M. B. Books were not furnished to the Committee although Committee had sought for. Moreover no material or information was furnished to the Committee to support the claim of the contractor. Therefore, the orders of the Commissioner, to make payment to m/s. Vasudeva Murthy and Sons to the tune of Rs. 83,99,092. 00 should not be approved, besides immediate action should be taken to recover Rs. 39,04,985.
Moreover no material or information was furnished to the Committee to support the claim of the contractor. Therefore, the orders of the Commissioner, to make payment to m/s. Vasudeva Murthy and Sons to the tune of Rs. 83,99,092. 00 should not be approved, besides immediate action should be taken to recover Rs. 39,04,985. 00 already paid to Vasudeva Murthy and sons without sanction from this Committee and the Corporation, and to initiate disciplinary proceedings against the concerned officers responsible for the payment without the sanction". ( 22 ) NO provision could be brought to our notice by the learned Counsel for the respondent-contractor under which the Corporation can be said to be bound by the opinion or direction given by the Expert Committee constituted by the Government. Since the right of the contractor claiming interest was seriously disputed by the Corporation on facts, it was not permissible on the part of this Court to grant such a relief under writ jurisdiction. ( 23 ) ON a careful consideration of the rival contentions raised at the Bar, we hold that the learned Single Judge should not have allowed the writ petition. The impugned order is accordingly set aside and the writ appeal is allowed. --- *** --- .