Ker HC | A party to contract cannot unilaterally quantify liability and proceed for recovery from the other side

Kerala High Court: Anu Sivaram, J. allowed the Writ Petition by directing the respondent to only decide the amount of liability after having afforded the petitioner the chance to put forth his side

In the present case, the Petitioner who is the former Director of T.K. Manufacturing Enterprises Private Limited had entered into a contract for manufacture and supply of electricity poles to the respondent Board. The contract was awarded in the year 2000 and terminated in 2002, alleging delay in executing the work. The Company had while entering into the contract, given security by way of Bank Guarantee which, according to the petitioner, was encashed by the respondent Board towards liquidated damages.

The petitioner was served with a revenue recovery notice by the respondent. The petitioner raised objection against the recovery proceedings and approached the Court.

The Court had directed the respondent Board to consider the representation submitted by the petitioner on merits. Having afforded an opportunity of hearing to the petitioner, he submitted evidence to prove his contentions.

The Court reprimanded the respondent and held that the Chairman was bound to deal with those contentions and take a reasoned decision. Moreover, nothing was brought on record to indicate that a proper process of quantification of liability with notice to the petitioner was undertaken prior to the initiation of the revenue recovery proceedings.

It is settled law that one party to an agreement cannot unilaterally quantify the liability and proceed for recovery.

The Writ Petition was allowed on the grounds that the liability of the petitioner cannot and should not be quantified without giving him a chance to appear and give his side. [Sundeep Abraham v. Kerala State Electricity Board, 2020 SCC OnLine Ker 3048, decided on 04-08-2020]

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