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2005 DIGILAW 2748 (RAJ)

Bhawani Shankar Panday v. Board of Revenue

2005-10-20

RAJESH BALIA

body2005
Judgment Rajesh Balia, J.-Heard learned Counsel for the parties. 2. The only question raised in these petitions for consideration is whether a party to an agreement itself can determine the quantum of damages of alleged breach of contract or otherwise and make it subject matter of recovery through public demand. 3. The question as raised in the circumstances is that the petitioner in two cases who is the same person had entered into an agreement with the Executive Engineer, CCW Division, I, Mahi Project, Bansawara for certain work which was to be executed between 210.1979 to 28.04.1980. The work could not be completed during the said period. Thereafter, the Executive Engineer holding the petitioner responsible for breach of contract is not completing the work within time, raised a demand of Rs. 3,79,838/-, and 77,0211., paisa respectively under the two contracts by way of breach of contract, payable by the petitioner to the State Government and issued a certificate of recovery to the Collector. On receipt of notice, the petitioner denied his liability inter alia on the ground that no amount has been adjusted against him and no amount has been determined by the competent authority which could be subjected to PDR. The Collector, Banswara vide his order Exhibit-1 dated 26.06.1989 passed a cryptic order after referring to the agreement and the non-completion of work within the period: ^^eSaus nksuksa i{kdkj dh cgl lquh rks bl fu"d"kZ ij igqaprk gqa fd ckdh nkj }kjk le; ij dk;Z ugha fd;k ftlls ,xzhesUV dh krZ la- 2] 3 ds rgr foHkkx }kjk dh xbZ dk; Zokgh mfpr izrhr gksrh gSaA** 4. With this finding, he held that the amount is recoverable form the petitioner. The petitioner appelad against the two orders passed by the Collector before the Revenue Appellate Authority. Before the Revenue Appellate Authority, the petitioner specifically raised the issue that amount of damages cannot be determined by the Executive Engineer and it cannot be made subject of recovery as public demand. The plea was rejected by the Revenue Appellate Authority on the ground that the amount is payable on account of breach of contract and not by way of damages. 5. Aggrieved with the order of the Revenue Appellate Authority, deciding two appeals by a common order dated 21.07.1990 the petitioner preferred separate revisions before the Board of Revenue. The plea was rejected by the Revenue Appellate Authority on the ground that the amount is payable on account of breach of contract and not by way of damages. 5. Aggrieved with the order of the Revenue Appellate Authority, deciding two appeals by a common order dated 21.07.1990 the petitioner preferred separate revisions before the Board of Revenue. The Board of Revenue on the aforesaid plea of the petitioner did not record any finding thereon and held that the amount which becomes due for breach of contract may be recovered under the PDR Act. The other questions about the agreement was validity executed in terms of Article 299 and making the demand recoverable under the PDR was held to be a valid term of contract. 6. Be that as it may, there is no dispute about that amount was quantified by the Executive Engineer, who was party to the contract, for the alleged breach of term namely not completing the work within the prescribed period. Such quantified amount of loss caused as a result of breach of contract cannot but be treated as damages. Nomenclature of such sum as penalty is not conclusive of its nature. Damages being quantified by the Executive Engineer for the alleged breach of contract with the petitioner denied that he was responsible for the delay in completing the work within the period was an area of dispute between contracting parties which needed adjudication by proper forum. 7. The Supreme Court in State of Karnataka vs. Shri Rameshwara Rice Mills, Thrithahalli and other two appeals, AIR 1987 SC 1359 , has clearly laid down that term in an agreement that for any breach of condition of contract, the contractor shall be liable to pay the amount of damages as assessed by the Government does not empower the Government to adjudicate upon the disputed questions. 8. In other words, the question of determining the quantum whether the breach was committed by the other party itself cannot be adjudicated upon by the contracting party even if such term exist that for any breach of condition of contract a contractor shall be liable to pay to the Government such damages as assessed by the Government. 9. 8. In other words, the question of determining the quantum whether the breach was committed by the other party itself cannot be adjudicated upon by the contracting party even if such term exist that for any breach of condition of contract a contractor shall be liable to pay to the Government such damages as assessed by the Government. 9. In the present case, the question of breach has also been decided by the contracting party, which according to the Supreme Court is not permissible even if there is a term as aforesaid in the agreement. Therefore, the very basic finding, that the petitioner is liable for breach of term of contract and is liable to make payment of damages caused as a result has not been reached by the competent authority to decide such question. Quantum of amount based on such finding by authority having no jurisdiction cannot provide foundation for valid proceedings of recovery under Public Demand Recovery Act. 10. In view of the aforesaid, this petition deserve to be allowed. 11. The learned Counsel for the State has placed reliance on a decision of this Court in D.B. Civil Writ Petiiton No. 4815/1993 decided on 21.05.2002 for submitting that remedy for the petitioner is to deposit the amount with the Collector and then file a suit. 12. A perusal of the aforesaid Judgment shows that no question was raised nor decided whether the quantification was made by the contracting party who was incompetent to decide the basic question about responsibility for breach of contract. Therefore, the question did not arise before the learned Single Judge in Jaspal Singhs case about the validity of a demand raised by a party to the agreement by himself adjudicating upon the breach of contract allegedly committed by the other party. The principle having been settled by the Supreme Court binds all Tribunals and Courts. Therefore, there is no other view possible. Hence, as per the principle enunciated in the case of Shri Rameshwar Rice Mills, the Executive Engineer had no jurisdiction to decide upon the alleged breach of contract by the other party and the quantification cannot stand on that basis, for which PDR proceedings can be initiated. 13. As a result, these writ petitions are allowed. The impugned orders passed by the Collector and Revenue Appellate Authority as well as Board of Revenue are set at naught. 13. As a result, these writ petitions are allowed. The impugned orders passed by the Collector and Revenue Appellate Authority as well as Board of Revenue are set at naught. There shall be no order as to costs.