Karnataka High Court
Karnataka Housing Board vs National India Contractor And ... on 7 November, 2024
Author: S.G.Pandit
Bench: S.G.Pandit
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 07TH DAY OF NOVEMBER, 2024
PRESENT
THE HON'BLE MR. JUSTICE S.G.PANDIT
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
R.F.A. No.1325 OF 2008 (MON)
BETWEEN
KARNATAKA HOUSING BOARD
A STATUTORY BODY CONSTITUTED
UNDER THE KARNATAKA
HOUSING BOARD ACT HAVING
ITS OFFICE AT CAUVERY BHAVAN,
K.G.ROAD, BANGALORE-560 009
...APPELLANT
(BY SRI RAJESH MAHALE, SENIOR ADVOCATE A/W
SMT SUMANGALA GACHCHINAMATH, ADVOCATE FOR
SRI GURUDEV I GACHCHINAMATH, ADVOCATE)
AND
NATIONAL INDIA CONTRACTOR
AND ENGINEERS
A REGD. PARTNERSHIP FIRM HAVING
ITS HEAD OFFICE AT KATRI HOUSE,
628, 13TH ROAD, KHAR (WEST)
MUMBAI-400 052,
REPTD. BY ITS EXECUTIVE PARTNER
MOHAMED AHMED USMAN GANI KHATRI
...RESPONDENT
(BY SRI. ARIF BHATI, ADVOCATE)
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THIS RFA IS FILED U/S 96 OF THE CPC AGAINST THE
JUDGEMENT AND DECREE DT.30.6.2008 PASSED IN
OS.NO.11343/1996 ON THE FILE OF THE XXVI ADDL. CITY CIVIL &
SESSIONS JUDGE, MAYOHALL UNIT, BANGALORE, DECREEING THE
SUIT FOR RECOVERY OF MONEY AND ETC.
THIS APPEAL HAVING BEEN RESERVED FOR JUDGMENT ON
14.08.2024, COMING ON FOR PRONOUNCEMENT THIS DAY,
POONACHA J, DELIVERED THE FOLLOWING:
CORAM: HON'BLE MR JUSTICE S.G.PANDIT
and
HON'BLE MR JUSTICE C.M. POONACHA
CAV JUDGMENT
(PER: HON'BLE MR JUSTICE C.M. POONACHA) The present appeal is filed by the defendant under Section 96 of the Code of Civil Procedure, 19081 challenging the judgment and decree dated 30.6.2008 passed in OS No.11343/1996 by the XXVI Additional City Civil and Sessions Judge, Mayo Hall Unit, Bangalore2, whereunder the suit for recovery of money filed by the respondent/plaintiff has been decreed by the Trial Court directing the appellant/defendant to pay a sum of `81,46,758.20 together with interest at 4% pa., from the date of the suit till realization with costs.
2. Parties will be referred to as per their rank before the Trial Court for the sake of convenience. 1 Hereinafter referred to as 'CPC' 2 Hereinafter referred to as the 'Trial Court' -3-
3. It is the case of the plaintiff that pursuant to a paper publication made by the defendant inviting tenders for construction of 909 tenements in Bengaluru city for slum dwellers, the plaintiff participated in the said tender. That the plaintiff was invited by the defendant for negotiations and the agreement arrived at between the parties in the negotiations was confirmed by letter of the plaintiff dated 28.10.1991, whereunder the following terms were agreed:
a. To accept/execute and complete the works of construction of 909 tenements at 15% above S.R (Schedule of Rates) 1990-91. Cement and steel was to be supplied at the agreed issue rate; b. Sanction of 15% mobilisation advance of the total work value against bank guarantee without interest;
c. To release 50% of the mobilisation advance along with the work order;
d. To recover mobilisation advance in 10 installments commencing from 3rd running bill;
e. To issue individual work order as and when the clear site is handed over to the plaintiff; f. To award the works before the SR of 1991-92 is released;
g. Offer for entire project of 909 houses. -4- 3.01. It is the further case of the plaintiff that the defendant informed the plaintiff that construction of the tenements behind Gajanana Talkies could not be taken up since the site was under dispute and indicated that construction of tenements at Appa Reddy Palya numbering 356 and construction of 462 tenements at Jeevanahalli (Doddagunte) was to be taken up immediately. Accordingly, the plaintiff commenced construction work of 462 out of promised 707 tenements at Jeevanahalli on 20.12.1991 even without the work order. It is the further case of the plaintiff that between 18.12.1991 and 2.11.1992 the bills were prepared and moneys were paid. That the construction of 770 units at Jeevanahalli over a total sital area of 3.876 acres was segregated as follows:
a. In Sy.No.150/1 - 308 units
b. In Sy.Nos.151 and 152 - 274 units
c. In Sy.No.158 - 188 units
3.02. That only construction of 462 tenements at
Jeevanahalli was entrusted and the sital area for construction of 378 units was released. It is the further case of the plaintiff that the sital area was not made available at one time and that they were made available as follows: -5-
a. in Sy.No.158, site area for 180 units was handed over on 14.1.1992 and markings were made on the same day; b. in Sy.No.158, site area for 4 units was handed over on 14.1.1992 and markings were commenced on 12.3.1992; c. in Sy.No.152, site area for 58 units was handed over on 14.1.1992 and markings were made on the same day;
d. in Sy.No.151, site area for 106 units was handed over on 14.1.1992 and markings were made on the same day; e. in Sy.No.151, site area for 24 units was handed over on 25.5.1995 and markings were made on the same day; f. in Sy.No.151, site area for 6 units was handed over on 15.12.1995 and markings were made on the same day. 3.03. It is the further case of the plaintiff that 75% of the site area was handed over to it only in the year 1995. That in terms of clause (3), date of commencement is when 75% of the site is given to the contractor. Hence, the period for completion of 18 months is to be construed from 15.12.1995 and that the plaintiff had time till June 1997 to complete the work. That the plaintiff entered upon the work for ultimate construction and completion of 770 units at Jeevanahalli without any formalities being completed and without work order issued by the defendant. That the work was commenced -6- and being carried out only on adhoc instructions issued by the officials of the defendant present on the site from time to time.
3.04. That the plaintiff had furnished on 26.12.1991 to the defendant a bank guarantee in a sum of `17.50 lakhs taking the contract value at `2,13,00,000/-. It is the further case of the plaintiff that it had faced variety of problems commencing from marking of sital area, digging of trenches, procurement of water etc., which although was brought to the notice of the defendant, and was reacted with lethargy and delay. That the work progressed in a haphazard manner for some time solely on account of the fact that the defendant was not in a position to furnish detailed drawings and instructions and provide materials in adequate quantities on time, from time to time. That the officers of the defendant on the site frequently changed instructions, thus hindering the progress of the work and requiring the plaintiff to do additional work.
3.05. That the parties entered into an agreement on 12.3.1992 and the defendant issued work order on the same day. The construction as agreed to be carried out are:
a. Work of construction of 770 units at Doddagunte - Jeevanahalli in Sy.Nos.150/1, 151, 152 and 158 was entrusted at 15% over the estimated rates on SR 1990-91; b. The total value of the contract was `1,88,59,825/-; -7- c. The period of completion was fixed at 18 months from the date of handing over to the plaintiff at not less than 75% of the work site area comprising in a block after the issue of the work order;
d. The plaintiff had paid a mobilization advance at 15% of the value of the work order without interest; e. Mobilization advance was to be recovered in 10 equal instalments starting from 3rd RA bill with intent that the entire mobilization advance is recovered in 10 instalments or before 75% of the work is completed, whichever is earlier; f. The defendant would withhold a sum of `12,04,500/- as further security deposit from the bills; g. Steel was to be supplied free of cost and cement at the rate of `86/- per bag with supply of the steel and cement at the spot of construction.
h. In the work order the defendant undertook to sent to the plaintiff Schedule -B being the details of the quantities of works, the rates per unit etc. 3.06. It is the further case of the plaintiff that effective from 1.1.1992 the government directed that SR under 1990- 91 be increased by 10% as per the government circular dated 12.3.1992.
3.07. It is the further case of the plaintiff that pursuant to issuing the work order on 12.03.1992 and fixing the valuation of the contract at `1,88,59,825/-, the defendant called upon the plaintiff to modify the existing bank -8- guarantee given by it from `17.5/- lakhs to `16.00 lakhs for the purpose of release of mobilization advance. That the project requirement of cement and steel was never provided.
3.08. It is the specific case of the plaintiff that right from the first day the defendant has defaulted in performing its obligations, which included, not giving drawings, schedule of progress not being furnished and specifications being changed from time to time. That despite the tender for construction of 909 units being accepted, the plaintiff was permitted to work only in respect of 348 units and that too in an area not covered by the original tender. That despite the failure of the defendant, the plaintiff fulfilled a substantial portion of its obligation under the contract by February 1993.
3.09. With regard to the payment of bills, it is the case of the plaintiff that there was a continued default by the defendant with regard to same, inasmuch as, as per PWG/65, clause 7(a), the plaintiff was to submit bills by 15th of each month for all items of work executed in the previous month. That the defendant was unable to furnish the bill of quantities with the unit rates. That the parties had orally -9- agreed which was confirmed by the conduct of the parties that the plaintiff would raise bills every month. Accordingly, between 20.12.1991 and May 1996, 14 bills were prepared by the Assistant Executive Engineer and passed by the Executive Engineer, which shows the progress of work even as assessed by the defendant. That the defendant was not accurate in making measurements and even this has been objected to. That in the bills, the defendant has been not making payments for items of work completed leaving a lot of payment to be made. That after 31.08.1995, bills were prepared by the Assistant Engineer, but for some reason they were never taken on record and consequently, the plaintiff itself prepared bill Nos.15 and 16 in the prescribed form and sent the same to the defendant by registered post.
However, the said bills have not been scrutinised by the defendant and no notice has been issued as contemplated under clause 7(b) of PWG/65 before taking measurements. Hence, it is deemed that the said bill Nos.15 and 16 are correct.
3.10. It is the further case of the plaintiff that the value of the project being more than `1.00 lakh, the progress of work ought to have been reviewed by the -10- Executive Engineer along with the plaintiff every fortnight and such review should have indicated the delay in progress was due to non supply of materials, drawings, etc. However, no such reviews were ever done. That the delay in work was not due to any lapse on the part of the plaintiff.
3.11. It is the case of the plaintiff that as on 31.8.1995, even according to the defendant, the plaintiff had completed the tendered items as well as the extra items and they were reflected in the bills. Thereafter, the work was done by the plaintiff till April 1996. That the plaintiff had submitted bills of an aggregate value of `1,15,67,934/- and it received a payment of `91,25,635/- leaving a balance of `24,42,300/-. That the bank guarantee of a value of `9.00 lakhs was invoked by the defendant in May 1996. That the plaintiff had worked up to April 1996. That the plaintiff received a letter dated 5/11.6.1996, whereunder the defendant rescinded the work contract. It is further stated that the defendant called upon the plaintiff to come for joint measurements on 26.7.1996. However, the plaintiff sought for fixing of a date after 26.7.1996. Hence, no joint measurement as required was taken.
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3.12. Various notices were exchanged between the parties, consequent to which the plaintiff filed the suit for recovery of `81,46,758.20 together with interest at 18% p.a. The claim of the plaintiff made in the suit was under
the following heads:
a. On account of loss of profits and loss of overheads `12,25,888/-
b. On account of excess EMSD collected and interest thereon ` 1,74,420/-
c. On account of transportation
costs for cement and steel. ` 56,035/-
d. Service charges on (c) at 12% ` 6,724.20
e. On account of mobilization and
Special reliefs. ` 2,21,215/-
f. Damages on account of loss
during the period between
21.12.91 to 11.7.96 of `94,67,578/-
restricted to `14,00,000/-
g. On account of 10% adhoc
increase in SR 90-91
effective 1.1.92 `26,20,177/-
h. Value of R.A. Bill No.15 `21,16,285/-
i. Value of RA bill No.16 __` 3,26,014/-__
Total ` 81,46,758.20/-
4. The defendant entered appearance and filed written statement denying the case of the plaintiff. However, it is admitted by the defendant that the plaintiff was the successful -12- tenderer for construction of 909 tenements for rehabilitation of slum dwellers in 7 places of Bangalore. However, since there were difficulties in handing over the scattered sites in vacant possession, it is the case of the defendant that it negotiated with the plaintiff for construction of houses under the scheme at alternate places and Doddagunta (Jeevanahalli) land bearing Sy.No.150/1P, 151, 152 and 158 was identified wherein 770 houses/units were to be constructed, which was accepted by the plaintiff. Accordingly, agreement dated 12.3.1992 was entered into. However, during the course of execution of the contract, the work on land bearing Sy.No.150/1P where 308 houses were proposed could not be taken up because of Court stay and the work was restricted to 462 houses at Jeevanhalli, to which the plaintiff agreed and commenced the work.
4.01. It is the further case of the defendant that the plaintiff did not show required progress of the work within the stipulated time and due to serious lapses on the part of the plaintiff in execution of the work as well as the quality of the progress of work, no further work was entrusted to the plaintiff and the defendant was compelled to restrict the tenements awarded. It is further contended that the plaintiff failed to complete construction in all respects even with regard to 462 -13- houses which was entrusted to the plaintiff and the plaintiff resorted to unhealthy correspondences. It is further contended that due to the inaction and delay caused by the plaintiff, the defendant Board suffered heavy losses on account of the project not being completed within the specified time and the slum dwellers who were the beneficiaries were put to hardship and inconvenience on account of the lapses of the plaintiff.
4.02. It is the further case of the defendant that the contract was awarded to the plaintiff on the basis of the contract rates prevailing during the year 1990-91 plus 15% of tender premium. That the work order was issued on 12.3.1992 on execution of the tender agreement by the plaintiff. The period of completion of the contract was 18 months from the date of handing over of the sites and approximate amount of contract of the sanctioned estimate rate based on SR of year 1990-91 plus 15% of the tender premium was specified. That on the request of the plaintiff, mobilization advance amount of `16.00 lakhs at 15% on pro-rata basis of the total value of the work was paid when the work order was issued to enable the plaintiff to go ahead with the construction. That the mobilization advance amount was an interest free advance which was recoverable in 10 equal instalments out of the -14- running bills starting from the 3 rd bill onwards. It was also agreed that the entire mobilization advance amount was to be cleared and adjusted in 10 equal instalments in the running bills or before 75% of the work completion, whichever is earlier.
4.03. The defendant has denied the case of the plaintiff that the construction of 462 units at Jeevanahalli was a new item for which no new rates, terms and conditions were quoted, accepted or agreed upon. That the contract agreement dated 12.3.1992 clearly indicated that the plaintiff agreed to execute the work at Jeevanahalli in lieu of the construction of 909 houses at different places in the same terms and conditions already agreed.
4.04. It is denied by the defendant that it got the plaintiff to commence the work of 462 units out of 707 promised at Jeevanahalli on 20.12.1991 even without the work order. That the required land area for construction of houses in Sy.Nos.151, 152 and 158 were handed over on 14.1.1992 itself in vacant possession even before the agreement was executed and work order was issued so as to enable the plaintiff to make preliminary arrangement for starting with the construction work. However, the plaintiff failed to give the required -15- progress as per the terms of the contract. The defendant denied that 75% of site area was handed over to the plaintiff only in the year 1995. It is the contention of the defendant that the required sites have been handed over long back during January 1992 and as per the condition of the contract, the plaintiff was bound to complete the work of construction by September 1993. It is contended that the plaintiff voluntarily agreed to execute the work of construction of houses at Jeevanahalli and on the request made by the plaintiff an amount of `16.00 lakhs interest free mobilization amount was released.
4.05. It is the contention of the defendant that the primary responsibility to arrange for marking and infrastructure facilities was that of the contractor. That there were three open wells and in addition two borewells were handed over to the plaintiff with sufficient yield of water. Hence, it is denied that the plaintiff has suffered any hardship in execution of the work. It is further contended that the drawings and details along with materials were made available and the work could have been carried out to 376 units without any hindrance. That the defendant had also paid running bills in respect of the work -16- executed by the plaintiff without any delay. That the plaintiff had accepted the measurements and received payments.
4.06. It is the further case of the defendant that houses were to be constructed to the extent of land available. That despite the efforts and endeavours made by the defendant and the vacant land being made available to the plaintiff, the targeted progress was not given by the plaintiff. That at the time of rescinding the contract on 11.6.1996, the plaintiff had a balance of 6177 bags of cement which were misused for construction of hollow blocks and 5 metric tonnes of steel unused which were the excess material which were released by the plaintiff towards execution of the work. It is further contended that the plaintiff had secured advance and the materials to the tune of `13.00 lakhs and the defendant released the said amount to enable the plaintiff to execute the work within the stipulated time. It is further contended that the plaintiff has misused the department material for his own gain and that if the material and advances were properly utilized for the work, 378 tenements could have been completed. That the lapses on the part of the plaintiff resulted not only in abnormal delay in completion of the project, but also resulted in heavy losses to the defendant.
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4.07. It is further contended that the balance work was taken up by the defendant at the risk and cost of the plaintiff. That the plaintiff is due to the defendant in a total sum of `26,74,054/- in the following manner:
i. Towards secured advance
Outstanding amount `13,01,165/-
ii. Cost of still unused and not
returned ` 3,77,780/-
iii. Cost of cement ` 9,95,109/-
__________
Total `26,74,054/-
4.08. It is further contended that the plaintiff never used to submit running bills as required under clause 7(a) of the contract. However, the officials of the defendant prepared running bills to the extent of work done and the payments were accepted by the plaintiff. That the plaintiff deliberately stopped work which has caused hardship to the defendant. It is further contended that the bills submitted by the plaintiff were fictitious and not in accordance with the actual work done at the spot.
4.09. It is further contended that the plaintiff was asked to be present on 20.6.1996 for taking final measurements. However, since the plaintiff was not present, the measurements were taken in his absence and mahazar has been drawn to that effect. That on the basis of the final -18- measurements taken, the final bill was prepared, according to which the amounts payable was `44,000/- which was adjusted towards the dues payable by the plaintiff. It is further contended that the plaintiff had no intention to complete the work in view of the fact that further execution of work would get him meagre bills and recovery would be effected against heavy outstanding dues and payable by the plaintiff. That since the plaintiff stopped the work and there was no response to the notices issued, the defendant was constrained to invoke the bank guarantee. It is denied that the plaintiff continued to work up to April 1996. It is contended that the plaintiff has stopped the work long back and has failed to perform its obligations under the contract. That the plaintiff had abandoned the work and left the work site for more than six months as on taking of the measurements.
4.10. The defendant also denied the claim made by the plaintiff towards loss of profits and other claims made in the plaint. Hence, the defendant sought for dismissal of the suit.
5. Based on the pleading of the parties, the Trial Court framed the following issues:
"1. Whether defendant proves that the required land area for construction of houses in Sy. -19- Nos.151, 152 and 158 were handed over to the plaintiff on 14.01.1992 itself?
2. Whether defendant proves that the plaintiff voluntarily agreed to execute the construction of houses at Jeevanahalli and at his request an amount of Rs.16.00 lakhs interest free mobilisation advance was released?
3.Whether plaintiff proves that the defendant took decision to bifurcate the construction of '770' houses at Jeevanahalli?
4.Whether plaintiff proves that the defendant has failed to fulfil its obligations as per the terms of agreement dated 12.03.1992?
5.Whether plaintiff proves that the delay in progress of construction of houses was due to non- supply of materials and drawings by the defendant?
6. Whether plaintiff proves that as on 31.08.1995 it had completed tendered and extra items work?
7. Whether defendant proves that the suit of the plaintiff is bad for want of notice under Section 72 of Karnataka Housing Board Act, 1962?
8. Whether defendant proves that by virtue of Court Stay Order the work on Sy No.150/IP could not be taken up?
9. Whether defendant proves that the work entrusted to the plaintiff was not completed within stipulated '18' months and time was the essence of contract it was forced to rescind the contract on 11.06.1996?
10. Whether defendant proves that as on 11.06.1996 the plaintiff had balance of 6177 bags of cement and 14.5 metric ton of steel?
11. Whether plaintiff proves that it is entitled to claim 10% increase in the rates over and above S.R. 90-91?-20-
12. Whether plaintiff is entitled to recover from the defendant Rs.81,46,758-20 as detailed in para 34 of its plaint?
13. Whether plaintiff is entitled to claim interest; if so, at what rate?
14. What decree or order? "
6. The Executive Engineer of the plaintiff was examined as PW.1. Exs.P1 to P90 have been marked in evidence. The Manager of the defendant - Board was examined as DW.1 and the Assistant Executive Engineer as DW.2. Exs.D1 to D58 have been marked in evidence. The Trial Court by its judgment and decree dated 30.6.2008 decreed the suit and directed the defendant to pay a sum of `81,46,758.20 to the plaintiff with interest at 4% pa., from the date of suit till date of realization with cost. Being aggrieved, the present appeal is filed.
7. Heard the submissions of learned Senior Counsel Sri Rajesh Mahale along with learned counsel Sri Gurudev I Gachchinamath for the appellant/defendant and learned counsel Sri Arif Bhati for the respondent/plaintiff.
8. Learned Senior Counsel for the appellant contends that admittedly as per the averments made at para Nos.10 and 11 of the plaint the property was handed over to the plaintiff to -21- commence construction work on 14.01.1992. That the terms and conditions under which the defendant was required to carry out the work was stipulated in the agreement dated 12.03.1992 (Ex.P.49) and that the plaintiff did not carry out the work within the stipulated time in terms of the agreement. It is further contended that 14 bills of the plaintiff have been cleared in respect of the work carried out by it and there is no question of the defendant paying any further amounts to the plaintiff. It is further contended that in terms of the said agreement (Ex.P49), the defendant was required to supply cement and steel to the plaintiff for carrying out construction work. That the said cement and steel have been supplied which has not been utilized by the plaintiff for the work that it was required to carry out under the agreement. It is further contended that the defendant is not entitled to pay any further amounts and that the running bill Nos.15 and 16 have been unilaterally prepared by the plaintiff. It is further contended that when the plaintiff was notified regarding joint measurements that was required to be taken, no representative of the plaintiff was present. That since the plaintiff did not carry out the work in terms of the agreement, the said agreement was rescinded vide notice / order dated 05/11.06.1996 (Ex.D.6). It is further contended -22- that due to the plaintiff not carrying out the work in terms of the agreement, the defendant was justified in rescinding the contract and the plaintiff is not entitled for any damages. That the plaintiff did not furnish any material to demonstrate and justify the quantum of damages sought for in the plaint and in the absence of the same, the Trial Court was not justified in awarding damages and decreeing the suit. It is further contended that the judgment of the Trial Court being erroneous and contrary to the material on record, is liable to be set aside and the suit is liable to be dismissed. Hence, he seeks for allowing of the above appeal and granting of the reliefs sought for.
9. Per contra, learned counsel for the respondent - plaintiff submits that although the tender was called for construction of 909 tenements in 4 slums, only 1 slum was handed over to the plaintiff for carrying out construction. It is further contended that the plaintiff was called upon to commence the construction, even prior to execution of the agreement by the plaintiff and in terms of the instructions of the defendant, the plaintiff commenced the construction work as required. It is further contended that the plaintiff has repeatedly corresponded with the defendant in bringing to its -23- notice the various shortcomings on the part of the defendant and the plaintiff repeatedly sought for resolution of various issues due to which the plaintiff was facing impediments in carrying out the construction. However, it is contended that the defendant did not respond to the said issues raised by the plaintiff. It is further contended that the defendant did not hand over the site as required, due to various reasons and the plaintiff was required to commence construction only after these sites were handed over without any encumbrances which the defendant failed to do within stipulated time. It is further contended that the defendant did not supply the requisite quantities of cement and steel. That PW.1 has not been cross- examined by the defendant regarding the said aspect of the matter. It is further contended that the panchanama drawn does not speak of any cement and steal that is available with the plaintiff. Hence, it is contended that the plaintiff is entitled to the damages sought for in the suit. That the Trial Court has adequately appreciated the oral and documentary evidence and decreed the suit which ought not to be interfered with by this Court. Hence, he seeks for dismissal of the above appeal.
10. Both the learned counsel have referred to various correspondences between the parties and the relevant -24- correspondences which will be considered during the course of this judgment.
11. The submissions of both the learned counsel have been considered and the material on record including the records of the Trial Court have been perused.
12. The questions that arises for consideration are:
i. Whether the finding of the Trial Court on issue Nos.1 to 6 is erroneous and liable to be set aside? ii. Whether the Trial Court was justified in recording a finding that the defendant is due and payable the sum of `81,46,758/- claimed by the plaintiff in the plaint?
iii. Whether the judgment and decree passed by the Trial Court is erroneous and liable to be interfered with?
Re.question Nos.(i) to (iii):
13. It is forthcoming from the factual matrix that it is undisputed that the defendant invited tenders for construction of tenements in Bengaluru city for slum development in which the plaintiff participated. It is further undisputed that the plaintiff was invited for negotiation by the defendant. It is -25- forthcoming from the letter dated 28.10.1991 (Ex.P.2) that the plaintiff wrote to the defendant placing on record the agreed terms pursuant to the negotiation held between the parties and the said terms are as under:
a. "To accept/execute and complete the works of 909 tenements at 15% above the SR of 1990-
91. Cement and steel to be supplied at site at agreed issue rate. We also confirm your having agreed to b. Sanction us 15% mobilisation advance on the total contract value against Bank guarantee BUT WITHOUT INTEREST.
c. Release atleast 50% of the agreed mobilisation advance along with the work order.
d. Recover the released mobilisation advance in ten equal instalments from ten running bills. First instalment to start from 3rd bill onwards. e. Issue individual work order as and when the clear site is handed over to us.
f. Award us the works before the SR of 1991-92 is released.
g. Our offer as above is for the entire project of 909 houses."
14. Vide letter dated 06.12.1991 (Ex.P.3), the defendant responding to the letter (Ex.P.1) confirmed that the tenders negotiated at 15% above the estimated rates based on -26- S.R.No.90-91. Further, it is stated that the sites at Appareddy Palya and the slum behind Gajanana Talkies are clear and the plaintiff was requested to contact the defendant for entering into a contract for issuance of a work order. It was further informed that action regarding request for payment of mobilization advance will be taken.
15. It is necessary to consider the correspondences between the parties to adjudicate upon the questions that arise for consideration. Accordingly, the correspondences are considered as under:
i. The defendant, vide letter dated 11.12.1991 (Ex.P.4), directed the plaintiff to start the work at Appareddy Palya immediately and directed the plaintiff to contact the Assistant Executive Engineer of the defendant for further information.
ii. The plaintiff, vide letter dated 11.12.1991 (Ex.P.5), informed that in the site of Appareddy Palya only about 20 houses can be constructed and requested the defendant to look into the matter and arrange to handover clear site where at least 25 to 30% of the tenements (out of total 909 can be constructed).
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iii. The defendant, vide letter dated 18.12.1991 (Ex.P.6), informed the plaintiff that
construction of tenements behind Gajanana Talkies cannot be taken up since the site is under dispute. Hence, construction of tenements at Appareddy playa numbering 36 may be taken up. It is further informed that construction of 462 units at Doodagunte (Jeevanahalli) be taken up immediately. That the work may be started either on 19.12.1991 or 20.12.1991 since the Hon'ble Minister for Housing and Urban Development is pressing for starting of the work. It is further informed that construction of 36 units at Jayaraj slum may also be taken up. Hence, it is informed that the total number of units entrusted was 530 and the balance of about 379 units will be entrusted immediately.
iv. Vide letter dated 28.12.1991 (Ex.P.7) the plaintiff informed the defendant that they have started cleaning the site, marking and excavation of marked houses at Jeevanahalli. The plaintiff sought for release of the proportionate mobilisation advance. -28- v. Vide letter dated 06.01.1992 (Ex.P.8), the plaintiff informed the defendant that although work commenced for construction of 462 tenements at Jeevanahalli, more that two weeks ago, progress could not be achieved due to various reasons. The reasons are set out in the said letter including foundation details not being made available, water struck while putting the foundation, that markings made during the second half of the day get wiped out by next morning since the site is being used as a play ground by the children.
vi. The defendant vide letter dated 24/25.01.1992 (Ex.P.9) placed on record that the Housing Commissioner along with the Executive Engineer inspected the site and the plaintiff was requested to excavate the work and start bed concrete work under intimation to the defendant.
vii. Vide letter dated 11.02.1992 (Ex.P.10/D.2), the plaintiff informed the defendant that the excavation foundation concrete and stone masonry work is in full progress at Jeevanahalli. The -29- plaintiff sought for issuance of the work order and payment of the mobilisation advance.
viii. It is forthcoming that vide copy of letter dated 07.02.1992, which is annexed along with Ex.P10, the Indian Bank informed the plaintiff regarding the amendments made in the bank guarantee. It is relevant to note here that the amendment was also to substitute the words 462 units at Doddagunte (Jeevanahalli) in place of '909 slums'. Further, a sum of `1,09,00,000/- was to be substituted in place of `2,13,00,000/- and `16,00,000/- was to be substituted in place of `17,50,000/-.
ix. Vide letter dated 18.02.1992 (Ex.P.11), the plaintiff wrote to the defendant that even though the site made available at Doddagunte for construction of 462 tenements was not the one mentioned in the tender, as a special consideration since the same falls under the constituency of the HUD Minister, the work has been started. Further, the plaintiff mentioned that despite commencement of work, no work order has been issued and mobilisation -30- advance for 909 slums has not been paid. Further, the plaintiff set out various hardships that were being faced by them in the matter of carrying out of the work including purchase of quarry materials, fetching of water, non-availability of labour etc. It is further mentioned that the work which was shaping up well has been stopped by the concerned Assistant Executive Engineer. Hence, the plaintiff sought for issuance of work order, release of the agreed mobilisation advance at the earliest and to provide a Borewell at the site.
x. Vide letter dated 27.02.1992 (Ex.P.12) the plaintiff highlighted the hardship caused due to non- availability of water and sought for providing a Borewell at the site.
xi. The proceedings of the meeting held on 10/11.03.1992 between the parties (Ex.D.4) discloses that the technical approval is accorded to the estimate amounting to `2,23,27,000/- for the construction of 770 houses at Doddagunte (Jeevanahalli) in Sy.No.150/1, 151, 152 and 158. It is further noted that the tenements of the plaintiff for construction of -31- 909 units at 15% above the existing rates at SR.90-91 has been approved in the meeting of the board held on 04.02.1992 that the over all project cost should not exceed `2,23,27,000/-.
xii. Vide letter dated 06.04.1992 (Ex.P.13), the plaintiff authorized their General Manager Mr. Shrikant R. Karnataki, to sign the bills, letters etc., and also accept cheques on their behalf.
xiii. Vide letter dated 08.04.1992 (Ex.P.14) the defendant referring to the work order bearing No.1/92-93 dated 12.03.1992 and its other correspondences informed the plaintiff that in terms of the tender notification and work order, the period of completion of work is 18 months including the rainy season from 15th June to 15th September. Further reference has been made to construction of 770 units at Doddagunte (jeevanahalli), the work order and the meeting held on 26.3.1992, wherein it was agreed to complete the work within 12 months. It was further placed on record that the condition for completing the work within 12 months was releasing the mobilisation advance and for the said purpose the plaintiff was -32- requested to present a bar chart for financial and physical completion of work within 10 months before the release of mobilisation advance.
xiv. Vide letter dated 20.04.1992 (Ex.P.15) the defendant informed the plaintiff that the Chairman of the defendant had inspected the work at Dr. Ambedkar slum on Murphy Town, Lingarajapuram tank bed and Doddagunte (Jeevanahalli) site on 22.03.1992 and issued various instructions. It is relevant to note that with regard to the work at the Doddagunte (Jeevanahalli) site unhappiness was expressed for the slow progress of work and the plaintiff was instructed to improve the tempo of the progress of work.
xv. Vide letter dated 15.05.1992 (Ex.D.29) the defendant informed the plaintiff that various points regarding the construction being carried out at Doddagunte (Jeevanahalli) including that the masons were not doing the size stones masonry with proper size stones; that the stones are not being dressed before laying; that the line, length and level are taken carelessly; that some new masons were engaged for -33- the work who do not know the masonry work and that they don't differentiate between size stones and rubble; that the laying of stones are done haphazardly effecting the quality of the work; that the supervision staff of the plaintiff do not take notice of the same to correct the mason, though the department staff repeatedly instructed them regarding the same. Further various short comings were pointed and it is stated by the defendant that the desired progress is not possible from the plaintiff with the type of organisation and set up, even though they brought sufficient construction material at the site. The defendant further called upon the plaintiff to submit the bar chart early and reinforce men and material at the site to gear up the tempo of progress and that any lapse may invite serious action.
xvi. Vide letter dated 18.05.1992 (Ex.P.16), referring to the construction of 462 units at Doddagunte (Jeevanahalli) and the letter dated 13.05.1992, the plaintiff informed the defendant of various requirements including supply of working -34- drawings, plinth beam details, required steel and sufficient place for casting yard.
xvii. Vide letter dated 27.05.1992 (Ex.P.17) referring to its earlier letter dated 10.04.1992, the defendant requested the plaintiff for submission of bar chart to closely monitor the progress of work within the time schedule.
xviii. Vide letter dated 05.06.1992 (Ex.P.18), the plaintiff wrote to the defendant with regard to the observations regarding progress of work. The plaintiff informed the defendant regarding progress of work and further requested for providing schedule - B as also working drawings. It was further informed that cement and steel were required to be supplied at work site, that the plaintiff was made to collect cement from Jayanagar and steel from A.D. Halli. It was further requested that the construction of 464 houses being allotted (out of which only 80% has been allotted), is only part of the successful tender for construction of 909 houses. It is further informed that men and machineries earmarked and geared up for -35- 909 houses is idle. The plaintiff requested the defendant to award balance portion of work. xix. Vide letter dated 08.06.1992 (Ex.P.19), the plaintiff requested the defendant for consideration of awarding of further work of construction of 909 tenements.
xx. Vide letter dated 10.07.1992 (Ex.P.20) the plaintiff informed the defendant that they have geared up and planned to hand over the houses by the end of October, 1992, much before the stipulated dated of 12th of March 1993 and that the plaintiff themselves are not happy with the progress due to strike of the transporters and non receipt of cement which is beyond their control. Hence, the plaintiff requested the defendant to look into the matter regarding supply of cement early.
xxi. Vide letter dated 18.07.1992 (Ex.P.21) the plaintiff informed the Chairman of the defendant that despite passage of six months, the plaintiff being the successful tenderer for the construction of 909 tenements, they have been awarded only 40% of the work i.e., 464 units out of which site for 94 units is -36- yet to be made available. That men, material and machineries kept ready for 909 units has remained idle and are thus incurring losses. Hence, the plaintiff requested the defendant to award the proposed project at Doddagunte (Jeevanahalli) on 5½ acres of acquired land.
xxii. Vide letter dated 20.07.1992 (Ex.P.22) addressed by the plaintiff to the defendant, the plaintiff admitted that they could not give the desired progress due to non supply of cement and steel by the defendant and that they purchased cement in the open market and enclosed the bills for the same. Hence, the plaintiff sought for release of material advance and also sought for reimbursement of the extra cost of cement incurred by the plaintiff. The bills of purchase of the cement was also enclosed along with the said letter.
xxiii. The defendant vide letter dated 22.07.1992 (Ex.P.23) highlighted the fact that no cement has been supplied and made a request for immediate supply of cement.
-37-xxiv. Vide letter dated 03.08.1992 (Ex.P.24) the plaintiff informed the defendant, while referring to the work order dated 12.03.1992 for 770 units at Doddagunte, placed on record that only 366 units have been entrusted and for want of availability of site for the remaining units have not been entrusted. Hence, the plaintiff requested for immediate arrangements to handover the site along with the markings.
xxv. The plaintiff vide letter dated 28.08.1992 (Ex.P.25), while referring to the letter of the defendant dated 17.08.1992 has informed the defendant, inter alia, that the work awarded by the defendant was outside the purview of the tender for 909 tenements, that the supplies of cement and steel have been irrational and that although two borewells have been dug, no pump sets and no electricity connection have been provided at the site. That there was complete demobilisation of men and machinery for over 1½ month and due to non supply of cement the hollow concrete blocks could not be manufactured during the said period.
-38-xxvi. Vide letter dated 02.09.1992 (Ex.P.26), the defendant while responding to the letter of the plaintiff - Ex.P.25 has stated regarding the land have been available for construction of 464 units. Further the defendant admitted that due to various factors there was delay in the supply of the cement. Further the defendant admitted that there was a delay in the changes recommended by the architect. However, water and electricity supply are responsibility of the tenderer. Further, the defendant informed the plaintiff that the reasons mentioned by the plaintiff in its letter Ex.P.25 cannot be the reason for the delay and informed that the defendant expects early completion of tenements. That depending on the progress of the work, defendant will take appropriate action in awarding the work concerning the tender for 9090 tenements.
xxvii. Defendant vide letter dated 14.09.1992 (Ex.D.30) informed the plaintiff that during the inspection of the site, it has been noticed that hollow blocks cast at the site are being used on the works without required curing which was objectionable. -39- Further, it informed that the arrangements for curing was very poor and that the hollow blocks had not acquired required strength. Hence, it is informed that the blocks manufactured should be tested by the quality control sub-division before being used. Hence, the defendant informed the plaintiff that necessary instructions be issued to the site Engineer and that there should be no deviation on the said instructions. xxviii. Vide letter dated 23/25.09.1992 (Ex.P.27) the defendant, in furtherance of its letter - Ex.P.26 informed the plaintiff to take up fabrication of steel for lintels and proceed with the work of casting of the same without further delay and also ensure that the roof slab is laid by the end of dated October 1992. xxix. Vide letter dated 05.10.1992 (Ex.D.31), the defendant referring to the undertaking dated 08.04.1992 executed by a representative of the plaintiff, as also its letters dated 08.07.1992, 13.05.1992, 09.04.1992 and 27.07.1992, informed the plaintiff that the bar chart of the work in terms of the undertaking dated 08.04.1992 of the representative of the plaintiff has not been furnished. -40- It is further informed that, as seen from the last paid bill, there is short progress. Hence, the defendant informed the plaintiff to raise the work progress to the agreed monthly progress by the next bill, failing which the penal clauses of the contract would be enforced. xxx. Vide letter dated 23.10.1992 (Ex.P.28) the defendant referring to the meeting dated 21.10.1992 reminded the plaintiff to submit the necessary bar chart, failing which action will be taken to cancel the contract.
xxxi. The plaintiff vide its letter dated 29.10.1992 (Ex.P.29) referring to the letter - Ex.P.28 intimated the defendant that copy of the sanctioned estimate of schedule - B to enable preparation of the required bar chart was not provided despite repeated requests. It also informed that construction at Doddagunte is outside the purview of the tender. Further it is informed that some of the houses have already reached roof level and the roof related drawings has not been furnished by the defendant. It is further placed on record that the oral changes are proposed in the stair case and hence, sought for -41- revised drawings. The plaintiff also sought for clarification regarding work of the internal walls which has been stooped by concerned architect. Hence, the plaintiff informed the defendant that maintaining progress in the absence of related drawings and clarifications was left to the imagination of the defendant.
xxxii. Vide letter dated 31.10.1992 / 02.11.1992 (Ex.P.30) the defendant referring to the letter - Ex.P.29 enclosed a copy of the schedule - B to enable submission of the bar chart.
xxxiii. Vide letter dated 24.12.1992 (Ex.D.32), the defendant referring to the letter dated 08.12.1992 of the plaintiff informed that the bar chart submitted by the plaintiff shows the period of completion at September 1993 which extends to 19 months instead of 18 months as per the agreement. Further 464 units were to be completed within 18 months from March 1992, but the plaintiff has given a program for completion of 348 units which should be completed by April 1993, where as the plaintiff has given programme up to September 1993 which is not -42- correct. It is further informed that the progress of the site is behind schedule which is to be expedited. The defendant has further informed that inspite of repeated reminders and instruction that there is no improvement in the style of working at the site. That the curing is poor and centering and laying of concrete is for from satisfactory. That the field staff of the plaintiff did not understand the instructions given by the department staff and that if the same is not corrected, action will be taken in terms of the agreement. The defendant also sought for bar chart showing physical and financial progress. xxxiv. Vide letter dated 01.01.1993 (Ex.D.34), the defendant referring to the plaintiff's letter dated 28.12.1992 informed the plaintiff that with regard to the issue of cement bags for the Jeevanahalli project, that sofar 11,600 bags of cement have been issued to the plaintiff and the plaintiff was permitted to bring 1,605 bags and use the same during the month of August 1992. That the overall quantity issued on the work is 13,250 bags, but when the actual physical progress of the work is assessed, the up to date -43- consumption is only 7,000 bags and that the plaintiff was left with 6250 bags for which no work is done. Hence, the stoppage of work on account of non issue of cement is not justified. It is further informed that curing is not satisfactory and that laying of concrete to roof slab, lintel, chejja and staircase is very carelessly done and lot of honeycombs are seen after centering. That in spite of mobilisation advance and regular bills in respect of the work done, the progress work is poor. Hence, the defendant informed the plaintiff that unless the defects are rectified in toto and the bank guarantee submitted for the mobilisation advance is received no recommendation for issue of any material will be made.
xxxv. The plaintiff vide letter dated 12.01.1993 (Ex.P.31) informed that 25% of the project units would be handed over by March 1993 at Jeevanahalli and subject to supply of cement and steel, clearance of drawings and bills periodically and instructions and directions in the right tempo.
xxxvi. Vide letters dated 01.02.1993 and 10.02.1993 (Ex.P.32 and 33) the plaintiff informed the -44- defendant that they are facing tremendous shortage of supply of cement and sought for action at the earliest.
xxxvii. Vide letter dated 06.02.1993 (Ex.D.36) the defendant informed the plaintiff that they have laid the roof concrete on 3rd block of Sy.No.158 on 12th and 13th January 1993 leaving three stair case and two units in the middle without concreting. That no arrangements have been made to lay the concrete for the remaining portion. It is further placed on record that the staff of the plaintiff has informed that they have not procured the jelly for the work. It is further placed on record that plaintiff has lifted 150 bags on 03.02.1993 informing that they will be lent for purchasing blocks and that though the defendant was not obliged to supply of cement for manufacture of blocks, sufficient quantity was issued to ensure good progress of work. The defendant has placed on record that the plaintiff is misusing the cement and steel and has not making arrangements for proper progress of work. It is further placed on record that the staff of the plaintiff have informed the defendant -45- that two pumps which are used for curing are under repair. It is informed that bar chart as promised to be supplied by the plaintiff was not done. Hence, the defendant informed the plaintiff that it was recommending to the higher authorities for applying the penal clauses of contract and for imposing fines on the inordinate delay.
xxxviii. Vide letter dated 10.02.1993 (Ex.D.35) the defendant has informed the plaintiff that it has issued 14,348 bags of cement and 70 Metric Tons (M.T) of steel and the consumption is only 8000 bags of cement and 46 M.T of steel. Hence, denied the statement of the plaintiff that cement and steel is not issued. The defendant further requested the plaintiff for bar chart to keep track of the progress of work and substantiation of utilisation of material on the work. The defendant further informed that the penalty of `100/- per day will be starting from 20.02.1993, if work is not resumed and continuous work is done not till the end of the tender which expires on 30.09.1993. xxxix. The plaintiff vide letter dated 18.02.1993 (Ex.P.34) informed that the works of casting roof -46- slabs, hollow block masonry, fixing of doors, windows, plasting etc., are in progress and sought for preparation of four RA bills.
xl. The plaintiff vide letter dated 18.02.1993 (Ex.P.35) listed progress of the work and also listed out various issues faced by the plaintiff. It is further placed on record that it received 15,800 bags of cement and consumed 15,710 bags. The basis of consumption has also been furnished. Hence, the plaintiff has placed on record that as only 90 bags (wrongly calculated as 80 bags in Ex.P35) of cement are in stock. It is further stated that the imposition of penalty is not justified. It is further informed that by February 1993 the plaintiff has planned to handover 25 units to slum dwellers and requested for handover of balance 561 units and the balance work in terms of work order.
xli. The plaintiff vide letter dated 23.02.1993 (Ex.P.36) has sought for sanitation, water supply and electrical drawings of the earliest as also the sanction schedule - B at the earliest. The plaintiff sought for the handover of balance 561 houses.
-47-xlii. Vide letter dated 05.03.1993 (Ex.P.38) the plaintiff referring to the letter of the defendant dated 03.03.1993 informed that the sanction schedule - B is not handed over. Further it has informed that water supply, electricity and sanitation has been handed over on 01.03.1993. Further the plaintiff requested the defendant to consider with holding supply of cement against recovery of cement as they are in need of financial assistance. Further the plaintiff stated that the scope of the work allotted as per estimates, schedules, EMD which may be handed over to avoid entitling the plaintiff to claim losses towards machinery, labourers, staff establishment overheads, etc. It is further informed that the bank guarantee is valid up to August 1993 and the same will be extended. It further informed that the plaintiff has been paid only 75% of the windows and 25% is with held and release of same was sought. It is further informed that the question of non preparation of bill No.4 did not arise and imposition of penalty was unjustified.
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xliii. The defendant vide letter dated 06.03.1993 (Ex.D.38) referring to letter - Ex.P.34 of the plaintiff enclosed para wise replies to the same and also regretted slow progress of work. It is further informed that action will be taken in terms of penal clauses of the agreement.
xliv. Vide letter dated 31.03.1993 (Ex.P.37) the plaintiff informed the defendant that they have no stock of cement and that they have not received cement from the defendant due to which the progress of work is suffering. Further the plaintiff is suffering from financial crisis due to non-release of bills by the defendant. Hence, supply of sufficient quantity of cement and release of bills were requested at the earliest.
xlv. Vide letter dated 07.05.1993 (Ex.P.39) the plaintiff stated regarding non supply of cement at regular intervals and non payment of bills and sought for making necessary arrangements to avoid losses. xlvi. Vide letter dated 22.06.1993 (Ex.P.40), the plaintiff referring to the meeting dated 07.06.1993 with the Housing Commissioner denied that the -49- plaintiff is due to the defendant in a sum of `9,40,000/-. Further the plaintiff informed the defendant to recover the cement, if any against a sum of `7,17,500/-. It further informed that the bank guarantee is valid up to August 1993 and the same would be renewed. It is further informed that payment of 4th RA bill of `9,40,000/- is pending. That revised bar chart for extension period in terms of the discussions with the Housing Commissioner will be submitted on payment of the 4th RA bill. It further sought for supply of cement as there was no cement with the plaintiff. It further informed that around 38% of the work has been handed over and 75% of the tendered work ought to have been handed over. That the work was entrusted on 12.03.1992 with the period of 18 months for completion. However, only 348 units against the allotted 909 units as per tender were handed over. That due to non supply of cement by the defendant that the work could not be completed as per the time schedule. Further it was informed that a fresh bar chart with extension period to be submitted on the defendant with release of `5,00,000/- against -50- the 4th RA bill. That the defendant was liable to pay a sum of `9,40,000/- towards the 4 th RA bill and that the plaintiff will start working immediately on release of `5,00,000/- on issue of bulk quantity of cement by the defendant.
xlvii. Vide letter dated 29.6.1993 (Ex.P41), the plaintiff submitted a revised bar chart to the defendant with extension period of 348 units at Sy.Nos.151, 152 and 158 at Jeevanahalli -
Doddagunte. However, it is stated that the said revised bar chart was subject to various conditions (11 nos.).
xlviii. Vide letter dated 7.5.1993 (Ex.P42) the plaintiff referring to the various letters written by the defendant sought to visit the office of the Chief Engineer of the defendant to personally cover the issues raised in the said correspondences. xlix. Vide letter dated 1.7.1993 (Ex.P43), the plaintiff referring to the meeting with the Housing Commissioner on 7.6.1993 and other correspondences confirmed that upon receipt of the cement shifting letter on 30.6.1993 the work has started.
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l. Vide letter dated 6.7.1993 (Ex.P44) the plaintiff sought for extension of time for completing 348 units at Sy.Nos.151, 152 and 158 at Jeevanahalli
- Doddagunte up to March, 1994. It is stated that extension was due to unavoidable circumstances from the defendant.
li. Vide letter dated 16.7.1993 (Ex.D40), the defendant responding to the letter - Ex.P41 informed that the period under the contract expires on 12.9.1993 and the work was required to be completed before the said date. It is further informed that there was regular supply of cement from time to time and 14666 bags have been issued against the utilised cement of 8596 bags towards the work and 6843 bags towards manufacture of hollow blocks. Further, it is placed on record that the plaintiff stopped the work since December 1992, which is not correct. It is further informed that handing over of balance site/houses as demanded by the plaintiff will arise only after completion of the work on hand. The plaintiff was called upon to step-up with the work progress.
-52-lii. Vide letter dated 27/29.7.1993 (Ex.P45), the plaintiff informed the defendant that the shifted quantity of cement from Valmikinagar site is almost over and further arrange for bulk quantity of cement to avoid stoppage of work.
liii. Vide letter dated 28.07.1993 (Ex.P.46), the plaintiff referring to the letter of the defendant - Ex.D.40 intimated the plaintiff that the cement supply is almost exhausted and if further bulk quantity is not released the work in progress will be effected. It further intimated that the cement supply by the plaintiff of 1650 bags will be removed if payment at `117 is not released for the same. It is further informed that the 4th part bill has not been paid. It is further demanded that the balance contract work should be handed over at the earliest to avoid further claims and losses.
liv. Vide letter dated 03.08.1993 (Ex.P.47), the plaintiff, referring to the meeting in the chamber of the Housing Commissioner on 07.06.1993 and earlier correspondence, intimated that the work is in progress inspite of non-cooperation by the defendant. -53- It further placed on record that bulk quantity of cement should be released without further delay as to avoid stoppage of work. It is further stated that the instructions of the Housing Commissioner has been maintained and the progress of the work has been kept up in spite of non cooperation. It is further stated that the quantity of cement consumed is accepted by the defendant in the previous letter and there is no further balance from the quantity supplied from the department.
lv. Vide letter dated 06.08.1993 (Ex.P.48), the plaintiff sent a reminder to the defendant regarding various aspects including payment of 4th part bill, release of balance payment for cleaning works, etc. lvi. Vide letter dated 06.09.1993 (Ex.D.41), the defendant referring to the letter of the plaintiff dated 03.09.1993 and earlier correspondence intimated the plaintiff regarding cement consumption and that the block / mixture machine after service / repair is kept at the site.
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lvii. Vide letter dated 09/10.09.1993 (Ex.D.42), the defendant issued a show cause notice, to show cause within 10 days as to why action should not be taken in terms of the contract. The said show cause notice has placed on record, various alleged lapses on behalf of the plaintiff.
lviii. Vide letter dated 14.09.1993 (Ex.D.43), the defendant has intimated the Housing
Commissioner that the contractor has lost interest in completing the work. It is further placed on record the various lapses of the plaintiff and it is also been informed that works entrusted are in three survey Nos.151, 152 and 158 and that balance portion of work in two survey numbers i.e., 151 and 152 would be withdrawn.
lix. Vide letter dated 13.10.1993 (Ex.D.44), the plaintiff with regard to the letter of the defendant regarding encashment of bank guarantee and undertook to continue with the work in full progress, which can be seen from the next three months.
lx. Vide letter dated 18.11.1993 (Ex.D.45), the defendant referring to its earlier letter dated -55- 20.10.1993 and the letter of the plaintiff dated 24.10.1993 informed the plaintiff to expedite the work including completion of internal services, so as to handover to the completed units without delay. It further sought for flooring works, plastering of walls and curing to be done simultaneously. It sought for submission of bar charts for granting extension of time.
lxi. Vide letter dated 26/27.11.1993 (Ex.D. 25 & 46), the defendant referring to the letter of the plaintiff dated 04.11.1993 has placed on record that the defendant has supplied 15038 bags of cement and 70.52 metric tons of steel, but the plaintiff has lifted 850 bags of cement and 14.365 metric tons of steel unauthorizedly. Hence, it has disputed the assertion of the plaintiff that despite non supply of materials by the defendant the work progress will be continued. Further it is stated that the centring work at Sy.No.152 has not started except Sy.No.151. It is further stated that the manufacturing of cement concrete hollow blocks are not being done continuously. It is further stated that the revised bar -56- chart has promised has not been furnished. It is further stated that the men and labour engaged in work are meagre, compared to left over portion for complexion and the work progress is slow. The defendant has further stated that as per its assessment, the plaintiff will not be able to complete the work in time as promised. The defendant further informed the plaintiff that they fail to give satisfactory progress engaging sufficient men, labour and materials, the defendant will be constrained to rescined the balance work and complete the same through another agency. It is relevant to note that said notice (Ex.D.25) which was sent by registered post has been returned as not claimed.
lxii. Vide letter dated 06.11/12.1993 (Ex.D.33), the defendant informed the plaintiff that there is delay and unsatisfactory progress in the work and that despite repeated reminders, no action has been taken. The defendant has called upon the plaintiff to look into the matter and to take necessary action to make up back log and shortfall in the progress and also maintain good quality of work and -57- that if the short fall is not made good within the stipulated time, the plaintiff will be liable for penal action.
lxiii. Vide letter dated 18/20.12.1993 (Ex.D.10) the defendant referring to its earlier letters dated 25.09.1993 (Ex.D43) and 18.11.1993 (Ex.D.45) as well as the undertaking dated 16.10.1993, informed the plaintiff that the work has been stopped since two weeks and the registered letters sent by the defendant are returned as not claimed. That as per the contract, the work should have been completed and units handed over by 12.09.1993 that the progress achieved is not encouraging. Hence, the plaintiff was intimated that the centering and laying of roof in Sy.No.151 and 152 was required to be done on or before 31.12.1993 failing which the said letter itself will be a final notice and action will be initiated as per agreement.
lxiv. Vide letter dated 24.12.1993 (Ex.D.11), the defendant referring to its earlier letters including letter - Ex.D.10 has informed the plaintiff that no action has been taken despite lapse of three months -58- of the period stipulated in the agreement and that the plaintiff has failed to keep up to the undertaking dated 13.10.1993 that work has been stopped since fifteen days without valid reasons even thought penalty of `100/- per day have been imposed for short progress. That 858 bags of cement and 14.385 metric tons of steel and mobilization advance of `14.40 lakhs is outstanding and that there is no satisfactory work progress. Hence, it was informed that if the centering and laying of roof in Sy.No.151 and 152 are not done within 31.12.1993 and the construction work is not commenced, the deposits of the plaintiff will be forfeited and penal clauses in the agreement would be enforced and the plaintiff will be recommended for black listing.
lxv. Vide letter dated 21.02.1994 (Ex.D.12 / Ex.D.47), the plaintiff informed the defendant that the balance quantity of steel is with them and will be used for the work as and when required.
lxvi. Vide letter dated 19/22.04.1994 (Ex.D.13), the defendant issued a "pre-final notice" to the plaintiff, referred to its earlier correspondence and -59- intimated that the progress achieved is to an extent of ` 45,82,366/- as against estimated cost of `2,23,27,000/- which is unsatisfactory. It is further reported that as per the report of the Assistant Executive Engineer of the defendant the plaintiff has not resumed the work as on 05.04.1994. Hence, the plaintiff was called upon to immediately commence the work failing which the contract would be rescinded.
lxvii. Vide letter dated 10/11.05.1994 (Ex.D.14), the defendant referring to the earlier correspondence and referring to the joint meting held on 22.02.1994 intimated the plaintiff that the revised bar chart has not been produced. Further it has intimated that in the event that the work has not completed on a "war footing basis", the defendant will withdraw a portion of the work and carry out the same, at the risk of the plaintiff.
lxviii. Vide letter dated 31.08.1995 (Ex.D.48), the defendant informed the plaintiff that tempo of progress of the work is not satisfactory and that the beneficiaries are expressing their apprehension for the -60- delay caused in the completion of houses. Hence, the plaintiff was informed to step-up the progress failing which penal clauses will be imposed.
lxix. Vide letter dated 11.09.1995 (Ex.P.52), the plaintiff referring to the letter of the defendant dated 31.08.1995, informed that the centering for casting, lintels, chejjas, roofs, plastering, etc are in progress. That the work is kept as per the supply of departmental materials and to increase the required tempo of progress, maximum quantity of departmental materials are required. It is further informed that as per mutual discussion in the chamber of the defendant the sanitation works will be started shortly.
lxx. Vide letter dated 13.10.1995 (Ex.D.49), the defendant informed the plaintiff that they have issued 1200 bags of cement during the months of July to September 1995 and the work carried out during July and August has been measured and paid. That 651 bags of cement were used on work and the same was recovered in the 14th RA bill. Hence, there were 549 bags of cement at the site. It is further informed -61- that 175 bags of cement were also issued on 27.09.1995. Hence, there is total 724 bags at the site. That as per the existing work it was estimated that 200 bags of cement was consumed and there should be a balance of 500 bags of cement as on the date of letter. Hence, it is informed that until all the 500 bags of cement should be used for work, no fresh cement will be given. It is further informed that curing work is not being carried out properly for the plastering and that centering work is also not done properly. The plaintiff was informed to rectify the said issues. It is further informed that 10.5 metric tons of steel was issued on 28.07.1995 and only 29 units have been casted. Hence, there is balance steel and cement available to carry out the work. It is further informed that the defendant has paid for steel windows and doors fixing. Hence, the plaintiff was requested to bring the quantity to the site and fix the same without further delay. It is further placed on record that despite repeated instructions, sanitary works are not being done properly and the plastering to inside walls is being done without fixing doors and windows. -62- lxxi. Vide letter dated 20.11.1995 (Ex.D.50), the defendant has informed the plaintiff that curing and centering work is not done properly. It is further informed that the material advance given for nearly `40,000/- hollow bricks was give and the same is not available on the site. Further 21.00 metric tons of steel issued was not available at the site. That the plaintiff has promised to bring back the balance quantity of steel to the work site. It is also noticed that steel doors and windows are fixed at site is not according to specification and measurements. Hence, needful action by the plaintiff was requested. lxxii. Vide letter dated 27.11.1995 (Ex.D.51), the defendant referring to its earlier correspondence has issued notice No.5 listing out the various deficiencies and further informed the plaintiff that the Minister of State Housing and the local MLA have expressed unhappiness with the execution of the work. It is further instructed that proper action be taken to accelerate the work and complete the same as per the schedule failing which fine will be imposed. -63- lxxiii. Vide letter 07/12.12.1995 (Ex.D.53), the defendant once again informed the plaintiff regarding various details and deficiencies in the work carried out by the plaintiff.
lxxiv. Vide letter dated 28.12.1995 (Ex.D.54), the defendant has once again pointed out various deficiencies in the work of the plaintiff and required the plaintiff to carry out the work and treat the said letter as final notice.
lxxv. Vide letter dated 05/08.01.1996 (Ex.D.55), the defendant once again listed out the various deficiencies and pointed out that the total outstanding secured advance was `13,00,945/- and called upon the plaintiff to take necessary action and read the said letter as a final notice.
lxxvi. Vide letter dated 28/29.02.1996 (Ex.D.57/D26/P53), the defendant pointed out the various deficiencies in the work of the plaintiff and informed that necessary action would be taken as per the agreement including resending of the contract if the needful is not done within time;
-64-lxxvii. Vide letter dated 5.3.1996 (Ex.P54) the plaintiff referring to the various earlier correspondences, listed out action for sorting out various issues;
lxxviii. The plaintiff, vide legal notice dated 7/8.3.1996 (Ex.P55) has called upon the defendant to sort out the differences to ensure completion by April, 1996;
lxxix. The plaintiff, vide letter dated 12.3.1996 (Ex.P56) has sought for issue of departmental materials to facilitate completion of the work in terms of the work order;
lxxx. Vide letter dated 13.3.1996 (Ex.P57), the plaintiff requested the defendant to withdraw the letter issued by it to the bank not permitting the plaintiff to encash the bank guarantee;
lxxxi. The plaintiff vide letter dated 18.3.1996 (Ex.P58) referring to the meeting held between the parties on 15.3.1996 conveyed to the defendant that pending settlement of its claims, the plaintiff will be increasing the strength of the work force and give progress of 3.5 lakhs by April, 1996, on specific -65- assurance that payments would be released. It further requested for 407 bags of cement to be issued immediately for carrying out the work up to 5.4.1996; lxxxii. The plaintiff vide letter dated 21.3.1996 (Ex.P59) requested for issue of material for completing the works in all respects with respect to 378 units;
lxxxiii. Vide letter dated 21.3.1996 (Ex.P60), the plaintiff sought for copies of the bill Nos.1 to 144; lxxxiv. Vide letter dated 21.3.1996 (Ex.P61) the plaintiff sought for payment of intermediate bill amounting to `21,61,285.16. It also requested for copies of bill Nos.1 to 14 contending that there was some omission in the measurements recorded by the defendant;
lxxxv. The defendant got issued a registered letter dated 26.3.1996 (Ex.P63), whereunder it referred to its earlier correspondences as well as letter dated 21.3.1996 of the plaintiff (Exs.P59 and P60) and in detail set out its responses, inter alia, placing on record that there is recovery outstanding towards consumed cement of 9980 bags up to 14 RA bill and -66- until the cost of the cement is recovered, there is no funds available to purchase the quantity of the cement. It has further placed on record that the balance quantity of 17.8 MTs., steel with the plaintiff and until the said quantity is consumed, the balance quantity cannot be issued. It has further placed on record that if the plaintiff does not give the required progress by 6.4.1996 to complete the balance work, action will be initiated;
lxxxvi. Vide registered letter dated 30.3.1996 (Ex.P64) in response to the legal notice dated 7.3.1996 (Ex.P55), the defendant has in detail responded to the assertions made by the plaintiff vide the said legal notice;
lxxxvii. The plaintiff vide its letter dated 3.4.1996 (Ex.P65) in response to the letter of the defendant dated 30.3.1996 (Ex.P64) as disputed the assertions made by the defendant regarding supply of cement and steel. Further, the plaintiff sought for settlement of existing claims as also the payment of pending bills and handing over of the balance site;
-67-lxxxviii. Vide letter dated 11.4.1996 (Ex.P66) the plaintiff referring to its earlier correspondences sought for supply of cement/steel and also settlement of its existing claims;
lxxxix. Vide letter dated 25.4.1996 (Ex.P67) the plaintiff once again sought for payment of existing bills and supply of material;
xc. Vide communication dated 5.6.1996 (Ex.P69), the defendant issued to the plaintiff,
contract rescinding order whereunder the defendant intimated the plaintiff that the tender agreement has been rescinded and requested that the representative of the plaintiff be present at the site on 20.6.1996 at 11.00 am., for taking final measurements; xci. Vide letter dated 19.6.1996 (Ex.P70) the plaintiff noticing the letter of the defendant dated 5.6.1996 has intimated that the plaintiff is unable to be present for the joint measurements and sought for deferment of the joint measurements;
xcii. Vide legal notice dated 17.10.1996 (Ex.P87) the plaintiff got issued a legal notice under Section 72 of the Karnataka Housing Board Act, 1962 -68- and made a claim for payment of a total sum of `1,75,10,964/- from the defendant.
16. It is forthcoming from the aforementioned that pursuant to the tender dated 14.10.1991 issued by the defendant for construction of the said 909 tenements, negotiations took place between the plaintiff and the defendant regarding the same and in October, 1991 itself, the defendant had intimated the plaintiff that various sites were unable to be handed over to the plaintiff for construction of the said tenements due to various issues/disputes. It is further forthcoming from the communication dated 18.12.1991 (Ex.P6) that the defendant had requested the plaintiff to take up construction of 36 tenements in Appareddy Palya and further construction of 462 tenements at Jeevanahalli/Doddagunte immediately and sought for the work to be commenced on either 19.12.1991 or 20.12.1991 since the Hon'ble Minister for Housing and Urban Development was pressing for starting of the work. Further, it is forthcoming from the letter dated 28.12.1991 (Ex.P7) that the plaintiff has acknowledged to the defendant that it has started cleaning of the site and excavation of marked houses.
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17. Thereafter, various communications have been exchanged between the parties including the plaintiff having issued a bank guarantee as is forthcoming from the letter dated 11.2.1992 (Ex.P10). The plaintiff vide letter dated 18.02.1992 (Ex.P11) has sought for issuance of work order while placing on record that the construction of 462 tenements was not part of the original tender. It is forthcoming that the plaintiff commenced construction much prior to issuance of the work order and that the work order was issued on 12.3.1992 (Ex.P83), whereunder construction of 770 units in Sy.No.150/1, 151, 152 and 158 of Doddagunte/Jeevahanalli was entrusted and the total contract including the tender premium of 15% was a sum of `1,88,59,825/-. The period of completion was 18 months from the date of entrustment of not less than 75% of the work site area. Various other conditions including security deposit was stipulated in the work order (Ex.P83). The defendant vide letter dated 08.04.1992 (Ex.P14) while referring to the work order dated 12.03.1992 has placed on record that although in the work order, the period for completion of the work was 18 months including the rainy season from 15th June to 15th September, as per the discussion held on 26.03.1992, -70- the period of completion of the work was restricted to 12 months.
18. It is forthcoming that the defendant has supplied various quantities of cement and steel as agreed, apart from giving mobilization advance. However, the plaintiff has consistently sought for further supply of cement and steel from the defendant.
19. As is forthcoming from the letters dated 1.1.1993 (Ex.D34), 4/10.2.1993 (Ex.D35) and 6.2.1993 (Ex.D36) the defendant has specifically alleged that the plaintiff has misutilized the cement and steel supplied by the defendant for the project in question and has in fact, diverted the said material supplied by not utilizing the same for project in question. Although the plaintiff has denied the same, there is sufficient material on record which indicate that the defendant has clearly pointed out the misappropriation of the material supplied by it.
20. The defendant vide letter dated 20.04.1992 (Ex.P15) has placed on record the observations/instructions pursuant to the inspection made by the Chairman of the defendant on 22.03.1992 whereunder, it, inter-alia, suggested various measures with regard to the construction carried out at -71- Doddagunte-Jeevanahalli site. The plaintiff vide letter dated 05.06.1992 (Ex.P18) has placed on record various aspects regarding construction of 464 units at Doddagunte. In the said letter, the plaintiff has admitted that out of 464 houses, more than 20% of the site is yet to be made available. The defendant vide letter dated 02.09.1992 (Ex.P26), while responding to the letter of the plaintiff dated 28.08.1992 (Ex.P25), has responded to the various aspects raised by the plaintiff in the said letter. Further, the defendant in Ex.P26 has raised various aspects indicating the slow progress of work and has specifically stipulated that depending on the progress of the work by the plaintiff, the defendant will take appropriate action in awarding the work concerning the tender for 909 tenements.
21. Hence, as is clearly forthcoming from the material on record, particularly Ex.P26, that the defendant specifically entrusted construction of 462 units (wrongly mentioned as 464 units) to the plaintiff and also specified that after completion of the said 462 units in a satisfactory manner the question of entrustment of further construction to the plaintiff would arise. However, it is forthcoming that the plaintiff has in all its correspondences specifically demanded from the defendant for -72- entrustment of the balance work of construction of 909 tenements. The demand of the plaintiff for entrustment of balance work of 909 tenements is ex facie untenable having regard to the fact that the area in which the construction was required to be taken was not available with the defendant. Although the plaintiff participated in the tender issued by the defendant for construction of 909 tenements, there was no binding obligation on the defendant to entrust the said work to the plaintiff. It is relevant to note that the work order (Ex.P83) was for construction of 707 tenements. However, the defendant has entrusted construction of 462 units to the plaintiff and had specifically stipulated vide Ex.P26 that appropriate action for awarding the work with regard to the 909 tenements will depend on the progress of the work by the plaintiff in respect of the construction of 462 units already entrusted.
22. The defendant vide letter dated 23.10.1992 (Ex.P28) had called upon the plaintiff to do the needful regarding the submission of the bar-chart, failing which action will be initiated to cancel the contract. The plaintiff, vide letter dated 29.10.1992 (Ex.P29) had sought for copy of the sanction estimate or Schedule-B, on receipt of which the required bar- -73- chart would be prepared. The defendant vide letter dated 31.10.1992 / 02.11.1992 (Ex.P30) forwarded a copy of the Schedule-B which contained the details/specifications of the construction that was required to be carried out by the plaintiff.
23. Further, despite the defendant repeatedly pointing out various deficiencies in the construction activity that was carried on by the plaintiff, the plaintiff has repeatedly claimed for the balance construction work to be handed over and also claimed that it had mobilized requisite men and material for construction of the entire work as demanded. However, it is relevant to note that there is no material placed on record by the plaintiff to demonstrate that it has mobilized the entire men and material. On the contrary, the claim of the plaintiff that it had mobilized all the men and material is ex facie untenable having regard to the fact that the defendant has from time to time pointed out the slow progress of the work carried on by the plaintiff and has repeatedly asked for the plaintiff to expedite the work. If the plaintiff had, infact mobilized the men and material to carry out construction of 909 tenements, the question of slow progress of work by it would not have arisen.
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24. It is relevant to note that vide letter dated 06.02.1993 (Ex.D36) the plaintiff has specifically alleged regarding the plaintiff misusing the steel and also that two water pumps used for curing were under repair for more than a month. Hence, the defendant called upon the plaintiff to comply with the work progress failing which the penal clause under the contract would be applied. Further, vide letter dated dated 02.05.1992 (Ex.D28), which has been issued by the defendant in reply to the plaintiff's letter dated 18.02.1993 (Ex.P34), the defendant enclosed parawise replies to the letter of the plaintiff and further intimated that action will be taken by imposing penal clauses and withdrawal of work.
25. It is forthcoming from a perusal of the correspondences as noticed above that despite the demand made by the defendant to expedite the progress of the construction work, the plaintiff has made a counter demand for supply of material and payment of bills. In fact, it is forthcoming from letter dated 01.01.1993 (Exs.D34), letter dated 7/12.12.1995 (D53) and letter dated 28/29.02.1996 (D57) that the plaintiff has also stopped the work on the ground that the defendant has not supplied material to the plaintiff.
-75-
26. It is clear that the plaintiff has admitted vide letter dated 05.06.1992 (Ex.P18) that it had received more than 80% of the area to put up construction of 462 units at Jeevanahalli- Doddagunte. In terms of the tender (Ex.P83) and as recorded in Ex.P14, the time for completion of the construction was 12 months. Hence, the plaintiff was required to complete the construction within 12 months from 05.06.1992.
27. Since there was delay in the completion of construction, various correspondences have been exchanged between the parties and the parties have also held various joint meetings to address the issues arising from the said delay. The minutes of the meeting held on 21.02.1994 (Ex.P51) discloses that the parties agreed to the manner of resolution of various aspects including the demand of the plaintiff for further cement as well as payment of pending dues. However, since according to the defendant, the work had not progressed in terms of what was agreed between the parties, various notices have been issued i.e., Ex.P53/Ex.D57, Ex.P63, etc. Thereafter, the defendant vide letter dated 05.06.1996 (Ex.P69) has issued the "Contract Rescinding Order" whereunder it has rescinded the contract entrusting the work to the plaintiff and directed the -76- representative of the plaintiff to be present at the site on 20.06.1996 for taking final measurements. However, the plaintiff vide letter dated 19.06.1996 (Ex.P70) has sought for rescheduling of the date fixed for taking joint measurements. It is also relevant to note here that the plaintiff also issued legal notice dated 07.03.1996 (Ex.P55) to the defendant.
28. The defendant has also issued various notices to the plaintiff i.e., notice dated 19/22.04.1994 (Ex.D13), notice dated 10/11.05.1994 (Ex.D14), final notice dated 15.6.1994 (Ex.D15), final notice dated 19.7.1994 (Ex.D16), notice dated 20.02.1996 (Ex.D18/Ex.D57), notice dated 20.03.1996 (Ex.D19), notice dated 26/27.11.1993 (Ex.D25/Ex.D46), notice dated 28/29.02.1996 (Ex.D26), notice dated 05/08.01.1996 (Ex.D27), notice dated 15.05.1992 (Ex.D29), notice dated 01.01.1993 (Ex.D34), notice dated 10.02.1993 (Ex.D35), notice dated 09/10.09.1993 (Ex.D42), notice dated 31.08.1995 (Ex.D48), notice dated 13.10.1995 (Ex.D49), notice dated 20.11.1995 (Ex.D50), notice dated 27.11.1995 (Ex.D51), notice dated 01.12.1995 (Ex.D52) and notice dated 05.01.1996 (Ex.D55) with regard to the alleged delay in the progress of the work by the plaintiff.
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29. The Trial Court has, while considering issue No.1 recorded a finding that the version of the plaintiff is supported by relevant documents and defendant has failed to prove the issue. Further, while considering the claim of the plaintiff, the Trial Court has held that the plaintiff has stated in the plaint that the land in Sy. No.151 for 24 units were handed over on 25.05.1995 and the Survey number site area for 6 units was handed over on 15.12.1995. The Trial Court has further held that the version of the plaintiff is supported by relevant documents without specifically recording a finding as to which of the documents demonstrates the same. Hence, the finding of the Trial Court on issue No.1 is ex-facie untenable and liable to be set aside.
30. The Trial Court while considering issue No.2 has noticed that although the plaintiff was the successful tenderer for construction of 909 tenements in seven places in Bengaluru, due to difficulties in handing over the possession of the area to the plaintiff for construction, negotiations were made for construction of 770 houses in Jeevanahalli-Doddagunte in Sy. Nos.150, 151, 152 and 158 which was accepted by the plaintiff. The Trial Court has further, noticing Exs.P6 and P7 -78- held that the defendant has asked the plaintiff to take up the construction work immediately even without executing proper agreement. Hence, the Trial Court has held issue No.2 in the Negative.
31. The Trial Court while considering issue Nos.4 to 6 merely noticed that the plaintiff has filed an affidavit containing 125 pages and marked Exs. P1 to P9. Further, noticing that the defendant examined its Manager as DW.1 and Assistant Executive Engineer DW.2 and marked Exs.D1 to D58, without noticing any specific correspondence between the parties, merely recorded a finding that the correspondence clearly goes to show that the defendant is at fault. The said finding recorded by the Trial Court is ex-facie untenable and liable to be set-aside.
32. The Trial Court has noticed that the defendant entrusted the work of construction of 462 units at Jeevanahalli and the defendant gave sital area for construction of 376 units, the site area for 348 units was handed over on 14.01.1992 and remaining units was handedover on 15.12.1995. Further, the Trial Court noticing the testimony of DWs.1 and 2 held that DW.1 has admitted that 75% of the area was given to the -79- plaintiff only on 15.12.1995 and that DW.2 admitted that in the year January 1992 area given to the plaintiff was only for 348 units in Jeevanahalli. The said finding of the Trial Court is contrary to Ex.P18 as has been noticed at para 26 herein above.
33. The Trial Court while considering the claims made by the plaintiff and while discussing regarding issue Nos.12 and 13 has, after noticing the 9 claims made for a total sum of `81,46,758.20 has recorded the following findings:
"31. The plaintiff estimated the loss during the period between 1991 to 1996 to the extent of `94,67,578/-; but restricted the claim only for `14,00,000/-. While discussing above issues and particularly while discussing issue Nos.3 to 6, the Court has come to the conclusion; it is the defendant who has failed to supply materials like cement, steel and structural drawings to defendant in time. Further, the Court has also come to the conclusion that the defendant has not handed over the complete 75% of the site (area) to the plaintiff before December 1995 and as per the terms and conditions the plaintiff was liable to finish the work in June 1997; but in June 1996 itself the defendant without any valid reasons rescinded the contract of the plaintiff.
Further, the defendant officials stopped the work of construction temporarily. The defendant officials have also asked the plaintiff to change and alter the structures in the middle and all these facts caused delay in finishing the work by plaintiff. For that, the plaintiff is not responsible. -80- The defendant itself is responsible for the delay caused in finishing the work. The claim of the plaintiff is supported by various documents and bills submitted by the plaintiff. There is no reason to discard the claim of the plaintiff for a decree for `81,46,758.20 paise. Hence, the suit of the plaintiff is to be decreed."
34. With regard to the construction carried out by the plaintiff it is relevant to note that the defendant from time to time pointed out various deficiencies in the work carried out by the plaintiff including the improper curing, unsatisfactory progress of the work, not carrying out the work as per the instructions given by the officials of the defendant, etc., as is forthcoming from letters dated 28.08.1992 (Ex.P25), 10.03.1994 (Ex.D14), 28/29.02.1996 (Ex.D18), 14.09.1992 (Ex.D30),06.02.1993 (Ex.D36) and letter dated 13.10.95 (Ex.D49). Although the plaintiff has repeatedly sought for various drawings and particulars to enable it to carry out the construction, there is overwhelming evidence on record to demonstrate that the plaintiff was not carrying out the work as specified by the defendants. Having regard to the same, the defendant had imposed a penalty of `100/- per day as is forthcoming from the letter dated 10.02.1993 (Ex.D35), letter dated 18.2.1993 (Ex.P35), letter dated 7/12.12.1995. However, despite imposition of the penalty, the plaintiff has -81- continued to carry on the work, although in its correspondences with the defendant, the plaintiff has protested the imposition of the penalty.
35. It is relevant to note that the defendant has issued various notices to the plaintiff by specifically stipulating that there is delay in the progress of the work and notifying the plaintiff to expedite the completion of the work, failing which the penal clauses in the Agreement would be imposed and also the contract terminated. This aspect has already been noticed at para 24 hereinabove. Further, it is also pertinent to note that some of the notices issued by the defendant to the plaintiff were also returned as unserved.
36. It is also relevant to note that on the date when the defendant called upon the plaintiff to be present for joint measurement, the Plaintiff was not present. It is further forthcoming that the defendant has specifically notified the plaintiff that the work at the site has stopped and there were no men of the plaintiff who was present at the site.
37. The Trial Court has not appreciated the material on record with respect to the claims made by the plaintiff while awarding the amounts sought for in the suit. Merely on a -82- cursory mention of some of the documents, the Trial Court has decreed the suit of the plaintiff by granting the entire sum of `81,46,758.20. The said judgment of the trial Court is ex-facie erroneous and liable to be interfered with.
38. Learned counsel for the respondent/plaintiff vehemently contended that PW.1 has not been cross examined regarding the testimony adduced by the plaintiff claiming damages. However, it is relevant to note that the plaintiff was required to plead and prove the basis of its claim of damages. The plaintiff is not entitled to succeed in the suit by merely demonstrating that there was delay by the defendant in handing over certain requirements for completion of the work entrusted to the plaintiff by the defendant. The plaintiff is specifically required to plead and prove its entitlement in respect of each claim of damages made by it. In that regard, it is relevant to note that apart from adducing the testimony of PW.1 who was the partner of the plaintiff, no other witness, like the Supervisor who was supervising the work at the site on behalf of the plaintiff, etc., has been examined to testify regarding the extent of manpower and material maintained at the site. The plaintiff has also not produced any material on -83- record to demonstrate that it has made payments in respect of the manpower it had allegedly maintained at the worksite of the defendant. Although the plaintiff has filed a voluminous affidavit by way of examination in chief giving details of various calculations on the basis of which it has made its claim for damages, the plaintiff has failed in producing the necessary documentary material in support of the oral evidence adduced by it to justify its claim for damages.
39. The plaintiff has made a claim towards bill Nos. 15 and 16. However the plaintiff has failed to demonstrate that it has carried out the works, the cost of which was claimed vide the said bill Nos.15 and 16.
40. The plaintiff has also made a claim for further amount in respect of bill Nos.1 to 14. It is relevant to note here that the Bill Nos.1 to 14 which were submitted to the defendant in respect of the work carried on by the plaintiff have been paid by the defendant. Although the plaintiff has sought copies of the said bill Nos.1 to 14 as is forthcoming from letter dated 1.03.1996 (Ex. P60) the plaintiff has failed to take any steps in the suit requiring the defendant to produce the said bills, so as to mark the same in evidence in order to prove its -84- entitlement for any further amounts that the defendant is liable to pay under the said bills Nos.1 to 14. In the absence of the plaintiff calling upon the defendant in the proceedings before the trial Court to produce Bill Nos.1 to 14, the claim of the plaintiff in respect of any further amounts claimed in the Bill Nos.1 to 14 is not liable to be granted.
41. It is relevant to note here that the defendant has examined its Manager as DW.1 and Assistant Executive Engineer in its project office as DW.2. DW.1 has, in detail set out as to how the plaintiff has, despite having been supplied the requisite quantities of cement and steel, has not shown requisite progress of work resulting in the defendant terminating the contract vide contract agreement rescinding order dated 5.6.1996 (Ex.P69) and 5/11.6.1996 (Ex.D6). Further, it has been stated by DW.1 that, consequent to rescinding the contract with the plaintiff, the defendant itself has completed the 384 units departmentally. He has specifically deposed that the defendant, in its Board Meeting held on 13.8.1996 has, approved the revised cost of `75.60 laksh proposed for completion of the said 384 units departmentally. It is further relevant to note that the -85- defendant produced the sketch of the project (Ex.D20) and measurement books as Exs.D21, D22 and D23. Five books containing vouchers, indents and invoices for supply of cement and steel have been marked together as Ex.D24.
42. DW.2 who is the Assistant Executive Engineer has also deposed regarding the stoppage of work on 15.2.1996 and that the plaintiff not being present for joint measurements. DW.2 has also stated in his affidavit by way of examination-in- chief that the cost incurred by the defendant towards the balance work was `75,50,000/-. The cost towards the material supplied to the plaintiff has also been stated in the affidavit. Although the plaintiff and the Trial Court have placed reliance on the cross-examination of DW.1 to contend that 75% of the sital area was not handed over, having regard to the plaintiff itself admitting vide letter dated 5.6.1992 (Ex.P18) that it had received more than 80% of the payment to put up construction of 462 units, it is now not open to the plaintiff to contend that requisite area has not been handed over.
43. It is relevant to note here that in the present case, the plaintiff has not completed construction of the work entrusted to it. In fact it has abandoned the project as is -86- forthcoming from letters dated 28/29.2.1996 (Ex.P53 and Ex.D57) resulting in the defendant rescinding the contract vide said letters. It is further clear and forthcoming that the defendant has undertaken completion of the balance work by itself having regard to the failure of the plaintiff to complete the construction of the work entrusted to it. The Trial Court has miserably failed in considering this aspect of the matter and hence, the judgment of the Trial Court is contrary to the material on record.
44. It is also relevant to note that the defendant has produced the relevant measurement books as well as the vouchers, indents and invoices vide Exs.P21 to P24 indicating the extent of construction that has been carried out periodically as well as the material supplied. The Trial Court has not appreciated the said documents while considering the claim of the plaintiff.
45. In view of the discussion above, the judgment of the Trial Court decreeing the suit of the plaintiff for a sum of `81,46,758.20 is unsustainable and not based on the material available on record. The plaintiff has miserably failed in proving that the defendant was liable to pay the amounts -87- claimed by the plaintiff. Hence, the question Nos.(i) to (iii) framed for consideration are answered in the negative.
46. This Court by order dated 06.04.2009 granted interim stay of the impugned judgment and decree subject to the appellant depositing 50% of the decreetal amount before this Court. Accordingly, the appellant has deposited a sum of `40,73,379/- vide cheque bearing No.276786 dated 15.05.2009. Hence, the said amount is required to be refunded to the appellant.
47. In view of the aforementioned, the following:
ORDER i. The above appeal is allowed with costs; ii. The judgment and decree dated 30.6.2008 passed in OS No.11343/1996 by the XXVI Additional City Civil and Sessions Judge, Mayo Hall Unit, Bangalore, is set aside;
iii. OS No.11343/1996 on the file of XXVI Additional City Civil and Sessions Judge, Mayo Hall Unit, Bangalore, is dismissed with costs; -88- iv. The amount of `40,73,379 deposited by the appellant before this Court pursuant to the order dated 06.04.2009 shall be refunded to the appellant.
v. Modified decree to be drawn accordingly.
Sd/ (S.G.PANDIT) JUDGE Sd/-
(C.M. POONACHA) JUDGE Bs/nd/pnv/sh/yan