TMI Blog2000 (3) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... by the first respondent to the petitioner which was replied by the petitioner as per Ext. P3 dated 31-12-1990 repudiating the alleged breach and raising a counter claim -- According to the petitioner, there was a long silence after Ext. P3 which was broken on 12-1-1998 on which date, the petitioner received Ext. P4 demand notice from the 2nd respondent Deputy Tahsildar (RR), Thiruvananthapuram under Section 34 of the Revenue Recovery Act, 1968 calling upon it to remit an amount of ₹ 22,16,303/-with future interest at the rate of 12% from 1-4-1997. On receipt of Ext. P4, the petitioner moved this Court with Arbitration Request No. 2/98 under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an Arbitrator for resolution of all disputes and differences between the parties concerning the performance of the work under Ext. P1 agreement. The request of the petitioner was resisted by the first respondent contending, inter alia, that there is no provision for arbitration in Ext. P1 agreement. It was also contended that as per Clause 54 of Ext. P1 agreement, there is a specific exclusion of resolution of disputes by arbitration and the civil Courts at Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The further contention of the petitioner was that since the entire proceedings are barred, a time barred debt cannot be recovered by recourse to revenue recovery proceedings. According to learned counsel for the first respondent, the first respondent is a society owned by the State and therefore, Article 112 of the Limitation Act is applicable and in that view, the demand placed is well within time. In view of the nature of the contentions raised, the learned single Judge felt that the matter should be placed before a Division Bench and accordingly, it is posted before us. 3. We heard learned counsel on both sides at length. 4. The moot question that arises for consideration is whether a breach of conditions of a contract is not admitted, whether it will be open for the first respondent to adjudicate upon the disputed question of breach as well as to assess the damages arising from the breach. According to the first respondent, the petitioner has committed breach of Ext. P1 agreement as borne out by Ext. R1(c). However, according to learned counsel for the petitioner, they have not committed any breach of contract as can be spelt out from Ext. P3. The petitioner would conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Ext. P3 reply notice that they have not committed breach of contract and the delay was due to lapses on the part of the first respondent against whom the petitioner had made counter claims. Even assuming that clause in an agreement empowers the instrumentality of the State to adjudicate the question of breach as well as the quantum of damages, the adjudication by an officer of the State instrumentality regarding the breach of contract and assessment of damages cannot be sustained in law because the parties to an agreement cannot be an arbiter in his own cause. The question as to whether there is a breach of contract and if so, what is the quantum of damages, are all matters which are best left to be adjudicated upon by a Court or Tribunal and not by one of the contracting parties. The view, we are taking, finds support in the decision of the Supreme Court reported in State of Karnataka v. Rameshwara Rice Mills Thirthahalli, AIR 1987 SC 1359. There, it was contended that when the State is one of the contracting parties and seeks to recover damages for breach of that contract, the State cannot be a Judge in its own cause and cannot be its own arbiter to determine the liability an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Following the aforesaid decision, a Full Bench of this Court in Abdul Rahiman v. Divisional Forest Officer, held as follows at pages 4-5, of AIR : When a contract is broken, the party who suffers by such breach is entitled to receive from the party who has broken the contract, compensation for any loss or damage caused to him thereby. This principle of Section 73 of the Contract Act equally applies where one of the contesting parties is the Government. It is the breach of the contract that gives rise to the cause for damages. The primary duty therefore is to fix the liability for the breach. Assessment of damages is only an incidental or subsidiary function. The liability to pay damages is thus fastened where there is breach of contract. However, when a dispute arises as to whether the contract has been broken or not. that dispute cannot be settled by one of parties to the contract for, he cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uperintending Engineer, ILR 1993 (2) Ker 426 had occasion to observe as follows : It is settled law that an order entailing civil consequences to an Individual shall be passed strictly in accordance with the principles of natural justice. The State shall not spring orders of this nature like a magician pulling rabbits out of his hat. A citizen cannot be suddenly confronted with a demand notice without there being a prior adjudication by a competent authority in accordance with the principles of natural justice and fair play both of which are intrinsic in the concept of equality before the law enshrined under Article 14 of the Constitution of India. To satisfy the fundamentals of fair play in action the individual concerned should be given an opportunity of presenting his case before he is made liable and the adjudication in question has to be at the hands of an independent authority totally unconnected with the bargain. The question whether there is a breach of contract and if so, what is the quantum of damages, etc. are all matters which are left to be adjudicated upon by a Court or tribunal and not by one of the contracting parties. Adjudication of liability by one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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