Madras High Court
M/S.Saraswathi Engineering ... vs The Government Of Tamil Nadu on 11 August, 2018
Author: C.V.Karthikeyan
Bench: C.V.Karthikeyan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 11.08.2018 CORAM THE HONOURABLE MR. JUSTICE C.V.KARTHIKEYAN C.S.No. 570 of 2009 M/s.Saraswathi Engineering Construction (P) Ltd., No.14, Rajan Kuppam Road, Maduravoyal (Via), Ayyanambakkam Post, Chennai 600 095. ... Plaintiff Vs. 1. The Government of Tamil Nadu Represented by the Secretary, Public Works Department, Fort St.George, Chennai 600 009. 2. The Chief Engineer, Public Works Department, WRO, Chennai Region, Chepauk, Chennai 600 005. 3. The Superintending Engineer, Public Works Department (WRO), Pennaiyar Basis Circle, PWD Campus (Opp. Ramanar Ashram), Tiruvannamalai 606 603. 4. The Executive Engineer, Public Works Department (WRO), Middle Pennaiyar Basin Division, Tiruvannamalai 606 603. ... Defendants PRAYER: Civil Suit filed under Order IV Rule 1 O.S. Rules read with Order VII Rule 1 CPC, praying for a Judgement and Decree of: (a) to pay the plaintiff a sum of Rs.46,64,568/- together with interest at 18% per annum on the said amount from the date of filing of the suit until the date of realization towards the cost of the said sand; (b) to pay the plaintiff a sum of Rs.1,21,54,820/- together with interest at 18% per annum on the said amount from the date of fling of the suit until the date of realization as compensation towards loss of profit, idle machinery and escalation of prices; (c) to pay the cost. *** For Plaintiff : Mr.K.Surendranath For Defendants : Mr.M.Venkatesh Kumar Government Advocate (CS) JUDGMENT
Plaint:-
1.The plaintiff, M/s.Saraswathi Engineering Construction (P) Limited is a Company, registered under the Companies Act, 1956. It is represented by its Managing Director. They are class-I Contractors. They have experience in the field of construction. They take up Government and Quasi-Government contracts alone.
2.The defendants, namely, Public Works Department, particularly, the Superintending Engineer, the Executive Engineer, Pennaiyar Basin Circle, Tiruvannamalai, who are shown as 3rd and 4th defendants, had called for an open tender to construct a reservoir across the Mirugandanathi with allied component works near Melsolankuppam Village in Polur Taluk, Tiruvannamalai District. The plaintiff was the successful bidder and was awarded a contract by the Tender Committee. This was, by order, in Proceedings No.TAC-41/P/2003, dated 31.12.2003. Consequently, an agreement dated 21.01.2004, in L.S.Agreement No.18 SE/2003-04, dated 21.01.2004, was entered into between the plaintiff and the defendants. The total cost of the contract was Rs.12,74,81,189/-. The period of execution of work was 18 months from the date of handing over of site. The plaintiff had furnished a bank guarantee for a sum of Rs.25,50,000/- and had also deposited a sum of Rs.5.97 lakhs as earnest money deposit.
3.In the plaint, it had been further stated that the defendants handed over only a portion of the site on 28.01.2004. The remaining portions were handed over, after the plaintiff had written letters dated 19.04.2004 and 27.04.2004. They were actually handed over on 26.04.2004 and 18.07.2004. The site for construction of quarters was handed over only during January-2005. The plaintiff commenced the work on 26.04.2004. However, further progress could not be achieved, because there was delay in handing over the site, conveying the decision on the Cut off Trench, delay in supplying designs and drawings for the deck bridge, delay in fixing the anchor rods by another agency, rains during the period, delay in issuing entry permit by the Department, delay in removing electricity overhead line and failure to get the necessary permission to quarry sand from Cheyyar river. However, the plaintiff completed the works and handed over the same to the defendants on 25.03.2006.
4.The plaintiff had sought extension of time under letters dated 26.06.2005 and 12.12.2005. Time was also granted by the defendants by letters dated 15.07.2005 and 29.12.2005. The plaintiff relied on clause-12 of the General Special Conditions (herein after referred to as GSC) of the agreement, which reads as follows:
12.No royalty shall be charged due for materials quarried from the Public Works Department or other Government quarries. Assistance as necessary will be given to the contractor by the PWD to obtain access to the quarries approved by the Executive Engineer
5.According to this clause, it had been stated by the plaintiff that they were entitled to quarry sand free of cost, except payment of labours and transportation charges. Subsequently, the plaintiff had not included the cost of sand, when providing the estimate for the work at the time of submitting the tender. The plaintiff had written letters dated 17.02.2004 and 01.03.2004 seeking permission to quarry sand. The third defendant, by letter dated 05.03.2004, sought for the details regarding quantity of sand. Subsequently, the third defendant, by letter dated 11.03.2004, requested the Special Chief Engineer, PWD WRO, Tiruvannamalai, to obtain necessary orders from the Government. However, the said Special Chief Engineer informed the plaintiff that Minor Mineral Concession Rules, 1959 had been amended, banning quarry of sand by private parties. The plaintiff was informed that they could collect sand from Elathur IB Depot on priority basis on payment of charges. The third defendant also informed the plaintiff about the opening of the sand depot w.e.f., 01.09.2004. However, the plaintiff could not procure sand from Elathur and the plaintiff wrote a letter dated 10.03.2005 in this regard. The plaintiff then purchased sand from other private suppliers at a higher cost and also incurred expenditure for transporting. The plaintiff wrote letters dated 23.11.2004 and 19.01.2005 regarding this. The plaintiff, however, claimed that the defendants violated clause-12 of GSC. They continued to do the works by purchasing sand from private suppliers. They procured 11,76,699 Cubic feet of sand, which is 5853 lorry load sand to complete the work. The plaintiff paid Rs.624/- for each lorry load of sand. They also paid transportation charges. The extra amount paid by the plaintiff was Rs.520/- for each lorry load. Calculating their loss, the plaintiff claimed a sum of Rs.30,43,560/- towards procurement of sand. They also claimed interest at 18% per annum and finally claimed a sum of Rs.46,64,568/- towards the loss suffered by procuring the sand from private suppliers.
6.The plaintiff further claimed that they were asked to do additional work, but they were not paid any additional amount for the said work. The plaintiff suffered from want of funds. They had to borrow funds by paying interest. The cost for additional work was approved after long delay. The plaintiff had to suffer escalation of prices in the materials and loss of profit. The plaintiff claimed that they had to keep their machinery idle due to the delay made by the defendants and they suffered a sum of Rs.56,11,500/- on this head. They also claimed an amount of Rs.22,19,336/- due to increase in material costs and labour chargers. They further claimed interest on the above two heads at 18% per annum and finally claimed on this head a sum of Rs.1,21,54,820/-.
7.The plaintiff sent a letter dated 15.11.2006 invoking Arbitration Clause. However, the defendants, by letter dated 04.01.2007, informed the plaintiff that they would have to approach the Civil Court as the claim exceeds Rs.50,000/-. The plaintiff also filed a Original Petition before this Court, seeking appointment of Arbitrator. But that petition was dismissed. Finally, the plaintiff issued a on 15.10.2008 under Section 18 CPC claiming a sum of Rs.1,09,74,396/- together with interest. The defendants sent a reply, dated 31.10.2008, denying the claim. This suit has been instituted seeking recovery of a sum of Rs.1,68,20,000/- together with interest at 18% per annum till the date of realization and also for costs of the suit.
Written Statement:-
8.There are four defendants. First defendant is the Government of Tamil Nadu, represented by the Secretary, Public Works Department. The second defendant is the Chief Engineer, Public Works Department, WRO, Chennai Region, Chennai. The third defendant is the Superintending Engineer, Public Works Department (WRO), Pennaiyar Basis Circle, Tiruvannamalai. The fourth defendant is the Executive Engineer, Public Works Department (WRO), Middle Pennaiyar Basin Division, Tiruvannamalai, verified the written statement. In the written statement, it was stated that the tenders were called for construction of reservoir across Mirugandanathi with allied component works near Melsolankuppam Village in Polur Taluk, Tiruvannamalai District.
9.The plaintiff was the successful bidder and offered to execute the work for Rs.12.75 lakhs. The work comprised different components of construction of reservoir across river. An agreement was entered into on 02.01.2004. The work had been completed within 18 months from the date of handing over of site. The plaintiff had given the quotation after the inspection of site and much before the tendering for the work. The site was handed over on 28.01.2004. The work should have been completed on 27.07.2005. Extension of time was also granted, as requested by the plaintiff. However, that could not be a ground to seek additional amount towards escalation of costs and rates. The plaintiff completed the works only on 22.03.2006. They have received final payment in full settlement of all claims on 31.03.2006. They also signed final bill. Therefore, the agreement between the parties stood terminated by performance. Therefore, the alleged delay in handing over of site could not be a ground for claiming compensation. Each segments should be completed within a period of three months.
10.With respect to the claim that the amount must be paid towards cost of sand procured from the private suppliers, it had been stated that the contractor should satisfy before tendering the work about the availability of various materials at the quarries. They must make necessary payment to the Forest and Revenue Departments. Royalty will not be charged for materials quarried from PWD or other Government quarries. The assistance would be provided to obtain access to the quarries. The plaintiff had signed the agreement understanding the terms of the agreement. It had been stated that the clause-12 should be read along with clause 10 and 11. If the contractor quarried materials from the sites of PWD or other Government, then they need not pay royalty. Clause-12 deals with costs of sand, stone and also other materials. According to it, assistance will be given to access the quarry. The plaintiff had misinterpreted the said clause and sought assistance in procuring the materials from the quarry site in either confessional or free rates. The plaintiff has to purchase the construction materials, like, steel, cement, rough stone and jellies and sand. The sand is also another item, used for construction. The plaintiff cannot seek exemption from the costs of sand by stating that they have not mentioned the value in the tender.
11.The defendants also stated that the agreement was signed on 21.01.2004, much after G.O.(Ms)No.95, Industries (MMC-1) Department, dated 01.10.2003 was introduced. The plaintiff should have understood the scope of the Government Order and its implications. The market rate fixed by the Government was far below the price fixed by the middle man. The defendants denied the claims for payment of loss alleged to have been suffered by the plaintiff in procuring sand. The plaintiff had to procure sand and could not depend on the defendants to make the construction materials available. The bills were realised in accordance with Tamil Nadu Building Practices Code and Tamil Nadu Public Works Account Code for the works. The plaintiff, as a Class-I contractor, should know about the payment, which was in accordance with the entries in the measurement book. The defendants also gave the details of the payment made to the plaintiff. The final bill of Rs.125.84 lakhs was paid on 31.03.2006. Each bill was paid, whenever they were raised by the plaintiff. The defendants claimed that since the plaintiff had received the final bill, the contract stood terminated. Moreover, the defendants also claimed that they are not liable to pay any interest in accordance with Tamil Nadu Building Practices Code. The defendants claimed that the amount sught in the plaint was frivolous and the suit was not maintainable. The defendants sought dismissal of the suit.
Reply statement of the plaintiff:
12.The plaintiff filed reply statement. The plaintiff claimed that the contract was an item rate contract. The total sum of the individual items was Rs.12,74,81,189/-. The bills were also paid on the basis of the individual work and on the basis of actual measurement recorded in the measurement book. The plaintiff again reiterated that the entire site was not handed over by the defendants. The plaintiff claimed that it was for that purpose, the work could not be completed within the time schedule. The plaintiff further claimed that the suit had been filed only with respect to the cost escalation of sand and not on other materials. The Government Order, dated 01.10.2003 was only with respect to sand. It had been stated that clause-12 had been incorporated only because of the introduction of the said Government Order. The plaintiff again reiterated that the defendants had violated the terms under clause-12 of the GSC. The plaintiff further stated that according to the Government Order, the PWD had exclusive right for selling of sand. The plaintiff again claimed reimbursement of royalty amount paid to agencies of PWD. The plaintiff again reiterated their claim with respect to loss suffered by them by procuring sand from third parties. The plaintiff finally stated that the suit should be decreed with costs.
13.The following issues were framed on the basis of pleadings and on hearing the arguments of the learned Counsel on either side:
(1)Whether failure to implement clause 12 of the General Special Conditions of the contract by the defendants had compelled the plaintiff to purchase sand from the open market?;
(2)Whether such purchase of sand in the open market by the plaintiff has caused loss to the plaintiff?;
(3)Whether the defendants are liable to compensate money value to the plaintiff for purchase of sand in the open market?;
(4)Whether the failure to implement clause 12 of the General Special Conditions had laid to delay in execution of the contract?;
(5)Whether the time for execution of the contract was extended by the defendants?;
(6)Whether the plaintiff is liable to be compensated for escalation of costs in view of extension of contract?;
(7)Whether the plaintiff had incurred loss owning to over heads, idle machinery, loss of profit and interest for delayed payment of loans due to delay caused by the defendants?;
(8)Whether the defendants are liable to compensate the plaintiff towards loss of profit, over heads, idle machinery and interest in delayed payment?;
(9)Whether the defendants are liable to pay the plaintiff towards increase in material cost and labour charges?;
(10)Whether the defendants are liable to pay interest at the rate of 18% p.a., for the past non-payment of amounts and also future interest?;
(11)Whether interest is payable in view of extension of time to perform the contract?; and (12)To what reliefs, the parties are entitled to?
14.The parties were invited to lead evidence. On the side of the plaintiff, Thiru.P.Kandasamy, Managing Director of the Plaintiff Company, was examined as PW-1. He also marked Ex-P1 to Ex-P37. These exhibits included Pre-Qualification Tenders approved by the Chief Engineer, dated 28.02.2003 as Ex-P1. The proceedings of the Tender Award Committee dated 31.12.2003 as Ex-P2. Articles of Agreement dated 21.01.2004, as Ex-P3. The letters from the plaintiff requesting permission to quarry sand dated 17.02.2004 and 01.03.2004 as Ex-P5 and Ex-P6. Letters from the Executive Engineer, dated 11.03.2004 as Ex-P7. A further letter from the plaintiff on the same issue, dated 19.04.2004 as Ex-P8 and letter from the Executive Engineer informing the plaintiff to collect sand from the depot dated 16.09.2004 as Ex-P10. Letter from the plaintiff to handover site, dated 27.04.2004, as Ex-P9. The Government Order, dated 01.10.2003, as Ex-P12. The amendment of Tamil Nadu Minor Mineral Concession Rules, 1959, dated 02.10.2003, as Ex-P13. Further letter between the parties and the plaintiff's letter making claim towards cost of sand dated 27.07.2006, as Ex-P22. The advocate's notice dated 15.10.2008, as Ex-P27. The reply dated 31.10.2008, as Ex-29. The letters with respect to extension of time, as Exs-P30, 31, 32 and 33. The final bill issued by the Chief Engineer, dated 31.03.2006 as Ex-P35. During the cross examination of PW-1, Ex-D1, which was a part of Ex-P3, namely, agreement dated 21.01.2004, was marked.
15.On the side of the defendants, Thiru.R.Govindarajan, Executive Engineer, PWD WRO, Middle Pennaiyar Basin Division, was examined as DW-1. During his chief examination, he marked Ex-D2, which was the authorisation letter given to him. He did not mark any other documents.
16.Heard the arguments advanced by Mr.K.Surendranath, learned Counsel for the plaintiff and Mr.M.Venkatesh Kumar, learned Government Advocate (CS) for the defendants.
17.Mr.K.Surendranath, learned Counsel for the plaintiff, during the course of his arguments, stated that the plaintiff had submitted their tender on 07.02.2003. This was for construction of reservoir across the Mirugandanathi with allied component works near Melsolankuppam Village in Polur Taluk, Tiruvannamalai District. The plaintiff was a Class-1 contractor. They were declared as the successful bidder. They were awarded contract. An agreement was entered into between the plaintiff and the defendants. Further, the learned Counsel stated that the condition in the contract was that the work should be completed within a period of 18 months from the date of handing over of the site. But, the site was not handed over till 28.01.2004. Even then, the site was handed over only in three small stretches. The plaintiff had written a letter complaining about the same. During the period of delay, the machineries of the plaintiff were kept idle. They could not be moved to any other work place, because the defendants had already agreed to the plaintiff's tender and work had to be commenced by the plaintiff.
18.According to the learned Counsel for the plaintiff, because of these reasons, the plaintiff suffered loss. The further aspect leading to the institution of the suit was the controversy relating to procurement of sand. It had been understood that the plaintiff can procure sand from the quarry of the defendants. They had to pay only the labour and transportation charges. Consequently, the plaintiff did not include the costs of sand in the tender amount. However, in the intervening period, Government Order in G.O.(Ms)No.95, Industries (MMC-I) Department, was passed on 01.01.2003. This prohibited quarry of sand by third parties. Subsequently, the plaintiff requested the defendants for permission to quarry sand from the quarries of the defendants. However, the defendants stated that the plaintiff can purchase sand from the sand depot. This was not possible. The plaintiff had to purchase the sand from third party private suppliers. This lead escalation of price. The clam in the suit is with respect to this aspect. The suit had also been filed as stated above for the compensation towards loss of profit and keeping machineries idle and for escalation of price.
19.The learned Counsel for the plaintiff had calculated the loss in accordance with Hudson principle and stated that the calculation of such loss had been approved by Honourable Supreme Court. The learned Counsel for the plaintiff also relied on the following judgments:
1.1979-2-SCC-70 (M/s.Hind Construction Contractors vs State of Maharastra);
2.1989-Supp(1) SCC 368 (P.M.Paul vs. Union of India);
3.(2006) 13 SCC 779 (Food Corporation of India vs A.M.Ahmed and Co and another);
4.(2007)-13-SCC-43 (K.N.Sathyapalan vs State of Kerala and another);
5.(2006) 11 SCC 181 (Mcdermott International Inc., vs Burn Standard Company Limited and others); and
6.AIR-1966-SC-1034 (V.R.Subramanyam vs B.Thayappa and others)
20.Mr.M.Venkatesh Kumar, learned Government Advocate (Civil Side), however, disputed the claims of the learned Counsel. According to the learned Government Advocate, the agreement had been signed on 21.01.2004. The Government Order in G.O.(Ms)No.95, Industries (MMC-I) Department had been passed on 01.10.2003. The Rules had also been amended on 02.10.2003. The agreement was subsequent to the date of amendment. Consequently, the plaintiff had entered into an agreement with knowledge about the actual existing stage with respect to procurement of sand from quarries. It was also pointed out that the defendants had offer sand for purchase by the plaintiff from the sand depot maintained by PWD. However, the plaintiff had purchased sand from third parties. It was, therefore, argued that the defendants cannot be held responsible for the increase or additional price for sand paid by the plaintiff.
21.With respect to the issue of handing over the site, it was argued by the learned Government Advocate that the work had to be completed segment wise and each segment had been handed over within the stipulated time. However, the plaintiff did not complete the work within the time period. Then he sought extension of time. The extension time was also granted, since, allotting work to another contractor would only incur more cost. Finally, after the plaintiff had completed the works, the bills were also cleared and final payment made. Thereafter, the contract stood terminated. It was, therefore, argued that the plaintiff could not lay any claim on the Government. It was, therefore, argued that the plaintiff also cannot claim loss on account of machineries being idle. The plaintiff is the contractor and he has to perform the work in accordance with the agreement. The learned Government Advocate also stated that interest cannot be granted on a claim made by a contractor. The learned Government Advocate stated that the contract stood terminated and sought dismissal of the suit.
22.I have carefully considered the arguments advanced and also the pleadings and the documentary and oral evidences submitted by the parties.
Issues 1, 2 and 3:-
23.The defendants had called for an open tender to construct a reservoir across Mirugandanathi with allied component works near Melsolankuppam Village in Polur Taluk, Tiruvannamalai District. The plaintiff is a private company, registered under the Companies Act, 1956 and engaged primarily in taking up contract works for Government and Quasi-Government Departments. The plaintiff bid for the contract. They were the lowest bidder. As a matter fact, Ex-A1 is the letter from the second defendant to the third defendant approving the tenders given by the plaintiff and other contractors. Ex-P2 is the proceedings of the Tender Award Committee of the PWD in Proceedings No.TAC-41/P/2003, dated 31.12.2003. In this letter, it was observed by the Committee as follows:
The Chief Engineer PWD W R O Chennai Region Chenani has sponsored the lowest negotiated tender of M/s.Saraswathi Engineering Construction (P) Ltd., Erode, for a value of Rs.12,74,81,189/- with an excess of Rs.1,02,53,849/- ie., (+) 8.75% over the estimated value of Rs.11,72,37,340/- (2002-2003) for acceptance by Tender Award Committee.
24.Thereafter, they had decided as follows:
Based on the strength of information furnished by the Chief Engineer PWD W R O Chennai Region, Chennai, The committee decided to accept the L1 tender of M/s.Saraswathi Engineering Construction (P) Ltd., Erode for the negotiated tender value of Rs.12,74,81,189/- (Rupees twelve crore, seventy four lakh, eighty one thousand one hundred and eighty nine only) which is Rs.1,02,53,849/- or 8.75 % excess over the estimate value of Rs.11,72,27,340/- (2002-03) put to tender and to award the work to the L1 tenderer.
25.Accordingly, the plaintiff was awarded the contract. The agreement was entered into between the plaintiff and the third defendant on 21.01.2004. The agreement itself was termed as Articles of agreement (lump sum). This agreement had been produced as Ex-P3. The name of the work was as follows:
Formation of a Reservoir across Mirukandanadhi with allied component works near Melsolankuppam Village, Rehabilitation of Anicuts and conversion of mudkondams into masonry Anicuts and other related works in Polur Taluk of Tiruvannamalai District, Tamil Nadu.
26.The original estimate was Rs.1679.00 lakhs and the revised estimate was Rs.1888.00 lakhs. The approximate value of work to be done under the agreement was Rs.12,74,81,189/-. This agreement had been signed by PW-1, Mr.K.Kandasamy, Managing Director of the plaintiff company and by the Superintending Engineer, PWD WRO, Pennaiyar Basin Circle, Tiruvannamalai District, who is the third defendant. A perusal of Ex-P3, which had been signed by PW-1, Managing Director of the plaintiff company does not reveals that it had been signed under protest. Even in the proof affidavit of PW-1, he had not stated that he had signed the agreement under protest. It was not stated by PW-1 during cross examination that the agreement was entered into under protest by the plaintiff. Consequently, it has to be taken that the plaintiff and the defendants are bound by agreement, Ex-P3, dated 21.01.2004. The plaintiff also conducted Boomi Pooja and the invitation for the same was also marked as Ex-P4. This was done on 26.04.2004. Even at that point of time, it was not protested by the plaintiff that the entire site had not been handed over. Thereafter, the plaintiff raised issue with respect to cost and procurement of sand. The issue now under consideration are with respect to the aspects raised by the plaintiff. The agreement in Ex-P3 contains special conditions. Clause-2 of GSC is as follows:
The rates specified in the schedule for the different items of work are for the finished work Clause 4 of GSC is as follows:
The contractor should satisfy himself about the availability of the various materials at the quarries before tendering for the work.
27.Availability of materials required for construction, including sand, which is a very important component, according to clause-4, had been satisfied by the plaintiff. It is the plaintiff, who should satisfy themselves about the availability of sand. However, in the present case, the plaintiff has raised a plea with respect to availability of sand. In Ex-P5, dated 17.02.2004, the plaintiff had stated as follows:
Kindly refer to the Executive Engineers letter third cited above, requesting the Special Chief Engineer to fix rate for sand to be quarried. We mention that as per para 12 of general special conditions of the agreement no royalty should be charged for materials quarried from the Public Works Department quarries. At the time of tendering we assumed that we would be permitted to quarry sand without payment of royalty or any other charges, and that we would incur expenditure only for quarrying and conveying to the site.
So, we request you to kindly give necessary permission to quarry sand from Cheyyar River at S.No.306 in Solapura and S.No.395 of Elathur Village as per para 12 of General Special Conditions of the agreement as early.
28.In Ex-P5, the plaintiff had referred to clause 12 of GSC. Clause-12 of GSC, is as follows:
12.No royalty shall be charged due for materials quarried from the Public Works Department or other Government quarries. Assistance as necessary will be given to the contractor by the PWD to obtain access to the quarries approved by the Executive Engineer
29.This clause-12 has been interpreted in different ways by the plaintiff and the defendants. According to the plaintiff, assistance to be provided by the PWD would include permission to quarry sand without payment of royalty. However, according to the defendants, clause-12 only provides permission to be granted to access quarry. It is the duty of the plaintiff to arrange for quarrying the sand and pay necessary expenses. Ex-P6 is yet another letter dated 01.03.2004, issued by the plaintiff. It must be also mentioned that even prior to the agreement being entered into, the Government had passed Ex-P12, G.O.(Ms)No.95 Industries (MMC-1) Department, dated 01.01.2003. In the said Government Order, it had been stated as follows:
6. Hence detailed discussions were held by Government at various levels. After taking cognizance of the pernicious practice of unsustainable over exploitation of sand in the State, it was decided in Public interest that the quarrying of sand in Government poramboke lands and private patta lands by private agencies will cease to be effective with immediate effect and sand quarrying henceforth will be undertaken only by the Government through a single department namely the Public Works Department. In order to meet the above requirements, suitable amendment to the Tamil Nadu Minor Mineral Concession Rules is necessary.
7.In accordance with the directions of the Hon'ble High Court and the recommendations of the High Level Committee constituted in pursuance of the directions of the Hon'ble High Court, Government has taken these initiatives in public interest to ensure:
(a)elimination of indiscriminate and unscientific sand quarrying.
(b)uninterrupted availability and supply of sand in a regular and orderly manner to the common public.
(c)availability of the sand at affordable prices to common pubic thereby effecting reduction in the cost of construction.
(d)augmentation of the revenue of the State Government.
30.Pursuant to this Government Order, the Minor Mineral Concession Rules, 1959, was also amended and a new Rule-38A was inserted. The said Rule was also follows:
38-A. Quarrying of sand by the State Government Notwithstanding anything contained in these rules, or any order made or action taken thereunder or any judgement or decree or order of any Court, all existing leases for quarrying sand in Government lands and permissions/leases granted in ryotwari lands shall cease to be effective on and from the date of coming into force of this rule and the right to exploit sand in the State shall vest with the State Government to the exclusion of others. The proportionate lease amount for the unexpired period of the lease and the unadjusted seigniorage fee, if any, will be refunded.
31.This position had came into effect, even prior to the date of agreement signed by PW-1, the Managing Director of Plaintiff. On the basis of this clause 12, it can only be interpreted by me that royalty shall not be charged for materials quarried from PWD or other Government quarries. PWD can grant access to the quarries approved by the Executive Engineer. This clause-12 has to be read in conjunction with Clause-10 and 11 of GSC, which are as follows:
10.The contractor shall be responsible for the payment of seigniorage charges to the Forest Department and Revenue Department, if the contractor quarries the materials from the above department lands.
11.The Contractor shall be responsible for the payment of seigniorage charges to the concerned department of the Government if any demands received from other departments in this respect it will be recovered from the contractor's bills and remitted to the department concerned.
32.A plain reading of the three clauses, which relate to quarry materials for construction purpose would mean that the contractor hss to pay seignorage charges to Forest Department and Revenue Department. They must also pay such charges for any other Department, if the bills are raised. They need not pay royalty for material quarried from PWD or other Government quarries. It is thus seen that very specific charges are imposed for quarrying materials from Forest and Revenue Departments, but, not from quarries from PWD or other Government quarries. According to the plaintiff, the defendants have violated the clause-12 of the GSC. The plaintiff stated that they must be permitted to quarry sand from Cheyyar river bed. But, Ex-P10, Executive Engineer, who is the fourth defendant, had stated as follows:
jpUtz;zhkiy khtl;l NghSh; tl;lk; Nky;Nrhod;Fg;gk; mUNf kpUfz;lhejpapd; Fwf;Nf fl;lg;gl;L tUk; ePh;j;Njf;fj; jpl;l gzpapd; gpuj;jpNaf cgNahfj;jpw;nfd NghSh; tl;lk; Vyj;J}h; nra;ahW Mw;wpy; Gjpa kzy; tpw;gid fplq;F xd;wpid muR Mizg;gb 01.09.2004 Kjy; nray;gLj;jg;gl;L tUfpwJ. vdNt ,j;jpl;l gzpf;F Njitahd kziy Nkw;fz;l fplq;fpypUe;J chpa tpiyapid nrYj;jp gzpf;Fj; Njitahd kziy vLj;J cgNahfg;gLj;jpf; nfhs;Sk;gb Nfl;Lf; nfhs;fpNwd;.
33.The fourth defendant informed the plaintiff that the sand depot had actually been opened at Elathur on the banks of Cheyyar from 01.09.2004 and sand cannot be procured from particular places. However, the plaintiff did not comply with this. On the other hand, they issued a letter dated 23.11.2004, in which they stated as follows:
At the time of tendering we used to enquire market rates for materials taking into consideration all the contract conditions and specifications. For sand we took into consideration that necessary permit for quarrying sand would be issued and that sand would be collected and conveyed to the site of work. Accordingly, we obtained rates from the local lorry owners and quoted our rates. This is indicated as local market rate in the rate analysis submitted by us. Hence the contention that the quoted rates include royalty charges is not correct.
34.The plaintiff then stated under Ex-P16, as follows:
The Superintending Engineer has further stated that specific quarry to collect sand if possible within the purview of the Rule 7 and 15 of Section II of the Minor Mineral Concession Rules, 1959 may be given. We like to mention that the agreement drawn between the Superintending Engineer and ourselves only mentions condition 12 for sand and hence the Rule 7 and 15 of Minor Minerals Concession Rules 1959 will not bind us.
35.Thereafter, the plaintiff sought the following request:
In view of the above, we request you to kindly take suitable action to allot us a quarry to collect sand from of royalty as per special condition 12 of the agreement, immediately, as valuable time has already been lost
36.It is seen that the defendants can only offer sand to the plaintiff for the execution of the work. However, the plaintiff kept complaining again and again. In this connection, evidence on this aspect will have to be examined. As stated, PW-1 was the Managing Director of the plaintiff company and has stated as follows:
Q.What you mean by the said sand?
A. It is river clear sand.
Q.As per the terms of the contract, what kind of sand is required for contract work?
A.We need River sand and filling sand. I do not remember how much quantity of river sand and filling sand used in the contract work.
Q.You have not stated in the plaint about the quantity of river sand utilized in the site?
A.Yes I have not stated.
37.From this statement of PW-1, it is clear that they have not mentioned about the quantity of sand in the plaint in every segment. Thereafter, he was further asked as follows:
Q.Whether you have stated in the plaint regarding the calculation arrived at for Rs.46,64,568/-
A.I do not remember.
38.It is to be again reiterated that PW-1 was not only a witness, but, Managing Director, who had also verified the plaint. He cannot claim ignorance about the contents of the plaint. He was further asked as follows:
Q.What is the cost of river sand per unit at that point of time?
A.I do not remember the cost in the open market.
39.He was then asked about the documents regarding quantity of sand purchased, which was as follows:
Q.Have you produced any document to show that how much sand was purchased from Elathur quarry and how much sand was purchased from other places?
A.No. I have not produced. The sand was purchased in the name of our company. I have not produced any document to show that all the sand purchased in the name of company was utilized in the suit site. Witness adds that the sand purchased for these site can be utilized only for this suit site and it cannot be used any other site.
At that time two other contract was going on apart from the suit work. Witness adds that in the same district we did not carry on any other work. Ex.P36 all are our company vouchers. For the purchase of sand the receipt will be given at the quarry to in the name of lorry by mentioning that registration of lorry.
40.It is thus seen that sufficient information was not conveyed by the witness. He had not produced any document to show that the sand purchased in the name of plaintiff was actually used in the suit site. Though he justified that he did not carryout any other work at that particular point of time, still what is significant is that the quantity of the sand, which he claims, must be proved by him that the sand was actually used in this particular site. That evidence is lacking from the plaintiff. He was, therefore, asked with respect to purchase of sand:
Q.Have you maintain any record by receiving the sand with receipt?
A.We will not receive the said receipt, we will see the receipt and return the same to the driver.
41.He was then asked about the costs and the documents to substantiate the cost. Again, his answer was not in the affirmative with respect to production of document and the same reads as follows:
Q.What is the cost of the sand per unit at that point of time?
A.Rs.300/- per unit I have not produced any document to show that the cost of the sand per unit was Rs.300/- at that point of time.
42.Though he claimed a sum of Rs.300 per unit, he admitted that documents to substantiate the price had not been produced. He was then asked about obtaining signature by affixing revenue stamp and again he denied that though he is aware of the same, he did not do so and the question and answer is as follows:
Q.I put it to you that whether you have obtained the signature by affixing a revenue stamp in the voucher for purchasing the sand by us?
A.Yes. I know that revenue stamp has to be affixed we did not do that.
43.He was then asked about the accounts regarding Ex-P36 series and he has stated that he did not produce the accounts book. The question and answer is as follows:
Q.Have you produced the account book relating to Ex.P36 series before this Court?
A.I have not produced.
44.In this connection, Ex-P36, which is the basis for the claim of the suit, has to be considered. Ex-P36 is a set of vouchers. As admitted by PW-1, the handwriting same in all are the same. They have not been substantiated by examining atleast one of the singnatory in PW-36 vouchers. No witness has been examined to prove Ex-P36. The signature of PW-1 does not find place in Ex-P36. Ex-P36 has to be rejected, since it has not been proved in the manner known to law. Clause-12 of GSC has to be read in conjunction with Clause-10 and 11 and also with Ex-P12, which is G.O.(Ms).95, dated 01.10.2003. The plaintiff was very well aware about the Government Order. They knew that they cannot quarry sand. They also knew that quarries are vested with PWD. PWD can only grant permission for access to the quarries. However, they also offer sand at the sand depot. However, the plaintiff purchased the sand from the private parties. Hence, I hold there has not been any violation under Clause-12 by the defendants. They have acted in accordance with Clause-12. The plaintiff has breached the terms and conditions. Out of their own volition, they purchased sand from private parties. In view of the documentary and oral evidence in this case, I am not able to convince myself to accept the claim of the plaintiff that the defendants had violated clause-12 of the GSC. Accordingly, the issue No.1 is answered against the plaintiff that there has been no violation by the defendants of Clause-12 of GSC, as the plaintiff had purchased the sand from the open market on their own volition.
45.The issue No.2 is answered against the plaintiff, as even though the plaintiff might have spent more by the said purchase, this cannot be termed as a loss to the plaintiff and cannot be mulcted on the defendants, since it was voluntarily purchased by the plaintiff.
46.With respect to issue No.3, it is categorically held that the defendants are not liable to compensate money value to the plaintiff for their purchase of the sand in the open market. The issue Nos.1 to 3 are answered in the above terms and against the plaintiff.
Issue No.4:-
47.The plaintiff had complained that failure to implement the clause-12 of GSC has led to delay in execution of the contract. However, it had been determined in Issues 1 to 3 that there has been no violation to implement clause-12 of GSC by the defendants. Consequently, the delay in execution of the contract cannot be related to either clause-12 or to any allegation that there was a violation adhering to clause-12 by the defendants. Therefore, it was the plaintiff themselves, who are responsible for the delay in the execution of the contract. This issue is answered against the plaintiff.
Issue Nos.5 and 6:-
48.It is a fact that the period of completion of work had been extended by the defendants. The correspondences and exhibits in this regard are Ex-P30, dated 26.06.2005, Ex-P31, dated 15.07.2005, Ex-P32, dated 12.12.2005 and Ex-P36, dated 29.12.2005. Ex-P30 is a letter issued by the plaintiff sought for extension of time upto 31.12.2005. In Ex-P31, extension of time was granted by letter dated 15.07.2005 issued by the third defendant. It had been very clearly stated as follows:
(5)the contractor will not be paid for any revised rates (or) extra rates due to extension of time and the quoted rates in the contract will prevail during extension period as per General Condition of contract.
(6)Any liquidated damages will not be imposed during extension of time and price escalation will not be considered except any delay of contractors part in completing the additional item of work.
49.However, the plaintiff did not complete the work by 31.12.2005. They wrote another letter dated 12.12.2005 in Ex-P32. They gave different reasons seeking extension of time. They sought extension of time till 31.12.2006. This was replied in Ex-P33 by the defendants. In Ex-P33 issued by the fourth defendant, extension of time was granted till 31.03.2006. However, following conditions have been imposed:
(7)The Extension of time has been granted under the following conditions:
(a)Any revised rates (or) extra rates will not paid to the contractor due to extension of time and the quoted rates in the contractor will prevail during the extension period as per general conditions and special conditions of contract.
(b)Further extension of time if any required will only be considered when there is any delay due to the departmental side with specific reasons.
(c)If the project work can not be completed by the contractor within the 2nd Extension of time period which has been granted by the under signed upto 31.03.2006, fine will be imposed as per agreement conditions and should be recovered from the contract bills.
(d)Based on the above conditions, the 2nd Extension of time has been granted to the contractor from 01.01.2006 to 31.03.2006 to complete the balance works of Mirukandanadhi Reservoir project. I is also informed that further extension of time should not be given at any circumstances.
Hence, the contractor is hereby requested to complete the entire works within the 2nd Extension of time period granted upto 31.03.2006 and also requested to submit the programmed chart for completion of the balance works of the project. It may be submitted to this office within a week time.
50.A careful reading of the four documents reveal that the plaintiff had given reasons, much after commencement of work and at the point of time when the work should have been completed. They had then given a separate set of reasons seeking two extensions of time. It was made clear that though the extension of time is granted, they will not be paid revised or extra rates. It was made clear that the quoted rates in contract will prevail during extension period as per General Condition of contract. It was only then as a fact, the defendants have granted extension of time. I hold that it is only a conditional extension of time and the condition was that additional charges will not be paid. Consequently, the issue No.5 is answered accordingly and that the extension of time was actually granted by the defendants.
51.In issue No.6, it has to be determined whether the plaintiff has to be compensated for escalation of costs in view of extension of time. As seen from the extracts in Ex-P1 and Ex-P33, the defendants had made it clear that they will be not pay any additional or revised charges. The plaintiff has not protested against this letter. Consequently, the defendants are not liable to make any additional payment for escalation of costs in view of extension of time. The extension of time was on the basis of request of the plaintiff. Therefore, the plaintiff has to be bear the additional charges. Accordingly, issue No.6 is answered against the plaintiff and I hold that they are not entitled for compensation, for escalation of charges.
Issues 7, 8 and 9:-
52.The plaintiff has claimed a sum of Rs.1,25,54,820/- together with interest at 18% p.a, towards compensation for loss of profits, idle machinery and escalation of prices. These include increase in material costs and labour charges. In the plaint, it has been stated that the claims are made because of breach of contract by the defendants in failing to handover the site as a whole and failure to give designs and drawings in time and other such reasons. They have claimed compensation of a sum of Rs.56,11,500/- towards overhead, idle machinery, interest for delayed payment and loss of profits. They have also claimed a sum of Rs.22,19,336/-towards increase in materials and labour charges due to delay. During cross examination of PW-1, questions were asked to him on the above aspect. He has stated as follows:
I have not produced the documents regarding the details of men and machineries that was kept idle and the period for which they were kept idle and I am ready to produce the same.
53.He was further questioned as follows Q.I put to you that since you were doing some other contracts works you need not keep the men and machineries in idle position?
A.The men and machineries involved in the suit construction work is different from the other contracts and the same men and machineries cannot be utilized elsewhere.
Q.I put it to you that you are telling false hood for the purpose of this suit?
A.I deny.
We are maintaining muster roll book. We have not produced the muster roll book before this Court. Our company superior and mastery are maintaining the muster roll book. There is a store keeper in the company to maintain the machineries and the materials. We have not produced the store book before this Court.
Q.Are you prepared to examine any one of the store keeper or superior as a witness?
A.I am prepared to examine the available store keeper, superior. Mr.Elanchezhian was the project site engineer from our company. I can examine the said Elanchezhian as a witness in this case.
54.However, the store keeper-supervisor, Elanchezhian was not examined as a witness. The books were also not produced as documents. He was further questioned as follows:
Q.Have you produced any document to show that equipments were brought to the site at the time of starting of the work?
A.I have not produced necessary documents.
Q.Whether the machineries were taken on hire or your own machineries?
Some of the machineries were hire by us and we have some own machineries.
I have not produced any documents to show the machineries hire by me and other own machineries equalized in the work. As per the contract, I have to produce the necessary raw materials to the site and commence work.
55.Above answers would reveal that the claim has not been substantiated by documentary evidence. Basis for such claim have not been revealed by the plaintiffs. The witness only made statements. The Court requires proof and the claim cannot be granted in the absence of evidence. I am afraid that the plaintiff will have to suffer an adverse order with respect to this claim. He has clearly stated that he has not produced the documents of store book and he has not produced the documents regarding the machinery that has been kept idle and the period for which they were kept idle, he has not produced the documents to show that the equipments were actually brought to the site and he has also not produced any document to show which are the machinery hired by him and which are other machinery. It is thus clear that, the plaintiff has miserably failed to prove the claims under this head. I, therefore, hold issue Nos. 7, 8 and 9 against the plaintiff and I hold that the defendants are not liable to pay the plaintiff towards loss of profits, overhead, idle machinery, interest in delayed payment, material costs and labour charges. All the three issues are answered against the plaintiff.
Issues 10 and 11:-
56.In the written statement, the defendants have specifically stated as follows:
As the plaintiff received the final bill in full settlement of all claims the defendants are not liable to pay any interest to the plaintiff, as it has been specifically mentioned in the preliminary specifications in the Tamil Nadu Building Practices Code (formerly known as the Madras Detailed Standard Specifications) that no interest on the works payment is payable to any contractor.
57.The plaintiff had the liberty to file reply statement. They actually filed reply statement. In the reply statement, they have stated as follows:
It is not correct to state that no interest is payable. It is also submitted that the Tamil Nadu Building Practices Code would not be applicable for the breach of the contract and the defendant would be liable to pay the interest.
58.It has been found as a fact that there has not been any breach of contract by the defendants. The plaintiff has claimed interest on the basis that the defendants had breached the contract. It has been found on facts that the fault was on the part of plaintiff that they have delayed the execution of the work and for voluntarily purchasing the sand from the private parties. Consequently, I hold that the defendants are not liable to pay any interest at all. Consequently, the issues 10 and 11 are answered against the plaintiff.
Issue No.12:-
59.In view of the reasons stated above, I hold that the suit has to be dismissed with costs. Accordingly, the suit is dismissed with costs.
cmr 11.08.2018
List of Witnesses:
P.W.1 P.Kandasamy
List of Exhibits on the side of the plaintiff:
1.Ex.P1 Letter sent the Second Defendant, dated 28.02.2003
2.Ex.P2 Proceeding No.TAC41/P/2003-2 PWD, dated 31.12.2003
3.Ex.P3 Bhoomi Pooja Invitation Card, dated 26.04.2004
4.Ex.P4 Letter sent by the Plaintiff, dated 17.02.2004.
5.Ex.P5 Letter sent by the Plaintiff, dated 01.03.2004
6.Ex.P6 Letter sent by the Plaintiff, dated 11.03.2004
7.Ex.P7 Letter sent by the Plaintiff, dated 19.04.2004
8.Ex.P8 Letter sent by the Plaintiff, dated 27.04.2004
9.Ex.P9 Letter sent by the 4th Defendant, dated 16.09.2004
10.Ex.P10 Letter sent by the Plaintiff, dated 23.11.2004
11.Ex.P11 G.O.Ms.No.95, Industries (MMC 1) Department, dated 01.10.2003
12.Ex-P12 Copy of amendment Notification, dated 02.10.2003
13.Ex.P13 G.O.Ms.No.451 PWD (W Spl)
14.Ex.P14 Letter sent by the 3rd Defendant, dated 20.12.2004.
15.Ex-P15 Letter sent by the plaintiff, dated 19.01.2005
16.Ex.P16 Letter sent by the 3rd Defendant, dated 27.07.2005
17.Ex-P17 Letter sent by the 4th Defendant, dated 15.12.2005
18.Ex-P18 Letter sent by the 2nd Defendant, dated 10.11.2005
19.Ex-P19 Letter sent by the plaintiff, dated 19.12.2005
20.Ex.P20 Letter sent by the 3rd Defendant, dated 04.01.2007
21.Ex-P21 Letter sent by the plaintiff, dated 27.07.2006
22.Ex-P22 Letter sent by the plaintiff, dated 16.12.2006
23.Ex-P23 Petition Copy in Arbitration O.P.No.127/2007
24.Ex-P24 High Court Order in O.P.No.127 of 2007
25.Ex-P25 Lawyer Notice sent by the plaintiff
26.Ex-P26 Letter sent by the Executive Engineer, PWD WRO, dated 17.10.2008.
27.Ex-P27 Reply sent by the 4th Defendant, dated 31.10.2008
28.Ex.P28 Letter sent by the Plaintiff, dated 26.06.2005
29.Ex-P29 Letter sent by the 4th defendant, dated 15.07.2005
30.Ex-P30 Letter sent by the plaintiff, dated 12.12.2005
31.Ex-P31 Letter sent by the 4th Defendant, 29.12.2005
32.Ex-P32 G.O.Ms.No.242 PWD (W Spl), dated 03.08.2007
33.Ex-P33 Letter sent by the 2nd Defendant
34.Ex-P34 Balance Sheet of the plaintiff company
35.Ex-P35 Proof Affidavit of plaintiff with depositions of PW1
36.Ex-P36 Proof Affidavit of Defendants with depositions of DW1
List of Witnesses:
D.W.1 R.Govindarajan
11.08.2018
cmr
C.V.KARTHIKEYAN, J.
cmr
Pre-delivery Judgment in
C.S.No. 570 of 2009
11.08.2018