M/s Ajendar Singh, A Partnership Firm Duly Registered With The Registrar Of Firms v. 1. State of Chhattisgarh Through- The Secretary, Public W
Case Details
1 CR No. 23 of 2017 ANKIT KUMAR SINGH Digitally signed by ANKIT KUMAR SINGH Date: 2025.09.15 17:26:39 +0530 2025:CGHC:46878 AFR HIGH COURT OF CHHATTISGARH AT BILASPUR CR No. 23 of 2017 M/s Ajendar Singh, A Partnership Firm Duly Registered With The Registrar Of Firms And Societies Having Its Office At Devendra Nagar, Raipur, Chhattisgarh, and Represented Through Its Partner Mr. Ajendar Singh, Aged About 57 Years, S/o Shri Dilip Singh, R/o C-117, Sector-1, Devendra Nagar Raipur, Chhattisgarh ...............Claimant. ... Applicant versus 1. State of Chhattisgarh Through- The Secretary, Public Works Department Raipur, Chhattisgarh 2. The Executive Engineer, P.W.D. (B&R) Division No.1 Raipur, Chhattisgarh. ... Respondents For Applicant :- Mr. Kabir Kalwani, Advocate, on behalf of Mr. Anurag Singh, Advocate.
Legal Reasoning
Bench of this Court in the matter of M/s. A.K. Construction Company v. The State of M.P. (now Chhattisgarh) and others 1 . 5. Mr. R.S. Marhas, learned State counsel, would support the impugned order and submit that that since the applicant did not perform the maintenance and repair work, the 1 2005 (4) M.P.H.T. 15 (CG) 5 CR No. 23 of 2017 amount has rightly been recovered from the applicant and, therefore, the instant civil revision deserves to be dismissed. 6. I have heard learned counsel for the parties, considered their rival submissions made herein-above and gone through the records minutely. 7. It is not in dispute that for the subject agreement performance guarantee was refunded to the applicant and on 21.01.2004, the respondents asked the applicant to carry out repair works on account of visit of Hon’ble President of India, but the applicant did not perform the work and the same was got done by the another agency causing the loss of 42,56,000/- to the respondents-department which ₹ sought to be recovered from the applicant. However, it is pertinent to mention here that though the amount of ₹ 7,64,871/- was recovered from the security deposit of the other contract of applicant bearing Agreement No.97/DL of 2008-09 and though that amount has not been due and recoverable by way of adjudication either by Court or by Arbitration Tribunal, but the department assuming the role 6 CR No. 23 of 2017 of arbiter sought to recover the said amount relying upon Clauses 37 & 39 of the contract. 8. At this stage, it would be appropriate to notice the relevant decision in this regard. 9. In the matter of State of Karnataka etc. v. Shri Rameshwara Rice Mills Thirthahalli etc. 2 contractor had entered into an agreement with the State for construction of certain buildings. As the contractor failed to complete the work, the contracts were terminated in terms of agreement entered into by them and damage payable were assessed and sought to be recovered as arrears of land revenue, without there being any adjudication upon the question with regard to the liability of the parties. The Supreme Court considering clause 12 of the agreement observed as under: - “Even assuming for argument's sake that the terms of clause 12 afford scope for being construed as empowering the officer of the State to decide upon the question of breach as well as assess the quantum of damages, we do not think that adjudication by the officer regarding the breach of the contract can be sustained under law because a party to the agreement cannot be an arbiter in his own cause. Interests or justice and equity require that where a party to a 2 AIR 1987 SC 1359 7 CR No. 23 of 2017 contract disputes the committing of any breach of conditions the adjudication should be by an independent person or body and not by the other party to the contract. The position will, however, be different where there is no dispute or there is consensus between the contracting parties regarding the breach of conditions. In such a case the officer of the State, even though a party to the contract will be well within his rights in assessing the damages occasioned by the breach in view of the specific terms of clause 12.” 10. A Division Bench of this Court in the matter of A.K. Construction Company (supra) where work of construction was awarded after completion of work, bills were submitted and the claim bills, however, were not released which led to dispute between the parties and the aggrieved party approached Arbitration Tribunal constituted under the Adhiniyam, 1983. Defence of the State Government was that the Government dues were to be recovered and in terms of the agreement, the Government was entitled to recover “sums recoverable” not only under the contract in question, but also under other contracts. The Division Bench speaking through A.K. Patnaik, CJ (as then His Lordship was), held that the Government could not be arbiter, Judge of its own cause and could not recover the amount unless the amount is held to be due and 8 CR No. 23 of 2017 recoverable by way of adjudication either by the Court or by the Arbitration Tribunal, and observed as under: - “It will be clear from second sentence of the aforesaid clause that in the event of the security being insufficient or if no security has been taken from the contractor, then the balance or the total sum recoverable, as the case may be, shall be deducted from any sum then due or which at any time thereafter may become due to the contractor under the instant or any other contract with the Govt.. The expression 'sum recoverable' would mean any sum that is admitted by a contractor to be due to the Govt. or that is disputed by the contractor but adjudicated by the Court or the arbitrator to be due and recoverable form the contractor. This can be the only interpretation of Clause 4.3.39.1 consistent with the principle of natural justice that no person can be a Judge of his own cause. In case, it is held, as has been held by the Arbitration Tribunal that the “sum recoverable” is any amount which the Govt. or any authority of the Govt. considers to be recoverable from the contractor, then the Govt. or such authority will be a Judge of its own cause and would be entitled to recover any sum from the contractor, even though the said sum is disputed and not adjudicated to be due and recoverable from the contractor by the arbitrator or the Court.” 11. Similarly, the Division Bench of this Court in M/s. Macadum Makers v. State of Chhattisgarh and others3 following Shri Rameshwara Rice Mills Thirthahalli's case (supra) and A.K. Construction Company (supra), has laid down similar proposition as under: - 3 AIR 2012 Chhattisgarh 123 9 CR No. 23 of 2017 “20. It is therefore, apparently clear that though respondents claimed certain amount to be recoverable from the petitioner, alleging that the work of the petitioner was unsatisfactory and he failed to repair the road within the time stipulated as per letter dated 06.11.2008, the petitioner took recourse to the provision contained under the arbitration clause-29 by raising a dispute before the Superintending Engineer. However, without adjudication of the petitioner's liability towards payment, alleged sum is sought to be recovered against the petitioner, and respondent- Executive Engineer has proceed to issue impugned letter dated 03.12.2010. This act on the part of the respondents-State authority can only be termed as arbitrary and unreasonable, violative of Article 14 of the Constitution of India. Moreover, respondents could not bring to the notice of this Court any law operation in the field, authorizing the respondents authority to recover the amount by stretching their hands to the due payment and deposits of the petitioner with other offices in connection with other works. Even in the agreement, no such terms have been stipulated. Present is not a case where even after adjudication, petitioner failed to deposit the amount and, therefore, the respondents have proceeded to recover the amount as arrears of land revenue.” 12. In the matter of Bharat Sanchar Nigam Ltd. and another v. Motorola India Pvt. Ltd.4, the Supreme Court has followed the principle of law laid down in Shri Rameshwara Rice Mills Thirthahalli's case (supra) holding that a party cannot be a judge in his own cause. 4 AIR 2009 SC 357 10 CR No. 23 of 2017 13. In the matter of J.G. Engineers Pvt. Ltd. v. Union of India and another5, the Supreme Court has relied upon Shri Rameshwara Rice Mills Thirthahalli's case (supra) to hold that adjudication upon the issue relating to a breach of condition of contract and adjudication of assessing damages arising out of breach are two different and distinct concepts and right to assess damages arising out of a breach would not include a right to adjudicate upon as to whether there was any breach at all and one of the parties to an agreement cannot reserve to himself the power to adjudicate whether the other party has committed breach. 14. In the matter of M/s. Gangotri Enterprises Ltd. v. Union of India and others6, the Supreme Court while considering the question of encashment of bank guarantee has held that the sum claimed by the respondents from the appellant is in the nature of damages, which is not yet adjudicated upon arbitration proceedings. Their Lordships observed in paragraph 42 of their report as under: - “42. On perusal of the record of the case, we find that firstly, arbitration proceedings in relation to the contract dated 22.08.2005 are still pending. Secondly, 5 (2011) 5 SCC 758 6 AIR 2016 SC 2199 11 CR No. 23 of 2017 the sum claimed by the respondents from the appellant does not relate to the contract for which the Bank Guarantee had been furnished but it relates to another contract dated 22.08.2005 for which no bank guarantee had been furnished. Thirdly, the sum claimed by the respondents from the appellant is in the nature of damages, which is not yet adjudicated upon in arbitration proceedings. Fourthly, the sum claimed is neither a sum due in praesenti nor a sum payable. In other words, the sum claimed by the respondents is neither an admitted sum or a sum which stood adjudicated by any Court of law in any judicial proceedings but it is a disputed sum and lastly, the bank guarantee in question being in the nature of a performance guarantee furnished for execution work of contract dated 14.07.2006 (Anand Vihar works) and the work having been completed to the satisfaction of the respondents, they had no right to encash the Bank Guarantee.” 15. In the matter of Hameeda Hardware stores Vs. B. Mohan Lal Sowcar 7 , their Lordships of the Supreme Court have held as under:- “13...... The word 'claim' means “a demand for something as due” or “to seek or ask for on the ground of right” etc.” 16. Since the amount of 7,64,871/- has been recovered from ₹ the another contract of the applicant which has not been adjudicated by the Competent Authority either by the Court or by the Arbitration Tribunal, without any adjudication the State Government could not be arbiter, Judge of its own 7 AIR 1988 SC 1060 12 CR No. 23 of 2017 cause and could not recover the said amount unless the amount is held to be due and recoverable by the Competent Authority. In that view of the matter, the impugned order dated 16.11.2016 is hereby set aside. The respondents are directed to pay the amount to the tune of 7,39,006/- along ₹ with interest thereon @ 6% from the date of filing of reference before the Chhattisgarh Madhyastham Adhikaran, Raipur, i.e. 11.03.2010. 17. Consequently, the instant Civil Revision is allowed to the extent indicated herein-above. Ankit Sd/- (Sanjay K. Agrawal) Judge
Arguments
For Respondents :- Mr. R.S. Marhas, Additional Advocate General. SB- Hon'ble Shri Justice Sanjay K. Agrawal Judgment On Board 12.09.2025 1. The applicant has preferred this revision under Section 19 of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983, (for brevity, “Adhiniyam, 1983”) calling in question 2 CR No. 23 of 2017 legality, validity and correctness of the order dated 16.11.2016 by which his reference has been rejected finding no merit. 2. The aforesaid challenge has been made on the factual backdrop:- (i) The applicant has executed an agreement with the State Government bearing Agreement No.5/DL of 2002-03, of which the work order was issued to the applicant on 05.04.2002. As per the said agreement, the applicant was required to perform the maintenance work of the road for 3 years i.e. commencing from the date of completion of work and ending on after expiry of three years. The work was completed on 20.06.2002 and the final bill was paid to him. The applicant also said to have executed the maintenance work for complete three years i.e. from 22.06.2002 to 22.06.2005. (ii) It is the case of the applicant that after period of 4 & ½ years, after expiry of maintenance period, the respondents demanded from him an amount of 42,56,000/- on the ₹ ground of some audit objection raised by the Accountant General of Chhattisgarh. In furtherance of the said demand, 3 CR No. 23 of 2017 ₹ the respondents recovered 7,39,006/- from the security deposit of other contract bearing Agreement No.97/DL of 2008-09, of the petitioner, vide memo dated 30.11.2019. Against which the applicant by invoking Clause 29 of the agreement made a request to the Superintending Engineer to settle the dispute, but the Superintending Engineer rejected the demand, thereafter the applicant preferred an appeal to the Chief Engineer which also came to be dismissed leading to filing of reference petition for refund of ₹ 7,39,006/- along with interest thereon @ 14%, meaning thereby the total amount is 7,64,871/- ₹ (iii) The respondent-State filed its reply and refuted the claim made by the applicant herein. In the reply it has been stated that though the performance guarantee was refunded, but on 21.01.2004, the respondents asked the applicant to carry out repair works on account of visit of Hon’ble President of India, but the petitioner did not commence and conclude the work and the same was get done through an another agency which caused the respondents a loss of ₹ 42,56,000/- and the same is recoverable from the applicant. 4 CR No. 23 of 2017 3. After appreciating the oral and documentary evidence available on record, the Chhattisgarh Madhyastham Adhikaran, Raipur (for short, ‘Tribunal’) has dismissed the reference relying upon the Clauses 37 & 39 of the Agreement. Feeling aggrieved and dissatisfied with the aforesaid order of the Tribunal, the applicant preferred the present civil revision under Section 19 of the Adhiniyam, 1983. 4. Mr. Kabir Kalwani, learned counsel for the applicant, would submit that alleged amount which was never adjudicated from the applicant, therefore, the same could not have been recovered from the applicant’s other contract bearing Agreement No.97/DL of 2008-09. To buttress his submission, he would rely upon the decision of the Division