Karnataka High Court
The Chief Engineer vs M/S. Rathod And Naik Co on 14 May, 2025
Author: B.M.Shyam Prasad
Bench: B.M.Shyam Prasad
IN THE HIGH COURT OF KARNATAKA AT DHARWAD
BENCH
DATED THIS THE 14TH DAY OF MAY 2025
PRESENT
THE HON'BLE MR. JUSTICE B. M. SHYAM PRASAD
AND
THE HON'BLE MR. JUSTICE C.M. JOSHI
REGULAR FIRST APPEAL NO. 100189 OF 2018
BETWEEN
1. THE CHIEF ENGINEER
KNNL, IRRIGATION (NORTH)
CLUB ROAD, BELAGAVI-590001.
2. THE EXECUTIVE ENGINEER
OFFICE OF THE EXECUTIVE ENGINEER
KNNL IRRIGATION DEPARTMENT
GLBC DIV NO.3, BILGI
DIST. BAGALKOT
3. THE MANANGING DIRECTOR
KNNL, 4TH FLOOR, COFFEE BOARD
BUIDLING, DR. AMBEDKAR VEEDHI
BENGALURU-560001.
ALL APPELLANTS ARE REP BY
APPELLANT NO.2 WHO IS AUTHRORISED
TO REPRESENT
...APPELLANTS
(BY SRI. M.B.NARAGUND, SENIOR COUNSEL FOR
SRI. A.S.PATIL, ADVOCATE)
2
AND
M/S. RATHOD AND NAIK CO.,
REGD. PARTNERSHIP FIRM
CIVIL CONTRACTORS
VEERABHADRA NAGAR,
PLOT NO.62, 1ST CROSS,
BELGAVI-590016,
REP. BY ITS PARTNER
SRI. KESU POMU RATHOD
AGE 56 YEARS
OCC: CONTRACTOR
R/O BELAGAVI.
...RESPONDENT
(BY SRI. M.S.BAGALI, ADVOCATE FOR
SRI. MRUTYUNJAY TATA BANGI, ADVOCATE)
THIS REGULAR FIRST APPEAL IS FILED UNDER
SECTION 96 OF CPC AGAINST THE JUDGMENT AND
DECREE DATED 12.12.2017 PASSED IN O.S.No.49/2012
ON THE FILE OF THE I ADDITIONAL SENIOR CIVIL
JUDGE AND CHIEF JUDICIAL MAGISTRATE, BELAGAVI,
PARTLY DECREEING THE SUIT FILED FOR RECOVERY
OF MONEY.
THIS APPEAL HAVING BEEN HEARD AND
RESERVED ON 10.01.2025 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, B.M.
SHYAM PRASAD.,J DELIVERED THE FOLLOWING:
CORAM: THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD
AND
THE HON'BLE MR. JUSTICE C.M. JOSHI
3
CAV JUDGMENT
(PER: THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD) This appeal is by M/s Karnataka Neeravari Nigam Limited and its officers [the defendants and are referred to as 'M/s KNNL'] in OS No.49 of 2012 on the file of the I Additional Senior Civil Judge, Belagavi [for short, 'the civil Court'], and M/s KNNL is aggrieved by the civil Court's judgment and decree dated 12.12.2017. The civil Court has decreed the respondent's suit in OS No.49 of 2012 for recovery of money holding M/s KNNL and its officers are jointly and severally liable to pay to the respondent [a partnership firm] Rs.6,05,02,830/- along with interest at 6% per annum from date of the suit till the date of realization. The civil Court has directed M/s KNNL to pay this amount of Rs.6,05,02,830/- under the following heads:
Sl. No. Amount awarded Amount
under
4
1 Excavation of all kinds Rs.5,64,516.75
of soil
2 Excavation of soft rock
(SR] and some rock Rs.18,09,296.18
blasting [SRB]
3 Towards un-coursed Rs.1,52,918.29
rubble masonry.
4 Towards fabrication of
steel enforcement and
for work of CCM-15, Rs.9,49,735.00
40mm D/S with 15%
plum.
5 Removal and hauling of
debris and de-silting/ Rs.4,12,445.25
dewatering
6 Towards storage of Rs.2,41,50,000.00
materials
7 Towards forfeiture of Rs.1,09,248.00
EMD
8 Removal of hard rock Rs.2,82,02,850.00
9 IV R A Bill Rs.9,55,480.47
2. This Court, on 15.11.2018, has
considered M/s KNNL's request for stay of the operation of the civil court's impugned judgment and decree with the respondent beginning execution proceedings in EP No.97/of 2018. This Court has 5 stayed further execution proceedings subject to M/s KNNL paying the respondent a sum of Rs.75,00,000/-. In this appeal, M/s KNNL has admitted the liability to this extent. It is brought on record that M/s KNNL, in compliance with this condition, has indeed paid the respondents Rs.75,00,000/-.
The undisputed facts and circumstances:
3. M/s KNNL, under a time bound Central Government Program called the Central Assistance of Accelerating Irrigation Benefit Program [CAAIBP], has envisaged project for modernizing Ghataprabha Left Bank [GLB] Main Canal over a stretch of 30 Km between the 71st and 105th Kms of this Main Canal dividing this into six packages of 5 Kms each. M/s KNNL has issued separate tenders for these six packages, and the respondent has successfully participated in the tender issued for the fifth package [V Package] comprising 5 Kms stretch between the 93rd and 98th Kms of this Main Canal. A 6 set of certain other contractors are successful in offering their respective bids for the other five packages.
3.1 M/s KNNL and the respondent have signed the contract dated 17.11.2006 [referred to as, 'the Agreement'] with the respondent entrusting the work of Concrete Lining for the stretch of 5 Kms between 93rd and 98th Kms and issued Work Orders dated 28.11.2006. M/s KNNL has handover the site to the respondent on 01.03.2007. The respondent, in performance of the terms of the Agreement, had to complete the Concrete Lining work after the requisite extraction, and removal of debris within four [4] months between 01.03.2007 and 30.06.2007 as the work could only be executed during this period before the commencement of rains1.
3.2 The respondent, when he could not complete the Contracted Work before 30.06.2007, 1 This stipulation admittedly is part of Clause 38 of the Agreement.7
has requested for extension of time, and M/s KNNL has granted such extension of time during the years 2008 and 2009 requiring the respondent to complete the Contracted Work by 30.06.2009. However, with the Contracted Work not being completed even during the extended period, M/s KNNL has cancelled the Agreement and entrusted the balance work to third-party contractors after issuing fresh tender. The other five packages are completed without dispute.
3.3 The Contracted Work requires the respondent to cut earth on either side of the existing canal excavating all kinds of soil [AKS], Soft Rock [SR] and Soft Rock Blasting [SRB] to provide for the requisite Full Supply level [FSL] with Free Board [FB] and Berm2 maintaining the requisite Canal Bed Level/ Width and Slope. The extent of cutting [excavation] varies along the stretch because of the terrain, and therefore, the measurements will also 2 BERM means a flat strip of land [a raised bank] bordering a canal [or even a River].
8vary. The nature of work with the Full Supply Level with Free Board and specifications [subject to variation as aforesaid] are explained by this schematic representation [diagram]. The respondent - plaintiff's case:
4. M/s KNNL estimated the cost of the Contracted Work at Rs.4,98,69,860/-, and the respondent offered 33% more than the aforesaid amount [in a sum of Rs.6,63,26,914/-]. This amount was revised to Rs.6,08,24,847/- based on the Technical Standing Committee's recommendation, and the respondent accepted to execute the work for 9 this amount. M/s KNNL estimated the cost of work in the year 2006 when the canal was in use, and as such, the work entrusted under the Agreement did not correspond with the site condition. M/s KNNL, to prepare the estimates had to inspect the Canal when it was not in use, and M/s KNNL, in notifying the work based on improper estimation contrary to the site condition, has committed a fundamental breach.
The respondent therefore had to mobilize men and machinery beyond the estimated work to handle the site's condition.
4.1 The respondent, describing the aforesaid as the fundamental breach, has alleged that M/s KNNL has committed breach such as [a] preparation of the estimate based on cross sections of the Canal at the interval of 50 meters instead of interval of 20 meters resulting in the difference in measurements and increase in excavation, [b] the existing Ground Level, Canal Bed Level, Side Slope and such others mentioned in the agreement did not 10 tally with the site's condition [c] the insistence on the execution of the Canal Lining Work [Concrete Lining] despite these errors would result in mismatch of Canal Bed Levels at the Distribution Outlets, and therefore improvisations had to be done [d] the stretch at the 94th KM required Deep Cut but the estimate did not correspond with the site conditions like Slope, Top and bottom Widths, [e] the Concrete Lining using Mechanical Paver Machine required a minimum of 1.5 meter wide Berm but this was not shown, [f] executing the excavation work to achieve the required Full Supply Board and Free Board required extensive removal of earth contrary to the estimate, [g] the estimate only provided for excavation of Soft Rock/Soft Rock Blasting but the site's condition required extraction of Hard Rock.
4.2 The respondent brought these defects to the notice of the concerned from M/s KNNL seeking Technical Clearance for Additional Work as contemplated under Clause 12 of the Agreement, but 11 M/s KNNL remained silent to gloss over the defect and directed the respondent [orally] to execute the work with no decision on the increase in the excavation work and the cost. The Engineers with M/s KNNL coerced the respondent to execute the work without the technical approval for the increased quantities.
4.3 The respondent has executed the work during the years 2007, 2008 and 2009 despite all the difficulties and in anticipation of the requisite technical approval for the additional work. The engineers with M/s KNNL have prevailed with the Technical Sub-committee to decide on cancelling the Agreement despite the Sub-committee's observations about payments, which are detailed in para 13 of the plaint.
4.4 The respondent also asserts that because of the above, M/s KNNL is liable to pay 12 different amounts under the following heads along interest at 24% p.a. [i] The delayed interim payments for the work done and delay in release of amounts according to the Running Account submitted with effect from 01.07.2007, [ii] For excavation of Soft Rock/ Soft Rock Blasting in a sum of Rs.28,26,546/- [at the rate of Rs.125.26 for the quantity measuring 22,565.43 m³], [iii] For excavation of All Kinds of Soil [AKS] in a sum of Rs.10,05,479/- [at the rate of Rs.62.34 for the quantity of 16,128.95 m³ ], [iv] For Uncoursed Rubble Masonry in a sum of Rs.2,88,581/- [at the rate of Rs.2279.29 for a quantity of 126.61 m³], [v] For fabrication of steel reinforcement a sum of Rs.9,49,735/- [at the rate of Rs. 61.34 for a quantity of 15,483.12 KG of Steel], 13 [vi] For Cement Concrete with M-15 grade, 40mm d/s 15% plum at Rs.1,00,58,718/- [at the rate of Rs.4,382.96 for a quantity of 2,294.96], [vii] For removing and hauling debris in a sum of Rs. 7,36,968/- [at the rate of Rs.112.57 for the quantity of 6546.75 m³], [viii] For excavation of Hard Rock in a sum of Rs. 3,13,22,578/- [at the rate of Rs.364.80 for the quantity of 85,862.33 m³], [ix] For Storing Materials [such as sand] in a sum of Rs.76,50,000/- [at the rate of Rs.1700/- for a quantity of 4500 m³], [x] For storing jelly at site in a sum of Rs.1,65,00,000/- [at the rate of Rs.2200/- for the quantity of 7500 metric tons], [xi] For the charges incurred in procuring rubble [at the rate of Rs.200 per cubic metre], and 14 [xii] For the cost of two Concrete Transit Mixers in a sum of Rs.75,94,627/-.
4.5 The respondent apart from these amounts has also sought for special damages under different heads such as reimbursement of the extra expenditure incurred in employing men and machinery for commencing the work after the delay with an appropriate escalation in price of Rs. 2,00,000/- per month for the extended period starting from 01.07.2007 towards overhead charges, and other special damages under different heads. M/s KNNL's defense:
5. M/s KNNL, without denying that the estimate is prepared based on the cross-sections of the Canal at intervals of 50 meters and not 20 meters3, has contended that the respondent, which had to begin work simultaneously on all the 3 According to M/s KNNL, the Estimation is prepared based on the cross sections at 50 meter intervals for existing canals and for construction of new canals the Estimation is prepared based on the cross sections at 20 meter intervals. 15 stretches, commenced work only on the 94th KM stretch employing just an excavator. Therefore, the Assistant Executive Engineer wrote to the respondent on 27.02.2007 to expedite commencement of work on all the stretches to ensure that the Contracted Work is completed by 30.06.2007. M/s KNNL has specifically denied the allegation that the preliminary estimation was prepared when the Canal was in use stating that this exercise was undertaken during the canal closure period.
5.1 M/s KNNL has averred that the site's conditions for assessment of the Deep Cuts, Partial Cutting, Bank-work reaches and Cross-section at 50 meter intervals were collected during the canal closure period and submitted to the Chief Engineer [Irrigation] Belagavi, and that this Chief Engineer has approved the Estimate [and other details of the Contracted Work] after a detailed scrutiny. M/s KNNL also contends that, as typically there will be variation between the estimation and the site's condition, 16 Clause 20 is incorporated in the Agreement providing for adjustments in terms of Clause 13 of the General Conditions of Contract.
5.2 M/s KNNL asserts that the respondent during the contract period could only achieve financial closure of Rs.35,14,000/- as against Rs. 6,08,24,000/- and that too only along the 94th KM stretch denying the respondent's case that during this period its representative had filed details of the defects in Estimation. However, M/s KNNL accepts that the Chief Engineer, in August 2007 [after completion of the contractual period], suggested modifications4 as the Deep Cut Reaches had to be altered because the Canal width had to be increased from 4.11 meters to 8.01 meters, but contending that this did not render the tender defective as the tender provided for additional work.
4 The details in these regards are stated in paragraph 16.3 of the Written Statement.
17
5.3 M/s KNNL, while detailing the work executed by the respondent along the 94th KM stretch to justify its case that the respondent had achieved a financial closure of Rs.35,14,000/-as against the tender work of Rs.6,08,24,000/-, has contended that on 09.01.2008 the respondent submitted Schedule of Program undertaking to complete the work by 30.06.2008, but did not even turn up at the site to begin the work during the canal closure period in the year 2008. M/s KNNL asserts that the respondent had abandoned the work in the year 2008 and therefore the concerned mooted proposal to begin criminal proceedings, but no action was taken as the respondent pleaded bona fides and undertook to execute the work during the canal closure period in 2009.
5.4 M/s KNNL further contends that the respondent had not submitted any bill as was required under the Agreement and therefore its officers arranged for measurement and prepared the 18 Bill taking the respondent's counter signature for payment, and that subsequently in the year 2009, the respondent showed progress of Rs.69,77,000/- and submitted Second Running Account and Third Running Account Bills for a sum of Rs.16,05,000/-. Thereafter, a decision was taken to cancel the Agreement without penalty and risk. M/s KNNL contests the respondent's reliance upon the Sub- committee's observations asserting that such observations are internal, and the respondent cannot draw any support from the same.
5.5 M/s KNNL has denied the liability to pay the different amounts claimed by the respondent under the specific heads on different grounds while also denying the claim for special damages such as the alleged improper forfeiture of EMD. M/s KNNL has further denied the liability essentially contending that the respondent will not be entitled to the different amounts claimed because it has not completed the work within the contractual period or 19 the extended period, and because the quantity of work is part of the tender either as estimated or as an additional work.
Issues framed by the civil Court
6. The civil Court has at the first instance framed Issues such as whether the respondent proves that it could not execute the Contracted Work within the stipulated period because M/s KNNL was in breach and whether M/s KNNL proves that the suit is not maintainable and that it had no jurisdiction to entertain the suit5. However, the civil Court has framed Additional Issues6 such as whether the respondent proves [i] that there was defective estimation, [ii] that the 5 The civil Court at the first instance had framed Issue No.1 requiring the respondent to prove that he has executed the tender work for M/s KNNL as per the terms of the agreement, but on 28.06.2017 has reframed this Issue to be whether the respondent proves that he could not carry out the tender work within the stipulated period because of latches by M/s KNNL.
6 These Issues are framed on 02.06.2017, when the suit was listed for judgement, but the civil Court has heard the learned counsels for the parties after framing these additional Issues.
20actual site condition differed from the details based on which M/s KNNL has prepared the estimates, [iii] that it had to excavate hard rock which is not part of the quantities identified in the Estimate, [iv] it has [a] excavated 85,862.33 Cubic Meter of hard rock, [b] excavated Soil of All Kinds [SAK] in 16,128.95 Cubic Meter, [c] excavated Soft Rock/Soft Rock Blast in 22,565.43 Cubic Meter, [d] used rubble masonry in 126.61 Cubic Meter in the ratio of 1:5, [e] used additional steel reinforcement of 15,483.12 KG, [f] executed CCM-15, 40 MM d/s with 15% plum for 2294.96 Cubic Meter, and [g] removed and hauled debris in 6546.75 Cubic Meter.
21The details of the Witnesses examined and the Documents marked:
7. The respondent has examined Sri. Ravi S/o Kashinath Chavan, a Power of Attorney, as PW.1 and marked Exhibits P1 to P93, and M/s KNNL has examined Sri Ulhas S/o Vasanth Kulkarni, a retired Executive Engineer, who was in service at the relevant time, as DW.1. M/s KNNL has marked Exhibits D1 to D90. The respondent and M/s KNNL have marked some documents twice, and these documents include certain correspondences inter se the officers of M/s KNNL and between the respondent and M/s KNNL apart from the Tender Documents, Work Order and proceedings of the Technical Subcommittee Meeting.
The essentials of the civil Court's Reasoning:
8. The civil Court has taken Issue -1 and Additional Issues -1 and 5 together for consideration, and these Issues require the respondent to establish latches by M/s KNNL in 22 preparation of estimate as alleged and M/s KNNL to show that unless the respondent constructed the Template Wall, the estimation of Extra Financial Implication [EFI] was not possible. The civil Court, while opining that the evidence on record clearly shows that the tender was faulty in technical specifications and the officers of M/s KNNL have made false allegations against the respondent of executing the work whimsically, has concluded that the strata classification at the time of estimation for tender was not proper. The civil Court, in arriving at this conclusion, has relied upon these following conclusions.
8.1 The clause 1.5[a] of the tender stipulates that M/s KNNL shall prepare L Sections and drawings at intervals of 5 meter along the stretch with the participation of the respondent's representative and obtain his counter signature, and though this clause is admitted, KNNL's witness [DW.1] has stated that these details are part of the 23 Measurement Books. The Assistant Executive Engineer with M/s KNNL [as per Exhibit P.36 dated 28.04.2009] has alleged that the respondent is executing the work according to his whims and fancy, but when the requisite sections and drawings are not furnished, this allegation could not have been made.
8.2 The Chief Engineer along with the Superintending Engineer, Executive Engineer and Assistant Executive Engineer [DW.1] have inspected the site [as per Exhibit P.20 dated 07.08.2007] and prepared notes of Inspection which show that [a] the respondent has tackled work in the 93rd, 94th, 95th, and 96th KMs, [b] the excavation has to be carried out after constructing Template Wall, [c] there must be Paver Lining for Berm of 1.5 meter at Free Board with balance cutting with side Slope at 1:1, and [d] that Bank Work reaches for the Berm will have to be provided.
8.3 The civil Court has opined that this Inspection Note shows that there were instructions to 24 execute additional work observed at the time of inspection with extra financial implication to the respondent, but there is nothing on record to show that any action was taken in furtherance thereof before the cancellation of the Agreement except that the proposal for approval of the financial implication for the additional work is sent on 04.12.2009 as per Exhibit P.44.
8.4 The civil Court has next considered the Issues No. 4, 6 and 7, and these Issues relate to the maintainability of the suit, the sufficiency of the court fee paid and the respondent's right to relief. The civil Court, on verification of the documents such as correspondences and the minutes of the Technical Sub-committee Meetings, has opined that the respondent has established that M/s KNNL is responsible for the delay. The civil Court has concluded that M/s KNNL has acknowledged that executing the Contracted Work will require extra excavation/extraction and approval of Extra 25 Financial Implication [EFI] but has not granted such approval and the respondent has proved that M/s KNNL did not even release payment for the financial closure achieved.
8.5 The civil Court has found in favour of the respondent on these counts holding that in the year 2007, the respondent is called upon [as per Exhibit P.21/D.42] to complete the Contracted Work by 14.07.2008 without approval of EFI, that in the year 2008, the respondent is also called upon [as per Ex. D.45-D.51] to complete the work by 14.07.2008 and it is informed that the contract will be closed at its risk and cost without approval of EFI or payment, that in the year 2009-2010, the respondent is informed that:
[a] the contract will be extended on a penalty of 7.5% but only to be later informed that the penalty will be at the rate of Rs.100/- per day for the period between 30.06.2007 to 30.04.2010, 26 [b] the Technical Sub-committee is not given all the information, [c] the legal opinion [Exhibit P.59] rendered to the Technical Sub-
committee is that the closure of
contract would not be appropriate
because no clear breach by the
respondent is established and there is nothing to show that the respondent has been assigned the additional work, and [d] in a hurriedly convened manner the Technical Sub-committee thereafter has decided to close the Agreement and forfeit the EMD.
8.6 The civil Court referring to a series of decisions on the tendency amongst the Government officials to encourage litigation to protect themselves without taking decisions and the requirement in the Government Officials to act fairly, 27 has opined that M/s KNNL is unfair in its conduct and the respondent has established its entitlement to receive compensation holding that the suit is maintainable.
M/s KNNL's case in brief as urged in this appeal
9. Sri Nargund, the learned Senior Counsel for M/s KNNL, in his endeavour to persuade this Court to interfere with the Civil Court's impugned judgment and decree canvasses the following.
9.1 The Civil Court has awarded a total sum of Rs.6,05,02,830/- under different heads but without even considering M/s KNNL's specific case and the evidence that is placed on record to vindicate the same. This can be seen, amongst others, in the Civil Court awarding a sum of Rs.2,82,02,850/- towards Removal of Hard Rock and a sum of Rs.2,41,50,000/-towards Storage of Materials. 28
9.2 The respondent has admittedly not completed the work, and M/s KNNL is compelled to publish fresh tenders and award fresh Work Orders for completion of the modernization of the canal between 93 and 98 KMs. M/s KNNL has this time issued Work Orders to 5 [five] different agencies for this stretch of 5 [five] KMs. These agencies have completed the work and none of these 5 [five] agencies have submitted a bill for payment for the extraction of Hard Rock. M/s KNNL, to establish this facet of their defense, has produced Balance Work Sheet and Completion Report Balance Sheet [Exhibit D.88 and D.89] and M/s KNNL's witness [DW.1] has also spoken about this in his evidence, but he has not been cross-examined.
9.3 The civil Court has not considered these circumstances, and crucially, the civil Court has failed to consider that the respondent has placed no detail on [i] the stretch where the Hard Rock is 29 extracted, [ii] the men and machinery employed to remove Hard Rock and [iii] the disposal thereof to establish its case that it has extracted Hard Rock or to refute the evidence as per Exhibits D.88 and D.89 to controvert M/s KNNLs' case.
9.4 The civil Court has accepted the cross sections furnished by the respondent overlooking the fact that the respondent has prepared these cross sections unilaterally just before the commencement of the suit and although the respondent has signed Measurement Books. These Books not only show the respondent has not completed the Contracted Work despite repeated extensions but also that the respondent is paid according to the work executed in terms of the Agreement. This would also be with the Running Bills/Final Bills which are signed on behalf of the respondent accepting that the measurements as mentioned therein are true and correct. 30
9.5 The respondent's witness [PW.1] has also admitted to signing the Measurements Book and the Running/Final Bills in stating that "it is shown that whatever the work the plaintiff has executed during the tender period is recorded by the defendant in the Measurement Book at points of time". The civil Court, despite this overwhelming evidence, has drawn conclusions against M/s KNNL.
9.6 The respondent's witness [PW.1] was cross-examined on commission, and the civil Court, because the Commissioner's Report containing the cross examination was kept separately, has not considered the cross-examination. The civil Court has thus excluded vital material. The civil Court should have examined the entire evidence in determining the liability to pay compensation under the specific heads upon consideration of the specifics of the respective cases.
31
9.7 Sri Nargund, relying upon the synopsis of the submissions on behalf of M/s KNNL, proposes to take this Court through the details of the findings by the Technical Sub-committee to justify that the civil Court could not have accepted the respondent's case on the extent of the work executed or the expenses incurred in the execution, including the cost of material such as jelly and sand in computing the amount payable. The learned Senior counsel emphasizes that M/s KNNL has shown the liability to pay only a sum of Rs.75,00,000/- to the respondent, which is in fact paid in compliance with the interim orders of this Court in the present proceedings.
A brief statement on the response on behalf of the respondent
10. Sri. M S Bagali, the learned counsel for the respondent, stoutly refutes the canvass on behalf of M/s KNNL, but he is not convincing in his efforts to persuade this Court to accept that the civil 32 Court has actually considered the cross-examination of the respondent's witness. The learned counsel argues that this Court must not interfere with the impugned judgement and decree, notwithstanding certain circumstances in favour of M/s KNNL, because the essentials of the respondent's case are established.
10.1 Sri. M S Bagali argues that the evidence on record establishes that [a] M/s KNNL prepared the Estimate when the Canal was in use, [b] the respondent has constructed the Template Walls as directed by the Assistant Executive Engineer, [c] the respondent objected to increase the canal width in the Deep Cut Portions along the entire stretch between the 93rd and 98th KMs, [d] the respondent was restricted in commencing the work because it's representatives were asked to await prior approval from the competent authority for the additional work/construction of Template Walls [e] the Chief Engineer's Inspection Report, which refers to certain 33 additional works and deficiencies, bears testimony to the Estimate being faulty.
10.2 Sri M.S. Bagali, relying upon the details as underscored in the List of Dates and Events filed on 22.11.2024, proposes to rely upon correspondences [such as Exhibit P. 21, Exhibits P. 23
- P.30, Exhibits P.35 - P.41] to contend that these Exhibits must be construed in a particular manner that vindicates the respondent's case. However, the learned counsel, with Sri Nargund seriously contesting such reading of these exhibits, does not dispute that this particular reading of these Exhibits have not been put to M/s KNNL's witness. The point/s for consideration:
11. This Court has called for a glossary of the technical terms used and a PPT on the details of the Contracted Work to understand the nuances. With both Sri Nargund and Sri M.S. Bagali accepting that M/s KNNL and the respondent must have 34 another opportunity to bolster their evidence to substantiate their respective cases, this Court has heard them on deciding the appeal on merits calling for a report from the civil Court as contemplated under Order XLI Rule 27 of the Code of Civil Procedure [for short, 'the CPC'].
11.1 Further, as part of consideration of the afore question, this Court has also heard Sri M.B. Nargund and Sri M.S. Bagali on the question of remanding the suit for reconsideration setting aside the impugned judgement and decree with liberty to file Interrogatories as contemplated under Order XI of CPC and to lead further evidence.
This Court's reasoning on remand as against calling for a report
12. This Court must refer to one of the recent decisions of the Apex Court on remand as against the appellate Court itself deciding on the merits. The Apex Court in Shivakumar v. 35 Sharanabasappa7 has held that a remand routinely will not be justified when available evidence suffices to dispose of the appeal on merits, but a remand may be necessary in certain eventualities depending on the facts and circumstances of each case. The Apex Court has thus declared rejecting a canvass for remand for reconsideration of the due execution and authentication of a purported last Will and Testament. The Apex Court has held thus:
A conjoint reading of Rules 23, 23-A and 24 of Order 41 brings forth the scope as also contours of the powers of remand that when the available evidence is sufficient to dispose of the matter, the proper course for an appellate court is to follow the mandate of Rule 24 of Order 41 CPC and to determine the suit finally. It is only in such cases where the decree in challenge is reversed in appeal and a retrial is considered necessary that the appellate court shall adopt the course of remanding the case. It remains trite that order of remand is not to be passed in a routine manner because an unwarranted order of remand merely elongates the life of the 7 (2021) 11 SCC 277 36 litigation without serving the cause of justice.
An order of remand only on the ground that the points touching the appreciation of evidence were not dealt with by the trial court may not be considered proper in a given case because the first appellate court itself is possessed of jurisdiction to enter into facts and appreciate the evidence. There could, of course, be several eventualities which may justify an order of remand or where remand would be rather necessary depending on the facts and the given set of circumstances of a case.
12.1 The essential controversy for the decision in the suit is whether the respondent has established that M/s KNNL is liable to pay the different amounts claimed with the onus being on M/s KNNL to show that the respondent has not completed the Contracted Work despite the extension of time. This controversy is presented for decision with the rival pleadings leading to multifarious Issues that have been framed and re-framed by the civil Court with these Issues being reframed even after the hearing of arguments. It cannot be gainsaid that the 37 Issues are presented in the backdrop of a technical matter i.e., an assessment of the structure of the canal as it existed, the details of the work to be executed to change the structure to provide additional features [modernizing the canal], and the details of the work executed by the respondent.
12.2 These technical aspects will have to be examined based only on the circumstances as could be gathered today because M/s KNNL, admittedly, has completed the modernization of the subject stretch of the canal engaging the services of other contractors after issuing fresh tender cancelling the Agreement with the respondent. This Court opines that, in these circumstances, the saying in law that it is not the bulk of [the quantity of] the evidence but the effectiveness of the evidence that will be material is emphasized.
12.3 The respondent has examined a Power of Attorney, whose competence to give evidence 38 is under serious dispute with M/s KNNL asserting that this person was not supervising the work and that he is not acquainted with all the technical details. The respondent has marked 93 Exhibits, and these include [apart from the correspondences] technical documents showing the different quantities. M/s KNNL through its witness [Sri Ulhas S/o Vasant Kulkarni - DW1 - a retired Executive Engineer who was in service at the relevant time] has marked 90 documents, and most of these exhibits are internal communications or communications with the respondent and technical documents such as Estimates and Estimate Face Sheet with certain abstracts, measurements and such other technical details.
12.4 Undeniably, the evidence that M/s KNNL and the respondent have let in is mostly documentary evidence. The ocular evidence on the relevance and probative value of the documentary evidence is rendered tenuous with neither M/s 39 KNNL's witness nor the respondent's witness speaking about them in the context of the specific Issues that are considered. If the witnesses have not explained the relevance of the correspondences or the technical details in the documents in their chief examination, they have also not been cross-examined in this regard.
12.5 Perhaps it could be argued that the onus cannot be on the other side to cross-examine on the relevance of the documents if the witness has not spoken about the documents marked through him, but indubitably in the present case the assessment of both the probative and relevance of the documentary evidence is vastly undermined by the lack of exhaustive examination of the witnesses on the documents marked in evidence. This Court must refer to certain specific aspects, which are as follows.
12.5.1 Measurement Book/s Running Bills. M/s KNNL relies upon the Measurement 40 Books, which are marked as Exhibits P.84 and P.85. As canvassed by Sri Nargund, these Exhibits [as also the Running /Final Bills - Exhibit D.10] show that the joint measurement was taken along each stretch of the canal as per the Contracted Work at intervals of 20 meters. It is emphasized that the details in these Measurement Books and Running/Final Bills do not reflect the quantities, or the measurements, for which the respondent has filed a claim in the suit.
12.5.2 The respondent has marked the Measurement Books and M/s KNNL has marked the Running/Final Bills. On behalf of M/s KNNL, the respondent's witness is cross-examined on the relevance of the entries in these Books/ Bills, but M/s KNNL's witness has not explained the same in his evidence and as such there is cross- examination. These documents have multiple data, and unless the witnesses concerned speak about the relevance with appropriate cross-examination, these 41 documents serve no purpose, and this can only mean that the trial is not effectively concluded. Further, the civil Court has not considered these documents.
12.5.3 Temporary and Permanent Benchmarks: The civil Court, referring to clause 1.3 of the agreement, has opined that M/s KNNL has failed to provide Temporary Benchmarks and this was necessary for effective measurement of the work executed by the respondent because the respondent, based on such Temporary Benchmarks, was required to erect the Permanent Benchmarks to facilitate final measurements. The respondent's witness, while admitting that the respondent has not written to appellants asking for Temporary Benchmark, has denied the suggestion that the Temporary Benchmark would not be relevant but without furnishing details.
42
12.5.4 Sri M.B. Nargund and Sri. M S Bagali propose to take this Court elaborately through the documents on the significance of the Temporary/Permanent Benchmark. However, this Court must observe that neither M/s KNNL's nor the respondent's evidence is conclusive in this regard, and if either M/s KNNL or the respondent can take advantage of any failure in establishing/ erecting the Temporary and Permanent Benchmarks, they should have placed on record cogent evidence. As such, this Court cannot arrive at a particular conclusion without evidence.
12.5.5 Construction of Template Walls:
The civil Court has referred to M/s KNNL's witness admitting to certain blanks in the Tender Documents to opine that there are some latches in M/s KNNL on giving instructions to the respondent to execute the Contracted Work. M/s KNNL, to assert that the blanks in the Tender Document will not be significant given the other terms of the 43 Tender Documents/ Agreement, contends that the respondent was required to construct Template Walls at regular intervals and if the respondent had constructed such Template Walls, the difference, if any, in the quantity could have been assessed.
12.5.6 The respondent's witness is elaborately cross-examined with reference to M/s KNNL's correspondence calling upon the respondent to construct Template Walls. The respondent's witness has disputed the correspondences asserting that these have been written although the respondent had constructed Template Walls. If the respondent's version is to be believed and held against M/s KNNL, this Court must opine that it was imperative for the respondent to place on record the details of the construction of the Template Walls.
12.5.7 The civil court overlooking this material aspect has opined that the question of construction of the Template Walls will not be 44 relevant because neither the Executive Engineer nor the Superintending Engineer have examined the financial repercussions to the respondent. This conclusion is a consequence of the party's failure to place on record cogent and relevant evidence to justify conclusions on technical aspects.
12.5.8 The reliance on Correspondences: M/s KNNL and respondents have relied upon, as aforesaid, on a series of correspondences. The evidentiary value of these correspondences must be firstly explained in the chronology that they are written and secondly based on the specific areas that those correspondences relate to. These details will provide the context in which the probative value of these correspondences must be assessed. If these details are not furnished with the opportunity to the other to admit the consequence or the inference that could be from these correspondences, neither M/s KNNL nor the respondent can implore this Court/s to draw 45 inferences on a technical subject that could cause jumbled conclusions.
12.5.9 The civil Court, in the absence of these details, has opined that some correspondences [Exhibits P.18, 19 and 20] are self-
explanatory and that these correspondences indicate that the respondent required Additional Funding as it had to execute additional work. In this appeal, M/s KNNL and the respondent want this Court to test the merits of the civil Court's conclusions, but if this Court undertakes this exercise in the absence of the details, it tantamount to substituting its own reading on technical matters without clear and cogent evidence.
12.5.10 The Respondent's claim of removal of Hard Rock and Storage of Materials: Sri M.B. Nargund has taken this Court through the civil Court's reasoning to allow the respondent's claim for removal of Hard Rock in a sum of Rs.2,82,02,850/- 46 and towards Storage of Materials in a sum of Rs.2,41,50,000/- to demonstrate the deficiencies in the civil Court's consideration of the respective cases. The learned Senior Counsel emphasizes, amongst others, that if the respondent had extracted Hard Rock it should have been reflected either in the Measurement Books or the Running Bills but they are not mentioned in these documents and that the Contracted Work, which is abandoned by the respondent, is completed by five different agencies after a fresh tender and none of these agencies have made any claim for extracting Hard Rock.
12.5.11 These would indeed be substantial circumstances, and these must be considered for a complete evaluation in the backdrop of any other material that the respondent has produced. The civil Court's conclusion in these regards is found in paragraph-188 and onwards of the impugned judgment, and this Court must opine 47 that the civil Court's conclusions are essentially inferential or presumptive.
12.5.12 The civil Court, based on its own reading of certain Exhibits, such as Exhibit P.20, which refers to an increase in the slope for the canal, has inferred that the respondent has extracted Hard Rock. The civil Court is also presumptive in its conclusion that the respondent should succeed in its claim for reimbursement of the costs incurred in removal of hard rock in opining that the Chief Engineer or the other concerned from M/s KNNL should have visited the site to verify.
12.5.13 This Court must opine that the decision on the respondent's claim for reimbursement at the cost of removal of hard rock/ Storage of Materials must be assessed based on whether there is material to show that the respondent has indeed removed hard rock/ stored material and the actual quantity of hard rock removed and the material stored as also the price 48 that is payable. The Tender Document/Agreement provide for rates at which M/s KNNL must pay the respondent for additional work; if the additional work is within 125% of the volume, at a particular rate and if the additional work is more than that, at a rate determined in a particular manner.
12.5.14 This Court must observe that the evidence is inconclusive, and that both M/s KNNL and the respondent, who rely upon certain circumstances must first call upon the other to admit the foundational facts from which it could be held either that the respondent has removed a certain quantity of hard rock and stored the material and the price that is payable. The civil Court overlooking these decisive factors has accepted the respondent's claims on these.
13. This Court must also observe that the respondent's witness strangely asserts that M/s KNNL did not handover the site to the respondent 49 and Contracted Work is also executed. This Court, upon going through this witness's testimony in its entirety, must opine that there is a definite irreconcilability in his evidence lending credence to M/s KNNL's case that this witness is only examined as a Power of Attorney and he does not personally know all the material facts, and the respondent must have another opportunity. In the light of the afore, this Court concludes that the appeal must be allowed in part restoring the suit for reconsideration with liberty to lead evidence instead of deciding the appeal on the merits calling for a report from the civil Court.
14. This Court must observe that neither M/s KNNL nor the respondent has availed the recourse available to them under Order XI of CPC, and if indeed they had availed this recourse, given the technical nature of the dispute and the nature of evidence relied upon by them, the civil Court could have separated the admitted facts from the disputed facts with respect to the specific areas of dispute and 50 answered the Issues based on the sufficiency of the evidence. M/s KNNL's/respondent's failure has contributed to an undeniable impression that the impugned judgment and decree is despite an incomplete trial. In this context, this Court must also observe that it cannot be conclusively opined that the civil Court has had the advantage of the cross- examination of the respondent's witness.
15. The importance of interrogatories and discoveries in technical and complex matters have been underscored even by attorneys in other jurisdictions, and an immediate reference could be made to the Article called "The Effective Use of Written Interrogatories" published way back in the year 19768. The importance is underscored thus:
"In complex litigation interrogatories are often the only practical and efficient means of obtaining certain information. For example, 8 THE EFFECTIVE USE OF WRITTEN INTERROGATORIES" - Adrian P. Schoone and Edward L. Miner, Marquette Law Review, Vol. 60:29, 1976 51 although depositions are relatively effective for obtaining spontaneous answers, the information is restricted to the knowledge of the deposed individual. Answers to interrogatories, on the other hand, represent the collective knowledge of the opponent and his attorneys and agents. Moreover, the answering party is required to conduct a reasonable investigation if this is necessary in order to formulate an adequate response to the questions.
............................
Written interrogatories are also the ideal discovery device where the information sought can be obtained only by reference to several documents or where the information is of such a complex and technical nature that it cannot be communicated verbally in an organized and comprehensible manner."
16. This Court must now refer to the Apex Court's decision in T A. Shanmugam v. Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Paripalanai Sangam9. The Apex Court, while emphasizing that the parties must set forth sufficient factual details to reduce the ability to 9 [2012] 6 SCC 430 52 put forward a false or exaggerated claim or defense and that the Courts must carefully look into the pleadings, has declared that it is imperative that the Judges must have a complete grip of the facts before they deal with the case and that a proper admission and denial are imperative in disposal of the cases. The relevant extract reads:
"29. Ensuring discovery and production of documents and a proper admission/denial is imperative for deciding civil cases in a proper perspective. In relevant cases, the courts should encourage interrogatories to be administered."
17. The other important facet of the present dispute is its nature, which is technical and complex. This suit, with the promulgation of the Commercial Courts Act, 2015, should have been transferred to be decided as a commercial dispute but for the proviso to Section 15 of the Act. In fact, this Court, by the order dated 04.09.2024, has examined whether the appeal should have been entertained by this Court's Commercial Division to opine that the civil Court has justifiably decided the suit without 53 transferring the suit to the Commercial Court because it had reserved the suit for judgement prior to the constitution of the Commercial Court in Belagavi, and therefore, the appeal, is rightly before this Court.
18. This Court has opined that the civil Court's impugned judgement and decree is without an effective and complete trial and that it will be just and reasonable to set aside this judgement and decree remanding the suit for fresh consideration. Further, this Court is also of the opinion that M/s KNNL and the respondent must file for Interrogatories before the relative merits of their respective cases are assessed for a decision on merits. The next question for consideration, therefore, is whether this suit must be restored to the Commercial Court at Belagavi or be restored to the civil Court, and if the suit is to be tried by the Commercial Court, Order XI of CPC as applicable to 54 the Commercial Courts will apply and filing for interrogatories will be in order.
19. As observed by this Court in the aforesaid order dated 04.09.2024, the present dispute between M/s KNNL and the respondent emanate from a tender issued by M/s KNNL for civil construction [modernization of a stretch of a canal], and Section 2[1][c][vi] of the Commercial Courts Act10, a dispute arising out of a tender would be a commercial dispute by definition. The respondent's suit, if it was pending as of today, should have been decided as such by the Commercial Court at Belagavi, and with this Court interfering with the judgement restoring the same suit for reconsideration, it must necessarily be considered by the Commercial Court and not by the civil Court.
20. As such, the suit must be restored to the Commercial Court at Belagavi with the 10 Section 2[1] [c]: "Commercial Dispute" means a dispute arising out of-
[vi] Construction and Infrastructure Contracts, including tender;
55respondent and M/s KNNL filing for Interrogatories as contemplated under Order XI of CPC applicable to the Commercial Courts. The respondent and appellants must file for Interrogatories based on the exhibits that are already marked with liberty to lead fresh evidence. This Court must observe that the ocular evidence on record must be part of the record and considered in the light of the response to the Disclosure/Discovery and Interrogatories and further evidence that the parties may lead consequent to the remand.
ORDER The appeal is allowed in part, and the impugned judgement and decree dated 12.12.2017 in OS No. 49/2012 on the file of the First Additional Senior Civil Judge and CJM, Belagavi, is set aside restoring the suit for reconsideration by the Commercial Court at Belagavi with the following directions:
56
[a] The suit as OS No. 49/2012 shall be listed before the First Additional Senior Civil Judge and CJM, Belagavi, at Belagavi on 16.06.2025 and the appellants [M/s KNNL and its Officers] and the respondent shall appear without further notice on 16.06.2025.
[b] The First Additional Senior Civil Judge and CJM, Belagavi, at Belagavi shall transfer the suit to the Commercial Court, at Belagavi under Section 15 of the Commercial Courts Act, 2015 fixing the date of first appearance before such Court.
[c] The Commercial Court at Belagavi shall permit the appellants [M/s KNNL and its Officers] and the respondent to file Interrogatories as contemplated under Order XI Rule 2 of CPC as applicable to the Commercial Courts and lead further evidence based on the response to the respective Interrogatories. The Commercial Court shall 57 expedite a decision on merits as required under Section 15 of the Commercial Courts Act, 2015.
[d] The Office is directed to refund the Court Fee paid as permissible under the provisions of the Karnataka Court Fees and Suits Valuation Act, 1958.
[e] The Office is also directed to transmit TCR forthwith.
[f] No costs.
Sd/-
(B.M. SHYAM PRASAD) JUDGE Sd/-
(C.M. JOSHI) JUDGE NV*