Andhra Pradesh High Court - Amravati
Lakshmi Venkateswara Constructions vs The Chairman And Perment Lok Adalat For ... on 26 September, 2025
Author: R. Raghunandan Rao
Bench: R. Raghunandan Rao
1
RRR,J& TCDS,J
W.P.No.4063 of 2025
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
***
W.P.No.4063 of 2025 Between:
1. LAKSHMI VENKATESWARA CONSTRUCTIONS, KURNOOL REP.
BY ITS MANAGING PARTNERS K. NAGENDRUDU, S/O K.VENKATESWARLU, AGED ABOUT 37 YEARS, RESIDENT OF H.NO. 3/60 VENKATAPURAM VILLAGE, KOMAROLU POST, ORVAKAL MANDAL, KURNOOL DISTRICT.
2. KAMSALI SOMAIAH ACHARI,, S/O LATE VENKATESWARAIAH ACHARI, AGED ABOUT 38 YEARS, RESIDENT OF D.NO. 14/243-18, SIVARAMAKRISHNA REDDY NAGAR, VELDHURTHY MANDAL, KURNOOL.
... Petitioners And $ 1.THE CHAIRMAN AND PERMENT LOK ADALAT FOR PUBLIC SERVICES, KURNOOL DISTRICT.
2. NADIMPALLI NAGARAJU, S/O SURYA NARAYANA, AGED ABOUT 57 YEARS, RESIDING AT PLOT NO.39, LAKSHMI VENKATESWARA GROUP HOUSING LAYOUT, DINNEDEVARAPADU VILLAGE, B.CAMP POST, KURNOOL STRICT.
3. NADIMPALLI SHARADA, W/O NADIMPALLI NAGARAJU, AGED ABOUT 40 YEARS, RESIDING AT PLOT NO.39, LAKSHMI VENKATESWARA GROUP HOUSING LAYOUT, DINNEDEVARAPADU VILLAGE, B.CAMP POST, KURNOOL DISTRICT.
... Respondents 2 RRR,J& TCDS,J W.P.No.4063 of 2025 Date of Judgment pronounced on : 26-09-2025 HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO HON'BLE SRI JUSTICE T.C.D. SEKHAR
1. Whether Reporters of Local newspapers : Yes/No May be allowed to see the judgments?
2. Whether the copies of judgment may be marked : Yes/No to Law Reporters/Journals:
3. Whether the Lordship wishes to see the fair copy : Yes/No Of the Judgment?
3
RRR,J& TCDS,J W.P.No.4063 of 2025 *IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI * HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO HON'BLE SRI JUSTICE T.C.D. SEKHAR + W.P.No.4063 of 2025 % Dated: 24-09-2025
1. LAKSHMI VENKATESWARA CONSTRUCTIONS, KURNOOL REP. BY ITS MANAGING PARTNERS K. NAGENDRUDU, S/O K.VENKATESWARLU, AGED ABOUT 37 YEARS, RESIDENT OF H.NO. 3/60 VENKATAPURAM VILLAGE, KOMAROLU POST, ORVAKAL MANDAL, KURNOOL DISTRICT.
2. KAMSALI SOMAIAH ACHARI,, S/O LATE VENKATESWARAIAH ACHARI, AGED ABOUT 38 YEARS, RESIDENT OF D.NO. 14/243-18, SIVARAMAKRISHNA REDDY NAGAR, VELDHURTHY MANDAL, KURNOOL.
... Petitioner AND $ 1.THE CHAIRMAN AND PERMENT LOK ADALAT FOR PUBLIC SERVICES, KURNOOL DISTRICT.
2. NADIMPALLI NAGARAJU, S/O SURYA NARAYANA, AGED ABOUT 57 YEARS, RESIDING AT PLOT NO.39, LAKSHMI VENKATESWARA GROUP HOUSING LAYOUT, DINNEDEVARAPADU VILLAGE, B.CAMP POST, KURNOOL STRICT.
3. NADIMPALLI SHARADA, W/O NADIMPALLI NAGARAJU, AGED ABOUT 40 YEARS, RESIDING AT PLOT NO.39, LAKSHMI VENKATESWARA GROUP HOUSING LAYOUT, DINNEDEVARAPADU VILLAGE, B.CAMP POST, KURNOOL DISTRICT.
4
RRR,J& TCDS,J W.P.No.4063 of 2025 ... Respondents ! Counsel for petitioner : T. Diwakar Reddy ^Counsel for Respondents : Sri Lakshmi Narayana Reddy, learned Standing Counsel for respondent No.1.
Smt. S. Ayesha Azma for R2 and 3 <GIST :
>HEAD NOTE:
? Cases referred:1
2022 LiveLaw (SC) 499 2 2024:PHHC:128984 3 (2020) ibclaw.in.116 HC 4 1958 AIR 560 5 RRR,J& TCDS,J W.P.No.4063 of 2025 APHC010070962025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI [3529] (Special Original Jurisdiction) FRIDAY,THE TWENTY SIXTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO THE HONOURABLE SRI JUSTICE T.C.D.SEKHAR WRIT PETITION NO: 4063/2025 Between:
1. LAKSHMI VENKATESWARA CONSTRUCTIONS, KURNOOL REP. BY ITS MANAGING PARTNERS K. NAGENDRUDU, S/O K.VENKATESWARLU, AGED ABOUT 37 YEARS, RESIDENT OF H.NO. 3/60 VENKATAPURAM VILLAGE, KOMAROLU POST, ORVAKAL MANDAL, KURNOOL DISTRICT.
2. KAMSALI SOMAIAH ACHARI,, S/O LATE VENKATESWARAIAH ACHARI, AGED ABOUT 38 YEARS, RESIDENT OF D.NO. 14/243-18, SIVARAMAKRISHNA REDDY NAGAR, VELDHURTHY MANDAL, KURNOOL.
...PETITIONER(S) AND
1. THE CHAIRMAN AND PERMENT LOK ADALAT FOR PUBLIC SERVICES, KURNOOL DISTRICT.
2. NADIMPALLI NAGARAJU, S/O SURYA NARAYANA, AGED ABOUT 57 YEARS, RESIDING AT PLOT NO.39, LAKSHMI VENKATESWARA GROUP HOUSING LAYOUT, DINNEDEVARAPADU VILLAGE, B.CAMP POST, KURNOOL STRICT.
3. NADIMPALLI SHARADA, W/O NADIMPALLI NAGARAJU, AGED ABOUT 40 YEARS, RESIDING AT PLOT NO.39, LAKSHMI VENKATESWARA GROUP HOUSING LAYOUT, 6 RRR,J& TCDS,J W.P.No.4063 of 2025 DINNEDEVARAPADU VILLAGE, B.CAMP POST, KURNOOL DISTRICT.
...RESPONDENT(S):
Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an order or writ or direction more particularly one in the nature of writ of certiorari, calling for the records pertaining to the docket order dated 03-10-2024 in C.F.R.No. 200/2024 and docket order dated 06- 11-2024 in I.A. No. 23 of 2024 in PLAC 16/2024, on the file of the Permanent Lok Adalat for Public Utility Services PLAPUS at Kurnool, and to quash the same, as the Permanent Lok Adalat lacks jurisdiction to entertain such cases under section 22 A (b) and 22 D of the Legal Services Authorities Act, 1987 and pass IA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the respondent No.1 to stop all further proceedings in PLAC No. 16 of 2024 on the file of the Permanent Lok Adalat for Public Utility Services [PLAPUS] at Kurnool, forthwith during the pendency of the writ petition and pass Counsel for the Petitioner(S):
1. T DIWAKAR REDDY Counsel for the Respondent(S):
1. AYESHA AZMA S
2. S LAKSHMINARAYANA REDDY The Court made the following Order:
(per Hon'ble Sri Justice R. Raghunandan Rao) Heard Sri T. Diwakar Reddy, learned counsel appearing for the petitioners, Sri Lakshmi Narayana Reddy, the learned Standing Counsel 7 RRR,J& TCDS,J W.P.No.4063 of 2025 appearing for the 1st respondent and Smt. S. Ayesha Azma, learned counsel appearing for the respondents 2 and 3.
2. The petitioners herein are engaged in Real Estate Business, that is, construction of houses and selling them to customers. The petitioners had entered into an agreement with respondents 2 and 3, on 24.03.2021, for sale of a house, for a sum of Rs.35,50,000/-. Subsequently, respondents 2 and 3 filed a petition before the Permanent Lok-Adalat for Public Utility Services at Kurnool seeking damages of Rs.20 lakhs, on account of the defects in the construction of the house, including usage of substandard material and for completion of the balance pending work would required under the agreement, dated 24.03.2021, part from compensation of Rs.2 lakhs towards mental agony and Rs.10,000/- towards costs of the complaint. This complaint was taken up as PLAC:16 of 2024 by the Permanent Lok-Adalat. After receipt of notice of this complaint, the petitioner approached the Permanent Lok-Adalat and raised preliminary objections regarding jurisdiction of the Permanent Lok-
Adalat on two grounds. The first objection was that the Permanent Lok-Adalat did not have pecuniary jurisdiction. The second objection was that a civil suit was already pending in O.S.No.831 of 2023 on the file of the Principal Junior Civil Judge, Kurnool due to which the complaint should not be taken up by the Permanent Lok-Adalat. The objections were rejected by the Permanent Lok- Adalat, by an order dated 03.10.2024, on the ground that the pecuniary jurisdiction of the Permanent Lok-Adalat had been enhanced to Rs.1 crore in 8 RRR,J& TCDS,J W.P.No.4063 of 2025 2015 itself while the dispute was valued for Rs.35,50,000 and that the said suit was not between the parties in the complaint and there was also a doubt as to whether the property in question in the said suit was identical to the property in the complaint.
3. The petitioners being aggrieved by this order, had filed the present Writ Petition.
4. The petitioners have raised a new ground which was not raised before the permanent Lok-Adalat, in the present writ petition. The petitioners contend that Section 22-A(b) and 22-D of the Legal Services Authorities Act, 1987 does not confer jurisdiction on the Permanent Lok-Adalat to take up cases relating to defects in construction etc.
5. Sri T. Diwakar Reddy, learned counsel for the petitioners submits that a Permanent Lok Adalat, would have an adjudicatory jurisdiction over cases involving Public Utility Services, enumerated in Section 22A (b). He submits that the public utility service "Real Estate Services", would not include agreements of construction of immovable property and as such, the Permanent Lok-Adalat would not have jurisdiction. The learned counsel for the petitioners would also submit that the Permanent Lok-Adalat is being called upon to undertake a detailed enquiry into the alleged defects in construction and also into the quantification of damages etc. He submits that such an enquiry has to be a comprehensive, detailed enquiry which is not permissible 9 RRR,J& TCDS,J W.P.No.4063 of 2025 under the provisions of the Legal Services Act, 1987. He relies upon the judgment of the Hon'ble Supreme Court in Canara bank vs. G.S Jayarama1, the judgment of Punjab and Haryana High Court at Chandigarh in the case of Santhosh Gupta and Another vs. Permanent Lok Adalat (Public Utility Services) and Ors2, and the judgment of the Hon'ble High Court of Kerala in Santhosh T.N vs. Pemanent Lok Adalat3.
6. Smt. Ayesha Azma, learned counsel for respondents 1 and 2, on the other hand, would contend that real estate services would include construction services and that the Permanent Lok-Adalat would have jurisdiction to undertake the enquiry required by the respondents 1 and 2. Consideration of the Court:
7. The Legal Services Act, 1987, while providing a legal frame work, for the functioning of Legal Services Authority in India, had provided for the establishment of Lok Adalats and settlement of cases before such Lok Adalats. Subsequently, the Legal Services Authorities Act was amended in 2002, by Act 37 of 2002, for the purposes of establishment of Permanent Lok Adalats for Public Services. These Permanent Lok Adalats, apart from being an alternative dispute resolution mechanism, based on the consensus of the parties, were also conferred with adjudicatory jurisdiction in cases relating to public utilities. The initial list of Public Utilities for which the Permanent Lok- 1 2022 LiveLaw (SC) 499 2 2024:PHHC:128984 3 (2020) ibclaw.in.116 HC 10 RRR,J& TCDS,J W.P.No.4063 of 2025 Adalat could function, was incorporated in the Act, by way of inclusion of such services in Section 22A (b). Later, this list was expanded, as provided under Section 22A of the Act, by way of notifications, by the Government of India Notification No. SO595(E), dated 16.02.2016, Ministry of Law and Justice, Department of Justice, "Housing and Real Estate Services" were included in the list of Public Utility Services.
8. The term "Housing and Real Estate Services" is not defined in the Act. In the present case the claim of respondents No.1 and 2 is based on a construction and purchase agreement. This Court would have to determine whether such an agreement is an agreement for services. The nature of such a contract came up for consideration, before the Hon'ble Supreme Court, in a case arising out of the levy of sales tax, on the consideration received in a contract for construction, in the case of State of Madras vs. Gannon Dunkerly and Co., (Madras) Limited4. The Hon'ble Supreme Court went into this question and held that a works contract, for construction of immovable property, would be a composite contract of sale of goods and supply of services. The Hon'ble Supreme Court had then held that such a composite contact, cannot be split into two separate contracts and consequently no sales tax could be levied on the component relating to the sale of goods. This judgment, held the field, until the constitution had been amended and clause 29-A was added to Article 266 by the 46th constitution 46th Amendment Act, 4 1958 AIR 560 11 RRR,J& TCDS,J W.P.No.4063 of 2025 1982, w.e.f 02.02.1983. This clause defined the term "tax on the sale or purchase of goods". By way of this inclusion, the judgment of the State of Madras vs. Gannon Dunkerly and Co., (Madras) Limited, was nullified, in relation to tax on the sale or purchase of the goods. Since this definition was restricted to tax on sale of goods, the said definition would not be available for application in the Legal Services Authorities Act, 1987. The relevant observations are extracted below:
(38) It now remains to deal with the contention pressed on us by the States that even contract cannot be regarded as a sale under the Sale of Goods Act, that contract is nevertheless a composite agreement under which the contractor undertakes to supply materials, contribute labour and produce the construction, and that it is open to the State in execution of its tax laws to split up that agreement into its constituent parts, single out that which relates to the supply of materials and to impose a tax thereon treating it as a sale. It is said that this is a power ancillary to the exercise of the substantive power to tax sales, and reliance is placed on the observations in United Province v. Atiqa Begum 1940 FCR 110 at p.134: (AIR 1941 FC 16 at p.25) (Z20) and 1955-1 SCR 829: ((S) AIR 1955 SC 58) (J), at p.836 of (SCR): (at p. 61 of AIR). The respondents contend that even if the agreement between the parties could be split up in the manner suggested for the appellant, the resultant will not be a sale in the sense of the Sale of Goods Act, as there is in a works contract neither an agreement to sell materials as such, nor does property in them pass as movables.
(45) Another difficulty in the way of accepting the contention of the appellant as to splitting up a building contract is that the property in materials used therein does not pass to the other party to the contract as movable property. It would so pass if that was the agreement between the parties. But if there was no such agreement and the contract was only to construct a building, then the materials used therein would become the property of the other party to the contract only on the theory of accretion. The position is thus stated by Blackburn, J., at pages 653-600 in (1867) 2CP 651 (Z28):
"It is quite true that materials worked by one into the property of another become part of that property. This 12 RRR,J& TCDS,J W.P.No.4063 of 2025 is equally true, whether it be fixed or movable property. Bricks built into a wall become part of the house; thread stitched into a coat which is under repair, or planks and nails and pitch worked into a ship under repair, become part of the coat or the ship."
When the work to be executed is, as in the present case, a house, the construction imbedded on the land becomes an accretion to it on the principle quicquid plantatur solo, solo cedit, and it vests in the other party not as a result of the contract but as the owner of the land. Vide Hudson on Building Contracts, 7th Edition, page 386. It is argued that the maxim, what is annexed to the soil goes with the soil, has not been accepted as a correct statement of the law of this country, and reliance is placed on the following observations in the Full Bench decision of the Calcutta High Court in Thakoor Chunder Poramanick v. Ramdhone Bhuttacharjee, 6 Suth W R 228 (Z29):
"We think it should be laid down as a general rule that, if he who makes the Improvement is not a mere trespasser, but is in possession under any bona fide title or claim of title, he is entitled either to remove the materials, restoring the land to the state in which it was before the improvement was made, or to obtain compensation for the value of the building if it is allowed to remain for the benefit of the owner of the soil, the option of taking the building, or allowing the removal of the material, remaining with the owner of the land in those cases in which the building is not taken down by the builder during the continuance of any estate he may possess."
The statement of the law was quoted with approval by the Privy Council in Beni Ram v. Kundan Lall, 26 Ind App 58 (PC) (Z30) and in Narayan Das Khettry v. Jatindranath, 54 Ind App 218: (AIR 1927 P C 135) (Z31). But these decisions are concerned with rights of persons who, not being trespassers, bona fide put up constructions on lands belonging to others, and as to such persons the authorities lay down that the maxim recognised in English law, quicquid plantatur solo, cedit has no application, and that they have that the right to remove the superstructures, and that the owner of the land should pay compensation if he elects to retain them. That exception does not apply to buildings which are constructed in execution of a works contract, and the law with reference to them is that the title to the same passes to the owner of the land as an accretion thereto. Accordingly, there can be no question of title to the materials passing as movables in favour of the other party to the contract. It may be, as was suggested by Mr. Sastri for the respondents, that when the thing to be produced under the contract is movable 13 RRR,J& TCDS,J W.P.No.4063 of 2025 property, then any material incorporated into it might pass as a movable, and in such case the conclusion that no taxable sale will result from the disintegration of the contract can be rested only on the ground that there was no agreement to sell the materials as such. But we are concerned here with a building contract, and in the case of such a contract, the theory that it can be broken up into its component parts and as regards one of them it can be said that there is a sale must fail both on the grounds that there is no agreement to sell materials as such, and that property in them does not pass as movables.
(46) To sum up, the expression "sale of goods" in Entry 48 is a nomen juris, its essential ingredients being an agreement to sell movables for a price and property passing therein pursuant to that agreement. In a building contract which is, as in the present case, one, entire and indivisible and that is its norm, there is no sale of goods, and it is not within the competence of the Provincial Legislature under Entry 48 to impose a tax on the supply of the materials used in such a contract treating it as a sale.
9. The "Housing and Real Estate Services", included in Public Utility Services, can only be contracts of service and not composite contracts of construction. In view of the observations of the Hon'ble Supreme Court, in the aforesaid case, a contract for construction and sale of immovable property cannot be treated as pure contract of services, nor split into a contract of services and sale of goods. In such a situation, a contract for construction, would not be covered under the term "Housing and Real Estate Services".
10. Another issue raised in the present case is whether a Permanent Lok-Adalat can undertake an in depth trial or enquiry into the complaint before it. In view of the above decision of this Court, it would not be necessary to go into this question and the same is left open for consideration and decision, in a future case.
14
RRR,J& TCDS,J W.P.No.4063 of 2025
11. For the aforesaid reasons, this Writ Petition is allowed quashing the proceedings in PLAC:16 of 2024 before the Permanent Lok Adalat for Public Utility Services at Kurnool. It is open to the respondents to avail of their remedies, in accordance with law. There shall be no order as to costs.
As a sequel, pending miscellaneous petitions, if any, shall stand closed.
_______________________________ R. RAGHUNANDAN RAO, J ____________________ T.C.D. SEKHAR, J RJS 15 RRR,J& TCDS,J W.P.No.4063 of 2025 THE HON'ABLE SRI JUSTICE R RAGHUNANDAN RAO AND THE HON'BLE SRI JUSTICE T.C.D. SEKHAR WRIT PETITION No.4063 of 2025 (per Hon'ble Sri Justice R Raghunandan Rao) 26.09.2025 RJS 16 RRR,J& TCDS,J W.P.No.4063 of 2025 HON'BLE MR. JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE & HON'BLE MR. JUSTICE R. RAGHUNANDAN RAO W.A.Nos.680 & 681 of 2024 (per Hon'ble Sri Justice R.Raghunandan Rao) _______ October, 2024 JS 17 RRR,J& TCDS,J W.P.No.4063 of 2025