Full Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT THE HONOURABLE MRS. JUSTICE M.R.ANITHA THURSDAY, THE 30TH DAY OF JUNE 2022 / 9TH ASHADHA, 1944 RSA NO. 214 OF 2011 AGAINST THE ORDER/JUDGMENT IN OS 1749/2003 OF PRINCIPAL MUNSIFF COURT, THIRUVANANTHAPURAM AS 383/2005 OF II ADDITIONAL DISTRICT COURT,THIRUVANANTHAPURAM APPELLANTS/RESPONDENTS/DEFENDANTS 1 TO 3S: 1 STATE OF KERALA, REPRESENTED BY ITS CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM 2 THE SUPERINTENDING ENGINEER IRRIGATION SOUTH CIRCLE,THIRUVANANTHAPURAM 3 THE EXECUTIVE ENGINEER IRRIGATION DIVISION,THIRUVANANTHAPURAM BY ADV GOVERNMENT PLEADER RESPONDENTS/APPELLANT AND 4TH RESPONDENT & 4TH DEFENDANT:
1 RAGHUNATHAN, S/O. KUNJAN, CONTRACTOR, LEYAM, KPX/196, ARAPURA LANE, KANNAMOOLA, MEDICAL COLLEGE, THIRUVANANTHAPURAM 695 011[DIED] LRS IMPLEADED 2 K MURALEEDHARAN, PWD CONTRACTOR, SHYLAM NIVAS, MATHILIL P.O., KOLLAM 691 601[DIED] LRS IMPLEADED AS ADDITIONAL R3 TO R6 ADDL.RESPONDENTS: ADDL.R3 SMT KANAKAMMA GOPALA VILASOM VEEDU,KOCHALUMMOODU,KARIPPUZHA,THRIKKADAVUR 691604 ADDL.R4 SRI YASHODHARAN ARANYA NIVAS,PERUMAN P.O,PANAYAM 691601 ADDL.R5 SRI LAAMBODHARAN CHINCHU NIVAS,PEZHUM THURUTH, PERUMON P.O,MANROTHURUTH,691601 ADDL.R6 SRI SARNGADHARAN KUMARAPURAM,PEZHUM THURUTH,PERUMON P.O,MANROTHURUTH,691601
LEGAL HEIRS OF DECEASED 2ND RESPONDENT IMPLEADED AS ADDL RESPONDENTS 3 TO 6 AS PER THE ORDER DATED 26.06.2013 IN IA ADDL.R7 ADDL. SUJATHA W/O K REGHUNATHAN,LAYAM,TC-14/1502,ARAPPURA LANE,KANNAMMOOLA,MEDICAL COLLEGE P.O,THIRUVANANTHAPURAM 695 011 (DIED,LEGAL HEIRS OF R1 RECORDED) ADDL.R8 SRI. VISHNU AGED 34 YEARS,S/O K REGHUNATHAN,LAYAM,TC-14/1502,ARAPPURA LANE,KANNAMMOOLA,MEDICAL COLLEGE P.O,THIRUVANANTHAPURAM 695 011 ADDL.R9 SRI.KIRAN AGED 40 YEARS,S/O K REGHUNATHAN,LAYAM,TC-14/1502,ARAPPURA LANE,KANNAMMOOLA,MEDICAL COLLEGE P.O,THIRUVANANTHAPURAM 695 011 LEGAL HEIRS OF DECEASED R1 ARE IMPLEADED AS ADDL R7 TO R9 AS PER
ORDER DATED 22.06.2022 IN IA 1/2022.
DEATH OF ADDL R7 RECORDED. ALSO RECORDED THAT ADDL R8 AND ADDL.
R9 ARE THE ONLY LEGAL HEIRS OF DECEASED ADDL R7 AS PER ORDER
DATED 22.06.2022 IN MEMO DATED 21.02.2022. BY ADVS. T.RAJASEKHARAN NAIR AJITH KRISHNAN SRI.A.K.RAJESH SRI.REMYA MURALI SRI.B.S.SWATHI KUMAR SRI.VENKATESH GOPI THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 28.06.2022, THE COURT ON 30.06.2022 DELIVERED THE FOLLOWING:
JUDGMENT
This Regular Second Appeal has been filed against the
Judgment in A.S.No.383/2005 on the file of II Additional District
Court, Thiruvananthapuram, which arise out of the judgment in O.S.No.1749/2003 on the file of Principal Munsiff's Court, Thiruvananthapuram. Appellants are defendants 1 to 3 in the
suit. Pending this proceedings the sole plaintiff died and his legal heirs were impleaded as additional respondents 7 to 9. Subsequently, 7th respondent died and it is recorded that additional respondents 8 & 9 are the only legal heirs of deceased respondent No.7. Second respondent/4th defendant also died and his legal heirs were impleaded as additional respondents 3 to 6. (Parties would be referred as per the status before the Munsiff's Court).
2. Suit has been filed for permanent prohibitory
injunction. Defendants 1 to 3, that is, the State, the Superintending Engineer, Irrigation South Circle, Thiruvananthapuram as well as the Executive Engineer, Irrigation Division, Thiruvananthapuram awarded work of
construction of protection wall on the bank of Karamana river from Attupuram to Pallathukadavu to the 4th defendant as per an agreement. 4th defendant could not execute the work. So he executed a power of attorney in favour of the plaintiff on 30.03.2002 and the work was assigned to the plaintiff. Plaintiff carried out the work as per the power of attorney with the
permission of the Superintending Engineer, the second defendant. 4th defendant further entered into a contract with the second defendant in connection with another work, under which some amount is due from him to defendants 1 to 3. So, defendants 1 to 3 are attempting to deduct the said amount from the work bill submitted by the plaintiff for which they have no right. Hence suit has been filed for restraining the defendants 1 to 3 from withholding or adjusting any amount due from the plaintiff from the work agreement and make him liable for the amount due from the 4th defendant.
3. Fourth defendant remained ex parte. Defendants 1 to 3
filed written statement contending that the work was originally awarded to the 4th defendant and he did not commence the work in time. Power of attorney of the 4th defendant, that is, the plaintiff rendered financial assistance to the 4 th defendant. Power of attorney in favour of the plaintiff is not an assignment of agreement of the work. It is the responsibility of the 4 th
defendant to carry out the work. 4 th defendant entered into a contract with the 2nd defendant in connection with another work. An amount of Rs.11,99,233/- is due to the 2 nd defendant from the 4th defendant in connection with that work. As per the terms and conditions of contract, that amount can be recovered from the 4 th defendant and that amount can be realised from the bills of the contract work involved in the present case. The contract of agreement entered into between the 4th defendant and the 3rd defendant to carry out the work and the plaintiff who is the power of attorney for financial assistance to the 4 th defendant, has no right to file the suit against a contract agreement entered into between the 4th defendant and 3rd defendant. The plaintiff has no right to interfere with the action of defendants 1 to 3 in taking steps to realise the amount due from the 4th defendant.
4. PW1 was examined and Exts.A1 to A6 marked from the side of the plaintiff. DW1 was examined and Ext.B1 marked from the side of the defendants.
5. On evaluating the facts and circumstances and evidence the learned Munsiff dismissed the suit finding that the
status of the plaintiff is only of an agent and if at all he had sustained any loss in connection with the work involved in this case, his remedy is to proceed against the 4 th defendant. It is also found that since there is no assignment of contract work by the 4th defendant in favour of the plaintiff the money due under the bill issued in connection with the contract work belonging to the 4th defendant can be adjusted or withheld and the above right of the defendants 1 to 3 cannot be questioned by the plaintiff who is not an assignee of the contract work and accordingly the suit was dismissed.
6. Aggrieved by the same, the plaintiff filed
A.S.No.383/2005 along with I.A.No.4130/2008 which was one filed for receiving additional documents. The learned Additional District Judge on evaluating the facts and circumstances, evidence adduced and the law involved found that there is complete assignment of work by the 4 th defendant in favour of the plaintiff by virtue of Ext.A3 power of attorney which was accepted by the Superintending Engineer as borne out from Ext.B2 supplemental agreement. Hence the defendants cannot adjust any amount due to the plaintiff for the work done by him towards the dues of 4th defendant to the defendants 1 to 3.
Accordingly, the suit was decreed and defendants 1 to 3 are restrained from adjusting or deducting any amount due from the 4th defendant towards the amount due to the plaintiff for the work done. I.A.No.4130/2008 is allowed and additional document received and marked as Ext.B2.
7. Against the Judgment and decree passed by the first
appellate court decreeing the suit defendants 1 to 3 the State and the officials approach this Court in appeal and the following substantial questions of law are formulated: “(i). Is the lower appellate court correct in holding that there was an equitable assignment of contract work?
(ii) If the contract work was not assigned in favour of the plaintiff, is he entitled to get the relief sought for?
(iii) If any amount was due from the 4th defendant, to
whom the contract work was originally given, are not defendants 1 to 3 entitled to adjust that amount towards the amount payable to the 4th defendant and whether the lower appellate court was justified in holding otherwise?“
8. According to the defendants, Ext.A3 power of attorney
executed by the 4th defendant in favour of the plaintiff will not bind the defendants 1 to 3 with respect to their right to realise the amount or adjustment of amount due from 4th defendant. Unless and until they have consented or agreed for
such assignment in favour of the plaintiff, it will not bind the Government. It is also their contention that a power of attorney has been executed only for rendering financial assistance to the 4th defendant in carrying out the execution of the contract work effectively and hence plaintiff has no independent footing with respect to the contract work involved in this case and his status is only of an agent as per the Indian Contract Act and if at all he sustained any loss in connection with the work his remedy is only
to sue the 4th defendant. So according to the learned Government Pleader, if any money is due from 4 th defendant to defendants 1 to 3 it can be adjusted or withheld and plaintiff cannot question the same. It is also contended that as per the clause 2 of power of attorney, it was seen executed by the 4 th defendant in favour of the plaintiff only for rendering financial assistance. It is further contended that all the powers in respect of contract work has been retained by the 4 th defendant and the responsibility to execute the work and complete the work is with the 4th defendant. So all those factors according to the defendants would show that 4th defendant has not assigned the contract work in favour of the plaintiff.
9. The learned counsel for the additional respondents 8
and 9 (legal heirs of original plaintiff), hereinafter be referred as plaintiffs, on the other hand fully endorse the view of the first appellate court and would contend that ExtA3 is an irrevocable power of attorney executed by the 4 th defendant in favour of the plaintiff and by virtue of the same there is complete assignment of work by the 4th defendant in favour of the plaintiff and that has been approved by the 2nd defendant, the Superintending Engineer and hence they cannot adjust the amount due to the plaintiff for the work done by him towards the amount due to the Government from the 4th defendant.
10. The learned counsel for the plaintiffs placed reliance
on Thomas Samuel v. Pappu Ramachandran [1980 KLT 867] wherein it has been held that when the rights and liabilities under a contract are made over as per irrevocable power of attorney it amounts to an equitable assignment of rights under the contract in favour of the holder of power of attorney and it creates an agency coupled with interest within the meaning of Section 202 of the Contract Act, 1872. Learned counsel also placed reliance on Joseph George v. Cochin Sanitary Wares [1991 (2) KLT 447] wherein while dealing with Section 202 of the Indian Contract Act, 1872 in a case where the agent was
authorised to do all the acts in connection with the execution of the contract and to receive the amounts payable by the Government except the security amount which was payable to the 2nd respondent, it was held that the right conferred under the power of attorney therefore amounts to an equitable assignment of the amounts due to the 2nd respondent. It is also held that on the strength of the power the entire right in respect of the contract work had vested in the claimant and what was reserved with the 2nd respondent is only the right to claim the security amount.
11. In this case the terms of Ext.A3 power of attorney executed by the 4th defendant in favour of the plaintiff are relevant. Clause Nos.5, 7 and 8 are relevant in this context to be extracted, which read thus:
“5. I hereby agree that I shall be bound by all that my said Attorney does in connection with the above work in pursuance of this power of Attorney. Any amounts paid by the Government to my said attorney through his account No.C&I-CC-16 of S.B.I, Kannammoola Branch, Thiruvananthapuram shall be deemed to have been paid to me personally and I will be absolutely liable for all or any amounts paid to my Attorney even in case where my Attorney has not accounted to me.
7. I hereby agree that all acts, deeds and things done by the
said attorney shall be construed as acts, deeds and things done by me and I undertake to ratify and confirm all and whatever that my said attorney shall lawfully do or cause to be done for me by virtue of the power hereby given.
8. I hereby declare that this power of Attorney and all
powers granted hereby will not be revoked till the whole of the said works is completed under and in accordance with the terms of the said agreement and until the complete settlement and disbursement of all claim in connection therein.”
12. So the above clauses in the power of attorney would
state in unequivocal terms that the 4th defendant is bound by all acts done by the plaintiff in the work in pursuance of the power of attorney. It is also agreed that any amount paid by the Government to the power of attorney, the plaintiff through his account be deemed to have been paid personally to the 4 th defendant and he would be liable for all or any amounts paid to the attorney even in case where attorney has not accounted to him. He also agreed that all acts, deeds and things done by the attorney the plaintiff shall be construed as the acts of 4th defendant and undertook to ratify all his acts. It is also agreed that the power of attorney will not be revoked till the whole work
is completed as per the terms of the agreement and until the complete settlement and disbursement of all claims therein.
13. Ext.B2 supplemental agreement executed between the
power of attorney of the contractor, (4 th defendant) and the Superintending Engineer, Irrigation South Circle also would go to show that the Superintending Engineer, the 2 nd defendant had entered into an agreement with the plaintiff as the power of attorney holder of the 4th defendant with regard to the execution of the work. As per that agreement the period of 18 months for completion of the work from the date of handing over the site has been extended to two years and six months from the date of handing over the site and the plaintiff, the power of attorney had signed the agreement for and on behalf of the 4 th defendant. Ext.A1 letter issued by the Superintending Engineer, the 2 nd defendant, accepting the power of attorney agreement executed by the 4th defendant in favour of the plaintiff also would go to show that the defendants have ratified the acts of execution of power of attorney by the 4th defendant in favour of the plaintiff. A contention was advanced by the defendants 1 to 3 that the power of attorney cannot be treated as an irrevocable power of attorney in view of clause No.8 of Ext.A3 wherein it has been
agreed that it will not be revoked till the completion of the work and once the work is completed the power of attorney is revocable and hence it cannot be treated as an irrevocable power of attorney. But as has been rightly found by the first appellate court as per clause 8 of the power of attorney it has been specifically provided that all powers granted therein will not be revoked till the whole of the said work is completed and in accordance with the terms of the said agreement and until the
complete settlement and disbursement of all claims in connection therein. Till the completion of the entire work and complete settlement, disbursement of the claim, the power of attorney stands irrevocable. So Ext.A3 is an irrevocable power of attorney, assigning the entire work awarded in favour of the 4 th defendant to plaintiffs and to make complete settlement of the claims under the work with the defendants 1 to 3. So also
eventhough there is express bar against assignment or subletting of the contract as per clause No.20 of Ext.B2, it is also made permissible on written approval of the Superintending Engineer. Ext.B2 agreement which have already been referred to would convincingly establish that the Superintending Engineer, the 2nd defendant, acknowledge the appointment of the plaintiff
by the contractor. There is also a clause in Ext.B2 by which contractor/power of attorney holder (plaintiff) requesting for extension of time for completion of work upto 26.10.2003 whereas the original period was on or before 26.10.2002. Considering the request of the plaintiff, an extension of time for one year was also granted. So Ext.B2 would speak in
unequivocal terms that the Superintending Engineer acknowledges the plaintiff as the contractor. Ext.A1 letter dated 30.03.2002 though states about the acceptance of the act of 4 th defendant in executing the power of attorney agreement for getting financial assistance of the execution of the work, Ext.B2 agreement dated 16.08.2003 would convincingly establish that the 2nd defendant acknowledge or accepts the plaintiff as the executor of the work as the power of attorney. So the contract has been assigned by the 4 th defendant in favour of the plaintiff with written approval of the Superintending Engineer and hence it is legal and valid.
14. So as has been held in Joseph George as well as in
Thomas Samuel, referred above, once the power of attorney is proved to be irrevocable authorising the power of attorney to do all acts in connection with the work including the full and final
settlement of the whole claims as per the work and receive the amount payable by the Government, it amounts to an equitable assignment of the amounts due to the 4 th defendant. So as per the power of attorney the entire right in respect of the work covered therein has been vested with the plaintiff and the right which has been reserved with the 4 th defendant is only to claim the security amount. So the first appellate court rightly set aside the order of the Munsiff and found that the power of attorney executed in favour of the plaintiff is an irrevocable one by which 4th defendant agreed and assigned all the rights to carry out the work and conduct the work and invest and to receive the amount due from the Government by the plaintiff.
15. Once it is proved that there is complete assignment of
work by the 4th defendant in favour of the plaintiff and there is express clause that the powers granted will not be revoked till the whole of the work is completed and until the complete settlement and disbursement of all claims in connection with the work as found earlier it amounts to equitable assignment of amounts and hence the amount due to the plaintiff for the work done is not liable to be adjusted or deducted for the amount due from the 4th defendant in connection with another work. So the
impugned judgment passed by the first appellate court is perfectly legal and proper and I do not find any reason to interfere with the well reasoned judgment passed by the first appellate court.
16. There was a contention raised by the defendants with
regard to the valuation of the suit since the plaintiff sought for injunction restraining the defendants not to adjust the amount due from the 4th defendant which comes to Rs.11,99,233/-. So the defendant has got a contention that the suit of this nature will not lie before the Munsiff's Court and it is also contended that the court fee liable to be paid is under Section 25(d)(i) instead of Section 27 (c) of the Kerala Court Fees and Suit Valuation Act. But the relief claimed by the plaintiff as rightly found by the first appellate court is disclaiming liability and the suit is not by claiming any title, right or interest.
17. It is relevant in this context to quote Sathyan v. Manager, Indian Overseas Bank [1988 KHC 7 : 1988 (1) KLT 553] wherein in a suit filed for injunction restraining the Bank from
paying the amount covered by a fixed deposit receipt it was held
that the plaintiff only claims that he alone is entitled to the amount covered by the fixed deposit receipt in the bank and did
not seek any declaration of his right. He proceeds on the footing that the bank has no power to pay the amount to any other person. Hence it was held that the suit be valued only under Section 27(c) of the Kerala Court Fees and Suit Valuation Act as a suit for injunction and not under Section 25 as a suit for declaration or under Section 22 as a suit for recovery of money.
18. So in the present case the relief of the plaintiff is for an injunction that the amount due to him as per the contract cannot
be adjusted or deducted towards the amount due to the 4 th defendant. So the principles laid down in the above cited decision squarely applies and hence valuation made under Section 27(c) is legal and proper as has been found by the first appellate court.
19. In the result, appeal is found to be devoid of any merit and hence dismissed. Parties shall bear their respective costs. Sd/- M.R.ANITHA SHG JUDGE