2007 (1) TMI 635 - HC - Indian Laws

Summary

Issues Involved:
1. Legality of Revenue Recovery Proceedings by a Government Company for unquantified damages.
2. Applicability of writ petition in contractual disputes.
3. Interpretation of contractual clauses regarding dispute resolution and jurisdiction.
4. Authority of the Chief Engineer to demand payment under the Revenue Recovery Act.

Summary:

1. Legality of Revenue Recovery Proceedings by a Government Company for unquantified damages:
The primary issue was whether Revenue Recovery Proceedings can be initiated by a Government Company to recover damages from an alleged breach of contract without adjudication. The court held that only settled and fixed dues, either admittedly due or adjudicated and settled, can be recovered through the machinery under the Kerala Revenue Recovery Act. Disputed amounts not settled or adjudicated cannot be recovered by such proceedings.

2. Applicability of writ petition in contractual disputes:
The court acknowledged that generally, writ petitions under Article 226 of the Constitution of India do not lie in purely contractual matters, especially when the dispute involves interpretation of contract terms. However, the court can interfere if there is patent illegality, irrationality, or procedural impropriety. In this case, the petitioner was not challenging the contract terms but contending that no amounts were due to KSIDC and that the termination of the contract was illegal.

3. Interpretation of contractual clauses regarding dispute resolution and jurisdiction:
The court examined Clause 31 of the contract, which stated that all disputes should be settled by the Managing Director of KSIDC, whose decision would be final and binding. However, the court noted that this clause could not be treated as an arbitration clause. The court also referred to Clause 34, which specified that disputes would be referred to civil courts in Trivandrum, and Clause 18 of the Notice inviting tenders, which excluded arbitration as a means for settling disputes.

4. Authority of the Chief Engineer to demand payment under the Revenue Recovery Act:
The court found that the Chief Engineer was not authorized to make a demand and threaten recovery under the Revenue Recovery Act without proper adjudication. The court emphasized that the amount due must be an agreed or adjudicated amount, and the Chief Engineer's demand was not based on such adjudication.

Conclusion:
The court set aside Ext. P-12 issued by the Chief Engineer, allowing the petitioner to pursue other legal remedies. The court did not express any opinion on the merits of the claim by KSIDC and allowed for the possibility of filing a separate suit or counterclaim. The original petition was allowed to the extent of setting aside the Chief Engineer's demand.