Madhya Pradesh High Court
Ramavtar Sharma vs State Of M.P.& Ors. on 11 September, 2019
Author: Vivek Agarwal
Bench: Vivek Agarwal
THE HIGH COURT OF MADHYA PRADESH
W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)1
Gwalior, Dated:-11.09.2019
Per Justice Vivek Agarwal
Shri V.K.Bhardwaj, learned senior counsel with Shri Rohit
Batham, counsel for the petitioner.
Shri Pratip Visoriya, learned Govt. Advocate for the State.
This writ petition has been filed challenging order dated
23.4.2004 passed by respondent No.3 by which respondent No.3
directed the petitioner to deposit remaining amount of Rs.1,14,217/-, for which RRC was issued, under the head of minerals in the government treasury.
Brief facts leading to the present writ petition are that petitioner was one of the participants in the open auction for a trade quarry mine which was to be auctioned in village Mau, district Gwalior. Petitioner being a successful bidder was granted such lease for a period of three years for black stone up to 31.3.1988. His highest bid of Rs.42,000/- per annum was accepted and he was directed to deposit Rs.14,000/- as the first installment alongwith Rs.27/- towards map charges. Petitioner had also executed an agreement dated 15 th March, 1985 as enclosed by the respondents as Annexure R/1. It is petitioner's case that he had deposited security amount of Rs.12,600/- as well as first installment of Rs.14,000/- within the stipulated time, but had failed to deposit further installments as per the agreement, Annexure R/1, as a result of which a show-cause notice was issued to him on 1.2.1986 with a direction to THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)2 deposit Rs.28,000/- being the amount of due installments which were payable on 1.8.1985 and 1.12.1985. He was also directed to stop mining operations for violation of clause 18 of the agreement asking him to file his explanation as to why his agreement be not cancelled in terms of clause 9 of the agreement and why his security deposit be not forfeited either in whole or in part.
Vide order dated 25.3.1986 petitioner's lease agreement was cancelled and it was decided to recover the loss caused to the revenue as the arrears of land revenue in case any loss is incurred on putting such quarry on re-auction.
Vide order dated 6.9.1989, Annexure P/7, petitioner was informed that despite show-cause notice dated 1.2.1986 petitioner had not deposited the remaining installments violating the provisions contained in clause 5(i) of the agreement resulting in cancellation of the contract vide order dated 25.3.1986 as a result of which quarry was again put to auction wherein State suffered loss of Rs.99,400/- which petitioner was directed to deposit.
It is petitioner's contention that he had given a representation, Annexure P/8 in the year 2002 , in response to which, impugned order, Annexure P/1 was communicated. Thereafter, a legal notice was sent for demand of justice on 23.6.2004 but when nothing materialized, then this writ petition is filed.
Learned counsel for the petitioner places reliance on the THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)3 judgment of Madhya Pradesh High Court in case of Pran Nath Suri v. State of M.P. as reported in 1989-II MPWN SN 137 wherein referring to Section 73 of the Contract Act, 1872 it has been held that if contractor failed to execute contract and provide surety and quarry was not re-auctioned for unexpired term, only earnest money can be forfeited. Placing reliance on such judgment, learned counsel for the petitioner submits that only earnest money to the tune of Rs.12,600/- as was deposited by him while executing the agreement could have been forfeited and no additional demand could have been raised against the petitioner. It is further submitted that no recovery could have been ordered after expiry of three years period of termination of contract in terms of the provisions contained in Article 55 of the Limitation Act.
Learned counsel for the petitioner also placed reliance on the judgment of the Supreme Court in case of Masum Hussain v. State of Madhya Pradesh and others as reported in AIR 1981 SC 1680 specifically drawing attention of this Court to para 3 and 5 of the said judgment which reads as under :-
"3. The Collector who started recovery proceedings assumed that once a lessee committed breach of the agreement, the loss suffered by the State would be equal to the amount of rent payable by the lessee as represented by the amount of bid at which auction was knocked down. An identical contention was negatived by this Court in Civil Appeal No. 228 of 1979 (Kali Das Aggarwal v. The State of Madhya Pradesh and Ors.) decided on January 22, 1979, observing that in such a situation the Collector must, in the first instance, adjudicate on the question as to the quantum of loss suffered by the Government of THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)4 Madhya Pradesh by reason of the default, if any, on the part of the lessee who committed breach of the agreement of lease. This Court struck down the order by which coercive process was resorted to by the Collector without a preliminary adjudication and directed that the Collector should adjudicate the loss, if any, after giving an opportunity to the appellant to participate in the proceedings. The facts in the present case are identical with the facts in the appeal referred to above and the decision will mutatis mutandis apply in this case.
5. Learned counsel for the respondent State frankly stated that since the date of the second auction the loss will have to be assessed keeping in view the amount at which the bid of the deceased lessee was accepted and the highest bid at the second auction accepted by the concerned authorities, and the difference between the two may provide a reasonable measure of loss, if any. He, however, contended that for the earlier period there was nothing wrong in adjudging the loss equal to the amount annually payable by the deceased lessee. Without accepting this contention, from this point of view also, a fresh assessment is inevitable."
Learned counsel for the State on the other hand submits that petition is barred by limitation. Demand was admittedly raised in the year 1989 vide Annexure P/7. Petitioner has approached this Court after fifteen years of raising of such demand, in the year 2004, and therefore, the writ petition suffers from delay and laches.
It is also submitted by learned counsel for the State that mere reply to the notice sent on behalf of the petitioner in the year 2002 could not have revived the limitation, and therefore, the writ petition is not maintainable.
It is also submitted by the State counsel that the plea of the petitioner that only security deposit could have been forfeited and no THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)5 amount of loss incurred on re-auction of the trade quarry abandoned by the petitioner could have been recovered from the petitioner is not made out inasmuch as facts of the case relied on by the petitioner in case of Pran Nath Suri (supra) were different and are not applicable to the facts and circumstances of the present case.
Learned counsel for the State submits that neither Article 55 of the Limitation Act will be applicable to the facts and circumstances of the case nor the provisions contained in Section 73 of the Contract Act.
We have heard learned counsel for the parties and perused the record.
The issue which is to be determined in this case is three fold; namely,
(i) whether in terms of Section 73 of the Contract Act respondents were not entitled to claim any compensation for loss sustained by them due to the breach of contract in the hands of the petitioner,
(ii) whether such demand vide Annexure P/7 was barred by limitation as provided under Article 55 of the Limitation Act, 1963 and
(iii) whether petitioner has taken recourse to the remedy as provided under the agreement, Annexure R/1, before approaching the writ Court or whether the writ petition has been filed without availing such alternate contractual remedy THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)6 after lapse of more than 15 years of accrual of cause of action accruing in the year 1989.
As far as Section 73 of the Contract Act is concerned, it deals with compensation for loss or damage caused by breach of contract. As per the law laid down in case of Ghaziabad Development Authority vs. Balbir Singh as reported in (2004) 5 SCC 65 the word 'compensation' is again of very wide connotation. In legal sense it may constitute actual loss or expected loss and may extend to physical mental or even emotional suffering, insult or injury or loss. The law is well settled that under Section 73 of the Contract Act compensation is not be given for any remote or indirect loss or damage sustained by reason of the breach. It is also well settled as has been laid down in case of M/s. Murlidhar Chiranjilal v. M/s. Harishchandra Dwarkadas and another as reported in AIR 1962 SC 366 that two principles of which damage is calculated are well settled. The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed; but this principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent to the breach and debars him from claiming any part of the damage which is due to his neglect to take such steps.
When judgment referred to by the petitioner in case of Pran THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)7 Nath Suri (supra) is examined in the light of these two principles, then it is evident that facts of the case of Pran Nath Suri are different. Firstly, there was no executed contract and secondly quarry was not re- auctioned for unexpired term, and therefore, second limb of Section 73 was not completed as per the law laid down in case of M/s. Murlidhar Chiranjilal (supra) and in those circumstances learned Single Judge held that only earnest money can be forfeited.
Similarly, in case of Masum Hussain (supra) facts before the Supreme Court were that Collector representing the Government of M.P. in the first instance had failed to adjudicate on the question as to the quantum of loss suffered by the Government of M.P. by reason of default on the part of the lessee who committed breach of the agreement of lease. In that context, in para 5 as reproduced above, default on the part of the Collector has been noted and appeal was allowed, impugned order was quashed and set aside and Collector, Raisen was directed to, after hearing the parties, ascertain the loss caused to the State Government as a result of breach, if any, on the part of the deceased lessee in the performance of the contract.
However, in the present case, as per the agreement, Annexure R/1, installments were due at quarterly rest and after paying the first installment of the contract money, other installments were defaulted by the petitioner for which notice was duly served on him vide Annexure P/4 on 1.2.1986 citing violation of clause 18. This was followed by THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)8 another notice Annexure P/5. Thereafter on failure of the lessee to deposit the remaining due installments, contract was cancelled in terms of clause 9 of the agreement and quarry was put to re-auction. Clause 9 of the agreement reads as under :-
"If any contract money of royalty or any other dues reserved under this agreement remain unpaid for more than 3 months or there is any breach of terms of the agreement than the Government may either cancel the contract and confer upon the land and take possession of the quarry and all the quarry products or if the Government is satisfied that the breach is minor it may instead of cancelling the contract, forfeit the whole or part a part of the security deposit in which case the lessee will have to make up required amount of the security deposit within 15 days. The Government will have the right to recover any arrear under this contract as arrear of land revenue."
This clause has been substituted by following clause 9 which has been incorporated by notification No.426-6477-XII dated 3.2.1969 published in M.P. Rajpatra Part I dated 27.6.1969 :
"9. If any contract money or royalty or any other dues reserved under this agreement remain unpaid for more than 3 months or there is any breach of the term of the agreement then the Government may either cancel the contract and enter upon the land and take possession of the quarry and all the quarry products or if the Government is satisfied that the breach is minor, it may, instead of cancelling the contract, forfeit the whole or a part of the security deposit in which case the contract will have to make up required amount of the security deposit within 15 days. If the contract quarry is re-auctioned as a result of cancellation of the contract of deficit, if any, shall be recovered from the contractor or his security. The Government will have the right to recover any arrears under this contract as arrears of land revenue."
THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)9 Thereafter vide order dated 6.9.1989 loss which was caused to the State upon re-auction of the quarry was sought to be recovered alongwith arrears of two installments which were defaulted by the petitioner during currency of the agreement.
This action having been taken by the State and it is not the case of the petitioner that quarry was not put to re-auction, plea of order dated 6.9.1989 being barred by Article 55 of the Limitation Act is not made out.
In fact, as per clause 30 of the agreement, which reads as under :
"30. Should any question of dispute arise regarding the contract or any matter or thing of construction of any term of condition in the contract or any thing connected with the quarry contract or mineral or the working or made payable by the contract the contractor shall be bound to submit such dispute to the Collector for decision. But the contractor shall have the right of appeal to the Commissioner or Ad. commt. against such decision. The decision of the Commissioner or Ad. commit. shall be final and binding on the contractor."
petitioner had a remedy of submitting dispute to the Collector for decision and thereafter had an appeal to the Commissioner or Administrative Committee against such decision, but petitioner has failed to avail such remedy as provided in clause 30 of the agreement. Besides this, as per the amended form 3 for contract agreement on trade quarry, clause 9 has been incorporated by notification No.426- 6477-XII dated 3.2.1969 published in M.P. Rajpatra Part I dated 27.6.1969 and as per amended form, in the matter of trade agreement THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)10 relating to a trade quarry, clause 9 specifically prescribes condition with respect to recovery of loss caused to the State in case of re-auction of the quarry. In terms of such provisions contained in clause 9 and clause 29, which is similar to clause 30 of the executed agreement, petitioner is bound to satisfy the demand and petition after fifteen years of cause of action accruing in the year 1989 is not maintainable in view of not only delay and laches, but also on account of availability of alternative remedy which petitioner had failed to avail.
The law on delay and laches is settled. The relief under Article 226 is not exactly one that can be demanded as of right. The criteria Courts have been following in the matter of issuance of writs has been dealt with in detail. The basic principle is that when the relief claimed is one relating to a fundamental right, the Court has to grant the relief once the right and the infringement thereof are established. But if Article 226 is invoked "for other purposes" then enforcement of fundamental rights, it is discretionary for the Court to grant or refuse the relief. Please refer to law laid down in case of K.S. Rashid v. I.T. Investigation Commission, AIR 1954 SC 207.
Inordinate delay in making the motion for a writ will be an adequate ground for refusing to exercise the discretion. The Court can refuse the relief when the petitioner has no satisfactory explanation to offer. Please refer to the judgment of Allahabad High Court in case of Sri Niwas v. Election Tribunal, AIR 1955 All 251, of Madras High THE HIGH COURT OF MADHYA PRADESH W.P.2268/2004 (Ram Avtar Sharma Vs. State of M.P. & Ors.)11 Court in case of Nathamooni v. Viswanatha, AIR 1951 Mad 250.
In fact in case of K.T. Abraham v. State of Trav-Co., AIR 1954 Trav-Co 55 it has been held that though Article 226 of the Constitution does not prescribe any period of limitation, a petitioner who is not diligent cannot succeed in a writ proceeding. Supreme Court in case of Durga Prashad v. Chief Controller of Imports & Exports, (1969) 1 SCC 185 has held that normally in the case of belated approach, writ petition has to be dismissed. Delay or laches is one of the factors to be borne in mind by the High Courts when they exercise their discretionary powers under Article 226 of the Constitution of India. In an appropriate case, the High Court may refuse to invoke its extraordinary powers if there is such negligence or omission on the part of the applicant to assert his right as taken in conjunction with the lapse of time and other circumstances, causes prejudice to the opposite party. Supreme Court has travelled beyond the earlier judgments and has held that even where fundamental right is involved, the matter is still within the discretion of the Court.
Therefore, the petition fails and is dismissed.
(Sanjay Yadav) (Vivek Agarwal)
Judge Judge
ms/-
MADHU SOODAN
PRASAD
2019.09.19
14:52:05 -07'00'