The main legal point established in the judgment is that a party to a contract cannot unilaterally interpret the terms of the contract, especially when there is a dispute regarding the breach of conditions. Adjudication should be by an independent person or body.

K. Sreedharan, J.

1. Petitioner challenges Exts. P2, P4, and P6. Ext. P2 is notice of demand served on the petitioner in Form No. 10 as provided by S.34 of the Revenue Recovery Act. By that notice the petitioner was called upon to pay a sum of Rs. 2,71.157.21/- being the arrears of guarantee commission for the period between 23-10-1967 and 7-9-1978. On receipt of that notice the petitioner put in objection before the Thahasildar, Talipparamba. That objection was rejected by Ext. P4 order dated 15-10-1982. There upon the petitioner moved the District Collector. The District Collector, by Ext. P6 order dated 29-1-1983 confirmed the decision of the Tahasildar. Hence this Original Petition.

2. The short facts relevant for decision of this case are as follows:

A detailed scheme was prepared for the development of the petitioner's land. As per that plan the property belonging to the petitioner was mortgaged to the Government of Kerala to stand surety for the amount advanced. For the Government to be the guarantor for the advance to be made by the Bank, the petitioner was to pay commission at the rate of 1% of the amount guaranteed. This commission, it is alleged, has not been paid. The contract allowed the Government to realise the amount due from the guarantor under the provisions of the Revenue Recovery Act. Therefore, proceedings under that Act were initiated for recovery of the guarantee commission.

3. The petitioner would contend that the guarantee commission to be paid by him was only 1% of the amount guaranteed. The amount guaranteed was 46.61 lakhs. 1% of that amount is Rs. 46,610/-. That amount has been paid to the Government as and when the amounts were advanced. The agreement did not provide for an yearly commission of 1% on the amount guaranteed. The quantification of guarantee commission made by the Government is against the provisions of the mortgage deed, a copy of which is marked in this case as Ext. P1, Therefore, it is stated that the proceedings initiated under the Revenue Recovery Act are without jurisdiction.

4. A detailed counter affidavit has been filed on behalf of the state The contentions raised therein are that for the long term loan of Rs 46.61 lakhs form the Central Bank of India a mortgage deed was executed on 23-10-1967 between the petitioner and the Bank with the state of Kerala as the guarantor, that in the year 1970 the scheme was revised and loan amount was reduced to Rs 43.58/- lakhs, that a total amount of Rs 39.95 lakhs was disbursed, that the mortgagor failed to repay the loan, that the Government paid a sum of Rs. 45.59 lakhs to the Bank in full settlement of the liabilities to the Bank, that the state has stepped into the shoes of the mortgagee on 7-9-1978, that para.8 of the mortgage deed dated 23-10-1967 provided for the payment of guarantee commission at the rate of 1% of the amount guaranteed, that the said provision implies the commission to be paid annually, that the mortgagor paid a sum of Rs. 39,950 only, that Rs. 2,71,157.21/- is outstanding towards the guarantee commission and that steps initiated under the Revenue Recovery Act are valid and proper.

5. Clause.8 of the mortgage deed executed on 15-11-1967 is in the following terms:

"The mortgagors shall pay to the Government a guarantee commission at the rate of one per ant of the amount guaranteed."

According to this clause, it is the contention of the petitioner that he need pay only 1% of the amount guaranteed as commission. It is not a recurring liability. The amount guaranteed under Ext. P) was Rs. 46.61 lakhs. 1% of that amount, viz., Rs. 46,610/- alone can be claimed as guarantee commission. Petitioner would contend that the said amount of Rs 46,610/- has been paid to the Government as and when the amounts were advanced.

6. According to Government, the guarantee commission is to be paid annually at the rate of 1% of the amount guaranteed. The amount guaranteed being Rs 46.61 lakhs, the annual guarantee commission to be