Karnataka High Court
Karnataka Power Corporation Ltd vs M/S Bangalore Construction Company on 22 February, 2024
1
RFA NO. 1188/2010
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF FEBRUARY, 2024
PRESENT
THE HON'BLE MRS. JUSTICE K.S.MUDAGAL
AND
THE HON'BLE MR. JUSTICE C.M.JOSHI
REGULAR FIRST APPEAL NO. 1188 OF 2010 (MON)
BETWEEN:
KARNATAKA POWER CORPORATION LTD.,
A GOVERNMENT OF KARNATAKA UNDERTAKING
HAVING ITS OFFICE AT
NO.116/2, TRADE CENTRE BUILDING,
2ND FLOOR, R.C ROAD,
BANGALORE-560 001.
REPRESENTED BY ITS HEAD (LEGAL SERVICES),
MR. CHIDANANDA RAO
...APPELLANT
(BY SRI MAHESHA A.S, ADVOCATE FOR
SRI ASHOK N NAYAK, ADVOCATE [PH])
AND:
1 . M/S BANGALORE CONSTRUCTION COMPANY,
A PARTNERSHIP FIRM
REGISTERED UNDER THE PARTNERSHIP ACT,
HAVING ITS OFFICE AT
NO.104, R V LAYOUT,
KUMARA PARK EXTENSION,
BANGALORE-560020.
REPRESENTED BY ITS 9 PARTNERS.
2 . MR. A S KUPPURAJU,
2
RFA NO. 1188/2010
AGED ABOUT 85 YEARS,
S/O SRI AKALA RAJU.
DELETED AS PER ORDER DATED 28.02.2011
3 . SRI K GOPAL RAJU,
AGED ABOUT 61 YEARS,
S/O SRI KUPPU RAJU.
4 . SRI KODANDA RAJU,
AGED ABOUT 38 YEARS,
S/O SRI A S KUPPU RAJU.
RESPONDENTS 2 TO 4,
HAVING ITS OFFICE AT
NO.104, R V LAYOUT,
KUMARA PARK EXTENSION,
BANGALORE-560 020.
...RESPONDENTS
(BY SRI S.K.V CHALAPATHY, SENIOR COUNSEL A/W
SMT. ANAGHA JAYAPRAKASH, ADVOCATE FOR R1 & R3 [PH];
R-4 SERVED;
R-2 IS DELETED V/O DATED 28.02.2011)
THIS RFA IS FILED U/S 96 OF CPC, AGAINST THE
JUDGMENT AND DECREE DATED 23.11.2009 PASSED IN
O.S.NO.1094/1989 ON THE FILE OF THE XLIII ADDL. CITY CIVIL
AND SESSIONS JUDGE, CCH-14, BANGALORE, PARTLY
DECREEING THE SUIT FOR RECOVERY OF MONEY.
THIS REGULAR FIRST APPEAL HAVING BEEN HEARD AND
RESERVED ON 09.01.2024, COMING ON FOR PRONOUNCEMENT
OF JUDGMENT THIS DAY, C.M.JOSHI J., DELIVERED THE
FOLLOWING:
3
RFA NO. 1188/2010
JUDGMENT
Being aggrieved by the judgment and decree passed in O.S. No.1094/1989 by the learned XLIII Additional City Civil and Sessions Judge, Bangalore, (CCH 4), dated 23-11-2009, the plaintiff- The Karnataka Power Corporation Limited, is before this Court in this appeal.
2. The parties would be referred to as per their ranks before the trial Court for the sake of convenience.
3. The brief facts of the case are as below:
The plaintiff-Corporation is a Public Undertaking of the Government of Karnataka registered under the Companies Act. Defendant No.1- M/s. Bangalore Construction Company is a registered Partnership Firm engaged in Engineering Constructional Contracts with the principal place of business located at Bangalore. Defendants No. 2 to 4 are the partners of the Firm. The admitted facts are that, the plaintiff-Corporation had entrusted the construction of its building at No.82, Race course Road, Bangalore, to the 4 RFA NO. 1188/2010 defendant-Firm under Letter of Intent dated 22-3-1982.
The value of the work was to the extent of Rs.46.13 lakhs and period of execution was 30 months from 22-3-1982.
The work included in the Contract was construction of a building with framed structure having seven floors in addition to cellar and ground floor with all civil works excluding the electrical work. In pursuance to the Letter of Intent, the site was handed over to the defendant-Firm on 31-3-1982 and the work commenced on 04-05-1982.
Defendant No.1-Firm gave a detailed programme of execution by its Letter dated 15-6-1982. Though a detailed agreement had to be executed by 04-03-1982, it was actually executed on 09-12-1982 and letter dated 15-06-1982 was part of the agreement.
4. The plaintiff-Corporation averred in the plaint as follows:
(a) That since the progress of the work was slow from the beginning and several review meetings were 5 RFA NO. 1188/2010 conducted calling upon the defendants to accelerate the work, no improvement was shown by the defendants. A penalty of Rs.50/- per day was imposed and collected from 01-03-1983.
(b) The defendants issued a letter dated 25-04-1984 to enhance the rates by 30% for the work done from the inception till 31-03-1984 and 50% of the quoted rates for the works done from 01-04-1984, though the contract did not provide for any enhancement.
(c) By letter dated 27-7-1984 defendants requested for extension of time by eight months, which was permitted by the plaintiff-Corporation without acceding to the request for enhancement of the rates.
(d) By 21-09-1984, which was the stipulated date for completion, defendants executed the work to the tune of Rs.33.11 lakhs as against the total contract value of Rs.46.13 lakhs.6 RFA NO. 1188/2010
(e) On account of certain additions and alterations in design and additional requirements, the value of the balance work at the end of 21-09-1984 was Rs.27.87 lakhs including the shortfall of the work was to the tune of Rs.13.02 lakhs. Even during the extended period, the defendants could not complete the work as agreed and the extended period expired on 21-05-1985. The work executed was only to the tune of Rs.2.56 lakhs as against Rs.27.87 lakhs.
(f) The defendants by their letter dated 14-10-1985 intimated the plaintiff-Corporation that they are unable to continue the work and requested the plaintiff to terminate the contract after settling their claims. Thereafter, the defendants abandoned the work from 29-12-1985, by which time they had executed the work to the tune of Rs.3.44 lakhs as against the balance of Rs.25.31 lakhs. The discussions between the parties on 06-1-1986, 8-1-1986 and 10-2-1986 went in vain and the defendants had 7 RFA NO. 1188/2010 breached the contract. Therefore, the plaintiff-
Corporation rescinded the contract by letter dated 21-02-1986.
(g) The plaintiff had to get the remaining work executed by entrusting the work to other Piece Contractors and get the work finished.
(h) Though the plaintiff had called upon the defendants to appear at the spot to take accounts they did not appear but gave an untenable and evasive reply on 01-03-1986. They also filed a Writ Petition No.3468/1986 to stay the letter of rescinding the Contract and ultimately, the petition was dismissed on 02-04-1986.
(i) The defendants filed OS No.1014/1986 before the City Civil Court Bangalore, seeking injunction and a Court Commissioner was appointed to record the measurements of the work done under the contract and after the Court Commissioner submitted his 8 RFA NO. 1188/2010 report dated 21-06-1986 and 06-08-1986, the suit came to be withdrawn.
5. On the above grounds, the plaintiff-Corporation made following claims:
(A) The plaintiff has sustained loss of Rs.7,21,273.50 ps., due to consequences of breach of contract.
(B) The plaintiff had issued 405.31 MT of steel for execution of the work and out of it 14.955 MT was unaccounted and therefore, the defendants are liable to pay a sum of Rs.1,49,398.06 ps., as value to unaccounted steel.
(C) The plaintiff had issued 21,411 bags of cement to the defendants and a quantity of 566 bags remained unaccounted and as such, sum of Rs.27,690/- is liable to be paid by the defendants.
(D) The plaintiff has to locate several of its offices in rented buildings and the rentals per month for such premises was Rs.53,690.14 ps. If the defendants had 9 RFA NO. 1188/2010 completed the contract within a stipulated time, the plaintiff could have saved a sum of Rs.13,58,815.10 ps., paid as rentals for its offices, which is liable to be paid by the defendants.
(E) Due to the delay in execution of the work by the defendants, plaintiff had to continue the services of supervisory staff till the completion of the building by piece work contractors and as such, a sum of Rs.4,28,750/- is to be paid by the defendants for the period of 01-06-1985 to 30-06-1987.
(F) The plaintiff is entitled to adjust the sum of Rs.3,65,503.31 ps., towards the amount due to the defendants under the contract and a sum of Rs.12,364/- towards extra items/works done by the defendants. Therefore, the defendants are liable to pay the sum of Rs.26,85,926.66 ps., and after deducting the dues from the plaintiff to the defendants, the liability of the defendants is 10 RFA NO. 1188/2010 Rs.23,08.059/-. Thus, the plaintiff claimed Rs.23,08,059/- along with interest at 12% p.a.
6. After service of summons, defendants have appeared before the trial Court through their counsel and filed their written statement. The contentions of the defendants are as below:
(a) As per the allegations of the plaintiff-Corporation there was breach of agreement on 29-12-1985 and the present suit is filed on 20-2-1989 and therefore, the suit is barred by limitation.
(b) The site was handed over to the defendants on 31-3-1982 and commenced the work in April 1982, but not on 4-5-1982 as claimed by the plaintiff. It was denied that the progress of the work was slow and there were several letters to speed up the work.
(c) Even at the time of signing the agreement the plaintiff had not supplied the entire drawings and designs in respect of each and every item of work to 11 RFA NO. 1188/2010 be carried out, so that the defendants could have chalked out the programme of the work and complete the same within stipulated time.
(d) Even after the delayed supply of designs and drawings, on several times they were changed which resulted in rescheduling of the work by the defendants, dismantling the fabricated structures and re-designing such structures. Therefore, the delay in progress of the work was completely attributable to the acts, omissions and commissions of the plaintiff.
There was no justification for penalty of Rs.50/- per day from 1-3-1983.
(e) It is admitted that the defendants claimed enhancement of the rates for the work done and to be done and also that the time stipulated for the work was extended for eight months. There were valid reasons and the written statement narrates those reasons in detail.
12RFA NO. 1188/2010
(f) The time and rates stipulated under the agreement was relevant only if both the parties discharged their duties in accordance with the terms and conditions of the agreement. Since there was delay on the part of the plaintiff and violations of the terms of the agreement, the plaintiff had failed to perform its part of the agreement.
(g) The rates of the material as well as cost of labour had increased nearly 3/4 and it was impossible for the defendants to carryout the works at the rates stipulated in the contract. Despite request by the defendants, the plaintiff-Corporation did not take any decision. But the Corporation went on to levy penalty since it was in dominating position.
(h) The defendants deny the allegations that they had completed works of the value of Rs.33.11 lakhs and if any work remained unexecuted as on 21-09-1984, it was mainly due to the failure of the plaintiff-Corporation in not making available the 13 RFA NO. 1188/2010 drawings and designs, in not taking decisions regarding height of floors, not communicating its decision regarding fabrication of the works, etc.
(i) Defendants denied that during the extended period of contract work only to the extent of 2.56 lakhs was carried out. Therefore, the defendants by their letter dated 14-10-1985 intimated the plaintiff that if its demands are not considered and grievance remedied, they are not interested in continuing the work. Even then the plaintiff-Corporation terminated the contract by its letter dated 21-02-1986. The defendants denied that they had committed any breach of contract.
(j) The defendants also denied the several of the claims made by the plaintiffs specifically and meticulously.
(k) It was alleged that since the defendants had filed OS No.3423/1986 against the plaintiff-Corporation, the present suit was filed as a counter blast. On these 14 RFA NO. 1188/2010 grounds, the defendants sought for dismissal of the suit.
7. On the basis of the above pleadings, the trial Court framed the following issues for its consideration:
"1. Whether the plaintiff proves the defendants have committed breach of terms of contract, agreement entered into between the parties?
2. Whether the plaintiff proves by 21.9.84 the date originally stipulated for the completion of the contract, the defendants had executed the work of the value of Rs.33.11 lakhs as against the stipulated work of the value of Rs.46.13 lakhs?
3. Whether the plaintiff further proves the defendant has abandoned the work from 29.12.1985 and during the period from 21.5.1985 up to the date of stoppage of the work the defendants had executed work of the value Rs.3.44 lakhs as against the value of Rs.25.31 lakhs?
4. Whether the plaintiff proves that the contract of the defendants was properly rescinded on 21.2.1986 by letter No.CD/C3-T9C?
5. Whether the plaintiff proves they have sustained loss to the extend of Rs.7,21,273=50 ps.?15 RFA NO. 1188/2010
6. Whether the plaintiff proves the damages sustained by them amounting to Rs.31,58,815=10 ps. as stated in para 16 (d) of the plaint?
7. Whether the plaintiff proves owing to delay in execution work under the contract the plaintiff had incurred loss of Rs.4,28,750/-?
8. Whether the plaintiff further proves that on account of the negligence of the defendants, the defendants are liable to pay Rs.23,08,059/-?
9. Whether the plaintiff proves the defendants are liable to pay interest at 12% per annum?
10. Whether the suit is barred by Limitation?
11. Whether the plaint has been signed and verified by competent persons?
12. Does the defendant prove the site was not handed over to the defendant as contended by the plaintiff and the plan has been supplied to the defendants at a very late stage and also there were modifications to the original plan to that of the work to be carried out by the defendant?
13.Whether the defendants prove the delay in completion of the work only on account of the faults of the plaintiff's and not on the part of the defendants?
14. To what relief the plaintiff is entitled to?"16 RFA NO. 1188/2010
8. In order to prove its case, the Executive Engineers of plaintiff-Corporation were examined as PWs 1 and 2 and Exhibits P1 to P41 were marked in evidence. Defendants have not led any oral evidence, but got marked Exhibits D1 to D82 through PW2 on their behalf.
9. The trial Court after hearing both the parties, has answered issue Nos. 1 to 4, 11 in the affirmative, issue No.5,8 and 12 in partly affirmative and in partly negative and issue Nos. 6,7,9,10 and 13 in the negative and ultimately, partly decreed the suit with costs.
10. Being aggrieved by the said judgment and decree, the plaintiff-Corporation is before this Court in appeal.
11. On issuance of notice, respondents Nos. 1 and 3 have appeared through their counsel. Respondent No.2 is deleted and respondent No.4 served and unrepresented.
12. The trial Court records were secured on admitting the appeal and heard the arguments by 17 RFA NO. 1188/2010 learned counsel appearing for appellant and learned Senior Counsel appearing on behalf of the counsel on record for respondent Nos. 1 and 3.
Arguments by appellant/plaintiff:
13. The learned counsel for the appellant- plaintiff Corporation submits that though the trial Court comes to the conclusion that there was breach of contract by the defendants, while considering Issue No.5, it has not awarded the claims made by the appellant-Corporation in its entirety. He submits that though the claim made by the plaintiff was to the extent of Rs.7.21 lakhs in respect of the extra work which was entrusted to the piece contractors, the same was not considered by the trial Court and it has awarded a sum of Rs.53,126.05 ps. It is submitted that had the plaintiff proceeded with the defendants as the Contractor, he would have spent a sum of Rs.15.19 lakhs but on the other hand, they have to spend Rs.22,40,126.05 ps., for which the defendants are liable. He submits that 18 RFA NO. 1188/2010 the trial Court failed to consider the evidence of PW.2 in a proper perspective.
14. So far as Issue No.6 is concerned, he submits that the plaintiff-Corporation had to work from rented premises as the building was under construction. Due to the breach committed by the defendants, the offices of the plaintiff-Corporation had to continue to work from the rented premises for a longer period. Therefore, the rent of such premises towards longer period of occupation is also liable to be paid by the defendants as damages. It is submitted that the Company Secretary had issued a certificate about the money spent towards the rents and the same should have been accepted by the trial Court. It is submitted that the unliquidated damages should have been considered by the trail Court though there was no such clause in the Contract.
15. Regarding issue No.7, it is submitted that the plaintiff-Corporation had to continue the services of the 19 RFA NO. 1188/2010 Supervisory staff for completion of the balance work beyond the time fixed under the agreement. The trial Court in para 54 of the judgment rejected the claim on the ground that there was no such clause in the contract and therefore, the defendants are not liable to pay towards the salary of the supervisory staff. It is submitted that when there is breach of contract, all incidental expenses incurred by the plaintiff should have been compensated by the defendants. Therefore, the rejection of claim of Rs.4,28,750/- as per the Certificate at Ex.P37 issued by the Company Secretary should have been allowed by the trial Court.
16. It is submitted that the suit is filed within three years from the date of Ex.P12, the letter under which the Contract was terminated. It is also submitted that even after the alleged abandonment of the work on 29-12-1985, the defendants had continued the work and therefore, it was the date as per Ex.P12 which is relevant for Limitation. Therefore, in the absence of any cross- objection or appeal 20 RFA NO. 1188/2010 by the defendants, the claim of the plaintiff has to be allowed.
Arguments by respondents/defendants:
17. The learned Senior counsel appearing for the defendants/respondents No.1 and 3 herein, in his elaborate and meticulous arguments has contended that even though the defendants have not filed any cross- objection, by virtue of Order 41 Rule 33 of CPC he is entitled to lay a challenge to the findings rendered against the defendants. In this regard, he relies on the judgments in the case of Pannalal Vs. State of Bombay and others1 and in the case of Saurav Jain and others Vs. A.B.P Design and others2 .
18. The first contention of the learned counsel for the defendants is regarding the limitation. He submits that the plaintiff clearly admits that the breach of contract was on 29-12-1985 and PW.2 also states in his cross- examination that the breach of contract occurred on 1 AIR 1963 SC 1516 2 Manu/SC/0509/2021 21 RFA NO. 1188/2010 29-12-1985. The trial Court also holds that the breach occurred on 29-12-1985. Article 55 of the Limitation Act, prescribes a period of 3 years from the date of breach of contract to claim damages. The plaint was filed on 20-2-1989 and therefore, the suit is obviously time barred. He submits that the trial Court wrongly held that the termination of the contract vide Ex.P12 dated 21-2-1986 is the starting point of limitation.
19. He submits that Article 55 employs the words 'Breach' and 'Broken' and they connote the same meaning in reference to commencement of the limitation under the said Article. The word 'Broken' does not refer to termination of the contract, but it is breach of the contract. It is submitted that the termination of the contract is subsequent to the breach and the limitation has to be reckoned from the date of breach, but not termination/rescission. In this regard, he relies on the judgments in the case of Food Corporation of India and 22 RFA NO. 1188/2010 others Vs. Babulal Agrawal,3 State of Gujarat Vs. Kothari and Associates4, The Senior Regional Manager, Food Corporation of India Vs. G.V.V.N. Hanumantha Rao and others5 and Rajgopal Naidu Vs. Aiyyaswamy Chettiar and others6. Relying on the judgments in the case of K. Ramkumar Vs. Marappa and others7 and in the case of Kamalesh Babu and others Vs. Lajapat Rai Sharma and others8, he further submitted that the question of Limitation being a question of law may be raised by the defendants in appeal also.
20. Regarding 'Breach of Contract', he submitted that to ascertain as to who has committed the breach of contract, the nature of the Contract is to be appreciated. The Contract between the plaintiff and the defendants being the reciprocal in nature, it required both the parties to discharge their obligations. In this regard, he relied on Sections 52 and 54 of the Contract Act.
3 (2004) 2 SCC 712 4 (2016) 14 SCC 761 5 1993 (2) ALT. 524 6 1965(2) MLJ 135 23 RFA NO. 1188/2010
21. He submitted that in the case on hand, the defendants have clearly contended that work could not be completed due to; (a) non supply of drawings and designs;
(b) repeated revision of the drawings even after the fabrication works commenced and completed as per the original drawings; (c) non payment of the running bills in time; (d) not enhancing the rates regarding the altered quantities which exceeded 25%; and (e) non supply of material on time. When these breaches were shown to have been committed by the plaintiff, the Breach of the Contract could not have been attributed to the defendants.
22. In this regard, he has taken us through the evidence on record and has pointed out that each of the above elements of the breach are borne out of the records. He further submitted that when considering the question as to who has committed the breach? and as to whether the plaintiff is entitled to damages?, the principle of mitigation 7 2021 (4) AKR 371 24 RFA NO. 1188/2010 of damages as contained in Section 73 of the Indian Contract Act, has to be considered. While calculating the loss or damages, the means which existed of remedying the inconvenience caused by non performance of the contract must be taken into account. The plaintiff had not taken steps to mitigate the loss consequent upon the breach and therefore, the plaintiff is not entitled to any damages. In this regard, he has pointed out to the testimony of PW.2 in the cross-examination.
23. He submits that the Contract was entrusted to piece work contractors with much delay and an early action by the plaintiff could have resulted in the damages being lessened. In this regard, he has relied on the judgments in the case of M/s. Muralidhar Chiranjilal Vs. M/s. Harishchandra Dwarakadas and another9 and in the case of M. Nanjappa Vs. Muthuswamy10.
8 (2008) 12 SCC 577 9 AIR 1962 SCC 366 10 AIR 1975 KAR 146 25 RFA NO. 1188/2010
24. Regarding claim for cost of cement and steel, he submitted that Exs.P31 and P32 relied by the plaintiff do not show that the defendants had received the cement and steel and there is no acknowledgement in that regard. He has pointed out some inconsistency in para 16 (f) of the plaint to contend that the claim cannot be calculated twice.
25. Regarding rental expenses he submitted that there is no clause in the contract which entitles the plaintiff to seek rental expenses. He points out that there was no difficulty for the plaintiff to occupy the first and the second floors after completing the pending work within a week and this aspect having been admitted by PW.2, the principle of mitigating damages comes in play. Moreover, no material is placed to substantiate that such rentals were paid by the plaintiff. The certificate produced is self serving certificate of the Company Secretary of the plaintiff-Corporation.
26. Regarding salaries of the supervisory staff, the claim is bereft of any support from the clauses in the 26 RFA NO. 1188/2010 contract. Moreover, since the piece work contractors were entrusted with the work with much delay, there was no necessity for the plaintiff to continue the supervisory staff. Therefore, he submitted that the suit filed by the plaintiff should have been dismissed by the trial Court. Analysis and Conclusions:
27. Having heard the learned counsels appearing for both the sides and having perused the records, the points that arise are as below:
(i) Whether the suit is barred by time?
(ii) Whether there was breach of contract by the
defendant?
(iii) Whether the calculation of the claims of the
plaintiff under different heads is proper and correct?
28. The first contention of the learned counsel for the respondents that the Appellate Court has the power to grant relief to the respondents sans the filing of the cross objections or cross appeal is no more res-integra. The 27 RFA NO. 1188/2010 judgment in the case of Pannalal Vs. State of Bombay (supra) as early as in the year 1963 had the occasion to deal with the powers of the Appellate Court under Order 41 Rules 22 and 33 of CPC. In para 12 of the judgment, it was stated as below:
" Even a bare reading of O.41 R.33 is sufficient to convince any one that the wide wording, was intended to empower the appellate court to make whatever order it thinks fit, not only as between the appellant and the respondent but also as between a respondent and a respondent. It empowers the appellate court not only to give or refuse relief to the appellant by allowing or dismissing the appeal but also to give such other relief to any of the respondents as "the case may require". In the present case, if there was no impediment in law the High Court could, therefore, though allowing the appeal of the State by dismissing the plaintiff's suits against it, give the plaintiff a decree against any or all the other defendants who were parties to the appeal as respondents. While the very words of the rule make this position abundantly clear the Illustration puts the position beyond argument."
(Emphasis supplied) 28 RFA NO. 1188/2010
29. Such view of the Apex Court was again reiterated in the case of Ravinder Kumar Sharma Vs. State 11 of Assam and others . It is settled principle of law that a party who suffered an issue being answered against him but not assailing the result of the suit can very well challenge such a finding on the issue in the appeal filed by the other party. Therefore, the defendant who suffered an issue being answered against him need not file cross objection or cross appeal to assail the issue provided the resultant effect of the suit was in his favour. However, he can assail the issue in the appeal filed by the other party.
30. Similar view was taken in several other judgments of the Apex Court. Moreover, the powers of the Appellate Court are wide enough to grant relief in favour of the respondent. In the case of Koksingh vs. Deokabai12, the Apex Court has held that, if an appellate Court is of the view that any decree which ought in law to have been passed was in fact was not passed by the court below it 11 (1999) 7 SCC 435 29 RFA NO. 1188/2010 may pass or make such further other decree or order as the justice of the case may require. Such view was reiterated in the case of Mahant Dhangir and another vs. Shri Madan Mohan and others13; Manasa Housing Co-operative Society Limited Vs. Marikellaiah and others 14; Babusab and others Vs. Maniksab and others15. The recent judgment in the case of Saurav Jain Vs. ABP design and others (supra) has again reiterated this view in para 25 of the judgment, which reads as below:
"25. It is apparent from the amended provisions of Order XLI Rule 22 Code of Civil Procedure and the above authorities that there are two changes that were brought by the 1976 amendment. First, the scope of filing of a cross- objection was enhanced substantively to include objections against 'findings' of the lower court; second, different forms of raising cross-objections were recognized. The amendment sought to introduce different forms of cross-objection for assailing the findings and decrees since the 12 AIR 1976 SC 634;13
AIR 1988 SC 54;14
AIR 2006 Kar.273;15
2013 (2) KCCE 1309 30 RFA NO. 1188/2010 amendment separates the phrase "but may also state that the finding against him in the Court below in respect of any issue ought to have been in his favour" from "may also take any cross-objection to the decree" with a semi colon. Therefore, the two parts of the sentence must be read disjunctively. Only when a part of the decree has been assailed by the Respondent, should a memorandum of cross- objection be filed. Otherwise, it is sufficient to raise a challenge to an adverse finding of the court of first instance before the appellate court without a cross objection."
(Emphasis supplied)
31. Keeping in mind the above judgments on the scope and powers of the Appellate Court under order 41 Rule 22, 33 of CPC, we proceed to consider the points framed by us:
Re.Point No.1- Limitation
32. The question of limitation raised by learned counsel for the respondents being a question of law can be raised in appeal also. This Court in the case of K. Ramkumar Vs. Marappa and others (supra) by relying on 31 RFA NO. 1188/2010 the judgment in the case of Ravinder Kumar Sharma Vs. State of Assam and others (supra), has held that the question of limitation can also be considered by the Appellate Court. Moreover, Section 3(1) of the Limitation Act casts a duty upon the Court to consider the question of limitation even though the bar of limitation has not been set up as a defence.
33. The learned counsel for the respondents contend that in para-18 of the plaint the plaintiff has clearly averred that the defendant committed breach of contract on 29-12-1985. So also PW.2 in the cross-examination states that the breach of contract had occurred on 29-12-1985. He submits that the trial Court also holds that the defendants committed the breach of contract on 29-12-1985 by abandoning the work. Therefore, the suit should have been filed by the plaintiff within three years from the date when the contract was broken, i.e., on or before 28-12-1988. Evidently, the suit has been filed on 20-02-1989, which is beyond the period of three years. 32 RFA NO. 1188/2010
34. Per contra, the learned counsel for the plaintiff/appellant contend that the contract was terminated on 21-02-1986 by a letter of the plaintiff at Ex.P12. Therefore, it is the date of rescission of the contract which is material. In the background of this contention, it is necessary to consider whether the breach of contract would be a relevant date or the date of termination of contract/ rescission of the contract which would be material to calculate the period of limitation.
35. The provisions of Article 55 of the Limitation Act, read as below:
Description of suit Period of Time from which period Limitation begins to run
55.For compensation Three years When the contract is for the breach of broken or (where there any contract, express are successive breaches) or implied not herein when the breach in specially provided for respect of which the suit is, instituted occurs or (where the breach is continuing) when it ceases.
36. Thus, it is evident that the time from which the period of limitation begins to run is, when the contract is 33 RFA NO. 1188/2010 broken or where there are successive breaches, when the breach in respect of suit is instituted occurs or where the breach is continuing, when it ceases.
37. In Food Corporation of India and others Vs. Babu Lal Agarwal (supra), the Apex Court has observed as below:
"In the case in hand, as indicated above, the notice terminating the contract is dated 26.9.1988 saying that "we are going to vacate your above plinths by October 10, 1988". The plaintiff replied to the notice saying that the defendant could not vacate the premises before 23.1.1990. However, the defendant vacated the premises on 10.10.1988. This is the date when the contract was broken and cause of action also accrued. The suit had been filed on 4.10.1991 i.e., within three years of vacating the premises. In view of the position indicated above, we do not find any merit in the argument raised on behalf of the appellant that the suit of the plaintiff was barred by time. In the result, we find no substance In the appeal preferred by the Food Corporation of India".34 RFA NO. 1188/2010
38. In the case of State of Gujarat Vs. Kothari and Associates (supra), where again, it was observed as below:
"3. The period of limitation would be computed under either Article 55 or Article 113. The facts at hand are dissimilar to those in Gannon Dunkerley and Co. Ltd. v. Union of India in that the damages sought by the present Respondent are for work covered by the contract, and the change in circumstances was directly caused by breaches ascribable to the Appellant State in not handing-over the site on time. Facially, the suit claims are damages incurred due to the extension of the contract period and the resultant damages are incurred by the Respondent. The suit would therefore fall within the ambit of article 55. Article 113, which is a residuary provision, cannot be resorted to.
4. It also appeared to the Court that the contract was clearly not broken as the Respondents chose to keep it alive despite its repeated breaches by the Appellant State. The factual matrix presents a situation of successive or multiple breaches, rather than of a continuous breach, as each delay in handing over the canal/site by the Appellant State constitute to a breach that was distinct and complete 35 RFA NO. 1188/2010 in itself and gave rise to a separate cause of action for which the Respondent could have rescinded the contract or possibly claimed compensation due to prolongation of time and resultant escalation of costs. Of course the Respondent is enabled to combine all these causes of action in one plaint, as postulated in the Code of Civil Procedure provided each claim is itself justiciable. Even the Respondent has argued before the High Court that the suit was based on successive breaches committed by the Appellant State. In Court's opinion, the suit was required to be filed within three years of the happening of each breach, which would constitute a distinct cause of action."
(Emphasis supplied)
39. In the case of the Senior Regional Manager, Food Corporation of India Vs. G.V.V.N. Hanumanth Rao, (supra) while distinguishing "Breach of Contract" and "Termination of Contract", in para 14, it was observed as below:
"14. It may be pointed out here that there is difference between breach of a contract and termination of a contract; every breach of a contract by one party to it does not result in termination of 36 RFA NO. 1188/2010 the contract though it may furnish ground to the other party to terminate the contract and every termination of a contract does not necessarily result in breach of the contract. The question here is not as to when the contract as such was terminated or came to an end; the short question which is to be considered for purposes of application of Article 55 is when did the breach of the contract, in respect of which compensation is claimed, occur? On 28-9-1972 the contractor has expressed his inability to execute the work. That letter reached the Food Corporation of India on 3-10-1972. Therefore on that date the contract was broken, whether or not the Food Corporation of India has accepted the breach. Subsequent termination of contract by the Food Corporation of India on 8-12- 1972, is immaterial for the purposes of Article 55. The suit was filed by the Food Corporation of India on 18-10-1975 which was beyond three years from the date of breach of the contract on 28-9-1972 when the contractor declined to take up the work by Ex.C-5 which was received by the Food Corporation of India on 3-10-1972. It follows that the arbitrator was right incoming to the conclusion that the suit itself was barred by limitation and consequently the claim put forth in I.A No.137 of 1976 which was filed on 27-3-1976 was barred within the meaning of Sub- section (3) of Section 37 of the Arbitration Act".37 RFA NO. 1188/2010
(Emphasis supplied)
40. In the case on hand, it is evident that the plaintiff-Corporation, in para 18 of the plaint states that the cause of action arose on 29-12-1985 when the defendants committed the breach of the Contract by abandoning the execution of the contracted work, and also on or about 21-02-1986 when the plaintiff rescinded the contract of which the defendants committed breach and also on 30-6-1987 when the building was got completed by the Corporation. It is evident that the intimation of termination of contract was sent to the defendants on 21-02-1986 as per Ex.P12. Much prior to that, the defendants had indicated that the contract be terminated as per Ex.P11 dated 14-10-1985. In Ex.P11, the defendants had informed the plaintiff to terminate the contract in view of the financial stringency. There was no reply to the letter at Ex.P11 by the plaintiff till 29-12-1985. It was also indicated in Ex.P11 that the successive requests for enhancement of the rates was not considered for long period and ultimately, the 38 RFA NO. 1188/2010 defendants abandoned the work on 29-12-1985. This abandoning of the work by the defendants on 29-12-1985 is not in dispute.
41. PW2 in the cross-examination (Page 138 of PB) has stated as below:
"It is true that there was delay in payment of 4th R.A. Bill as seen in Exhibit D.18. Witness Volunteers: That he does not know the reason. It is true that there was delay in payment of 5th R.A. Bill as seen in Exhibit D55. I agree that as per the original contract the entire work had to be completed by 21st September 1984. By letter dated 27th September 1984 by Exhibit D58, the Defendant was intimated to alter the height of the 6th Floor from 3.10 Metres to 3.80 Metres. It is not true that the height of the 7th Floor also was altered. It is true that even by date of Exhibit D61 the details regarding 7th Floor were not furnished. It is true that as per Exhibit D69 there was a delay of 2 Months in the payment of 8th R.A. Bill."
42. From the above facts and circumstances, it is clear that the termination of the contract by letter dated 39 RFA NO. 1188/2010 21-02-1986 is not the breach of the contract, but it was when the defendants expressed their inability to go on with the contract. Evidently, it was on 14-10-1985 when the defendants asked the plaintiff to terminate the contract. A perusal of Ex.P11 shows that it runs to 4 pages and after narrating the various reasons indicating the breach of the contractual obligations by the plaintiff, the defendants states as below:
"Under the above circumstances, we are not prepared to continue the work further and our Agency may please be terminated after settling all our claims in full."
(emphasis by us)
43. This averment in Ex.P11 clearly indicates that the defendants would no longer wished continue to perform the contractual obligations. Even then the plaintiff has not responded to the same. The response is only on 21-02-1986 in the form of Ex.P12, whereby, termination was informed. Therefore, it is evident that the defendants 40 RFA NO. 1188/2010 had expressed their withdrawal from the contract by its letter dated 14-10-1985. In other words, the cause of action arose on 14-10-1985 when the breach of contract was brought to the notice of the plaintiff in unequivocal terms.
44. Now let us see whether there is any successive breach which has occurred and whether the breach was continuing?
45. As noted supra, PW.2 in his testimony has stated that the plaintiff had permitted the defendants to continue with work even after 21-5-1985 which is the date after extension of 08 months period from 21-09-1984 to complete the project. He also states that to the best of his knowledge the defendants continued with the work even after 29-12-1985 and subsequently, abandoned the work. This testimony of PW2 is not supported by the pleadings. The plaint avers in para 8 that the balance of the works till the end of 21-09-1984 was Rs.27.87 lakhs. Thereafter, an 41 RFA NO. 1188/2010 extension of 08 months was permitted and during such period, i.e., till 21-05-1985, the work turned out was Rs.2.56 lakhs. Even thereafter, i.e. from 21-05-1985 till the stoppage of work on 29-12-1985, the work turned out by the defendants was Rs.3.44 lakhs. In other words, there was absolutely no work turned out after 29-12-1985 when the defendants abandoned the work. The termination of the contract was informed by the defendants under letter at Ex.P11 dated 14-10-1985. Therefore, it is evident that there was no such continuing breach after 29-12-1985. No work was turned out after 29-12-1985 as per the pleadings. There is no evidence on record to show that the defendants had continued the work after 29-12-1985. Under such circumstances, we are unable to accept the contentions of the plaintiff that the limitation started from 21-02-1986. Plaintiff knew that the termination was informed by the defendants on 14-10-1985, but they kept mum till 21-02-1986.
42RFA NO. 1188/2010
46. It is also evident that the defendants filed W.P.No.3468/1986 on 21-02-1986 which came to be withdrawn later. O.S.No.1014/1986 was filed for injunctive relief on 12-3-1986 where a Court Commissioner was appointed for measurements of the works done. After the Court Commissioner submitted the report on 21-6-1986 and 6-8-1986, the said suit came to be withdrawn. Thereafter, the defendants filed OS No.3423/1986 seeking certain claims. Therefore, it is evident that there was no such continuing breach of contract by the defendants after 29-12-1985 when they abandoned the work.
47. Under these circumstances, it is clear that after the cause of action arose on 29-12-1985, there was no such continuing breach of the contract and the breach or breaking was final and conclusive when the defendants abandoned the work. It is evident that the plaintiff knew the abandonment of the work in pursuance to Ex.P11 by the defendants. Therefore, it was incumbent upon the plaintiff to file the suit within three years from 14-10-1985 43 RFA NO. 1188/2010 or from 29-12-1985. Certainly, Ex.P12 dated 21-2-1986 cannot be the starting point of the limitation.
48. The trial Court in the impugned judgment observes that the time starts to run from the date of rescinding of the contract and holds 21-2-1986 as per Ex.P12 to be the starting point of the limitation. Article 55 of the Limitation Act, does not speak rescinding of contract, but it speaks of the breach of the contract or when the contract is broken. Evidently, the contract was broken by the defendants addressing a letter as per Ex.P11. Therefore, the trial Court erred in holding that Ex.P12 is the starting point for the limitation.
49. In that view of the matter, we are of the view that the suit filed by the plaintiff is barred by limitation. The right to terminate the contract is on account of the contract terms being broken by a party to the contract. In the case on hand, the plaintiff alleged that the defendants had breached the contract by abandoning the work on 44 RFA NO. 1188/2010 29-12-1985 and to give effect to such breach, the contract was terminated by letter dated 21-2-1986. Plaintiff knew that the defendants had in unequivocal terms had broken the contract by letter dated 14-10-1985. Consequently the point No. 1 is answered in the affirmative. Re.Point No.2: Breach of Contract
50. The second question that arises for our consideration is, who has committed the breach of the contract. The plaintiff alleged that though the letter of intent was issued on 22-03-1982 stipulating the period of completion of contract as 30 months i.e., till 21-09-1984, the defendants did not commence the work and had to remind them by letter dated 04-05-1982 as per Ex.P4. Thereafter, the defendants furnished the bar chart showing the program of the project to be executed by them as on 15-05-1982 as per Ex.P5. The agreement was entered into between the parties on 09-12-1982. Thereafter, the progress of the work had been slowed down and therefore, 45 RFA NO. 1188/2010 the plaintiffs issued letter dated 03-03-1983 as per Ex.P6 indicating imposition of the penalty of Rs.50/- per day as per Clause-3 of the agreement.
51. Thereafter, the defendants wrote a letter as per Ex.P7 dated 25-04-1984 seeking enhancement of the rate for the work already done at 30% and balance work at 50% even though there was no provision in the agreement to enhance the rate. Then on 25-07-1984 as per Ex.P8, the defendants wrote a letter to the plaintiff seeking extension of eight months time to complete the work beyond the stipulated date of 21-09-1984. By that time, work executed was to the extent of Rs.33.11 Lakhs out of Rs.46.13 Lakhs.
52. The plaintiff wrote a letter as per Ex.P9 on 25-05-1985 extending the time to complete the project by 8 months, however, the escalation of the prices claimed by the defendants was not acceded to. On 14-10-1985, defendants wrote to the plaintiff as per Ex.P11 seeking termination of the contract and requesting to settle their 46 RFA NO. 1188/2010 claims. Thereafter, on 21-02-1986, the plaintiff terminated the contract as per letter at Ex.P12.
53. The defendants contend that the terms and conditions of the contract show that it was a reciprocal contract. They contend that non-supply of the drawings and designs, repeated revision of the drawings, non-payment of the running bills, non-enhancement of the rates regarding altered quantities exceeding 25% and non-supply of the material on time has seriously affected the timelines fixed for completion of the project. In this regard, they rely on several correspondences between the plaintiffs and defendants.
54. The fact that the contract was of reciprocal in nature and several of the acts of the defendants depended upon supply of the designs, drawings and material is not seriously disputed. The Clause 12 of Ex.P3 agreement reads as below:
"Clause 12: The contractor shall execute the whole and every part of the work in the most sound and 47 RFA NO. 1188/2010 substantial and workman like manner and in strict accordance with the specifications both as regards materials and workmanship. The contractor shall also conform exactly, fully and faithfully to the designs, drawings and instructions in writing relating to the work signed by the Divisional Engineer or other competent authority and lodged in his office and to which the contractor shall be entitled to have access at such office, or on the site of the Work, for the purpose of inspection during office hours and the contractor, shall if he so requires, be entitled to his own expense to make or cause to be made copies of the specifications and of all such designs, drawings, and instructions as aforesaid. The contractor shall also be responsible for the delivery of structure in sound condition and the execution of work strictly in accordance with the specifications for the work."
(emphasis by us) As per above clause, the defendant was ordained to conform exactly and fully to the drawings and designs supplied by the plaintiff in writing. It is clear that the defendants were not responsible for preparation of the working drawings/designs of the construction of the building. Therefore, the defendants were dependant upon 48 RFA NO. 1188/2010 the plaintiff for working designs and drawings. This obligation of the plaintiff is admitted by PW.2 in his cross- examination. However, the extensive correspondence between the parties is available before the Court.
55. We have carefully gone through these letters exchanged between the plaintiff and the defendants. The correspondences between the plaintiff and defendants as per Exs.D1 to D82 are admitted by PW2 in the cross- examination. Though an objection was raised by the learned counsel for the appellant/plaintiff that the original letters were not produced, but only photo copies were produced, the Court Commissioner who recorded the evidence of PW2 has clearly stated that these letters were admitted by PW2 and therefore, they were marked. Section 58 of Evidence Act, states that facts admitted need not be proved. Therefore, despite the defendants not entering the witness box to prove those letters, in view of the admission of PW.2 that the correspondence was there between plaintiff and defendants as per Ex.D1 to D82, it is not 49 RFA NO. 1188/2010 necessary for us to say that the defendants had to prove those correspondences. It is also clear that the progress of the project depended on the timely supply of working designs and drawings as well as supply of material like steel and cement.
56. Here it is necessary to mention the provisions of Sections 52 and 54 of the Contract Act, which read as below:
"52. Order of performance of reciprocal promises.--
Where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order; and where the order is not expressly fixed by the contract, they shall be performed in that order which the nature of the transaction requires.
54. Effect of default as to that promise which should be performed, in contract consisting of reciprocal promises.--
When a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise 50 RFA NO. 1188/2010 last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract".
57. The judgment of the Apex Court in the case of K C Skaria Vs Govt of State of Kerala and another16 also recognizes the principle of reciprocal promises and the delay on the part of the employer to supply the materials to the contractor.
58. We, therefore, come to the conclusion that the contract between the plaintiff and the defendants was reciprocal in nature. Our reasons in the below mentioned paragraphs regarding the breach alleged by the parties also augment this conclusion.
Non-supply of drawings and designs:
59. Exs.D1, 12, 13, 16, 20, 23, 26, 28, 30, 32, 35, 49, 61 and 62 are the letters between June-1982 to 16 I(2006) SLT 332 51 RFA NO. 1188/2010 07.02.1985. Under these letters, the plaintiff had supplied the drawings to the defendants. The Ex.D4, 6 to 8, 14, 19, 29, 38, 45, 58, 62, 65, 66, 71 are the letters between 02.08.1982 to 08.06.1985, under which, the plaintiff furnished the revised drawings to the defendants. These letters show that the drawings supplied earlier were revised subsequently and fresh drawings were supplied to the defendants.
60. We find from a perusal of Ex.P3, the contract between the parties that, the dates on which the drawings have to be supplied to the defendants are not stated. However, in the cross-examination, PW.2 states that the drawings and designs have to be furnished to the defendants at least a week prior to the commencement of the work as per the Bar Chart produced at Ex.P5. Ex.P5 happens to be a promise made by the defendants to commence the work and to complete the different stages of the work during the contract period. It is pertinent to note that the comparison of Ex.P5 with reference to the letters 52 RFA NO. 1188/2010 referred supra, shows that there was delay in supply of the designs and drawings. There is no evidence on behalf of PW.2 that the supply of drawings and designs at different stages of the execution of the work depended upon the completion of the previous stage as per Ex.P5. Therefore, if the supply of the drawings and designs did not depend upon the completion of the previous stages, there was no impediment for the plaintiff to supply the drawings and designs in one go.
61. In the cross- examination of PW2, he admits that the defendants sought drawings and designs from the plaintiff on different dates and there were minor changes in the design. In the cross-examination, PW.2 has admitted several of these aspects and that there was a need for the revision of the drawings and the designs. Further, the completion of each stage of the constructions of the building as per Ex.P5 was not fully visualized when Ex.P5 was prepared. Evidently, in reply to Ex.P5, the plaintiff has not stated as to when the final designs and drawings would 53 RFA NO. 1188/2010 be supplied to the defendants. There is no material on record to show that the defendants had demanded the working drawings and designs atleast a week prior to the commencement of each stage of the work as per Ex.P5. Under these circumstances, we are of the view that though the delay in supply of the working drawings and designs is also the cause for the delay of the execution of work, there is no sufficient material that the supply of drawings and designs was the sole cause for delayed execution of the work since there is no mention in the contract as to when and at what time the drawings and designs have to be supplied. It would suffice to say that there was delay on the part of the plaintiff in supplying the working drawings and the designs and revised drawings to the defendants. Delayed payment of running bills:
62. The next aspect to be considered is non- payment of the Running Bills. Again, PW2 in the cross- examination has admitted that there was delay in payment 54 RFA NO. 1188/2010 of the running bills. The payment of running bills to the Contractor as agreed between the parties is one of the reason for continuity in the work. When, such delay in payment of bills was put to PW2 in his cross-examination, he states that as and when the Contractor was preparing the running bills, they were scrutinized and they were paid to the defendants. However, he admits that there is a delay in payment of 4th running bill which is as per Ex.D48. He states that he does not know the reason as to why there was a delay in payment of 4th and 5th running bills as per Exs.D48 and D55. From the perusal of these documents, it appears that there was delay of about two months in payment of the RA bills.
63. It is also pertinent to note that, the entire contract period was 30 months and due to the increased quantity of the work, the period was extended by eight months. In other words, a total of 38 months was allotted for the Contractor to complete the work. Considering this total period of the work, the delay in payment of the RA 55 RFA NO. 1188/2010 bills by about a month or two cannot be said to be a substantial breach on the part of the plaintiff. Increase in quantity of work:
64. The third component of the breach is the increase in quantities of the work. There cannot be any doubt that there was increase in the quantity of the work. Evidently, the quantity of the work is not specified in any of the documents produced by the plaintiff. However the value of such increased quantity of the work can be found in para- 8 of the plaint.
65. It is relevant to note that, initially, the value of Contract was Rs.46.13 lakhs. Later, the total quantity of the work that was to be executed by the defendants is Rs.60.98 lakhs. In other words, there was increase of the value of the work by Rs.14.85 lakhs. Therefore, obviously, such increase in the quantity of the work was more than 25% of the work which was stipulated under the contract. 25% of Rs.46.13 lakhs would come to Rs.11.53 lakhs. Therefore, 56 RFA NO. 1188/2010 any quantity which is in excess of Rs.11.53 lakhs was obviously beyond the scope of the contract between the parties as per Ex.P3. Such increase in the quantity of the work should have been on the basis of the rates that could be mutually accepted by both the parties. Such quantity of work could not be on the same rates which existed as per the contract entered into between the parties. Delay in commencement and completion of work:
66. We have already held that the contract between the parties was a reciprocal contract in view of Clause 12 of the agreement. We have also noticed that the execution of the contract was dependent upon the timely supply of the working design and drawings, supply of steel and cement etc. If the supply of steel and cement was delayed, then definitely, it would have the bearing on the timely completion of the work under the contract. Therefore, it is necessary to ascertain whether the parties have understood that the time was essence of the contract or not. In doing so, it is relevant to note that in the case of M/s Hind 57 RFA NO. 1188/2010 Construction Contractors By Its Sole Proprietor Bhikamchand Mulchand Jain (Dead) By LRs Vs State of Maharashtra17 it was held as below:
"(1)(a) The question whether or not time was of the essence of the contract would essentially be a question of the intention of the parties to be gathered from the terms of the contract. Even where the parties have expressly provided that time is of the essence of the contract such a stipulation will have to be read along with other provisions of the contract and such other provisions may, on construction of the contract, exclude the inference that the completion of the work by a particular date was intended to be fundamental; for instance, if the contract were to include clauses providing for extension of time in certain contingencies or for payment of fine or penalty for every day or week the work undertaken remains unfinished on the expiry of the time provided in the contract such clauses would be construed as rendering ineffective the express provision relating to the time being of the essence of contract."
67. The contract at Ex.P3 stipulated 30 months for construction of the building and such construction shall be 17 (1979) 2 SCC 70 58 RFA NO. 1188/2010 as per the designs, drawings and specifications suggested and supplied by the plaintiff. Initially, both the parties agreed for time bound execution and understood that the time was the essence of the contract. Later, the increase in quantity of the work beyond 25% was accepted and therefore, as per Ex.P11(a) and Ex.P9, the period of contract was extended by eight months. So also, the contract envisaged imposition of the penalty for delayed execution of the work at different stages. As noted supra, there was delay on the part of the plaintiff also for supply of the designs and drawings. There was delay in payment of RA Bills by the plaintiffs. These aspects are admitted by PW.2 in his cross-examination. Therefore, the parties understood and acted in a way that the time was not the essence of the contract. They had foregone the essentiality of time as a fundamental requirement of the contract. The delay in execution of the work could not have been a substantial ground to rescind the contract, in view of the conduct of the plaintiff and the defendants. 59 RFA NO. 1188/2010
68. Thereafter, the plaintiff in pursuance to the letter at Ex.P9 dated 25-07-1984, extended the dead line for completion of the work by eight months i.e., till 21-05-1985. It was communicated through letter dated 25-5-1985. Obviously, it was after 04 days of the expiry of the extended period of eight months. Clause 5 of the contract at Ex.P3 contemplates extension of time for completion of the work. It reads as below:
"Clause.5: If the contractor shall desire an extension of the time for completion of the work on the ground of his having been unavoidably hindered in its execution or any other ground such as increase in quantities over 25% (vide clause no.14), he shall apply I writing to the Divisional Engineer before the expiration of the period stipulated in the tender or before the expiration of 30 days from the date on which he was hindered as aforesaid or on which the cause for asking for extension occurred, which ever is earlier and the Divisional Engineer or other competent authority may, if in his opinion there are reasonable grounds for granting an extension, grant such extensions as he thinks necessary or proper."60 RFA NO. 1188/2010
Further, Clause 14 of the contract also deals with extension of time in case there is increase in the cost occasioned by additions. It reads as below:
"Clause.14: The time limit for completion of the work shall be extended commensurate with the increase in its cost occasioned by additions, and the certificate of the Divisional Engineer or competent authority to such proportion shall be conclusive.
XXXX"
69. It is to be noted that in case there is increase in the quantity of work by more than 25%, the contract does not mention anything about the rates at which the additional and extra work is to be carried out. It does not provide for enhancement of the rates agreed.
70. Thus, it is evident that when the parties had foregone the condition that time was essence of the contract and even the extended period of eight months was communicated by plaintiffs to the defendants after expiry of 61 RFA NO. 1188/2010 eight months, it is evident that there is no reason to believe that the parties had again, agreed upon the time lines and revived the contract regarding its essentiality of time. Therefore, the conduct of the plaintiff does not show that it had kept up its promise regarding the time lines and accepted the time to be the essence of the contract.
71. Coming to the delay in commencement of the work, it is an admitted fact that the site was handed over to the defendants on 31-03-1982 and thereafter, as per Ex.P4 dated 20-04-1982, the plaintiff states that the defendants had agreed to commence the excavation work from 15-4-1982, but even till 20-04-1982 such work has not commenced. In other words, there was delay of about 20 days in commencement of the work. When we compare this delay of 20 days with reference to the total period of contract which is 30 months, it is not possible to hold that there was substantial delay in commencement of the work. 62 RFA NO. 1188/2010
72. We have already noticed that there was delay in supply of designs and drawings and payments of the running account bills.
73. So also, a careful perusal of the correspondences between the parties discloses that when the work was in progress, there were several impediments which surfaced. The height of the retaining wall, non- availability of the space for the storage of the building materials like, steel and cement and the excavated muck, were also the cause for the delay. There was no effort by the plaintiff to resolve these issues which surfaced, though he was in dominant position. However, the defendants were in the knowledge of the fact that there was no such space for storage and the defendants had not flagged these aspects at the time of entering into the contract between the parties. In that view of the matter, the defendants had accepted that there were difficulties for the storage of the building material, etc., and even then, they had agreed to complete the work as per the timelines mentioned in Ex.P5. Once the defendants had 63 RFA NO. 1188/2010 agreed that they would execute the work as per the timelines mentioned in Ex.P5, it was their duty to see that the work gets completed subject to the plaintiff adhering to the terms of the contract by supplying the working designs and drawings and payment of the running bills in time. Enhanced rates:
74. Apart from the delay, the plaintiff has contended that though there was no such clause in the agreement, the defendant demanded the enhanced rates at 30% and 50%. There was no justification for the defendant to demand the enhanced rates since the defendant had entered into agreement as per Ex.P3 and the timelines agreed was 30 months. Therefore, such demand by the defendant for enhanced rate so far as th work envisaged under the contract was beyond the scope of the contract and on that ground, the defendant could not have sought for termination of the contract and abandonment of the work. Conclusions reg. breach:
75. From the conspectus of the above documentary 64 RFA NO. 1188/2010 evidence which is available and also evidence of PW.2 available on record in the cross- examination, we are of the view that though the initial breach of contract was on the part of the defendants in commencement of work as per schedule, the subsequent conduct of both the parties show that there were breaches by both the sides. The substantial breach was on the part of the plaintiff on account of the delay in resolving the issues like dearth for space for storage of steel and cement, clearing and dumping of the muck from the excavation, supply of working designs and drawings well in time, considering the request by the defendants for extension of time lines in time and payment of the running bills in time. However, the increase in quantity of the work by more than 25% is also an indicator which show that the plaintiff had not planned the building very well. Plaintiff went on increasing the quantity of the work which is beyond 25% of the total quantity under contract. This itself shows that the plaintiff was not prompt 65 RFA NO. 1188/2010 in supplying the designs and drawings and also that it increased the quantity of the work.
76. Thus, the substantial breach of the contract was on the part of plaintiff and the breaches on the part of the defendants were minor. The delay in commencement of the work was only about 20 days as compared to total period of 30 months for completion of project. Even though the defendants had demanded the higher rates at 30% till the request was made and 50% for future work, that was not permissible under the contract. It is evident that the defendants had not stopped the work until 29-12-1985 even though there was no communication that the request was not heeded to. All that was informed under Ex.P9 while granting extension of time was that the other requests were under consideration.
77. Hence, we hold that the substantial breach of the contract was on the part of the plaintiff. The admissions of PW.2 clearly establish that the reciprocal 66 RFA NO. 1188/2010 promises were not adhered to by the plaintiff and the essentiality of the time was also not adhered by the plaintiff.
Reg: Point No. 3 - The damages
78. We now proceed to consider each of the claims made by the plaintiff. The plaintiff has claimed the damages under the following heads:
Plaint Amount
Description of the claim
para (In Rs.)
16(a) Money spent by plaintiff to complete the work through 7,21,273.50
peace work contractors
16(b) Unaccounted steel 1,49,398.06
16(c) Unaccounted cement 27,690
16(d) Rentals for housing the offices of plaintiff-Corporation 13,58,815.10
till completion of construction
16(e) Salary of Supervisory Staff 4,28,750
16(f) Reversal of EMD, Security Deposit and work turned -69,112.13
out by defendant after 9th RA bill
16(g) Extra items done regarding ramp and teak wood door -12,364
26,04,450
Total Claim 23,08,059
79. The plaintiff contends that as on 21-09-1984, the date originally stipulated for the completion of the construction, the defendants had not executed the work of 67 RFA NO. 1188/2010 the value of Rs.32.02 lakhs. It is admitted that there were additions and alterations in the design and there was requirement of additional quantities of certain items. Including the unexecuted portion of the work to the extent of Rs.13.02 lakhs, the balance of the work was Rs.27.87 lakhs as on 21-09-1984. Thus, it is evident that there was increase in the quantity of the work by Rs.14.85 lakhs which was beyond the 25% that was permissible as per the agreement Ex.P3. In other words, the total value of the contract had increased to Rs.60.98 lakhs. It is an admitted fact by the plaintiff that till 21-09-1984, the work of the value of Rs.33.11 lakhs was completed. Thereafter, from 21-09-1984 to 21-05-1985, work of the value Rs.2.56 lakhs was completed. Thereafter, from 21-5-1985 to 29-12-1985 when the defendants abandoned the work, the value of the work completed was Rs.3.44 lakhs. Thus, totally, the work completed by the defendants was to the tune of Rs.39.11 lakhs. The balance of the work including the increased quantity was to the tune of Rs.21.87 lakhs. Curiously, the 68 RFA NO. 1188/2010 plaintiff nowhere mentions as to what was the total quantity of the extra work entrusted to the defendants.
80. It is pertinent to note that the plaintiff claims that the plaintiff had to spend a sum of Rs.22.40 lakhs by entrusting the work to the Piece Work Contractors. It is stated that such contract entrusted to the Piece Work Contractors was to the tune of Rs.22.40 lakhs. The plaint schedule shows that the total expenditure incurred by the Corporation due to non completion of the work by the defendants was Rs.22,40,126.05 ps. It states that if the work had been entrusted to the defendants as per the terms of the contract, it would have valued Rs.15,18,852/-. It is not known how the sum of Rs.15,18,852/- was arrived at. Evidently, the balance of the work as mentioned in para 8 of the plaint shows that it was to the extent of (27.87- (2.44+3.56)) Rs.21.87 lakhs including the extra work entrusted to the defendants. It is not known as how the plaintiff arrived at the figure of Rs.15,18,852.55 ps., as per 69 RFA NO. 1188/2010 the plaint schedule. The plaint never explains as to how this figure was arrived at.
81. Thus, it is evident that the total balance of the work which was not executed by the defendants, including the additional or extra work was to the tune of Rs.21.87 lakhs. The plaintiff claimed Rs.22.40 lakhs for the same and therefore, the difference or the excess amount claimed by the plaintiff was only to the extent of Rs.53,126.05 ps. Though the trial Court has rightly arrived at this figure in the impugned judgment, the analogy for having arrived at the said figure was not properly explained by it. Therefore, we do not find any reason to find fault with the trial Court so far as the claim under this head is concerned.
82. The next claim by the plaintiff is in respect of unaccounted steel and the cement as claimed in para 16(b) and 16(c) of the plaint. The plaintiff has claimed that it had issued 405.31 MT of steel and out of it, 14.955 MT of steel has remained unaccounted and the value of the same is 70 RFA NO. 1188/2010 Rs.1,49,398/-. It also claimed that 21,411 bags of cement were supplied to the defendants, out of them 566 bags remained unaccounted, the value of which was Rs.27,690/-.
83. In para 16(f) of the plaint, it is stated that, EMD, Security Deposit and the amount towards the extra work done by the defendants is due from the plaintiff to the defendants. There cannot be any doubt on this aspect since the plaintiff admits the same. However, the learned counsel for defendants submits that the quantity of cement and steel has also been deducted in the said amount and that is not justifiable. It is pertinent to note that para 16(f) of the plaint pertains to the payments which are due from the plaintiff to the defendants. It is not the sum of Rs.69,112/- alone which is stated to be payable by the plaintiff to the defendants, but in addition to it, EMD amount of Rs.46,125/- and security deposit of Rs.2,56,066/- is also payable by the plaintiff to defendants. Totally, a sum of Rs.3,77,867/- is payable to the defendants. Therefore, we find no reason to find any fault in this regard, as it is an 71 RFA NO. 1188/2010 admitted figure stated by the plaintiff. However, so far as the loss of the unaccounted quantity of the steel and the cement is concerned, the learned counsel for the defendants states that Exs.P31 and P32 are the relevant documents and there is no acknowledgement by the defendants regarding this claim. If the defendants have not rebutted this evidence of the plaintiff in any way, it cannot be said that the said claim by the plaintiff is inadmissible. The manner in which the quantity of the cement and steel was consumed and whether it was in stock was the subject matter of of RA Bill No.9. It is relevant to note that though the defendants had got appointed the Court Commissioner and he had visited the spot and had measured the quantum of the work executed under the Contract, such a report was not placed before the trial Court. Even, such report was not relied by the defendants. Therefore, we find no reason to accept the argument of the learned counsel for the defendants in respect of the unaccounted quantity of the steel and the cement.
72RFA NO. 1188/2010
84. Similarly, the plaintiff has stated in para 16(g) that extra-work regarding the teak wood doors in the first floor was to the extent of Rs.12,364/- and the plaintiff has to pay the same to the defendant.
85. In para 16(d) the plaintiff has made claim in respect of the damages occurring on account of the rent paid by the plaintiff towards the premises occupied by the Corporation till the completion of the construction of the building. The said amount is assessed at Rs.13,58,815/-. The learned counsel appearing for the defendants submits that the provisions contained in Section 73 of the Indian Contract Act, stipulate that in calculating the loss or damage arising out of the breach of contract, the means which existed for remedying the inconvenience caused by non performance of the contract must be taken into account. In this regard, he has drawn the attention of this Court to the fact that there was delay in entrusting the unfinished work to the Piece Work Contractors after the 73 RFA NO. 1188/2010 defendants abandoned the work on 29-12-1985. He points out to the cross-examination of PW.2 where he had stated that he does not know why there was a delay in entrusting the work to Piece Work Contractors after abandoning the contract by the defendants on 29-12-1985 or after rescission of the Contract by the plaintiff as per letter Ex.P12. Therefore, he contends that the plaintiff had not tried to mitigate the damages by expeditiously entrusting the work to the Piece Work Contractor.
86. The trial Court in the impugned judgment has elaborately discussed this aspect and has referred to the judgment in the case of Muralidhar Chiranjilal Vs M/s Harishchandra Dwarakadas and another (AIR 1962 SC 366) and Nanjappa Vs M P Muthuswamy (AIR 1975 Karnataka 146). Ultimately, it has come to the conclusion that the person who is claiming damages is under the duty to take all reasonable steps to mitigate the loss consequent on the breach and he would be debarred from claiming any part of the damages due to its neglect to 74 RFA NO. 1188/2010 take such steps. It also noted that the plaintiff had not entrusted the balance of the work expeditiously, had not occupied the two floors which were completed. Thus, trial Court did not award any damages in respect of the rentals paid by the plaintiff in occupying the other premises.
87. We have another reason to concur with the conclusions reached by the trial Court. Evidently, the plaintiff has not produced any substantial evidence to show that after the rescission of the contract and till the completion of the work by the Piece Work Contractors, the plaintiff had paid the rent of Rs.13,58,815/-. Except the self serving certificate issued by the Company Secretary of the plaintiff, there is nothing on record to show that such a rent was paid. Obviously, the plaintiff was in possession of the best evidence in this regard in the form of the receipts, the agreement in respect of the tenancy, etc., and also the receipts for having paid the rent during the said period. The extract of the certificate or the ledger kept by the plaintiff and certified by the company Secretary of the 75 RFA NO. 1188/2010 plaintiff-Corporation would not be sufficient evidence within the meaning of the provisions of the Evidence Act.
88. It is relevant to note that the author of Ex-P33- Company Secretary, and author of Ex.P37 Senior Executive (Finance)I, who prepared such documents were not examined before the Court. The plaintiff relies on Exs.P33 and 37 the statement and certificate issued by the Company Secretary and the Senior Executive Officer (Finance) I showing the extra expenditure incurred by the plaintiff towards the rent and expenses of the staff. It is worth to note that Exs.P34 to P36 are the ledgers of the plaintiff-Corporation, but there is no such presumption of correctness for such statement of the account book kept by it. It is not a banking company and therefore, it was necessary for the plaintiff to prove such certificate and the statement and subject the persons who authored these documents to the cross-examination by the defendants. Therefore, the best evidence that could have been produced by the plaintiff is not available before the Court. 76 RFA NO. 1188/2010
89. In para 16(e), the plaintiff has claimed a sum of Rs.4,28,750/-, that was spent towards the salaries of Group Engineers, Engineers, Work Assistants, 3 helpers and other officers in-charge for the period 01.06.1985 to 30.06.1985. The analogy applied for the claim in respect of rents for buildings also applies to the claim in respect of the expenses made by the plaintiff towards the supervisory staff. It is relevant to note that neither the clauses in the Contract nor any correspondence between the parties show that the plaintiff was supposed to maintain a supervisory staff over the defendants while executing the contract. It is the case of the plaintiff that, it had maintained the supervisory staff for the purpose of completion of the building and such costs towards the salaries of the supervisory staff has to be borne by the defendants. The trial Court observes that there is no such agreement between the parties. Even if we accept that such liability is to be fastened on the defendants, the proof regarding the salaries paid to such supervisory staff is not available on 77 RFA NO. 1188/2010 record. The best evidence was to produce the details of the salaries paid and examine the persons who were working as a Supervisory Staff. A Certificate issued by the Company Secretary cannot be sufficient evidence in this regard. Such Company Secretary who issued the Certificate is not examined before the Court. Under the circumstances, we concur with the conclusions reached by the trial Court in this regard that the plaintiff is not entitled for these claims.
90. For the foregoing reasons, we have come to the conclusion that the finding of the trial Court that the plaintiff is entitled for a sum of Rs.53,126.05 ps., for extra expenditure, a sum of Rs.1,49,398.06 ps., towards unaccounted steel and a sum of Rs.27,690/- towards the unaccounted cement was proper and correct. The trial Court has also awarded a damages of Rs.10,000/- to the plaintiff. We have come to the conclusion that the plaint is barred by time and the trial Court had erred in holding that the breach of the contract was not on 29-12-1985 but it was on 20-03-1986. Such conclusion of the trial Court 78 RFA NO. 1188/2010 regarding limitation is not based on the material available on record, especially, Ex.P11 which we have noted above. Consequently, the suit has to be dismissed as barred by time. Hence, the following:
ORDER
(i) The appeal is dismissed.
(ii) The impugned judgment and decree passed by the trial court in OS No.1094/1989 on 23-11-2009 is set aside.
(iii) The suit of the plaintiff against the defendants stands dismissed as barred by time.
(iv) The amount paid by the defendants, if any, pursuant to decree, be refunded to them.
Sd/-
JUDGE Sd/-
JUDGE tsn*/NR