STATE OF KERALA Vs. PAILY CHANDY

JUDGEMENT

(1.) This second appeal by the defendants, the State of Kerala and the District Collector, Ernakulam, is against the decision of the lower appellate court decreeing the suit for injunction against the defendants from realising the amount of abkari arrears due from the plaintiffs for the year 1968-69. The plaintiffs were the successful bidders for conducting six toddy shops for the aforesaid period at an auction held by the Excise Department of the 1st defendant at Ernakulam. Shortly after the hid the plaintiffs deposited 3/10 of the bid amount as security. The balance amount was to be paid in seven monthly instalments. The plaintiffs commenced business in all the shops they had bid and paid some instalments due to the government. Thereafter, according to the plaintiffs, there were labour disputes on account of certain unreasonable demands of the toddy tappers and suppliers. The plaintiffs found it impossible to carry on and abandoned the business on 15-11-1968. The government took possession of the shops on 19-11-1968 and leased the same to different persons. The defendants had initiated proceedings against the plaintiffs for recovery of the abkari dues under the Revenue Recovery Act and the present suit was filed for an injunction to restrain the defendants from realising the balance amount as per the bids accepted by the government, under the Kerala Revenue Recovery Act. The plaintiffs' case is based on S.56 of the Indian Contract Act as according to them, for the reason of the labour dispute referred to in the plaint, it had become impossible for them to perform the contract between the parties. The defendants denied that the contract had become impossible of performance. According to them the plaintiffs are liable to pay good the balance amount due under the agreement. As per Clause.28 of the auction notification, the auction purchasers are bound to make good the loss that may be sustained by the government on account of the default of the auction purchaser. They also contend that under S.28 of the Abkari Act 1/1077 the Government has every right to recover the arrears due by resort to the Revenue Recovery Act. The Trial Court found that the contract has not become impossible of performance for the reason of the labour strike urged and the plaintiffs cannot avoid the contract for any such reason. It was also found that the defendants are entitled to recover the amount due from the plaintiffs by resort to the provisions of the Revenue Recovery Act. On these findings the suit was dismissed.

(2.) In appeal the learned Subordinate Judge has come to the finding that the contract between the parties had become impossible of performance for the reason of the labour strike, to prevent which the government had not taken any steps. It is also held, following the decision of this Court in Universal Marine Agencies v. State of Kerala & Others ( 1977 KLT 949 ), that the government should not have acted as Judges in their own cause and the amount if any due to the government should have been ascertained and adjudicated upon by filing a suit against the plaintiffs. It is against this that the defendants have come up in second appeal.

(3.) The point that the defendants are incompetent to adjudicate upon the claim against the plaintiffs for the purpose of ascertaining the loss sustained by the government was not taken in the plaint; nor was any such question urged before the Trial Court. The lower appellate court has followed the decision of a Single Judge of this Court in Universal Marine Agencies v. State of Kerala & Others reported in 1977 KLT 949. This decision had been reversed by a Division Bench in the decision in State of Kerala v. Universal Marine Agencies reported in 1980 KLT 187 . The Division Bench has held that if the agreement between the parties provide for the machinery for adjudication of the loss sustained by the government, there is nothing wrong in resorting to that machinery for ascertainment of the quantum of damages due to the government. In Para.4 it is stated thus: