Sardar vs Shakti on 28 September, 2012

[Cites 7, Cited by 0]

Gujarat High Court

Sardar vs Shakti on 28 September, 2012

1. This appeal is at the instance of Sardar Sarovar Narmada Nigam Limited against the judgment and decree dated 18.4.2007 passed by the learned 6th Additional Senior Civil Judge, Vadodara in Special Civil Suit No. 41 of 1992 filed by the respondent herein.

2. The respondent filed the above referred suit for recovery of Rs. 20,58,379.00 from the appellants with interest at the rate of 18% p.a. and for declaration that the appellants have got no right to encash the Bank Guarantee No. 91/10 amounting to Rs. 2,35,425.00.

2.1 The case of the respondent in the plaint was that the respondent was awarded public contract for the work of constructing residential building of Category "D" (24 Units) for Narmada Project Main Colony, Unit II at Chhani Jakatnaka, Vadodara. The respondent had furnished security deposit of Rs.2,34,425.00 and also furnished the Bank Guarantee as required for the purpose of performing contract. The agreement was then executed and as per the agreement, the respondent was to commence the work from 14.2.1991 and to complete within eighteen months i.e. on or before 13.8.1992. The cost of the work was Rs.47,08,470.28 ps.

2.2 It is further case of the respondent that after the drawings and designs, instructions were provided by the appellants, the respondent had proceeded with the work under the strict supervision of the appellants, and with required materials which were got tested from time to time by the appellants and the work was accordingly executed with the approved materials. However, on 13.7.1991, one half portion of the Block No. D/1 had collapsed and, therefore, the respondent was pressurized by the appellants to give undertaking to execute the work of collapsed block at the risks and costs of the respondent and the respondent having no other alternative, gave letter dated 14.7.1991 stating that the respondent would execute the work of collapsed block at their risks but since the said letter was given under pressure, it had no valid effect in the eye of law. However, the respondent was told to continue with the remaining portion of work and relying on the appellants for payment, the respondent had continued the work. Under the agreement, the appellants were required to make payment of the work done and though the respondent was not responsible for collapse of Block No. D/1, the appellants did not release the payments for the work of other blocks and even started to deduct the amount from the bill which resulted into breach of contract on the part of the appellants and, therefore, the respondent having been left with no other alternative, had to stop the work for which the appellants were informed. Because of the stoppage of work, ultimately, the appellants vide letter dated 7.1.1992, took action under clause 3(c)of the Tender Agreement, terminating the said contract and such action is wholly illegal, unwarranted, unjust, unfair and bad in law and by such illegal action, the appellants have made themselves liable to pay and compensate the losses and damages suffered by the respondent. In the plaint, the respondent has made various claims in relation to the work contract including the claim for refund of security deposit and the bank guarantee.

3. The suit was resisted by the appellants by filing written statement at Exh. 15 inter alia stating that the civil court has no jurisdiction to hear the suit; that it was the respondent who had failed to perform his part of the contract; that the respondent was made available the line out, drawings, designs etc. and, therefore, it was the respondent who was responsible for delayed commencement of the work under the contract; that the respondent was required to execute the items of work as per the drawings and specifications of designs and with the tested and approved material; that during the construction of Block No. D/1, major portion of Block No. D/1 had collapsed on 10.7.1991 and taking the responsibility of such collapse, the respondent immediately gave in writing letter dated 14.7.1991 to reconstruct collapsed portion at his own risk and costs; that the respondent did not fulfill his promise and by subsequent letter, the respondent backed out of his responsibility; that the collapse of block No. D/1 was because of the inferior workmanship, early removal of props, disturbance to props due to negligence in movement of labourers and materials, immature loading on slab etc.; that there was no pressure from the appellants to give writing for reconstruction of the work of collapsed block but taking the responsibility, the writing was given; that for the remaining work for Block No. D/2, D/3 and D/4, the respondent did not show any progress in the work and did not adhere to the time limit provided in the work contract; that at no point of time, the respondent was asked to stop the work but he was requested to continue the work, still, the respondent neither continued with the work nor made good the collapsed Block No. D/1 as agreed by him; that since the respondent has not acted as per the agreement, ultimately, the appellants were constrained to take action under clause 3(c) of the Tender Agreement to get the remaining work of the contract done at the risk and costs of the respondent by forfeiting the security deposit. It is further stated in the reply that the respondent was informed to remain present on 15.1.1992 to take the measurement of the work done by him and on that day, the respondent did not sign the final bill prepared based on the measurement, that since respondent was paid Rs.6,08,91.86 ps. for the cost of block No. D/1, same was deducted from the aforesaid amount. Respondent was also given advance of Rs.2,74,500.00 for the material and the said amount was also required to be deducted from the above said total amount. Ultimately, respondent was paid 5th Running Account Bill in the month of June, 1991.However, Rs.99,069.16 is due to be recovered from the respondent and the appellants were also required to spend the amount for demolition of collapsed portion and for removal of debris and remaining work was to be completed at the risks and costs of the respondent, the respondent will be required to pay even cost of executing the remaining work. The appellants dealt with claims of the respondent and stated that the suit was required to be dismissed.

4. On the basis of the pleadings, following issues were framed by the trial Court at Exh. 84:

Issues Whether the plaintiff proves that the defendant has failed to perform their part of the obligations of contract?

Whether the plaintiff proves that the defendant has committed the breach of the contract?

Whether the plaintiff proves that the defendants illegally want to encash the Bank Guarantee and without any right?

Whether the plaintiff proves the suit claim?

Whether the defendant proves that this court has no jurisdiction to hear the present suit?

Whether the defendant proves that suit is bad for the mis-joinder of the cause of action & non-joinder of the necessary parties?

Whether the defendant proves that the plaintiff has failed to execute the work as per the condition of contract?

Whether the plaintiff entitled for get relief prayed for alleged suit?

What order and decree.

5. Trial Court answered the above said issues as under:

In affirmative.

Partly in affirmative.

In negative.

In affirmative.

As per final order.

6. The respondent examined its witness at Exh. 168 and also produced documentary evidence on record. SO far as the appellants are concerned, the appellants have not led any oral evidence.

6.1 The learned Judge partly decreed the suit of the respondent and ordered the appellant to pay Rs.14,53,651.00 with interest at the rate of 12% p.a. from the date of the suit till realization. The appellants are also directed to release the bank guarantee No. 90/10 of Rs.2,35,425.00 in favour of the respondent.

6.2 We have heard the learned advocates for the parties.

6.3 Learned advocate for the appellant Shri A.D. Oza has submitted that in view of the provisions of the Gujarat Public Work Contracts Disputes Arbitration Tribunal Act, 1992, the Civil Court had no jurisdiction to decide the suit of the respondent. He submitted that the Tribunal was not established when the suit was filed in the year 1992. The tribunal was established after 1993 and thereafter, the suit was decided by the Civil Court in the year 2007. Therefore, when the judgment and decree was passed, the Civil Court had no jurisdiction to decide the suit and, therefore, same is required to be quashed and set aside. In support of this contention, Mr. Oza has relied on decision in the case of State of Gujarat v/s Engineers, Contractors, reported in 2006(1) GLH 438.

6.4 Learned advocate Mr. Oza further submitted that even if the appellants had not adduced evidence, but on the basis of the available evidence on record, when it was established that the respondent was responsible for collapse of Block No. D/1 and had undertaken to reconstruct Block No. D/1 and having not fulfilled his promise, the respondent could not have been made entitled to any of the claims put forth in the suit.

6.5 Learned advocate Mr. Oza then submitted that in the written statement, the appellants have put forth objections against the claims made in the suit and from the documents which are on record, it could be easily found that it was the respondent who was responsible for the collapse of Block No. D/1 and for stoppage of work without any reason though line out and drawings etc. were provided to the respondent and the appellants were justified in taking action under clause 3(c) of the agreement.

6.6 Learned advocate Mr. Oza further submitted that the letter given by the respondent to carry out the work of collapsed block has come on record, letter written by the department calling upon the respondent to remain present for the measurement has also come on record. The learned Judge also recorded in the judgment that it is admitted fact that during the progress, one half portion of block no. D/1 had collapsed and thereafter, the respondent continued work upto 21.10.1991 and then stopped the work, therefore, as submitted by the learned advocate Mr. Oza, if from the documentary evidence on record, finding could be arrived at that it was the respondent who was responsible for not fulfilling his promise to execute the work of collapsed block and if the learned Judge has recorded finding that the respondent had stopped doing further work, it was clear case of the breach of contract committed by the respondent. The appellants were therefore justified to take action under clause 3(c) of the agreement and therefore respondent was neither entitled to any claims nor even refund of the security deposit. Thus, learned Judge has committed grave error in partly decreeing the suit of the respondent.

6.7 Learned advocate Mr. Oza further submitted that there are contradictory finding recorded by the learned Judge for rejecting some of the claims of the respondent and on similar grounds, for granting other claims of the respondents. Learned advocate Mr. Oza further pointed out that there are communications on record especially Exh. 135, 162,176 which are sufficient to prove breach of contract and fault on the part of the respondent, therefore, respondent was not entitled to any of the claims. Referring to Exh. 162, learned advocate Mr. Oza pointed out that Exh. 162 clearly reflects fault on the part of the respondent and he was not entitled to any amount on account of over head, however, the learned Judge has not seriously considered Exh.162.Ultimately, learned advocate Mr. Oza urged that the respondent could not perform his part of the contract and having failed to execute the work of collapsed block, the judgment and decree passed by the learned Judge is required to be quashed and set aside.

Learned advocate Mr. Oza has relied on the following judgments :

2000(4) GLR 3660 in the case of Sarothia Velji Ratna & Co. v. Gujarat Agricultural University & Anr.

AIR 1985 SC 111 in the case of Laxmi Narayan Guin and others versus Niranjan Modak.

7. Mr.B.S. Patel, learned advocate for the respondent, in reply, submitted that the respondent had faced total non cooperation from the appellant in the matter of giving line out, designs and specifications, still, on great pursuation, when the respondent was able to start the work, because of the faulty design given by the appellant, there was collapse of Block No. D/1.The material used by the appellant was tested and approved as required under the contract and, therefore, it was not because of the inferior quality of material, block No. D/1 had collapsed. Mr. B.S. Patel has further submitted that the respondent had given evidence as to under what circumstances, he was compelled to give writing to execute the work of collapsed portion of block no. D/1. Mr. Patel submitted that there was no obligation on the respondent to carry out the said work because there was no fault on the part of the respondent for collapse of said block. Learned advocate Mr. Patel also pointed out that the respondent was constrained to stop the work as the appellant did not make any payment to the respondent though the respondent had done the work under the contract and for the work done under the contract, the respondent was very much entitled to get the periodical payment as per the contract. Mr. Patel further submitted that the respondent had though asked the documents including register to prove that the material used was not of inferior quality, still, there was no response to the application made by the respondent, but, however, the appellant has not proved before the Court that it was because of use of material of inferior quality, half portion of block no. D/1 had collapsed. Mr. Patel further pointed out that the action under clause 3(c) of termination of contract was not on the ground of use of inferior quality of material by the respondent. In fact, the appellant had not issued any notice or letter to the respondent alleging that the respondent had used material of inferior quality. He submitted that in fact, the reason for collapse of half portion of Block No. D/1 was faulty design provided by the appellant and Mr. Patel submitted that the respondent had, in order to keep relation, just agreed to reconstruct the collapsed portion of the said block without admitting the fault and, therefore, collapse of block no. D/1 cannot be made the basis for denying the claims put forth by the respondent.

8. As regards the contention of the learned advocate Mr. Oza that the suit was barred by the provisions of the Gujarat Public Work Contracts Disputes Arbitration Tribunal Act, 1992, learned advocate Mr. Patel for the respondent submitted that when the suit was filed, the Tribunal was not established at all. The Tribunal came to be established after 1993, therefore, when the suit was filed, the civil court was having jurisdiction to entertain and decide the suit and in deciding the suit at latter point of time, the civil court cannot be said to have committed any jurisdictional error in passing the judgment and decree. Mr. Patel relied on decision of this Court in the case of Executive Engineer v. Umashakti Construction Company in First Appeal No. 311 of 2011 decided on March 17, 2011.

9. As regards the claim put forth by the respondent in the suit, learned advocate Mr. Patel submitted that in support of each of the claim, the respondent had adduced ample evidence and the appellant had chosen not to give any evidence. Thus, the appellant has not denied or refuted by any cogent evidence any of the claims put forth by the respondent. Mr. Patel submitted that there are documents on record to prove that the delay in executing the work had occurred because of the non cooperation of the appellant. Mr. Patel submitted that the respondent has proved by adducing the evidence that the respondent was constrained to stop the work on account of non payment for the work done as required under the contract and if the respondent was justified in stopping the work to get the payment of the work done in order to facilitate the respondent to execute the further work,it could not have been seen as breach of contract by the respondent and, therefore, the appellant was not justified in taking measures under clause 3(c) of the agreement, therefore, the action of the appellant under clause 3(c) was totally illegal and against the terms and conditions of the contract. Mr. Patel has further submitted that as per the settled principles of law, if a party does not come forward to give evidence, the court is always justified in drawing an adverse inference against such party and in this case, the learned Judge was right in drawing adverse inference against the appellant and, therefore, it cannot be said that the learned Judge has committed any error in partly decreeing the suit of the respondent. Learned Advocate Mr. Patel has relied on the decision in the case of The State of Mysore and another v. Syed Mahmood and others, reported in AIR 1968 SC 1413; Ishwarbhai C. Patel alias Bachu Bhai Patel v. Harihar Behera and another, reported in 1999 SC 1341, The Managing Director,J&K Handicrafts, Jammu v. M/s. Good Luck Carpets, reported in 1990 SC 864 and decision rendered in First Appeal No. 2257 of 2001; First Appeal No.4421 of 2011. Decisions in the First Appeal relied on includes the issue about interest. Lastly, learned advocate Mr. Patel submitted that though there was no resistance from the appellant by adducing any evidence against the claims of the respondent, yet, the learned Judge has not allowed all the claims of the respondent and thus, the learned Judge has balanced the judgment and decree and, therefore, this court should not interfere with the judgment and decree passed by the learned Judge.

10. We have perused the judgment and decree passed by the learned Judge. We have also perused the record of the case.

10.1 As regards the first contention of the learned advocate Mr.Oza about the jurisdiction of the civil court, we find that the civil suit was filed by the respondent in the year 1992 when the Gujarat Public Work Contracts Disputes Arbitration Tribunal Act, 1992 had not come into force. The Gujarat Public Work Contracts Disputes Arbitration Tribunal Act, 1992 came into force on 1st April, 1994.

10.2 Reliance placed by learned advocate Mr. Oza on the decision in the case of State of Gujarat v/s Engineers, Contractors (supra) is of no help to the appellants as against the said judgment, review application was filed which was allowed and the said judgment was recalled. In the order for recalling earlier judgment, this Court has held that if the suit was filed prior to 1.1.94 and the same is decided by the civil court, the judgment and decree of the civil court, in such case, cannot be considered as without jurisdiction. Order in review application being Misc. Civil Application No. 102 of 2006 in case of Ajay S. Patel, Engineers, Contractors and Consultants versus State of Gujarat is reported in 2007 (2) GLH 567.

10.3 In view of the above decision, the contention of Mr. Oza that the civil court had no jurisdiction to decide the civil suit cannot be accepted.

11. Before considering the claims of the respondent in the suit, we may refer to the evidence of the witness examined by the respondent as also some documents produced on record. Mr. H.R. Patel, witness for the respondent deposed at Exh. 168 that the appellant did not timely provide the drawings, item wise program and necessary instructions because of which the work could not be executed. He has further stated that the work was carried on under the strict supervision of the officers of the appellant and the tested and approved materials of steel, cement, sand etc. were used for the work done by the respondent. It is also stated that on 13.7.91, half portion of Block NO. D/1 had collapsed and on 14.7.91, writing was given by the respondent that if permitted, the respondent would carry out the work of collapsed portion of block no. D/1 at his risks and costs without asking for any compensation for the same. He has further stated that the said undertaking/writing was given because of the pressure of the appellant and the respondent company being left with no option, had to give such writing, however, since the said writing was not given in free will, same was not binding to the respondent. It is further stated by the said witness that after collapse of half portion of Block No. D/1, the appellant had asked the respondent to continue with the remaining work under the contract and had assured to give payment of the work done. However, the appellant did not make payment of the work which was already executed by the respondent and since the portion of the block no. D/1 had not collapsed because of any fault on the part of the respondent, the appellant was not justified in not making payment of the work done. It is stated that though assurance given by the appellant, since no payment was made, the respondent had to stop the work as it was not possible to carry on the work in absence of the payment from the appellant. Said witness has further stated that since the appellant did not make any payment for the work done and illegally took action under clause 3(c) of the Agreement on 7.1.1992 and the respondent having come to know that the appellant was about to encash the bank guarantee, the respondent was required to file the suit immediately. This witness has in his deposition stated about different claims put forth in the suit.

Said witness of the respondent was cross examined by and on behalf of the appellant.

In the suit, following were the claims of respondent :

Claim No.1 : Rs.5,26,506.00 for the work done.

Claim No.2 : Rs.90,000.00 for over heads.

Claim No.3: Rs.45,000.00 for machinery etc. Claim No.4: Rs.2,15,305.00 for scaffolding material.

Claim No.5 : Rs.91,661.00 for site office, labour camp expenses.

Claim No.6 : Rs.82,664.00 on account of price escalation.

Claim No.7 : Rs.24,184.00on account of carrying out additional plaster of 7 mm.

Claim No.8 : Rs.23,478.00 on account of work executed for 9 inch thick wall and demolition charge.

Claim No.9 : Rs.2,10,825.00 for executing work of quantity above 30% than stipulated in Schedule B. Claim No.10: Rs.27,750.00 for the material lying at the site on account of illegal termination of the contract.

Claim No. 11: Rs.2,48,400.00 on account of loss of profit.

The total of all the claims comes to Rs.20,58,379.00.

12. Out of the above claims, the learned Judge has allowed claim No.1,4,5,6,7,9,10 and 11.

12.1 We may first examine the action taken by the appellant under clause 3(c) of the Contract. Clause 3(c) reads as under:

"3.(c) To order that the work of the Contractor be measured up and to take such part thereof as shall be unexecuted out of his hands, and to give it to another Contractor to complete, in which case any expenses which may be incurred in excess of the sum which would have been paid to the original Contractor, if the whole work had been executed by him (as to the amount to which excess expenses the certificate in writing of the Engineer-in-Charge shall be final and conclusive) shall be borne and paid by the original Contractor and shall be deducted from any money due to him by the Nigam under this contract or any other contract with the Nigam or from his security deposit or the proceeds of sale thereof or a sufficient part thereof.

In event of any of the above course being adopted by the Engineer-in-Charge the Contractor shall no claim to compensation for any less sustained by him by reason of his having purchased or procured any materials, or made any advances on account of or with a view to the execution of the or the performance of the contract and in case the contract shall be rescinded under the provision aforesaid, the Contractor shall not be entitled to recover or be paid any sum for any work thereof actually performed by him under this contract unless and until the Engineer-in-Charge shall have certified in writing the performance of such work and the amount payable in respect thereof and shall only be entitled to be paid amount to certified."

12.2 We are conscious that the appellants, except filing the written statement, had not examined any witness and also not given any evidence, therefore, whatever documentary evidence on record, we may consider such documentary evidence.

12.3 There is no dispute that by letter dated 14.7.91 at Exh. 162, the respondent had already agreed to reconstruct the collapsed portion of Block No. D/1.But, he then backed out from his agreement and wrote to the appellants on 5.10.1991 at Exh. 105 that if the payment of the work done was not received,it would stop the work. It was further stated in the said letter that if the payment was not made within seven days, the respondent would be compelled to stop the work and it would be the breach of contract on the part of the appellants. The appellants replied the said letter stating that there was a meeting with the representative of the respondent and it was decided that the payment which was made in respect of Block No. D/1 would be deducted from the remaining bill and after such deduction, the payment would be made. Respondent then wrote letter Exh. 107 dated 10.10.91 that it was not responsible for the collapse of portion of block No. D/1 as the work was carried out as per the design and instruction given to the respondent. It is stated that under pressure, writing was given for reconstruction of block No. D/1 and the appellants were called upon to make payment. However, by subsequent letter dated 11.10.91 at Exh. 109, the respondent agreed to accept the payment of the work done after deducting the cost of collapsed part of block No. D/1. In the said letter, it is stated that the preparedness on the part of the respondent to accept the amount after deducting the cost of collapsed part of block No. D/1 was subject to the rights of the respondent to claim the deducted amount and it was further stated that if no payment was made within week time, the respondent would be compelled to stop the work without any prior intimation. Again, by letter dated 14.10.91 at Exh. 111, respondent requested the appellants to furnish details of reconstruction to enable it to plan for execution of the work of reconstruction. However, by letter dated 21.10.91 at Exh. 114, the respondent reiterated its demand for payment and stated that since the payment was not received till 21.10.91, the work would be stopped from 22.10.91. Thereafter, by letter dated 16.11.91 at Exh. 121, the respondent stated that the collapse of block No. D/1 was totally on account of departmental reasons and the respondent was not liable to make good of the damaged work. It was stated that the work was totally stopped till the demand of the respondent for payment was satisfied. The appellants then by letter dated 5.11.91 wrote to the respondent that as per the discussion with the respondent on 25.11.91, the respondent was to commence the work and if by then, the work was not commenced, it was stated that the necessary action shall be taken by the appellants.

13.4 It appears that since the respondent had not commenced the work of rereconstruction of the collapsed portion of block No. D/1, the appellants by letter dated 7.1.92, informed the respondent that since the respondent had not commenced the work of collapsed portion of Block No. D/1, action under clause 3(c) of the tender agreement was taken. The respondent was asked to note that the remaining work of contract was to be done at the cost and risk of the respondent and the respondent was asked to remain present at the site on 15.1.92 for the purpose of measurement. However, the above said action of the appellants under clause 3(c) was resisted by the respondent by writing letters on the ground that the action taken under clause 3(c) was not legal and valid and not acceptable to the respondent as the respondent was not at fault for not reconstructing collapsed portion of said block as also for stoppage of work.

13.5 Above were some of the relevant correspondence which are on record of the case by way of documentary evidence. We find that the respondent having agreed to execute the work of reconstruction of collapsed portion of block No. D/1, backed out for no good reason. Simply because the appellants have not examined any witness and produced no evidence, that by itself is no ground to believe the say of the respondent that the respondent was pressurized to give in writing to reconstruct the collapsed portion of block No. D/1. It is pertinent to note that within only two days, after the block No. D/1 had collapsed, the respondent had agreed in writing to reconstruct the collapsed portion of block no. D/1.

13.6 Irrespective of the above writing executed by the respondent, we find that there was no good reason for the respondent to stop the work which could otherwise have been carried on by the respondent under the terms of agreement. Contents of the communication referred above would go to show that at some point of time, the respondent had agreed for deduction of the amount for reconstruction of collapsed portion of block no. D/1 from the bill of the respondent for the work done. We also find from the terms of the contract between the parties that the payment for the work done during the contract was subject to the final satisfaction and approval of the Chief Engineer and, therefore, for the work done by the respondent during the period of contract, even if some payment was not made by the respondent, the respondent could not have made the same as basis for stopping the work of other blocks under the contract. We are, therefore, of the view that inspite of repeated requests, since the respondent had not commenced the work and stopped the work totally on the ground of non payment of work already done, the appellants were justified in invoking clause 3(c) of the contract.

13.7 In view of the evidence on record as discussed above, we disagree with the finding recorded by the learned Judge that the appellants were responsible for the breach of contract.

14 This brings us to consider each and every claim allowed by the learned Judge.

14.1 As regards the first claim of Rs.5,26,506.00 for the work done, we find that except objecting in written statement by the appellants that the advance payment was made for the material to be used, evidence of the work done for the said amount was not contradicted by the appellants. The learned Judge has, on evidence, found that the work to the aforesaid extent was carried out and, therefore, the respondent was entitled to such claim. We, therefore, do not think it proper to disturb the finding recorded by the learned Judge on this claim.

14.2 As regards claim No.4 for an amount of Rs.2,15,305.00 for scaffolding material, we find that the loss for the material was not due to any fault or negligence on the part of the present appellants. We have observed earlier that the respondent having agreed for carrying out the reconstruction work of the collapsed portion of Block No. D/1, has backed out on the ground of pressure from the appellants. However, from the other correspondence on record, we find that even after backing out from its promise, the respondent had continued to agree to do the reconstruction work of the collapsed portion of Block No. D/1. There is no evidence adduced by the respondent to prove that the writing which was given by the respondent for carrying out the reconstruction work of collapsed portion of Block No.D/1 was under

pressure. In order to see that the respondent may not have to carry out the reconstruction work of collapsed portion of Block No. D/1, respondent came out with the theory of pressure from the appellants. The respondent has not spelt out anywhere either in any communication or in oral evidence about the details/particulars of pressure from the side of the appellants. Therefore, we are of the view that if the respondent had suffered any loss to scaffolding material on account of collapse of portion of Block No. D/1, the appellants cannot be made responsible for such loss. In view of this, the respondent is not entitled to any amount in respect of claim No.4. We, therefore, disallow this claim of the respondent.

14.3 As regards claim No.5 for an amount of Rs.91,661.00 for site office, labour camp expenses, we find that the respondent is not entitled to put forward any such separate claim under the contract. If the respondent had stopped doing any work on account of non payment of the bill for the work done during the contract, the respondent cannot claim separate amount for the site office, labour charge, expenses etc. Once the appellants are justified in taking action under clause 3(c) of the agreement, the respondent cannot be allowed the aforesaid claim for the site office, labour camp etc. We accordingly disallow this claim also.

14.4 As regards claim No. 6 for an amount of Rs.82,664.00 on account of price escalation, we find that the learned Judge without considering the terms of the contract as regards increase or decrease in the price, allowed the claim No. 6. The learned Judge has not discussed any evidence for granting such claim of the respondent. In the contract itself, clause 59 provides for price adjustment. As per the said clause, it was for the respondent to prove the claim of price rise in accordance with the formula of the said clause. It appears that the learned Judge has allowed such claim simply by observing that since the respondent had executed the work amounting to Rs.

30,32,644.88 ps., the respondent would be entitled to Rs.82,664.00 under the terms of contract as price escalation. We do not find that the respondent is entitled to such amount in absence of any evidence proving such claim for price escalation in accordance with the terms of contract, therefore, we disallow this claim of the respondent.

14.5 As regards claim No. 7 for an amount of Rs.24,184.00 on account of carrying out additional plaster of 7 mm., and claim No. 8 for Rs.23,478.00 on account of work executed for 9 inch thick wall and demolition charge, we find that the evidence in support of said claim has not been contradicted by the appellants and the learned Judge has, on the basis of the evidence, found that the work for the said two claims was carried out by the respondent and, therefore, we do not disturb claim no. 7 and 8 allowed by the learned Judge.

14.6 As regards claim No.9 for an amount of Rs.2,10,825.00 for the extra quantity of work done, we find that the evidence of respondent for extra quantity of work done for item no. 13, 34, 44 for 35% has not been contradicted. Respondent has, thus, proved this claim. This claim is not refuted by the appellants to be not covered by the contract. In view of the above, we, therefore, do not disturb this claim of the respondent.

14.7 As regards claim No.10 for an amount of Rs.27,750.00 for the material lying at the site on account of illegal termination of the contract, since we have found that the appellants were justified in taking action against the respondent under clause 3(c) of the agreement, said claim of the respondent cannot be allowed and, therefore, disallow the said claim.

14.7 SO far as the last claim of the respondent for an amount of Rs.2,48,400.00 on account of loss of profit, in view of our finding that the respondent has stopped the work for no good and valid reason and the appellants were justified in taking action against the respondent under clause 3(c) of the Agreement, we cannot allow this claim of the respondent. Accordingly we disallow this claim of the respondent.

15. Thus, the respondent will be now entitled to following amounts under the claims allowed by us:

Claim No. 1 Rs.5,26,506.00 Claim No.7 :Rs.0,24,184.00 Claim No.8 :Rs.0,23,478.00 Claim No. 9:Rs.2,10,825.00

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Total Rs.7,84,993.00

16. The learned Judge has granted interest on the principal sum at the rate of 12% per annum. We find that there is no contract between the parties for award of interest. However, the learned Judge allowed the interest at the rate of 12% per annum considering the fact that the claims were in respect of the commercial transaction. Since the claim of interest is from the date of suit, same would be governed by the provisions of section 34 of the Code of Civil Procedure which provides that where the liability in relation to a sum adjudged has arisen out of commercial transaction, the rate of interest may exceed 6% per annum as per the proviso to section 34 but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions.

We find that this Court, in the decision in First Appeal No. 709 of 1989 with First Appeal No. 914 of 1989 in case of KOTHARI AND ASSOCIATES Versus STATE OF GUJARAT decided on 7.9.2011, has considered the issue of grant of interest in commercial transaction where there is no agreement for interest. This court considering the bank rate of interest has granted interest at the rate of 9 per cent in that case. Following the said decision, we hold that the respondent shall be entitled to 9% interest per annum from the date of suit till realization on the amount for which the respondent is held entitled.

17. In view of the above, this appeal is required to be partly allowed to the extent indicated above.

18. In result, this appeal is partly allowed. The respondent is held entitled to an amount of Rs.7,84,993.00 with interest at the rate of 9% per annum from the date of the suit till realization. The judgment and decree passed by the learned Judge shall stand modified accordingly.

(Jayant Patel,J.) (C.L. Soni,J.) an vyas

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Gujarat High Court