(Judgment of the Court was delivered by P.KALAIYARASAN, J.) This appeal suit has been filed by the plaintiff as against the judgment and decree of the Additional District and Sessions Judge, Fast Track Court No.3, Madurai dated 10.11.2006 in O.s.No.86 of 2004, dismissing the suit for recovery of amount and decreeing the counter claim in part with cost.
2.The plaint averments are as follows:
2.1.The plaintiff is a limited Company engaged in undertaking civil works relating to laying, jointing, testing and commissioning of pipe lines. This suit has been filed by the power agent of the company. The first defendant is a partnership firm, wherein, the defendants 2 to 4 are partners. The contract was concluded as between the plaintiff's company and TWAD board of Tamil Nadu for executing the work ?Madurai Water Supply Scheme?. The plaintiff has engaged the service of other agencies for executing the earth work like excavating, laying, jointing and commissioning of pipes, by appointing them as sub-contractors.
2.2.The partners of the first defendant approached the Deputy Chief Engineer of the company offering to work as sub-contractor as per the rates furnished by them in their offer. After negotiations, as per the terms and conditions reached between the parties, the plaintiff appointed the first defendant for executing the civil works in ?Madurai Water Supply Scheme Reach-I? as per their work order.
2.3.As per the agreement, the plaintiff paid an advance amount of Rs.20,00,000/- to the first defendant for purchasing machinery and mobilizing the other equipments to carry out the work. It was agreed to between the parties that the said advance shall be recovered by the plaintiff on prorata basis from each running bill. It was further agreed that the defendants will be paid as per the rates covered in the schedule for the quantity of work done as measured by TWAD department Engineers.
2.4.One of the partners of the first defendant acknowledged the receipt of work order. On some occasions, bills for the machineries engaged for the work undertaken by the defendants have been paid by the company directly and debited to the account of the first defendant. When the work was in progress, the local Project Manager of the plaintiff's company was making advances to the first defendant in anticipation of completing further works without preparing monthly running bills.
2.5.The defendants have drawn heavy advances through the local Project Manager, who failed to verify the accounts properly. Finally, when it was verified by the Chief Engineer, according to the measurements furnished by TWAD board, it was found that the defendants have executed works amounting to the tune of Rs.90,12,422/- only, whereas, the defendants have received an advance of Rs.1,93,14,752/-. Thus, the defendants have overdrawn an amount of Rs.1,03,02,330/-. When the plaintiff's company discussed with the defendants on 18.02.1995 about the overdrawing, they were not ready to exercise reasoning. But, the first defendant submitted a bill on 20.03.1995 without any basis claiming Rs.16,39,981 plus 10% profit. The Chief Engineer issued notice dated 12.04.1995 about the overdrawing and requested the first defendant to repay the amount paid in excess. The first defendant issued a reply on 02.05.1995 as if the then Project Manager had agreed to pay 75% of the total expenditure weekly and the first defendant had also stated as if they have repaid the amount of Rs.23,75,000/- to the Project Manager for the alleged company's use. During June 1994, the first defendant requested for a revision of rates. Such a request is quite unsustainable as there is a condition in the work order that the rates will not be revised till the completion of the project.
2.6.The plaintiff issued a lawyer notice on 20.05.1995. The first defendant sent reply notice through their counsel on 31.05.1995. The Project Manager of the company does not have power to alter the work order already issued by him as per the direction of his superiors. The alleged agreement with the Project Manager on the basis of the men machinery and materials utilised every week and also the alleged repayment are all false. Therefore, the present suit has been filed.
3.The contentions of the written statement filed by the defendants are as follows:
3.1.The first defendant is a Corporation which is different from partnership form and as such, the defendants 2 to 4 are wrongly impleaded. There was not agreement as alleged. It is false to state that there was an agreement that the defendants will be paid as per the rates covered in the schedule for the quantity of work done as measured by TWAD board department Engineers.
3.2.At the request of the then Project Manager of the plaintiff, the first defendant undertook the work as set out in their letter dated 02.05.1995. The plaintiff's authorised representative of the Project Manager along with the Deputy Chief Engineer, Coimbatore had negotiations with regard to the revised rates and they agreed for revision of rates. The letter dated 02.01.1994 is not a work order. The plaintiff has not absolutely accepted or approved the alleged tender as per the above letter. The acceptance with conditions are strings will not and cannot amount to an unconditional acceptance under law. The plaintiff himself contemplated the signing of a separate agreement so as to have a binding effect.
3.3.The defendants never accepted the alleged conditions especially regarding the revision of rates. In fact, the defendants never entered into or signed any agreement as contemplated in the plaintiff's letter dated 02.01.1994. Even as early as on 11.12.1993, the then authorised Project Manager Mr.Ravindran and his Deputy Chief Engineer, Coimbatore had negotiations with the first defendant with regard to the revised rates, which was sent to the plaintiff. The defendants informed the plaintiff through its authorised Project Manager that the terms of their letter dated 02.01.1994 was not acceptable. The plaintiff agreed that the defendants to pay on the revised rates as may be claimed by the defendants and hence no such agreement was signed as contemplated under letter dated 02.01.1994.
3.4.It is false to state that the plaintiff paid advance of Rs.20,00,000/- to the first defendant as per the alleged agreement. On 23.12.1993, Rs.10,00,000/- was sent through the fourth defendant to the Project Manager of the plaintiff as required by him for company use. On 29.12.1993, another Rs.10,00,000/- was received from the defendant by the Project Manager. He also received Rs.3,75,000/- for the company use on various dates.
3.5.All the factors viz., short supply of pipes, defective pipes manufactured by M/s.Pioneer Syndicate and hindrance of the progress of the work due to encroachment by the local people were discussed with the plaintiff's authorised Manager and Engineer at their Madurai Office and they agreed for further revision of rates and to settle the final bill, on the basis of labour employments besides revised rates. The plaintiff is required to produce their entire accounts, inspection reports, periodical measurement data recorded by the plaintiff's representatives and Engineers and work done reports in their custody. Neither the notice nor the plaint discloses the exact extent area of the work done or the measurement taken.
3.6.Admittedly, the award of work certificate is to the tune of Rs.1,75,00,000/-. The defendants have executed the work well far below that amount before the stipulated period. There is absolutely no demur or complaint about the execution of the work by the defendants either in the notice or in the plaint. The defendants are not aware of any verification alleged to have been done by the Chief Engineer of the plaintiff or measurement made by TWAD board and the measurement were not taken in the presence of the defendants.
3.7.The plaintiff is bound to pay Rs.1,71,09,534.77 paise for the quantity of work done by defendants and the defendants are paid only Rs.1,54,58,900 deducting the sum of Rs.23,75,000/- towards repayment. The actual amount received by the defendants is only Rs.1,30,83,900/-. Therefore, the plaintiff is bound to pay the balance of Rs.40,25,694.77/-. Besides the aforesaid work, additional works were also undertaken with the approval under the request of the plaintiff's authorised Project Manager and its Engineers. For the additional work, the plaintiff has to pay Rs.36,42,638/-. Thus in all, the plaintiff is bound to pay Rs.76,68,272.77/- . The defendants are willing to pay Court fee on their counter claim. Therefore, the suit is to be dismissed and the counter claim is to be decreed.
4.The contentions of the additional written statement are as follows:
It was mutually agreed to revise the rates. Pursuant to the agreement arrived, admittedly, the defendants have sent the revised rates in their letter dated 21.06.1994. The contract came into existence by the subsequent discussions between the officials of plaintiff's company and the defendants, whereby, it was mutually agreed to work at the revised rates. Thus, the contract came into existence subsequent to the work order dated 02.01.1994.
5.The contentions of the reply statement and additional reply statement are as follows:
5.1.As per the final bill, TWAD board had paid the plaintiff Rs.2,15,65,399.48. Out of the said amount, the first defendant is entitled to get Rs.94,45,110.20 only and the other contractors, who were engaged to work between 0-16 km are entitled to get Rs.54,05,156.85. As against this, the first defendant had received Rs.1,93,14,752.08. In the plaint, the work done by the defendants was shown as Rs.90,12,122/-. But, as per the final bill of TWAD board, it works out to Rs.94,45,110.20. Hence, the plaintiff restricts the claim to Rs.98,69,641/-. The line testing of pipes manufactured by M/s.Pioneer Engineering Syndicate was done by the plaintiff itself at their expense and therefore, the claim of the defendant that they incurred additional expenses on that account is false.
5.2.The defendants, after 11 years, for the first time allege that the work order dated 02.01.1994 issued by the plaintiff is only a conditional acceptance and as such, subsequently, a new agreement was entered into. It is absolutely false to allege that a contract came into existence by the subsequent discussions between the officials of the plaintiff's company and the defendants. The defendants seem to have induced the local Project Manager and in connivance with him, received payments by cheating the plaintiff's company.
6.The learned Additional District Judge framed necessary issues and after analysing both oral and documentary evidence of both sides, dismissed the suit and decreed the counter claim in part with cost. Aggrieved by the judgment and decree, the plaintiff has filed this appeal suit.
7.The learned counsel for the appellant has contended that the contract between the plaintiff's company and defendants was concluded and work order was issued on 02.01.1994 and the defendants also, pursuant to the contract undertook the work; that as per the work order, revision of rates is not permissible till the completion of the project and the defendants with the connivance of the Project Manager of the plaintiff's company, have drawn the amount in excess to the work done by defendants as per the measurement made by TWAD board.
7.1.It is further contended that the defendants could not complete the work within the time and some works were completed through the other sub-contractors by the plaintiff and they were also paid by the plaintiff. Therefore, the excess amount received by the defendants are to be refunded to the plaintiff.
8.The learned counsel for the respondents/defendants has interalia contended that there was no concluded contract between the parties with the work order and there was subsequent negotiations with respect to the revised rate and only the defendants started to work as per the revised rates agreed between the parties. As agreed by the parties, the defendants sent revised rates to the plaintiff. The amount paid by the plaintiff as advance was repaid immediately at their request. The plaintiff paid the amount to the defendant calculating the workers and machineries used for the work only as advance at the rate of 75%.
8.1.It is further contended that the plaintiff has not furnished the full statement of accounts inspite of the demand made by the defendants. The District Judge, after analysing both the oral and documentary evidence, has rightly dismissed the suit filed by the plaintiff and decreed the counter claim and the same does not warrant any interference.
9.The consistent case of the plaintiff is that a contract between the plaintiff's company and the defendants came to be concluded by issuing work order dated 02.01.1994 and as per the contract, the defendants are not entitled to any revised rate and they are bound to repay the amount they have drawn in excess from the plaintiff's company. Whereas, the defendants' case is that the contract is not concluded with the work order and there was further negotiation with respect to the revised rate and as agreed, the defendants sent the revised rate to the plaintiff. The defendants started to work and plaintiff has also paid the amount only after assessing the work done by the defendants.
10.As per the contract act, in order to convert a proposal into a promise, the acceptance must be absolute and unqualified. Until there is absolute acceptance of a proposal, the parties are still in the stage of negotiations and no legal obligation attach to them.
11.The learned counsel for the respondents /defendants cited the judgment in U.P.Rajkiya Nirman Nigam Ltd., V. Indure Pvt. Ltd., reported in AIR 1996 SUPREME COURT 1373, for the proposition that if there is no consensus on the material terms of the contract, it cannot be said that the same is concluded contract. In this judgment, it has been held as follows:
?Clause (10) which thrusts responsibility on the first respondent was deleted in the counter-proposal. In clause 12, for joint responsibility unilateral liability was incorporated. In other words the respondent disowned its material responsibilities. Unless there is acceptance by the appellant to those conditions no concluded contract can be said to have emerged.
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The Joint liability of the parties was made unilateral liability of the appellant. Thereby, the respondent sought to absolve itself from the liability of further performance of the contract with the Board. Similarly, Clause (10) which contains material part of the terms for the performance of the contract with the Board was deleted. Thereby, there is no consensus ad idem on the material terms of the contract which contains several clauses. In the absence of any consensus ad idem on the material terms of the contract to be entered into between the parties, there emerged no concluded contract.? In the instant case, the work order dated 02.01.1994, which is marked as Ex.A3 = Ex.B5 reads thus:
?We refer your quotation and further discussion had with you, We are glad to approve your rates for doing the civil works such as Excavation of all soils, laying, jointing and testing of pipes at Reach I site as per schedule enclosed.
You will be paid an advance of Rs.20,00,000/- for purchasing machineries, mobilising the things for the above work and the same will be recovered on prorata basis on each running bill. The rates as per the schedule are accepted as per the following conditions:
1.You will be paid for the qty. measured by the Department Engineers.
2.The rates will not be revised till the completion of the Project.
3.Retention Deposit @ 3% will be deducted from our running bills and the same may be refunded only on satisfactory completion of work.
Income tax will be deducted @ 1.12% from your bill. You are requested to attend the office for signing the agreement with us at an early date. The receipt of the work order my be acknowledged.?
12.As per this order, the plaintiff is to pay an advance of Rs.20,00,000/- for purchasing machineries mobilizing the things for the work to the defendants. As per Exs.A4 and A5, the above amounts were paid to the defendants on 23.12.1993 and 28.12.1993 under Exs.A4 and A5, even prior to the work order dated 02.01.1994. But, it is seen from Exs.B3 and B4, the above amounts given to the defendants were repaid under Exs.B3 and B4, one on the same day and the other repayment on the very next day of the receipt of the same, i.e. on 23.12.1993 and 29.12.1993. After the work order, the above mentioned advance of Rs.20,00,000/- as stated in the work order, was not paid to the defendants by the plaintiff.
13.As per the work order, the defendants have been requested to execute the agreement with the plaintiff's company at an early date. But, no agreement has been entered into between the parties, as per the work order.
14.In the work order, it is specifically stipulated that the rates will not be revised till the completion of the project. But, the defendants requested for revised rates on 01.06.1994 and 21.06.1994 under Exs.B8 and B11. But, the plaintiff has not responded above letters.
15.The plaintiff made payments to the defendants on weekly basis and the defendants requested the plaintiff to enhance the weekly payment by its letter dated 23.07.1994, which is marked as Ex.B11. Though the work order stipulates that the payment will be both for the quantity measured by the department Engineers and 3% retention deposit will be deducted from the running bills, the same has not been followed. P.W.6, the Manager of the plaintiff's company says during the cross examination that 19 bills have been presented to the TWAD board by the plaintiff. Thus, the plaintiff presented the bills 19 time after taking measurements by TWAD board and got the bills cleared; but, the plaintiff has not paid to the defendants on the basis of the above measurements. The plaintiff has paid weekly payment to the defendants and therefore has not adhered to the conditions stipulated in the work order.
16.From the above facts, it is very clear that the work order has not been acted upon and the stipulations mentioned by the plaintiff in the work order was not accepted and therefore, the plaintiff paid the weekly payments to the defendants according to the work done by them, without paying the advance of Rs.20,00,000/- and clearing the payment as per the running bill according to the quantity of work measured by the department. Having not accepted the conditions by the defendants, which has also been established through the conduct of the plaintiff as aforesaid, it is to be a concluded as per the above settled proposition of law that the work order dated 02.01.1994 is not a concluded contract.
17.In the reply statement, the plaintiff for the first time avers that the defendants in connivance with the Project Manager of the plaintiff company received the payments by cheating the plaintiff's company. Even in the plaint, it is averred that the defendants misguided the Project Manager and got the excess payment. P.W.6, during his cross-examination, has clearly deposed that the company has got internal audit and twice a year, internal audit is undertaken. Nothing has comeforth how the plaintiff missed the payments made to the defendants from the audit. The Project Manager of the plaintiff's company, who was incharge of the work and who was also responsible for the issuance of the work order as well as accepting the repayment of advance and weekly payments has not been examined. Therefore, the contention of the appellant that the defendants got excess payment either by misguiding or inducing the Project Manager is not acceptable.
18.Though the plaintiff contends that entire work allotted to the defendants was not done by them, some parts of work were done by other sub- contractors. Though the plaintiff filed letters sent to various sub- contractors by the plaintiff as Exs.A7 to A10 and registers for the payment made to sub-contractors as Ex.A39, none of the sub-contractors have been examined. As rightly pointed out by the trial Court, payments made to the sub-contractors under Ex.A39 is not co-related with the work allotted to the defendants. As per the work certificate Ex.B2 dated 23.12.1993, the civil work awarded to the defendants is to the tune of Rs.1.75 crores. P.W.6, during his cross examination, has said that in Ex.A39, the payment register to the sub-contractors, it is mentioned in page Nos.55 to 57 that the total amount payable to the defendants is Rs.1,63,59,157/-. He also admits that apart from the above amount, Rs.30 lakhs shown in the account was paid directly by the plaintiff, on behalf of the defendants for engaging machineries from others. Therefore, it is clear that the plaintiff has not established its claim by producing all the accounts as to the agreed rates and measurements. At the time of filing the plaint, the plaintiff had not filed the account pertaining to the contract and after cross examination of P.W.1, the accounts of the plaintiff relating to the defendants were filed and they are also not helpful, as already discussed.
19.The defendants made a counter claim for the additional work done by the defendants plus 10% profit. Though the defendants gave the list of additional work under Ex.B17, detailed accounts as to the additional work has not been furnished and the same is not supported with any other documents. The additional work done by the defendants has not been denied by the plaintiff. As per Section 70 of the contract Act, if a party to a contract has done additional work for another not intending to do it gratuitously and the person so benefitted is liable to compensate the former for the additional work not covered by the contract. Therefore, the trial Court has rightly held that the defendants are entitled to Rs.16,39,981/- as mentioned in the reply notice.
20.Thus, the trial Court has rightly dismissed the suit and decreed the counter claim in part and this Court does not see any reason to interfere with the judgment and decree of the trial Court.
21.In the result, the appeal suit is dismissed with throughout cost. The judgment and decree of the trial Court, dismissing the suit with cost and decreeing the counter claim in part with cost for Rs.16,39,981/- are confirmed.
To
1.The Additional District Sessions Judge (Fast Track Court No.3), Madurai.
2.The Record Keeper, Madurai Bench of Madras High Court, Madurai.
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