The main legal point established in the judgment is the validity of contractual terms, the principle of no man being a judge in his own cause, and the compliance with the principles of natural justice in government contracts.

1. This appeal is against the judgment of a learned judge of this Court in O.P. No. 748 of 1970, reported in 1973 KLT 366. The writ petition sought to quash Ext. P19 order of the State Government and certain other proceedings taken by it. These proceedings were taken against the writ petitioner (Respondent in the appeal) holding him liable for shortage of a stock of rice which be, as a godown keeper in the foodgrains depot, at Ponnani, under the Civil Supplies Department, had brought about on account of his neglect, carelessness or misconduct. The contract between the writ petitioner and the Government evidenced by Ext. P1 contained clause (4) as follows:

"4. That the said bounden doth hereby covenant and agree with the party hereto of the second part that, in the event of any loss or damage being caused to the Government by any act, omission, neglect, carelessness, misconduct or dishonesty on the part of the said bounden, he the said bounden shall make good to the Government such loss or damage in full, immediately on receipt of notice in writing from the Government as to the amount of such loss or damage and that on his failure to so pay up the amount, it shall be lawful and competent to the Government to recover same from him as arrears of Public Revenue under the provisions of the Revenue Recovery Act for the time being in force or in any other manner that may commend itself to the Government."

On its being found that there was shortage of stock, which the Government was inclined to attribute to the negligence or misconduct of the 1st Respondent, proceedings were started invoking the above clause and notices and representations were exchanged between the 1st Respondent and the Government. By Ext. P7 G.O. date 12 71951 intimation was given, among others to the 1st Respondent, of the Government, having written off the admissible shortage and having decided for recovery of the costs of the excess shortage from certain persons. Ext. P7 appended a statement showing the details of shortage noticed at the time of physical verification. Against the name of the petitioner, the excess shortage or its value to be recovered was indicated with particularity and clearness. It would appear that although the petitioner kept quiet for a long time, thereafter, he made repeated and prolonged representations which were considered and dealt with in detail by Government orders; and eventually, Ext. P12 order dated 5-2-1964 and Ext. P16 order dated 26 9-1966 were passed by the Board of Revenue. These had been preceded, as stated, by representations of the petitioner. Ext. P16 was challenged in a writ petition which went up in Writ Appeal No. 229 of 1966. By Ext. P17 judgment, it was stated that the 1st Respondent proposed to move the Government for suitable relief and that his representation when made, may be disposed of, applying a fresh mind. Ext. P17 is a copy of the judgment. Accordingly the 1st Respondent submitted Ext. P18 representation and this was dealt with and disposed of by Ext. P19 order challenged in the writ petition. The learned judge allowed the writ petition holding that clause (4) of Ext. P1 offended the rules of natural justice and that the decision of the Government fixing liability on the petitioner was arbitrary.

2. We regret we are unable to sustain the reasoning and the conclusion of the learned Judge. The learned judge was of the view that no man can be a judge in his own cause, and that this elementary rule of natural justice was contravened by clause (4) in Ext. P1, which clothed the Government, one of the contracting parties, to decide for itself the disputes between it and the 1st Respondent. The learned judge was of the view that a provision dispensing with the rule of natural justice cannot be readily inferred in the case of even legislative enactments, and that stronger reasons for similar dispensation in case of contracts with similar provision as in Ext P1 was necessary. The learned judge has noticed t