(Per : HONOURABLE MR.JUSTICE C.L. SONI) 1. This appeal is directed against the judgment and decree dated 30.7.1991 passed in Civil Suit No.3850 of 1988.
2. The respondent-Gujarat Housing Board filed the above-said civil suit against the appellants for recovery of damages of Rs.35,98,576/- on account of breach of the contract, resulting into damages to the respondent-plaintiff. The respondent awarded the contract for construction of 276 (lower) MIG tenements in Western Sector, Naranpura, Sola Road, Ahmedabad to the appellants (hereinafter referred to as ‘the Contractor’ for short), at estimated cost of Rs.42,59,784/-. The Contractor was required to pay a sum of Rs.1,70,400/- as security amount, out of which Rs.85,200/-, being 50% of the said deposit, was to be paid at the time of execution of the contract and remaining half was to be deducted from the running account bill. The Contractor was also required to pay Rs.42,600/- as earnest money. Time limit for completion of the work was fixed at 24 months from the date of start of the work. As alleged by the respondent, the work order to start work from 15.6.1979 was given to the Contractor and the work was to be completed by 15.6.1981. However, the Contractor did not start the work on false ground that possession of the site was not given. It was found that the Contractor had carried out the work to the extent of only Rs.1200/-. The Contractor was reminded of action under Clause (2) of the agreement, as per which, the Contractor was liable to pay compensation for late start of the work. It is further stated that because of various breaches in not starting and completing the work, the Contractor was levied with compensation, still the Contractor did not show any progress in the work and the respondent was then compelled to levy further compensation as per the agreement. The respondent also cautioned the Contractor as regards the action under Clause (3) of the agreement. The Contractor, however, did not show any progress and was levied further compensation which in total came to Rs.1,77,820/-, which since the Contractor did not pay, the respondent decided to invoke the Bank Guarantee. Since the Contractor did not complete the work within the stipulated period, action under the agreement was taken against the Contractor to get the work done through other Contractor at the cost and risk of the Contractor and the contract was then entrusted to M/s. Shiva Corporation at the rate of Rs.76,67,611.20 by inviting tender publicly. Because of the entrustment of incomplete work to another Contractor, to whom the respondent had to pay additional Rs.31,09,642/-. This amount the Contractor was liable to pay to the respondent as damages. Ultimately, notice was issued to the Contractor to pay the above-said damages as well as Rs.1,77,820/- being liquidated damages, under Clause (2) of the agreement and Rs.3,10,964/- being supervision charges at 10% under the terms of the contract. The Contractor having not paid the said amount, suit was ultimately filed for recovery of Rs.35,98,576/-.
3. The Contractor opposed the suit by filing written statement at Exh.23 and took various contentions as regards the maintainability of the suit, limitation and also stating that the Contractor was not responsible for delay in work. The Contractor also took a stand that it was the respondent-plaintiff who had failed to perform its contractual obligation by not furnishing drawings, designs, specifications, cement, steel, etc. The Contractor also called in question the action of the respondent of levying compensation under Clause (2) of the agreement and also stated that because of the failure on the part of the plaintiff in performing its obligation and giving the contract to other persons, the Contractor had to suffer loss of profit, therefore, made counter-claim to the extent of Rs.1,30,779/-. The respondent-plaintiff opposed the counter-claim of the Contractor by submitting written statement.
4. On the basis of the pleadings, the Trial Court framed the following issues:-
(1) Whether the plaintiff proves that it is entitled to the suit claim as and by way of damages for the breach of contract committed by defendants?
(2) Whether the suit is maintainable ?
(3) Whether the suit is bad for want of jurisdiction?
(4) Whether the suit is barred by limitation?
(5) Whether the defendants are entitled to the counter- counter against the defendant?
(6) Whether the defendants' counter-claim is barred by limitation?
(7) What order and decree?
Findings recorded by the Trial Court against each of the issues are stated below:-
Issue No.1: In the affirmative.
Issue No.2: The suit is maintainable. Issue No.3: Not pressed.
Issue No.4: Not pressed. Issue No.5: In the negative. Issue No.6: In the negative.
Issue No.7: As per the final order.
5. In support of the claim, the respondent-plaintiff examined its Executive Engineer at Exh.68, whereas the Contractor examined its partner Shri Kantilal Nathalal Patel at Exh.81. Both the parties tendered documentary evidence on record. The Trial Court on examination of the oral as also the documentary evidence, ultimately came to the conclusion that it is the Contractor who had committed breach of the contract. The Trial Court, therefore, allowed the suit filed by the respondent- plaintiff and rejected the counter-claim of the Contractor and held the respondent-plaintiff entitled to recover a sum of Rs.35,98,576/- from the Contractor along with running interest at the rate of 12% per annum from the date of decree till realization.
6. We have heard learned advocates for the parties. Learned senior advocate Mr. S.B. Vakil for the appellant submitted that the Contractor cannot be said to be responsible for not executing the work in time, as the respondent Board did not perform its part of obligation under the contract. He submitted that the Contractor could not complete the work as the respondent Board neither handed over the possession of the site nor provided design, specification, etc. He contended that since the Contractor was not responsible for delay in executing the work, action of levying compensation by the respondent Board as also the action of handing over incomplete work to another contractor by resorting to Clause (3) of the agreement was totally illegal. He further contended that learned Trial Judge has committed serious error in passing the decree against the Contractor and rejecting his counter claim, by holding that the Contractor had committed breach of the contract. He ultimately urged that the findings recorded by the learned Trial Judge being contrary to the evidence on record, the appeal is required to be allowed.
7. As against the above said arguments advanced by learned senior advocate for the appellant, learned Assistant Government Pleader Ms. Moxa Thakkar has submitted that the Contractor, in fact, did not do any work though the work was to be completed within stipulated time as per the contract. She submitted that not only the site was made available to the Contractor but design, specification, etc. were also provided to the Contractor. She contended that in fact, the Contractor had no intention to adhere to the terms of contract, therefore, the Contractor was fully responsible for delay in executing the contract. She submitted that the Contractor at no point of time raised any objection about not getting site or design, specification etc. She submitted that the fact that compensation to the extent of Rs.1,72,000/- was required to be levied on the Contractor, establishes that it was the Contractor who did not start and complete the work in time, as provided in the contract. She further contended that before issuing notice and taking action under Clause (3) of the agreement, the Contractor was in fact reminded from time to time to adhere and complete the work within time limit as provided in the contract. However, the Contractor did not show any progress and totally left the interest in the work. She pointed out that it was because of such attitude on the part of the Contractor, the Board was required to resort to Clause (3) of the agreement and to hand over incomplete work to another Contractor and in doing so, the respondent Board had to pay additional amount of Rs.31,09,642/- to another Contractor.
She, therefore, submitted that the learned Judge was justified in passing the decree against the Contractor on the basis of the evidence adduced in the suit and the learned Judge thereby has not committed any error in passing the decree against the Contractor.
8. We have perused the record and proceedings of the suit. The respondent Board has examined its Executive Engineer at Exh.68. This witness has also brought on record documentary evidence to establish that the Contractor did not respond to the request of the respondent Board to start the work and complete the same within the time bound period and to establish that because of his not performing part of the contract, incomplete work under the said contract was required to be handed over to another Contractor by re-inviting fresh tender. This witness has brought on record the contract awarded to M/s. Shiva Corporation as also final bill drawn by M/s. Shiva Corporation. He deposed that the work under the contract was to be commenced from 15.6.1979 and was to be completed within 24 months. He deposed that the Contractor did not commence the work effectively and therefore, immediately, vide letter dated 25.6.1979, the Contractor was required to be asked to commence the work. It is further stated that thereafter also, the Contractor did not commence the work and he was served with various letters dated 6.10.1979, 16.1.1980, 22.1.1980, 8.4.1980, 24.4.1980, 26.5.1980, 9.7.1980 and 11.7.1980. These letters are indicative of the fact that the Contractor did not perform its part of the contract. It is further stated that the Contractor was handed over clear and vacant site for construction and was also released with necessary materials, like cement, steel, etc. and was also provided drawings, designs, specifications, etc. as per the contract. Still, the Contractor did not show any progress in the work. It is further stated that the respondent Board had performed its part of the contract but, unfortunately, the Contractor did not show any interest in completing the work under the contract.
9. On behalf of the Contractor, one Shri Kantilal Nathalal Patel was examined at Exh.81. The said witness has stated that when the work order was given to him, because of rainy season, for about 2 to 3 months, it was not possible to go on the site. He has also stated that after the tender was accepted, there was rise in price of the material to the extent of 70% and therefore, it was not possible to work as per the contract. He has stated that the request was made to the Housing Board for increase in the rates of work. He has also stated that along with the contract, item-wise program, design, specification were not provided as also sufficient stock of cement was also not provided by the Housing Board. In cross-examination, he has categorically admitted that because of rise in the price of material, since there was likelihood of suffering damages, he had not started the work. He has also admitted that he has raised no objection for not getting plans, drawings, designs, etc. He has categorically admitted that he has not done any work in respect of the contract.
10. Learned Judge has appreciated the oral as also the documentary evidence adduced by both the parties. Learned Judge has come to conclusion that out of 23 blocks, sites of 19 blocks were already clear and vacant and were made available to the Contractor and simply because some copies of the drawings and specifications were not there, the Contractor was not justified in starting the work. Learned Judge has found that because of steep rise in the building materials, the Contractor had not shown any interest in commencing and completing the work. Learned Judge has further found that by not showing any progress in the work and by not adhering to the terms of the contract and not completing the contract work within stipulated time, in spite of many letters written by the respondent Board, it was the Contractor who was responsible for breach of the contract and therefore, the respondent Board was justified in taking action under Clause (3) of the contract and to handover the work under the contract to another contractor by inviting tender. Learned Judge has recorded a finding that in case of failure of the Contractor to complete the work under the contract, the respondent Board is always at liberty to give contract to another contractor and to recover difference of rates by way of loss from the Contractor, who did not do the work under the contract. Learned Judge has also recorded a finding that the respondent Board has proved that tender of M/s. Shiva Corporation was accepted and contractual work was handed over to M/s. Shiva Corporation, who, then, completed the work and drew final bill. Learned Judge has also come to the conclusion that there is no challenge to the evidence of handing over the work to M/s. Shiva Corporation by the Contractor. It is further found by learned Judge that because of such handing over of work to M/s. Shiva Corporation, the respondent Board had to incur additional expenses because of the breach of the contract committed by the Contractor. Learned Judge has thus held the Contractor responsible for breach of the contract and passed decree, as aforesaid.
11. We have read the deposition of the plaintiff witness as also the correspondence produced by the said witness. We have also read the evidence adduced by the witness on behalf of the Contractor at Exh.81. We find that virtually, there is no challenge in the cross- examination of the plaintiff witness by the Contractor on the aspect of not starting and completing the work by the Contractor. From the correspondence on record, we find that in spite of repeated request and warning of taking penal action as also action under Clause 3(c), the Contractor did not move a step further in the matter of showing any progress in the work. In fact, in response to the correspondence also, at no point of time, the Contractor raised any kind of objection for delay in work. In fact, the witness of the Contractor has in unequivocal terms stated in his examination in chief that because of rise in the price of material, it was not possible for him to start with the work. He has reiterated in his cross-examination also that he did not want to start with the work because of increase in the price of material. He has also stated that he had not raised any objection as regards non-availability of the site, specification, design, etc. On the basis of the evidence, therefore, we find that the Contractor had in fact, abandoned the work at the very initial stage and had no intention to complete the work at all. Clause 3(c) of the agreement provides that in case where the Contractor has rendered himself liable to pay compensation amounting to whole of his security deposit, or in case of abandonment of the work owing to serious illness or death of the contractor or any other cause, the Executive Engineer, shall have power to measure up the work of the contractor and to take such part thereof as shall be unexecuted out of his hands, and to give it to another contractor to complete it in which case any expenses which may be incurred in excess of the sum which would have been paid to the original contractor, if the whole work had been executed by him (as to the amount of which excess expenses the certificate in writing of the Executive Engineer shall be final and conclusive) shall be borne and paid by the original contractor and shall be deducted from any money due to him by Board under the contract or otherwise or from his security deposit or the proceeds of sale thereof, or a sufficient part thereof.
12. As could be found from the evidence on record and as well appreciated by the learned Judge, the Board had to resort to the above action of handing over the work to another Contractor. Handing over of work, drawing of final bill as also payment as per final bill has already been proved. The above exercise was undertaken because of non-performance of the contract by the Contractor. We, therefore, concur with the findings recorded by the learned Judge and we also hold that the Contractor had not only abandoned the work but had no intention to start or complete the work because of increase in the price of material. We are therefore, of the view that the respondent Board was justified in getting the work completed through another contractor and the Contractor was liable to meet with the expenses and pay up the damages as claimed by the respondent Board. Accordingly, we do not find any substance in the appeal. This appeal is, therefore, required to be dismissed. Hence, the same is dismissed. Interim relief, if any, stands vacated.
Record and Proceedings is ordered to be sent back forthwith.
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(AKIL KURESHI, J.) omkar Sd/-
(C.L. SONI, J.)