Bangalore District Court
Godrej And Boyce Manufacturing vs Kpcl on 4 September, 2024
KABC170091382020
IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.OS.No.25108/2016
Dated on this 4th day of September 2024
Plaintiff Godrej & Boyce Manufacturing
Company Limited,
Karnataka Film Chambers of
Commerce,
No.28, 1st Main,
Crescent Road, High Grounds,
Bengaluru-560001.
Represented by its
Branch Commercial Manager
Sri.A.S.Murthy.
(By Sri.K.S.Harish, Advocate)
// versus //
Defendants 1. Karnataka Power Corporation Limited
A company registered under
Companies Act, 1956
No.22/23, Sudarshan Complex,
Shesadri Road,
Bengaluru-560009.
Represented by its
Chief Engineer(Thermal Design).
2. M/s. Shanthi Enterprises Electrical
Private Limited,
2
CT 1390_Com.OS.25108-2016_Judgment.doc
KABC170091382020
No.69, Aga Abbas Ali Road,
Bengaluru-560042.
(D1 by Sri.Promod Nair, Advocate,
D2 by Sri.Abhilash Vaidyanathan,
Advocate)
Date of Institution of suit : 28/01/2016
Nature of the suit : Money suit
Date of commencement of :
recording of the evidence 07/09/2022
Date on which the : 04/09/2024
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
08 07 07
JUDGMENT
This is a suit filed by the plaintiff against defendant No. 1 and 2 for recovery of money, permanent injunction and other reliefs.
2. The plaint averments in brief are that, the defendant No 1 awarded contract for supply and erection of electrical works at suit schedule property to the plaintiff on 5-2-2011. The effective date for commencement of the work was 17-01-2011 and from said date, supply work had to be completed within 12 months and erection work within 14 months. For doing 3 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 the electrical work by the Plaintiff, the defendant No. 1 was expected to complete civil construction work and hand over the work site. However, there was enormous delay on the part of defendant No. 1 in handing over the worksite after completing the civil work. In fact, in June 2013, nearly two and a half years after awarding of the contract, the civil work came to a standstill at the stage of fourth floor slab. On 18- 02-2015, which is nearly four years after awarding the contract, Defendant No. 1 communicated to the Plaintiff that Civil Work has again commenced and requested Plaintiff to resume the work. The Plaintiff replied on 19-02-2015, stating that in view of the delay, the defendant No. 1 is expected to pay escalation costs. However, by letter dated 10-06-2015, defendant No. 1 only revised the milestone for completion of the work but did not give escalation costs. By letter dated 7- 8-15, defendant No. 1 stated that the escalation will be considered and called upon the plaintiff to complete the work. To this, the plaintiff replied on 18-08-2015 calling for a short close of the contract if the escalation in rates is not provided. The meeting was held between the parties on 25-08-2015 in which defendant No. 1 stated that revision in rates cannot be 4 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 given, since contract does not provide for the same. The Defendant No. 1 caused legal notice dated 16-01-2016 threatening to terminate the contract and revoke the bank guarantee furnished by the plaintiff which was suitably replied to by the plaintiff. With these pleadings, contending that the plaintiff was unable to do the work within the stipulated period due to delay in finishing the civil work by the other contractor of Defendant No. 1 and due to failure of Defendant No. 1 to hand over the work site and contending that, the Defendant No. 1 is now calling upon the Plaintiff to complete the work at rates prescribed nearly 5 years back without giving escalation costs and threatening to invoke the bank guarantees and Defendant No. 1 has called for a new tender for the same work to dislodge the plaintiff from the contract, the suit was initially filed only against Defendant No. 1 for a direction to direct the Defendant No. 1 to pay Rs 2,12,17,591 towards cost escalation in respect of the tender and permanent injunction restraining defendant from foreclosing the contract and restraining defendant No. 1 from encashing the bank guarantee and restraining defendant No. 1 from awarding the contract to any third party and for 5 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 recovery of sum of Rs. 16,03,040 which was illegally deducted from running bills of the plaintiff.
3. Thereafter, the plaint was amended to incorporate subsequent facts that during the pendency of the suit, defendant No.1 has awarded the fresh tender for the same work to defendant No.2 and has also encased the bank guarantee amounting to Rs. 84,39,900 and thereby, additional prayer was incorporated for recovery of the bank guarantee amount of Rs. 84,39,900 with interest and for mandatory injunction to direct defendant No. 1 to terminate the contract of defendant No. 2 and award a fresh contract to the plaintiff either by awarding escalation cost of Rs. 2.12 crore or at the price of Rs. 9.01 crore at which contract has been awarded to Defendant No. 2.
4. The Defendant No 1 filed written statement taking up the stand that, the performance of the contract by the Plaintiff was delayed due to the delay in completion of related civil work by other contractor engaged by Defendant No 1 and although the agreements with the plaintiff do not provide for escalation clause and require the plaintiff to perform the 6 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 agreement at a fixed rate, Defendant No. 1 had assured the plaintiff that it would consider the plaintiff's request for revision of rates at a later date, but, in spite of the said indulgence shown, the plaintiff did not come forward to complete the work and in fact blatantly refused to perform the work unless escalation was given, which is against the terms of the contract. Thereby, it was contended that, the defendant No. 1 has acted strictly in terms of the contract in calling upon the plaintiff to complete the work by revising the time schedule for work and it is the plaintiff who has violated the terms of the contract and therefore, the defendant No. 1 was justified in encashing the bank guarantee and defendant No. 1 was also justified in imposing the penalty at the time of clearing the running bill. Since, plaintiff did not come forward to do the work in spite of assurance given to consider its request for escalation at a later date, the defendant No. No. 1 was justified in awarding the contract to defendant No. 2. In fact, it was contended that, due to the fault of the plaintiff in refusing to do the work, as agreed under the contract, it is the defendant No. 1 who has suffered huge loss since defendant No. 1 has awarded the contract for the same work at higher 7 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 price to defendant No. 2. With these pleadings and essentially relying upon the various clauses of the agreement between the parties which provides that, in case of any delay in the work which is attributable to the other contractors, then the plaintiff is only entitled to revised milestone and timeframe for completion of the work and not entitled to escalation, the defendant No. 1 prayed for dismissal of the suit.
5. On amendment of the plaint, the defendant No. 1 filed additional written statement essentially taking up the same stand.
6. On its impleadment, the defendant No. 2 has filed written statement taking up the plea that, after amendment of the plaint and incorporation of additional reliefs, the plaintiff has not paid court fee thereon. The defendant No. 2 pleaded that it has been awarded the contract by defendant No. 1 for Rs. 9.01 crores and it has also completed its work under the contract on 31.05.2019 and awaiting the release of amount. Thereby contending that the various reliefs sought in the Plaint, for cancellation of the contract in favor of defendant No. 2 and awarding the contract to plaintiff are all 8 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 infructuous and denying all other plaint averments, the defendant No. 2 prayed for dismissal of the suit.
7. On the basis of the above pleadings, the following issues are framed;
1) Whether the plaintiff proves that due to failure of defendant No. 1 to deliver possession of the constructed structure in time, the progress of the contract work entrusted to plaintiff has delayed?
2) Whether the plaintiff proves that defendant No. 1 is required to pay cost towards escalation as work is delayed due to the reasons attributable to the first defendant?
3) Whether the plaintiff proves that deduction of Rs. 16,03,040 by first defendant in the RA bill of the plaintiff as retention amount and penalty is illegal?
4) Whether the plaintiff proves that foreclosure of contract and encashment of the bank guarantee amounting to Rs.
84,39,900 by first defendant after filing of the suit are illegal?
5) Whether the plaintiff proves that it is entitled for Rs. 2,12,17,591 towards cost of escalation from first defendant?
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CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020
6) Whether the plaintiff proves that it is entitled for fresh letter of award for the remaining work by terminating the contract with second defendant?
7) Whether the plaintiff is entitled for the reliefs prayed in the suit?
8) What decree or order?
8. In the trial, the representative of the plaintiff was examined as PW1 and as got marked Ex. P1 to P38. In addition, on behalf of the plaintiff, Ex. P39 is got marked by confronting to DW1. At the time of arguments, by consent of the parties, Ex. P40 and 41 are marked. On behalf of the defendants, the representative of Defendant No. 1 is examined as DW1 and got marked Ex. D1 and D2. The representative of Defendant No. 2 is examined as DW2 and got marked Ex. D3 and D4.
9. After closure of evidence of both sides, I have heard the arguments of both sides and perused the records of the case.
10. My answer to the issues are as follows;
Issue No. 1 : In the affirmative.
Issue No. 2 : In the negative.
10
CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 Issue No. 3 : In the affirmative.
Issue No. 4 : As per finding.
Issue No. 5 and 6 : In the negative.
Issue No. 7 : As per finding.
Issue No. 8 : As per final order, the following :-
REASONS Issue No. 1, 3 and 4 :-
11. These issues are considered together to avoid repetition of facts, since they require common discussion.
12. The case of the plaintiff in brief is that, the defendant No 1 awarded contract for supply and erection of electrical works at suit schedule property to the plaintiff on 5-2-2011. The effective date for commencement of the work was 17-01- 2011 and from said date, supply work had to be completed within 12 months and erection work within 14 months. For doing the electrical work by the Plaintiff, the defendant No. 1 was expected to complete civil construction work and hand over the work site. However, there was enormous delay on the part of defendant No. 1 in handing over the worksite after completing the civil work. In fact, in June 2013, nearly two and a half years after awarding of the contract, the civil work came to a standstill at the stage of fourth floor slab. On 18- 11 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 02-2015, which is nearly four years after awarding the contract, Defendant No. 1 communicated to the Plaintiff that Civil Work has again commenced and requested Plaintiff to resume the work. The Plaintiff replied on 19-02-2015, stating that in view of the delay, the defendant No. 1 is expected to pay escalation costs. However, by letter dated 10-06-2015, defendant No. 1 only revised the milestone for completion of the work but did not give escalation costs. By letter dated 7- 8-15, defendant No. 1 stated that the escalation will be considered and called upon the plaintiff to complete the work. To this, the plaintiff replied on 18-08-2015 calling for a short close of the contract if the escalation in rates is not provided. The meeting was held between the parties on 25-08-2015 in which defendant No. 1 stated that revision in rates cannot be given, since contract does not provide for the same. The Defendant No. 1 caused legal notice dated 16-01-2016 threatening to terminate the contract and revoke the bank guarantee furnished by the plaintiff which was suitably replied to by the plaintiff. With these pleadings, contending that the plaintiff was unable to do the work within the stipulated period due to delay in finishing the civil work by 12 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 the other contractor of Defendant No. 1 and due to failure of Defendant No. 1 to hand over the work site and contending that, the Defendant No. 1 is now calling upon the Plaintiff to complete the work at rates prescribed nearly 5 years back without giving escalation costs and threatening to invoke the bank guarantees and Defendant No. 1 has called for a new tender for the same work to dislodge the plaintiff from the contract, the suit was initially filed only against Defendant No. 1 for a direction to direct the Defendant No. 1 to pay Rs 2,12,17,591 towards cost escalation in respect of the tender and permanent injunction restraining defendant from foreclosing the contract and restraining defendant No. 1 from encashing the bank guarantee and restraining defendant No. 1 from awarding the contract to any third party and for recovery of sum of Rs. 16,03,040 which was illegally deducted from running bills of the plaintiff.
13. Thereafter, the plaint was amended to incorporate subsequent facts that during the pendency of the suit, defendant No.1 has awarded the fresh tender for the same work to defendant No.2 and has also encased the bank 13 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 guarantee amounting to Rs. 84,39,900 and thereby, additional prayer was incorporated for recovery of the bank guarantee amount of Rs. 84,39,900 with interest and for mandatory injunction to direct defendant No. 1 to terminate the contract of defendant No. 2 and award a fresh contract to the plaintiff either by awarding escalation cost of Rs. 2.12 crore or at the price of Rs. 9.01 crore at which contract has been awarded to Defendant No. 2.
14. In support of its case, the plaintiff has examined its authorized representative as PW1 and got marked Ex. P1 to P41. Ex. P1 to P38 are marked in the chief examination of PW1. Ex. P39 is marked in cross-examination of DW1 by confronting to him. Ex. P40 and 41 are marked at the time of arguments, by consent, since it was submitted that, by inadvertence, the original contracts between the parties for supply of material and erection were inadvertently left out and not marked and therefore at the time of arguments, the two said original contracts are marked as Ex. P40 and P41 respectively.
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15. Ex. P1 is the authorization executed by the Board of Directors of plaintiff company in favor of Pw1. Ex.P2 is the power of attorney. Ex. P3 is the letter dated 20-12-2011 issued by Plaintiff to Defendant No. 1 stating that site is not ready for delivery due to delay in civil work and to revise the milestone accordingly. Ex. P4 is also a letter dated 4-05-2012 written by the Plaintiff to the Defendant No. 1, reiterating the delay in the civil work and to provide a revised schedule for delivery of material. Ex. P5 is similar letter dated 3-5-2013 written by the Plaintiff to the Defendant No. 1, wherein detailed reference is made to the delay and ultimately stating that due to steep hike in component prices and other equipment, the Plaintiff is not ready to supply at the same rate what was agreed two years back. Ex. P6 is a letter dated 23-08-2012 written by the plaintiff to Defendant No. 1, stating that, due to the slow progress of the Civil Work, plaintiff has been unable to deliver any material or components or erection at the site. Ex. P7 is a similar letter by Plaintiff to Defendant No.1 dated 17-01-2013, bringing to notice that the civil work has come to a standstill and therefore, the Plaintiff has been unable to take up the work as 15 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 per the schedule. Ex. P 8 to 10 are the running bills of the Plaintiff which have been cleared by deducting 10% penalty amount and recovery of the said deducted penalty amount is one of the reliefs being sought for in the present suit. Ex. P11 is another letter written by the plaintiff to Defendant No. 1 dated 20-6-2013, reiterating the slow progress of civil work as a result of which plaintiff has been unable to undertake its part of the work. Ex. P12 is also a letter written by the plaintiff to Defendant No. 1 dated 20-06-2013, which is a reminder for revision of milestone and for revision of rates of supply and erection. Ex P13 is a communication issued by the Defendant No. 1 to the Plaintiff dated 12-11-2014, stating that civil work will be commencing shortly and calling upon the Plaintiff to resume electrical work and further stating that insofar as revision of rates is concerned, it shall be governed by clause 1.05 of the contract and revision of milestones shall be governed by Clause 25 of Section II, Part 1 of the contract. Ex. P14 is the letter written by the plaintiff to the defendant No. 1, dated 24-12-2014, reiterating the contents of the earlier letters. Ultimately it is stated that. a request is made to grant revised dates for supply and erection and revised 16 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 milestone for completion of the work for both supply and erection, since the reason for revision of price and extension of time sought for, are delays which are not attributable to the plaintiff. Ex. P15 is also a letter dated 24-12-2014 addressed by Plaintiff to Defendant No. 1, to release the sum of Rs. 16,03,040 deducted as penalty amount while clearing the running bills. Ex. P16 is letter dated 18-02-2015 by Defendant No. 1 to the plaintiff reiterating that civil works have been commenced with a new agency and therefore requesting the plaintiff to resume the work by mobilizing men and materials as the civil work fronts are available. Ex. P17 is letter dated 19-02-2015 by Plaintiff to Defendant No. 1, again seeking for revised milestone and revised rates for erection and supply. Ex. P18 is another letter dated 28-05-2015 addressed by plaintiff to Defendant No. 1 seeking reply to its earlier letter. Ex. P19 is communication dated 10-06-2015 addressed by Defendant No. 1 to the plaintiff, rescheduling the milestone pertaining to supply and erection contract and calling upon the plaintiff to resume the work. This communication is important because it is stated that all other terms and conditions of the contract remain unaltered, 17 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 implying thereby that the defendant No. 1 is not giving any escalation in the rates, although the defendant No. 1 is calling upon the plaintiff to do the work after nearly four and a half years after the awarding of the contract. Ex P20 is a letter dated 22-06-2015, by plaintiff to Defendant No. 1, stating that due to upward swing in the rates in the market of all commodities and since the project is delayed by four years, unless revised rates are approved for both supply and erection, it will not be possible for the plaintiff to do or resume the work. Ex. P21 is another letter addressed by the plaintiff to Defendant No. 1, reiterating the contents of earlier letters and seeking approval for revised rates for supply and erection. Ex. P22 is another letter addressed by the plaintiff to Defendant No. 1 dated 5-08-2015 stating that in case the defendant No. 1 is unable to give alternate for smooth mechanism for further functioning, requesting to foreclose the contract amicably. In other words, the plaintiff has stated that it is unable to perform the work at the old rates fixed nearly four years back and therefore, unless revised rates are provided, it will not be able to do the work and instead to foreclose the contract. Ex. P23 is a letter written by the 18 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 Defendant No. 1 to the plaintiff to immediately resume the work. Ex. P24 is a letter written by the plaintiff to Defendant No. 1 dated 18-08-2015 stating that resuming the work at the old rates is impossible. Ex. P25 is a reply thereto issued by the Defendant No. 1, calling for a meeting on 24-08- 2015. Under Ex. P26, plaintiff has replied stating that it will be unable to attend the said meeting. However, it is an admitted position in the Plaint that, in spite of such a communication issued, in fact, a representative of the plaintiff did attend the said meeting which was held on 25-08-2015. Ex. P27 is the minutes of the said meeting, in which Defendant No. 1 has expressed constraints for revision of prices, as the same is not covered by the contract and Plaintiff has reiterated that it is not possible to continue performance of the contract at the old rate. Ex. P28 is letter dated 4-11-2015, issued by Defendant No. 1 to the Plaintiff, to extend the validity of the bank guarantees. Ex. P29 is the reply dated 29-12-2015, issued by the Plaintiff, stating that it will furnish extended bank guarantee subject to clarification regarding its request for short closure of the contract or for revising the prices. Ex. P30 is Letter dated 31-12-2015 issued by Plaintiff to 19 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 Defendant No. 1 protesting against processing of the bank guarantee. Ex. P31 is Letter dated 12-1-2016 under which the Plaintiff has communicated that it has extended the bank guarantee up to 31-12-2016. Ex. P32 is letter issued by Defendant No. 1 to the Plaintiff dated 6-1-2016 in which an ultimatum is given to the plaintiff that in case the plaintiff is unable to perform the contract and resume the work within 15 days the defendant No. 1 will take appropriate steps for termination of the contract and also exercise its remedy of invoking the bank guarantee. Ex. P33 is reply by the plaintiff to Ex. P32 reiterating its grievances regarding the long delay in completion of the contract and stating willingness of the plaintiff to perform its part under the contract, subject to revised rates. Ex. P34 are the photographs of the worksite. Ex. P35 is the 65-B certificate. Ex. P36 is the tender document under which Defendant No. 1 has invited new tenders and it is the grievance of the plaintiff that although the contract of the plaintiff was not terminated as on 16-01- 2016, even earlier thereto on 3-12-2015 itself for the same work, defendant No. 1 has called for fresh tenders. Ex. P37 and 38 are the letters of award dated 17-01-2011 issued by 20 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 the defendant No. 1 to the plaintiff for erection and supply work respectively.
16. Ex. P39, which is marked by confronting to DW1, is the minutes of the meeting dated 8-1-2013.
17. Ex. P40 and 41 are the original contract for award of supply contract and erection contract between the plaintiff and defendant No. 1.
18. Per contra, the stand of the defendant No. 1 is that, the performance of the contract by the Plaintiff was delayed due to the delay in completion of related civil work by other contractor engaged by Defendant No 1 and although the agreements with the plaintiff do not provide for escalation clause and require the plaintiff to perform the agreement at a fixed rate, Defendant No. 1 had assured the plaintiff that it would consider the plaintiff's request for revision of rates at a later date, but, in spite of the said indulgence shown, the plaintiff did not come forward to complete the work and in fact blatantly refused to perform the work unless escalation was given, which is against the terms of the contract. 21
CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 Thereby, it was contended that, the defendant No. 1 has acted strictly in terms of the contract in calling upon the plaintiff to complete the work by revising the time schedule for work and it is the plaintiff who has violated the terms of the contract and therefore, the defendant No. 1 was justified in encashing the bank guarantee and defendant No. 1 was also justified in imposing the penalty at the time of clearing the running bill. Since, plaintiff did not come forward to do the work in spite of assurance given to consider its request for escalation at a later date, the defendant No. No. 1 was justified in awarding the contract to defendant No. 2. In fact, it was contended that, due to the fault of the plaintiff in refusing to do the work, as agreed under the contract, it is the defendant No. 1 who has suffered huge loss since defendant No. 1 has awarded the contract for the same work at higher price to defendant No. 2. With these pleadings and essentially relying upon the various clauses of the agreement between the parties which provides that, in case of any delay in the work which is attributable to the other contractors, then the plaintiff is only entitled to revised milestone and timeframe for 22 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 completion of the work and not entitled to escalation, the defendant No. 1 prayed for dismissal of the suit.
19. In support of its case, the defendant No. 1 has examined its representative as DW1 and got marked Ex. D1 and D2. Ex. D1 is the letter of authorization in favor of DW1. Ex. D2 is a letter dated 17-02-2016 issued by chief engineer of defendant No. 1 to the Plaintiff, stating that, Plaintiff has failed to proceed with the work and thereby the contract for supply and erection are terminated and the bank guarantees will be invoked.
20. The stand of defendant No. 2 who is the entity to which subsequently, the contract has been awarded is that, it has been awarded the contract by defendant No. 1 for Rs. 9.01 crores and it has also completed its work under the contract on 31.05.2019 and awaiting the release of amount. Thereby contending that the various reliefs sought in the Plaint, for cancellation of the contract in favor of defendant No. 2 and awarding the contract to plaintiff are all infructuous and 23 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 denying all other plaint averments, the defendant No. 2 prayed for dismissal of the suit.
21. In support of its case, the Defendant No. 2 has examined its representative as DW2 and got marked Ex. D3 and D4. Ex. D3 is the authorization issued by Defendant No. 2 in favor of DW2. Ex. D4 is the completion certificate issued by Defendant No. 1, stating that Defendant No. 2 has completed its work under the contract awarded to it.
22. Having considered the rival cases set up by both sides and the oral and documentary evidence on record, at the outset, it is to be noted that, there is absolutely no dispute between the parties that, originally the contract for erection and supply for the purpose of carrying out electrical works at Suit Schedule property was allotted to the plaintiff as per the original contracts at Ex. P40 and P41. The letter of award for Supply and erection dated 17-01-2011 are marked as Ex. P37 and 38 respectively. The date of commencement for the purpose of the contract as per the letter of award is 17-01-2011. It is an admitted fact that, the time period fixed for completion of the supply and erection works was 12 24 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 months and 14 months respectively from 17-01-2011. These facts are admitted at paragraph 5 of the Written Statement filed by Defendant No. 1, wherein it is pleaded as follows;
"Pursuant to a notice inviting tender, KPCL entered into two agreements with the Plaintiff on 5th February 2011, one for supply of equipment having contract value of Rs 7,60,28,233 "supply agreement" and the other for erection of electrical work having contract value of Rs 83,71,767 "erection works agreement" (together the agreements). The agreements were in respect of KPCL's new office complex. The effective date of the agreements was the date of the respective letters of award that is 17-1-2011. Under the agreements the time period for completion of the supply and erection works was 12 months and 14 months respectively."
(Emphasis Supplied)
23. Therefore, from the above pleadings of defendant No. 1 in Written Statement, it becomes clear that, it is an admitted fact that, time period fixed for completing the supply contract was 12 months from 17-1-2011 i.e. 17-1-2012 and the time period fixed for completion of the erection contract was 14 months that is 17-03-2012.
24. It is further the undisputed fact between the parties that, the electrical work of supply and erection awarded to the 25 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 plaintiff could be done only after civil works were completed to a certain stage and undisputedly the civil work was not awarded to the Plaintiff but was awarded to some other contractor. It is admitted fact that the civil contractor delayed in performing the civil work and in fact at one stage the civil work had come to a complete standstill. As a result of this, the plaintiff could not do its work of electrical supply and erection because the civil work was not complete and the work site was not prepared for the electrical work due to delay in the civil work. It is admitted fact between the parties that whereas the supply and erection work had to be completed in January 2012 and March 2012 respectively, there was immense delay in completion of the civil work. This borne out by the fact that, as late as on 12-11-2014, defendant No. 1 was still writing, as per Ex. P13, that civil work will be commencing shortly. This was nearly two and a half years after the date fixed for completion of the contract. Therefore, even after two and a half years after the date for completion of the contract had expired, defendant No. 1 was still writing the letter as per Ex. P13 stating that civil work will be commencing shortly and thereafter, plaintiff can do its part of 26 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 the work. As per Ex. P16, Defendant No. 1 has written, on 18- 02-2015, which is nearly three years after the date fixed for completion of the contract work, that Civil Work will be entrusted to a new contractor who will resume the work shortly and thereafter the plaintiff can commence its supply and erection work of the electrical part of the building. On 10- 6-2015, which is nearly three years and three months after the date fixed for completion of the contract, defendant No. 1 wrote the letter as per Ex. P-19 calling upon the plaintiff to resume its electrical work, but without providing revised rates and only revising the milestone.
25. Revision of the milestone for completion of the work is no indulgence shown to the plaintiff because the delay in completing the civil work, which is the prerequisite for doing the electrical work, was due to the fault of civil contractor and in no way attributable to the plaintiff. In other words it is defendant No. 1 who has to take the blame and responsibility for the delay in completion of the civil work and plaintiff is in no way responsible for the same. The other correspondence between the parties which is already referred to Supra while 27 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 recapitulating the documentary evidence on record shows that from June 2015 onwards, which is nearly three and three months after the last date for completion of the contract, the defendant No. 1 has repeatedly called upon the plaintiff to resume electrical work, but without providing revised rates. The stand of the plaintiff in the correspondence is that, it is prepared to resume the work, but subject to revised rates due to upward swing in the rates of the various commodities in the international market. Therefore, the Plaintiff took up the stand that, defendant No. 1 cannot expect the plaintiff to do the work in 2015 for rates which were fixed in the year 2011. This is the essential dispute between the parties.
26. Therefore, the essential dispute between the parties is that, admittedly there has been delay in the contract due to reason which is no way attributable to the plaintiff. The plaintiff agreed to do the work of supply and erection, in January 2011 to be completed within 12 months and 14 months respectively. The rates were fixed in January 2011, taking into consideration the fact that the work had to be 28 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 completed within 12 months and 14 months respectively. Thereafter, due to delay of the civil contractor of the defendant No. 1, the work site was not ready for the electrical work. From June 2015, which is nearly 3 ½ years after the last date fixed for completion of the work, the defendant No. 1 has called upon the plaintiff to do the work at the rates fixed in 2011 without giving any revision in the rates. The plaintiff has refused to resume the work at the old rates and asked for revised rates, which is denied by the Defendant No. 1 on the ground that the contract does not provide for escalation or revision of rates. This has resulted in the breakdown between the parties, resulting ultimately in the plaintiff requesting for short closure and ultimately resulted in the termination notice at Ex. D2 dated 17-02-216 whereby Defendant No. 1 has terminated the contract and invoked the bank guarantee. In the meantime some part of the supply work has been done by the plaintiff for which running bills were raised, which have been cleared as per Ex. P 8 to P10 by deducting 10% as penalty for failure to meet the milestone. In this regard, the minutes of the meeting are marked as Ex. P39 by confronting to DW1. In this background, the grievance of the plaintiff is 29 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 that, even before termination of the contract in favor of the plaintiff, which was terminated as per Ex. D2 only on 17-2- 2016, even earlier thereto on 03-12-2015 itself, the Defendant No. 1 called for fresh tender for the same work, without even terminating the contract of the plaintiff and therefore, at that stage, the present suit was filed initially only against Defendant No. 1, with a prayer to direct the defendant No. 1 to award escalation costs of Rs. 2.12 crores and to restrain Defendant No. 1 from foreclosing the contract and encashing the bank guarantee and awarding the contract to any third party. Another releif which was sought in the suit as initially filed was for recovery of Rs. 16,03,040 which was deducted towards 10% of the running bills for failure to meet the milestones. Subsequently, after filing of the suit, admittedly, the fresh contract for the same work has been awarded in favor of defendant No. 2 and the bank guarantees were also encashed. Therefore, the additional prayer was incorporated for recovery of the sum of Rs. 84.39 lakhs, which is the sum of the bank guarantees. Another prayer which was incorporated by way of amendment is to issue fresh letter of award in favour of the plaintiff for the remaining work by 30 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 terminating the contract of Defendant No 2 by granting revised rates of Rs 2.12 crores or at the same contract value awarded to the Defendant No. 2 of Rs. 9.01 crores.
27. At the outset, it is to be noted that, since it is an admitted fact that during the pendency of the suit the fresh contract has been awarded to defendant No. 2 and defendant No. 2 has already completed its work under the contract and obtained completion certificate as per Ex. D4, it follows that the prayer A to D and I of the plaint have become infructuous and do not survive for consideration. This is because when defendant No. 2 has already completed its work on the basis of the fresh contract awarded to it, the question of directing defendant No. 1 to grant escalation of Rs. 2.12 crores to the plaintiff does not survive because the work has already been done and therefore there is no question of plaintiff doing the work at revised rates. Therefore, prayer (a) does not survive.
28. Similarly, the injunction sought to restrain defendant from foreclosing the contract does not survive since, as per the termination notice at Ex. D2, the contract has already 31 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 been terminated. The injunction sought from encashing the bank guarantee does not survive because admittedly the bank guarantees have been encashed and invoked and additional prayer is already incorporated for recovery of the bank guarantee sums. Therefore, prayer (b) and (c) do not survive.
29. The permanent injunction at prayer D of the plaint to restrain Defendant No. 1 from awarding fresh contract to third party does not survive because admittedly the fresh contract has already been awarded to defendant No. 2 who has already completed the work.
30. The prayer at prayer column (i) of the Plaint to direct defendant to issue fresh award in favour of plaintiff does not survive because admittedly Defendant No. 2 has already completed its work and therefore there is no question of terminating the contract of Defendant No. 2 and awarding the fresh contract to the plaintiff.
31. Therefore, the only prayers which survive for consideration are prayer E and H, i.e. for recovery of Rs. 32
CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 16,03,040 which was deducted from the running bills and for recovery of sum of Rs. 84,39,900 towards encashing of the bank guarantees.
32. In so far as issue No. 1 is concerned, it is framed for the plaintiff to prove that the progress of the contract work entrusted to the plaintiff was delayed due to the failure of Defendant No. 1 to deliver possession of the constructed structure in time. In this regard, as already noted supra, from the correspondence between the parties and the minutes of the meeting which are already referred to supra, it is an admitted fact between the parties that due to the delay of the civil contractor in doing the civil work, the work site was not ready for supply and erection of the electrical part of the work which was entrusted to the plaintiff. In this regard, particularly, reference may be made to the minutes of the meeting dated 8-1-2013, which is marked as Ex. P39 by confronting to DW1. At paragraph 1.03 of the said minutes, it is noted that Defendant No 1 orally requested the Plaintiff not to supply equipment till civil front is ready. At Paragraph 1.04, it is observed that there was a delay in civil related 33 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 works and therefore plaintiff had requested for revision of milestone through later dated 20-12-2011. At paragraph 1.05, it is noted that due to non-availability of the civil front for erection / commissioning of electrical equipment, proposal for considering the request of plaintiff for rescheduling the milestones was made by the office of the technical director of defendant No. 1. Therefore, it is clear that as on 8-1-2013, which is nearly one year after the scheduled last date for completion of the contract, it is admitted in the minutes of the meeting that there was delay in completion of the civil work, which in turn delayed the supply and erection of electrical equipment which was entrusted to the plaintiff. Further, reference may be made to the letter at Ex. P13 written by defendant No. 1 to the plaintiff dated 12-11-2014. This is nearly two years and nine months after the last date fixed for completion of the contract. In this letter, Defendant No. 1 states that civil work will be commencing shortly, which means that after the civil work came to a standstill the civil work was not resumed and only in December 2014, there was a chance of resumption of civil work. Then reference may be made to the letter at Ex. P16 dated 18-02-2015 which is 34 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 nearly three years after the scheduled last date for completion of the contract and in this letter Defendant No. 1 writes that a new agency has been appointed for the civil work. Ultimately on 10-6-2015, which is three years and three months after the last date fixed for the completion of the contract, Defendant No. 1 writes as per Ex.P 19, calling upon the plaintiff to resume the work. Therefore, on the basis of the above admitted correspondence between the parties, there can be absolutely no dispute that, whereas under the contract at Ex. P40 and 41 and the award letters dated 17- 01-2011 at Ex. P37 and P38, the date fixed for completion of the supply and erection contract was 12 months and 14 months from 17-1-2011 which would end on 17-1-2012 and 17-3-2012 respectively, the civil work was not completed even on 10-06-215 which is nearly three years and three months after the last date. Therefore there can be no doubt that due to the delay in the civil work which is in no way attributable to the plaintiff, the work of the electrical supply and erection work entrusted to the plaintiff got delayed. In fact, this is also admitted by DW1, who is the representative of defendant No. 1 in his cross examination at paragraph 12 of cross 35 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 examination dated 6-03-2024 wherein he has answered as follows;
"If it is suggested to me that there was delay on our part in handing over the site to the plaintiff as per the contract I say there was no delay on our part but there could have been delay in the civil work. It is true to suggest that Civil work was not awarded to the plaintiff. Witness volunteers only electrical work was awarded to the plaintiff. It is true to suggest that electrical installation can be done only after completion of the civil work."
33. Therefore, on the basis of the above admitted facts between the parties, which shows that, due to delay in doing the civil work by the civil contractor and for no fault which can be attributed to the plaintiff, the contract work of installation and erection of the electrical work of the plaintiff was delayed. Accordingly, I answer issue No. 1 in the affirmative.
34. Now turning to issue No. 3, the plaintiff is seeking recovery of Rs. 16,03,040 which is 10% of the RA bill amounts, which was deducted by the Defendant No. 1 while clearing the RA bills at Ex. P8 to P10. The reason behind the deduction of 10% of the RA bill amounts is found in the minutes of the meeting which is marked as Ex. P39 by 36 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 confronting to DW1. At paragraph 1.03 to 1.05 of the minutes which is already discussed, reference is made to the delay in civil work which in turn delayed the electrical work of the plaintiff. Then at paragraph 1.08 it is noted that plaintiff has now started supplying equipment and submitted the first supply bill. In paragraph 1.09 it is noted that milestones rescheduling of electrical work cannot be taken up till all the civil work related issues are sorted out. In paragraph 1.10, it is noted that in view of the above delay in civil work, which has in turn impacted the electrical work of the plaintiff, approval was sought to clear the RA bills raised by the plaintiff for supply without imposing penalty. But at paragraph 2 it is noted that CMG recommended for release of bills after deducting milestone penalty as per the agreement Therefore, from these minutes of the meeting, it is crystal clear that 10% has been deducted from the RA bills towards milestone penalty. In other words, the 10% is deducted for failure to meet the milestones by the plaintiff. But as per the minutes of the said meeting itself, it is evident that the plaintiff is in no way responsible for not meeting the milestones and instead, it was because of the fault of the 37 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 other civil contractor who failed to complete the civil works on time, which delayed the electrical works and therefore, it is clear that the deduction of 10% of the RA bills towards not meeting the milestones is penalizing of the plaintiff for absolutely no fault of the plaintiff. Therefore, this act of the Defendant No. 1 in deducting 10% of the RA bills as milestone penalty is illegal and cannot be accepted. Therefore, Plaintiff is entitled to recovery of the amount of Rs. 16,03,040 which was deducted as 10% penalty from the RA bills. In fact, in this regard, in the cross-examination of DW1, at paragraph 6, it is admitted by DW1 that three RA bills submitted by the plaintiff were cleared by retaining 10% retention money and said 10% retention money has not been released to the plaintiff. For the reasons already noted Supra, I hold that the deduction of 10% of the RA bill amount towards milestone penalty was unwarranted and it amounted to penalizing the plaintiff for absolutely no fault of the plaintiff & when the fault was with the defendant No. 1 itself, or in other words, due to the fault of a civil contractor of defendant No. 1 who delayed civil work, which in turn resulted in not providing the work site to the plaintiff, which resulted in delay in the 38 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 electrical supply and erection work. Therefore, I answer issue No. 3 in the affirmative holding that plaintiff is entitled for the recovery of sum of Rs. 16,03,040, which was illegally deducted as 10% of the RA bill amount.
35. Now turning to Issue No. 4, in respect of recovery of amount for encashing of the bank guarantees is concerned, in this regard, Learned Senior Counsel for Defendant No. 1, Sri. Pramod Nair, relied upon certain clauses of the contract between the parties at Ex. P40 and P41 which provides that, under no circumstances the plaintiff can seek revised rates or escalation. In this regard, the Learned Senior Counsel for Defendant No 1 relied upon the following clauses of the contracts at Ex.P41 :-
Clause 25 of Ex. P41 Delays by corporation or its authorized agents. If in the opinion of the corporation or the engineer the work or milestone is delayed by a) By reason of proceedings taken or threatened by disputes with adjoining or neighboring owners or public authorities or b) by the works or delays of other contractors or tradesmen engaged by the corporation or engineer, or c) by reason of engineer's instruction, or d) in consequence of contractor not having received in due time necessary instructions from corporation or engineer, for which he shall have specifically applied in writing, or e) by reason of non-payment 39 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 of running bills within a period as agreed in the contract, the corporation or engineer shall extend the completion of the contract and or the milestone date by the period equivalent to the delayed period without price escalation of any sort. The contractor shall nevertheless endeavor to prevent delay and shall do all that may be reasonably required to the satisfaction of the corporation or engineer to proceed with the work.
Clause 1.05.02 of Ex. P41 The above referred contract price is lump sum and firm for the entire scope of work and shall be firm throughout and until erection, testing and commissioning covered under the contract is complete.
Clause 1.05.05 of Ex. P41 Price variation.
No price variation in any form will be entertained, and the prices shall be firm throughout the period of contract and extension, if any. (Emphasis Supplied)
36. It is to be noted that, similar clauses are also contained in the contract at Ex. P40.
37. Therefore, relying upon the above clauses of the contract between the parties, the Learned Senior Counsel for Defendant No. 1 vehemently argued that, Plaintiff has entered into the contract with its eyes wide open and now cannot seek to dilute the terms of the contract entered into between the parties. He argued that, the contract is clear that, there shall be no price variation of any kind and even if 40 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 the delay is caused due to factors which are not attributable to the plaintiff and due to factors solely attributable to the defendant No. 1 or to any other contractor of defendant No. 1, the only relief that can be given to the plaintiff is extension of the time / milestones and plaintiff cannot in any event seek revision or escalation of the prices. Thereby, he submitted that, although the contract was delayed due to the delay caused by the civil contractor, when the defendant No. 1 called upon the plaintiff to resume the work on 10-06-2015 [Ex.P 19] the plaintiff was expected to resume the work without seeking any escalation or revision of the prices and to show its bona fides, Defendant No. 1 also communicated that the Defendant No. 1 will be ready and willing to discuss the escalation, once the work is completed and in spite of being obliged by the terms of the contract to resume the work at the price fixed under the contract, the plaintiff unjustifiably refused to do the work unless revision was granted at the very outset. Thereby, Learned Senior Counsel for Defendant No. 1 aruged that, the defendant No. 1 was justified in terminating the contract of the plaintiff and once the contract was terminated due to refusal of the plaintiff to commence the 41 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 work, the Defendant No. 1 was perfectly justified in invoking the bank guarantee. Thereby, it is argued that, by no stretch of imagination, the plaintiff can go back on the specific terms of the contract and seek for the recovery of the bank guarantee amount. In this regard, the Learned Senior Counsel for Defendant No. 1 relied upon the law laid down by Hon'ble Apex Court in New India Civil Erectors v. ONGC reported in (1997) 11 SCC 75. In the said judgment, the Learned Senior Counsel relied upon the law laid down at paragraph 10 wherein Hon'ble Apex Court, while considering a similar clause in the contract, which provided that the price is firm and is not subject to any escalation under whatsoever ground till completion of the work held that, the Division Bench of the High Court was right in the face of the said express stipulation that the contractor could not have claimed any amount on account of escalation in the cost of construction carried on by him after expiry of the original contract period. Thereby, the Learned Senior Counsel submitted that plaintiff was unjustified in seeking revision and refusing to resume the work without revision of rates and 42 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 thereby the bank guarantee has been rightfully encashed by defendant No. 1 and no relief can be given to the plaintiff.
38. Per contra, the Learned Counsel for plaintiff relied upon the ruling of Hon'ble Apex Court in Ramachandra Narayan Nayak v Karnataka Neeravari Nigam Ltd reported in (2013) 15 SCC 140, wherein Hon'ble Apex Court has held that, where the State Authority itself was in breach of the promise and the promise of the contractor was conditional upon the performance of the promise by the State Authority, non-performance by the contractor in such circumstances did not permit the State to invoke termination clause in the contract.
39. Having considered the rival contentions of both sides, in this regard, it is to be noted that, the contract between the parties whose relevant clauses have already been highlighted supra only provides that, there can be no revision or escalation of prices due to delay in the contract and the contractor is only entitled to revision of the milestones or for extension of time, even where the delay is attributable to the defendant No. 1 or to any other contractor of the defendant 43 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 No. 1. This clause would have been helpful for the defendant No. 1 in case the plaintiff in fact had resumed the work and completed the work and thereafter sought for revised / escalated rates. However, this is a case where the plaintiff refused to commence the work unless rates were revised. It is to be noted that, in the case on hand, admittedly, the commencement date for the contract was 17-01-2011, as per Ex. P-37 and P38. Admittedly, the contract had to be completed within 12 months and 14 months for supply and erection respectively and if so considered, the contract period came to an end on 17-01-2012 and 17-03-2012 respectively. No document is produced by Defendant No. 1 to show that, during the said contract period, the milestones were revised and plaintiff was called upon to complete the work within the revised timelines, before the contract period ended. In fact, in this regard, DW1 has admitted in his cross-examination at paragraph 13 as follows;
"If I am asked whether extension was given within 14 months from award of contract or subsequently I say extension was given after lapse of 14 months."44
CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020
40. Therefore, it is clear that, the contract period was 12 months and 14 months respectively and within the said contract period, no extension was given and the milestones were not revised during the period of the contract. It is only on 10-06-2015, which is nearly three years and three months after the contract came to an end, that the Defendant No. 1 called upon the plaintiff to resume the work, as per the letter marked at Ex. P-19. By then the contract had already come to an end and admittedly it was not revived and the milestones were not revised during the currency of the contract. Therefore, the Defendant No. 1 admittedly delayed providing the work front to the plaintiff during the period of the contract and the delay was in no way attributable to the plaintiff. After the contract period came to an end and nearly three years and three months after the contract period came to an end, defendant No. 1 for the first time revised the timelines and called upon the plaintiff to resume the work. The plaintiff responded by asking for fresh rates because the plaintiff cannot be expected to do the work after three and a half years for the rates fixed nearly four years back in January 2011. In other words, when the rates were fixed in January 2011 and 45 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 it was expected to complete the work by March 2012, the defendant No. 1 cannot expect the plaintiff to do the same work for the same rate in June 2015. No doubt, in the interregnum, even after completion of the last date for performance of the contract, the plaintiff had done some work of supply of material for which three RA bills were raised and cleared by deducting 10% penalty and there is also no doubt that the plaintiff kept the bank guarantees in force by renewing the same till December 2016. However, when the Defendant No. 1 is relying upon the letter of the contract to insist upon plaintiff to do the work at the old rate of 2011 in the year 2015, the defendant No. 1 is also bound by the same letter of the contract and since the defendant No. 1 did not extend or revise the timelines during the currency of the contract and allowed the contract period to lapse, it follows that the defendant No. 1 is unjustified in asking the plaintiff to resume the work in June 2015 when the contract period has already ended in March 2012 itself. At cost of repetition, it is to be noted that, the plaintiff is in no way responsible for the delay and the entire responsibility of the delay rests upon the defendant No. 1 or in other words upon the civil 46 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 contractor of Defendant No. 1. Therefore the defendant No. 1 being a state entity cannot expect the plaintiff to do its work in 2015 for rates fixed in the year 2011, particularly, when during the contract period the defendant No. 1 did not revise the timelines and permitted the contract period to come to an end. Accordingly, I hold that, Plaintiff was justified in seeking revised rates for resumption of the work in June 2015. Therefore, failure of the plaintiff to resume the work did not furnish ground to the defendant No. 1 to encash the bank guarantees. Accordingly I hold that the bank guarantees were illegally encashed by defendant No. 1 and therefore, plaintiff is entitled to recovery of the amount of the bank guarantees. Admittedly the bank guarantee amount encashed is in a sum of Rs. 84,39,900 which is forthcoming from the letter at Ex. P31 wherein plaintiff has stated that it has extended the two bank guarantees of sum of Rs. 76,02,823 and Rs 8,37,177, the total whereof comes to the amount sought to be recovered in prayer (h) of the Plaint i.e. Rs 84,39,900. The fact that the bank guarantees have been invoked is forthcoming from the termination letter at Ex. D2, wherein Defendant No. 1 has intimated its intention of 47 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 invoking the bank guarantees and also from the answer given by DW1 in cross-examination at paragraph 10 of his cross- examination, wherein he has stated that Defendant No. 1 has encased the bank guarantee according to the contract. Therefore, I answer issue no. 4 by holding that, Plaintiff is entitled to recovery of Rs. 84,39,900 towards the encashing of the bank guarantees.
Issue no. 2, 5 and 6 :-
41. I have already held supra that, the other prayers sought for in the plaint other than the prayer for recovery of 10% of running bill amount and bank guarantee amount have become infructuous.
42. Under issue No. 2, plaintiff is called upon to prove that defendant No. 1 is required to pay cost towards escalation as work is delayed due to reasons attributed to defendant No. 1. This relief for seeking escalation cost of Rs. 2.12 crores does not survive because admittedly, fresh contract for the same work has been awarded to defendant No. 2 who has already completed the work and obtained the completion certificate as 48 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 per Ex. D4. Therefore plaintiff is not entitled to this relief and accordingly issue No. 2 is answered in the negative.
43. Issue No. 5 is framed as to whether plaintiff is entitled to Rs. 2,12,17,591 towards cost of escalation. For the reason already noted supra when plaintiff has not resumed the work and when the remaining work has been done by defendant No. 2, the question of plaintiff being entitled to escalation cost does not arise. Hence issue No. 5 is answered in the negative.
44. Issue No. 6 is framed for the plaintiff to prove that it is entitled for fresh award of contract for the remaining work by terminating the contract of defendant No. 2. This relief has become infructuous and does not survive because defendant No 2 has already completed the work awarded and also obtained completion certificate as per Ex. D4. Accordingly I answer issue No. 6 in the negative.
Issue No. 7 :-
45. Having answered issue No. 1, 3 and 4 as above, I hold that plaintiff is entitled to recovery of sum of Rs. 16,03,040 49 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 towards 10% retention amount of the running bills. Insofar as the interest component on this head of relief is concerned, the plaintiff is seeking interest at 18% per annum on the said sum from the date of respective deductions. However, it is noted that, the pre-suit interest is neither quantified nor court fees paid thereon by the plaintiff and therefore, plaintiff is only entitled to interest on the said sum of Rs. 16,03,040 from the date of the suit. Although plaintiff is claiming interest at 18% per annum, since the defendant No. 1 is a state entity, I am of the view that, interest at the rate of 9% per annum is the proper interest to be awarded. Therefore, I hold that plaintiff is entitled to recover sum of Rs. 16,03,040 towards 10% of the R.A. Bill amount deducted, along with interest at 9% per annum from date of suit till date of realization.
46. Insofar as the other amount to which plaintiff is held entitled to, viz. the bank guarantee amount of Rs. 84,39,900 is concerned, admittedly, the bank guarantee has been encashed subsequent to the filing of the suit, since the said prayer has been incorporated by way of amendment. The 50 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 amendment application for incorporating the said prayer was filed on 4-11-2016 and therefore I am of the view that Plaintiff is entitled to similar interest of 9% on the said sum also from the date of amendment application. Accordingly, I answer Issue No. 7.
Issue No. 8:-
47. Before proceeding to dispose off the suit, it is necessary to take note of the fact that, after amendment of the plaint for incorporating the additional prayers, the plaintiff has not filed any fresh valuation slip nor paid the additional court fee on the additional prayers incorporated. Therefore, while partly decreeing the suit, it is necessary to call upon the plaintiff to pay court fee on the additional prayer for recovery of Rs. 84,39,900, for which no court fee has been paid.
48. As far as the costs of the suit are concerned, it is noted that the plaintiff has claimed several prayers and most of the prayers have been refused and only two prayers have been granted. Therefore, in these circumstances, and also considering that defendant No. 1 is a state entity, it is not appropriate to saddle defendant No. 1 with the cost of the 51 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 suit. Accordingly, I hold that, both parties should be directed to bear their respective costs.
49. Having recorded the above findings, I proceed to pass the following :-
ORDER The suit is partly decreed.
It is held that the plaintiff is entitled to recover sum of Rs. 16,03,040/= from defendant no. 1 along with interest at 9% per annum, from date of suit till date of realization. It is further held that the Plaintiff is entitled to recover sum of Rs. 84,39,900/=, towards encashment of bank guarantees, from defendant No. 1, along with interest at the rate of 9% per annum from the date of amendment application i.e. 4-11-2016, till date of realization.
The other reliefs prayed for in the suit are refused.
The suit is dismissed against Defendant No.2.
It is noted that, after amendment of the plaint incorporating additional prayer for recovery of sum of rupees 84,39,900/= towards encashment of the bank guarantees, the 52 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 plaintiff has not paid additional court fee on the said additional prayer and therefore, at this stage, plaintiff is called upon to pay the appropriate additional court fee on the said additional prayer, introduced by way of amendment and the decree shall be drawn up only after Plaintiff pays the said additional court fee.
Considering the facts and circumstances noted supra in the judgment, there shall be no order as to cost.
After collecting the court fee as above, Office to draw decree in accordance with this judgment.
Office to issue soft copy of this judgement to both sides, by email, if furnished. [Dictated using Dragon Professional Speech Recognition Software Version 15.3, transcript revised, corrected, signed and then pronounced by me in open court on this the 04th day of September, 2024] (Sri. S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT; BANGALORE.
ANNEXURE
1. List of witnesses examined on behalf of Plaintiff:
PW.1 : Kuldeepak Singh 53 CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020
2. List of witnesses examined on behalf of Defendants:
DW.1 : R. Prakash.
DW.2 : Murugesan .A.
3. List of documents marked on behalf of Plaintiff:
Ex.P.1 : C.C of Board Resolution.
Ex.P.2 : C.C of Power of Attorney.
Ex.P.3 : Copy of letter of the plaintiff dt.20/12/2011
Ex.P.4 : Copy of letter of the plaintiff dt.4/5/2012.
Ex.P.5 : Copy of letter of the plaintiff dt.3/5/2013.
Ex.P.6 : Copy of letter of the plaintiff dt.23/8/2012.
Ex.P.7 : Copy of letter of the plaintiff dt.17/1/2013
Ex.P.8to10 : Copy of 3 RA bills.
Ex.P.11 : Copy of letter of the plaintiff dt.20/6/2013.
Ex.P.12 : Copies of letter of the plaintiff
dt.20/6/2013
Ex.P.13 : Letter of the defendant dt.12/11/2014.
Ex.P.14 : Copy of letter of the plaintiff dt.24/12/2014
Ex.P.15 : Copy of the letter of plaintiff dt.24/12/2014
Ex.P.16 : Letter of the defendant dt.18/2/2015.
Ex.P.17 : Copy of the letter of the plaintiff
dt.19/2/2015
Ex.P.18 : Copy of the letter of the plaintiff
dt.28/5/2015
Ex.P.19 : Letter of the defendant dt.10/6/2015 with
attachment.
Ex.P.20 : Copy of the letter of plaintiff dt.22/6/2015
Ex.P.21 : Copy of the letter of plaintiff dt.14/7/2015
Ex.P.22 : Copy of the letter of plaintiff dt.5/8/2015
Ex.P.23 : Letter of the defendant dt.7/8/2015.
Ex.P.24 : Copy of the letter of plaintiff dt.18/8/2015
Ex.P.25 : Letter of the defendant dt.20/8/2015.
Ex.P.26 : Copy of the letter of plaintiff dt.25/8/2015
Ex.P.27 : Copy of minutes of meeting dt.25/8/2015
Ex.P.28 : Letter of the defendant dt.4/11/2015.
Ex.P.29 : Copy of the letter of plaintiff dt.29/12/2015
Ex.P.30 : Copy of the letter of plaintiff dt.31/12/2015
Ex.P.31 : Copy of the letter of plaintiff dt.12/1/2016
Ex.P.32 : Letter of defendant dt.6/1/2016.
Ex.P.33 : Copy of the letter of plaintiff dt.22/1/2016
54
CT 1390_Com.OS.25108-2016_Judgment.doc KABC170091382020 Ex.P.34 : Printout of 4 photographs.
Ex.P.35 : Certificate U/S.65B of Indian Evidence Act.
Ex.P.36 : Copy of Tender Notification dt.3/12/2015
Ex.P.37 : Letter of Award for erection dt.17/1/2011
Ex.P.38 : Letter of Award for supply.
Ex.P.39 : Minutes of Meeting of KPCL for clearing
RA Bill No.1 of the plaintiff.
Ex.P.40 : Contract Agreement -Book 1.
Ex.P.41 : Contract Agreement -Book 2.
4. List of documents marked on behalf of Defendants:
Ex.D.1 : Letter of Authorization.
Ex.D.2 : Letter dt.17/2/2016 addressed to the
plaintiff by defendant No.1.
Ex.D.3 : Resolution of Board of Directors
authorizing DW.2.
Ex.D.4 : Original completion certificate.
(Sri. S. Sudindranath)
LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT; BANGALORE.