A claim for damages for breach of contract is not a claim for a sum presently due and payable, and hence the appropriation of the amounts due in respect of one contract cannot be made simply because some disputes are pending in respect of another contract.

P. KODDANDA RAMAYYA, J.

( 1 ) THIS writ petition raises an interesting question of law regarding rule of appropriation by State in respect of claim for damages for a breach of contract.

( 2 ) THE petitioner is an Engineering Contractor and the Superintending engineer, Irrigation Circle No. II accepted his tender for the work of restoring Gurudev Talab near Yamnikunta village in Utnoor taluk of Adilabad district (hereinafter called the first contract) and started work on 1-12-72 and according to him he completed the work worth about Rs. 3,50,000/ -. As the Department did not finalise the amounts payable to him, the matter was referred to the arbitration on 20-2-80. According to him he is entitled to Rs 35,000/- and also for damages of Rs. 57,000/- in respect of this contract work. The above work is under the supervision and is in the circle of the lst respondent, the Executive Engineer (Iandp) Department, Nirmal division Kadam.

( 3 ) THE petitioner is also a contractor in respect of a different work for construction of an anieut across Epoor vagu, Gundla Singaram village, suryapet taluk, Nalgonda district (hereinafter called the second contract) under the 2nd respondent the Executive Engineer (Iandp) Department, I. B, division, Nalgonda. In respect of that work, final bills were prepared and according to the petitioner he is entitled to Rs. 45,000/- towards the work done and also for refund of Rs. 85,000/- towards the earnest money.

( 4 ) THE petitioner complains that the 1st respondent under whose circle he was doing the contract work under the first contract sent a comunication to the 2nd respondent on 15-11-79 and four other Executive Engineers informing them that a sum of Rs. 26, 750-53 Ps. stands recoverable from the petitioner on the work of restoring Gurudev Talab, Yamnikunta village, and he has no assets in his Division and hence requested the 2nd respondent and other Executive Engineers to withhold the payment to be made to the petitioner if any. He also sent another communication to the same (effect) on 27-3-80 to the 2nd respondent. Those two communications are challenged by the petitioner in this writ petition as being illegal and without jurisdiction a$ according to the petitioner the 1st respondent has no authority to request the 2nd respondent or other Executive Engineers to withhold the payments in respect of the amounts due under a different contract:

( 5 ) THE learned counsel for the petitioner in support of his contention relied upon a judgment of the Supreme Court in Union of India vs. Raman iron Foundry wherein Their Lordships held construing Clause 15 in general conditions of contract contained in the standard form that a claim for damages for breach of contract is not a claim for a sum presently due and payable and hence the Union Government cannot appropriate the other sums due under different contracts. That case arose under the Arbitration act 1940 where the contractor, having sought reference of the dispute under sec. 20 of the Indian Arbitration Act, requested the court to grant him injunction restraining the Union Government not to appropriate the amounts due to him under different contracts when the dispute is pending under reference in respect of one contract. The Delhi High Court granted the said relief and on appeal the Supreme Court affirmed the said order and Bhagwathi, J. , held construing Clause 18 of the terms and conditions of the contract, that the Union of India cannot appropriate the amounts due to the contractor under one contract towards the claims of damages in respect of another contract when the disputes are pending for that contract before the Arbitrator. He also held that the Union of India can refuse to Pay the amount if it thinks it has got a valid defence and if it does so the only remedy open to the contractor would be to take steps to enforce his claim in a court of law or other competent authority. No doubt in that case the proceedings were started under sec. 20 of the Arbitr

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