2018 Supreme(SC) 226

SUPREME COURT OF INDIA
RANJAN GOGOI, R. BANUMATHI, JJ.
KERALA STATE ELECTRICITY BOARD AND ANR. – Appellants
Versus
KURIEN E. KALATHIL AND ANR. – Respondents
CIVIL APPEAL NOS.3164-3165 OF 2017
Decided On : 09-03-2018

IMPORTANT POINTS
Mode of appropriation of advance payments submitted by claimant and approved and directed by Court cannot be deviated from.
If the decree is silent as to payment of further interest on principal sum, it should be deemed to be refused.
In absence of arbitration agreement or a joint memo or joint application, the parties cannot be referred to arbitration.
Supreme Court, in exercise of jurisdiction under Article 136, can re-appreciation the evidence when impugned judgment is perverse or findings likely to result in excessive hardship.

Headnote:(a) Government contract – Respondent contractor, in original bill, adjusting all advance payments made by Board towards principal amount and not interest – In subsequent claim turning around and adjusting the payments first against interest and then the principal – Not sustainable. (Para 13)

       (b) Government contract – Appropriation of payments received by contractor – Respondent-contractor submitting claim appropriating payments received firstly towards principal and then interest – Supreme court directing appellant Board to make payments accordingly – Subsequently respondent-contractor turning around and appropriating the payments firstly towards interest – Not permissible – Appropriation has to be made strictly in accordance with the directions of the Court. (Para 19)

       (2006) 8 SCC 457; (2013) 1 SCC 243 – Relied upon

       (1969) 2 SCC 274; (1999) 3 SCC 80; (1995) 4 SCC 26; (1996) 2 SCC 71 – Referred

       (c) Code of Civil Procedure, 1908 – Section 34(2) – Decree silent as to payment of further interest on principal sum – Deemed to be refused – Instantly Supreme Court not issuing any direction to pay subsequent interest – Held, the Court should be deemed to have refused such interest (Para 23, 24)

       (d) Arbitration and Conciliation Act, 1996 – Section 7 r/w section 89, Code of Civil Procedure, 1908 – Reference to arbitration – Instantly no arbitration agreement between the parties – Parties orally consenting to arbitration – No joint memo or joint application – Reference to arbitration not sustainable. (Para 40)

       (2010) 8 SCC 24; (2016) 3 SCC 619; (1993) 1 SCC 581; (1988) 1 SCC 270 – Relied upon

       (1992) 1 SCC 31 – Distinguished

       (e) Constitution of India – Article 136 – Re-appreciation of evidence – Permissible when impugned judgment is perverse or findings likely to result in excessive hardship. (Para 44)

       (2009) 11 SCC 141 – Relied upon

       (1999) 2 SCC 635 – Referred

       Facts of the case:

       Appellant-Kerala State Electricity Board (KSEB) entered into an agreement with respondent-contractor for construction of a composite dam across Karamanthodu at Padinjarethara in connection with Banasura Sagar Scheme (Kuttiyadi Augmentation Scheme). After commencement of work, Government of Kerala issued a notification by which minimum wages payable to certain categories of workers employed in works mentioned in notification was revised with effect from 01.04.1983. The respondent-contractor claimed labour escalation charges from 01.04.1983 to December, 1984. The Government of Kerala referred the matter to the industrial tribunal for adjudication of the dispute with regard to the claim of workmen employed for the construction of dam for the wage rates and other benefits fixed in the Minimum Wages Notification issued by the State Government. The industrial tribunal held that the notification of Government of Kerala was applicable to workmen employed by the respondent-contractor.

       Respondent-contractor filed O.P. claiming an amount of Rs.6,32,84,050/-towards labour escalation charges and an amount of Rs.7,66,35,927/-being interest at the rate of 18% per annum payable under Ex.P20 in respect of various bills issued by the respondent-contractor for the period 15.01.1985 to 31.10.1994. When the said writ was pending, the appellant-Board terminated the contract with respondent-contractor, which again came to be challenged before the High Court against termination of contract and for the payment of works done by respondent-contractor.

       The High Court held that the termination of contract was arbitrary and directed the appellant-Board to pay the amount claimed by the respondent-contractor for payment of labour escalation with interest at the rate of 18% per annum which the contractor claimed separately. The High Court also directed the appellant-Board to pay the amount claimed by the respondent-contractor under towards additional work done by the respondent-contractor.

       Finding of the Court:

       Respondent-contractor could not turn around and change the mode of appropriation.

       Result: Appeals allowed.