Revenue recovery cannot enforce disputed contractual damages without prior adjudication of liability and quantum.

Revenue recovery under the Kerala Revenue Recovery Act is available only for amounts that are settled, fixed, or otherwise adjudicated as due. A disputed contractual claim for damages arising from alleged breach cannot be enforced through revenue recovery unless liability and quantum have first been determined by a competent adjudicatory process. The Chief Engineer's demand was unsustainable because the contract did not authorise him to determine the disputed liability and then recover it as if it were an admitted government due. The demand notice was quashed, leaving the parties to pursue other remedies.

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Issues: (i) Whether revenue recovery proceedings could be initiated for recovery of disputed damages arising out of a contractual breach without prior adjudication or quantification of the amount due; (ii) Whether the Chief Engineer could demand and recover such amount under the contract and the Kerala Revenue Recovery Act when the dispute was not resolved by the Managing Director or by an independent adjudicatory process.

Issue (i): Whether revenue recovery proceedings could be initiated for recovery of disputed damages arising out of a contractual breach without prior adjudication or quantification of the amount due.

Analysis: The applicable legal position is that the Kerala Revenue Recovery Act enables recovery only of amounts that are already settled, fixed, or adjudicated as due. A claim for damages arising from alleged breach of contract does not become recoverable merely because it is asserted by one party. Where liability and quantum are genuinely disputed, the amount must first be determined by adjudication, such as by a civil court or another legally competent process. Revenue recovery cannot be used to create or enforce a disputed claim as though it were an admitted government due.

Conclusion: Revenue recovery could not be initiated for the disputed and unadjudicated damages.

Issue (ii): Whether the Chief Engineer could demand and recover such amount under the contract and the Kerala Revenue Recovery Act when the dispute was not resolved by the Managing Director or by an independent adjudicatory process.

Analysis: The contractual clauses relied on did not authorise the Chief Engineer to act as an adjudicator of the disputed liability and then enforce recovery as a settled amount. Even where the contract contemplated determination by the Managing Director or assessment of loss, the power could not be exercised by a party to the dispute in its own cause when breach itself was contested. In the absence of a binding adjudication fixing the amount due, the threatened recovery under the Revenue Recovery Act was not sustainable.

Conclusion: The demand and threatened recovery by the Chief Engineer were unsustainable.

Final Conclusion: The demand notice was quashed, and the petitioner obtained relief against revenue recovery of the disputed contractual claim, leaving the parties to pursue their remedies elsewhere.

Ratio Decidendi: Revenue recovery under the Kerala Revenue Recovery Act is permissible only for amounts that are settled or adjudicated as due, and a disputed contractual claim for damages cannot be recovered through that machinery without prior determination of liability and quantum by a competent authority.

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