IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 2519 of 2001 With CROSS OBJECTION No. 225 of 2011 For Approval and Signature:
HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= STATE OF GUJARAT - Appellant(s) Versus V.D.PATEL & CO. - Defendant(s) ========================================================= Appearance :
GOVERNMENT PLEADER for Appellant(s) : 1, RULE SERVED for Defendant(s) : 1, ========================================================= CORAM :
HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 21/02/2012 CAV JUDGMENT (Per : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. This appeal under Section 96 of the Civil Procedure Code is at the instance of original Plaintiff-State of Gujarat arising from suit proceedings for recovery of money towards damages and is directed against the judgment and decree dated 04.05.2000, passed by learned Civil Judge (S.D.), Godhara, and thereby, the learned Civil Judge partly decreed Special Civil Suit No.143 of 1992 preferred by the appellant herein-original plaintiff.
2. The case of the appellant-original plaintiff:-
(A) The State of Gujarat filed Special Civil Suit No.143 of 1992 against the defendant for recovery of Rs.44,06,601.15 ps. towards damages for committing breach of terms of the agreement. It
constructing Masonary Dam, including spill-way, Head Regulators, Drilling and Grouting and ancillary works of Umariya Irrigation Scheme (Village:Patwan Timba, Taluka:Limkheda, District:Panchmahals) in August, 1978. The tender of the respondent-defendant, which is a partnership firm engaged in the business of construction for the amount of Rs.66,02,715/- against the estimated cost of Rs.47,53,336/- was accepted. The defendant executed the agreement and agreed to abide by the terms and conditions of the contract.
(B) It is the case of the plaintiff that the defendant was expected to complete the work within the stipulated period i.e. two years from the date of agreement. However, the defendant failed to diligently execute the work as per terms of the contract, and therefore, the plaintiff was left with no other option, but to terminate the contract and had to get the work executed through another contractor.
(C) It is the case of the plaintiff that as the defendant failed to complete the work, the Government sustained a huge loss, as Government had to get the work completed through other agency M/s. Pandya Patel & Co. The plaintiff put forward in all eight claims under different heads and the total loss towards damages was estimated at Rs.44,06,601.15 ps. and accordingly filed a Civil Suit to recover the said amount from the defendant with running interest at the rate of 18% per-annum from the date of the suit till its realization. Eight claims put forward by the appellant-State of Gujarat are as under:-
“Claim No.1:-
Amounting of Rs.2,58,764.26 ps.
On account of outstanding amount due against equipment advance given for Air Compressor with its accessories.
Claim No.2:-
Amounting of Rs.1,05,381.37 ps.
On account of outstanding amount due against equipment advance given for Conveyor Belts 2 Nos.
Claim No.3:-
Amounting of Rs.2,95,946.46 ps.
On account of outstanding amount due against 1 No. Tata Tipper.
Claim No.4:-
Amounting of Rs.30,460.21 ps.
On account of Electric Energy Mills, charges, etc. paid to G.E.B. On behalf of the defendant.
Claim No.5:-
Amounting of Rs.2,76,735.01 ps.
On account of material issued to the defendant on unstamped receipt .
Claim No.6:-
Amounting of Rs.66,121.71 ps.
On account of non return empty cement begs. Claim No.7:-
Amounting of Rs.4,86,630.21 ps.
On account of security deposit forfeiture. Claim No.8:-
Amounting of Rs.28,86,561.92 ps.
On account of expenses incurred in excess of the original as per Clause.3.”
3. Case of the defendant:-
(A) The defendant appeared by filing written- statement. The defendant contended that the suit of the plaintiff is barred by law of limitation and also by principles of res-judicata, as all the issues arising out of the suit stand concluded with the judgment and decree passed by the learned Civil Judge in Special Civil Suit No.44 of 1984 preferred by the defendant herein for recovery of Rs.22,86,364.06 ps. from the State Government towards damages for breach of the contract, based on the self same agreement, which was also the subject matter of dispute in the suit being Special Civil Suit No.143 of 1992.
(B) In the written-statement, defendant took the stand that in the year 1978-79, the plaintiff- State of Gujarat through its Executive Engineer, Irrigation Project, Division No.1, Diwada Colony, invited tenders for the works of construction of Masonary Dam including spillway, head regulator, drilling and grouting and other ancillary works of Umaria Irrigation Scheme. The said tender was invited publicly in B-2 form.
(C) The estimated cost of the work was to the tune of Rs.47,53,338/- and the accepted cost of the tender was to the tune of Rs.66,02,715/-. The defendant submitted the tender by quoting his rates as per the items of Schedule-B of the tender. The defendant's tender was found lowest and the same was accepted by the Government vide letter dated 28.10.1978. Thereafter, the defendant was called upon to pay up the amount of security deposit and accordingly defendant deposited a sum of Rs.95,067/- as security by way of an FDR and the remaining amount of Rs.95,067/- was to be deducted from the R.A.Bills. This amount of security deposit was to remain with the Department till the completion of the work and was to be returned to the defendant as per conditions enumerated under Clause-1 of the tender agreement. After paying the amount of security deposit, the defendant was called upon to enter into contract agreement and accordingly defendant entered into contract agreement. The written contract between the parties contains various conditions and stipulations creating mutual bilateral and reciprocal contractual obligations to be performed by both the parties. In short, the defendant was required to construct masonary dam, which included construction of spillway, head regulator, drilling and grouting and other ancillary works for the project known as Umaria Irrigation Scheme.
(D) It is also the case of the defendant that the work of contract consisting of items of Schedule- B was required to be completed within stipulated period of two years. This period of two years was to be reckoned from the date of work order i.e. December-6, 1978 and was to be completed on or before December-5,1980. After having entered into the agreement, the plaintiff was asked to start the work as per the work-order dated December- 6,1978. The defendant commenced with the work, but work could not be completed , as the Department failed in giving line out and also failed to supply the drawings and designs and further there was a last minute change in the drawings and designs of the spillway.
(E) It is also the case of the defendant that the plaintiff also committed breach of contract on account of failure in making the payment regularly in respect of tendered items and also in respect of extra work. Ultimately, for no fault on the part of the defendant, the plaintiff terminated the work as a result of which the defendant was deprived of executing and completing the work in entirety.
(F) The defendant was, therefore, compelled to issue statutory notice dated 26.07.1982 under Section 80 of the Code of Civil Procedure and preferred Special Civil Suit No.44 of 1984 against the Government for recovery of Rs.22,86,364/- at the rate of 18% interest towards damages caused on account of illegal termination of the contract.
(G) The Trial Court proceeded to frame issues at Exh.26. The issues framed by the Trial Court are re-produced as under:-
“1. Whether the suit is barred by law of limitation?
2. Whether the plaintiff proves that due to the act of the defendant, the progress of the work was slow?
3. Whether the plaintiff proves that the defendant committed breach of contract?
4. Whether the plaintiff proves that the plaintiff proves that the plaintiff was entitled to take action under Clause-2 and 3 of the agreement.
5. Whether the plaintiff proves that the defendant abandoned the work?
6. Whether the plaintiff proves that the termination of contract is legal and proper ?
7. Whether the plaintiff proves its claim of Rs.44,06,601.15?
8. Whether the defendant, proves that the suit is not maintainable and is hit by the provision of res-judicata and constructive res-judicata?
9. Whether the defendant proves that the plaintiff could not give the line out of the entire work and could not give the drawings and designs and there was in the drawings and designs of spill way?
10. Whether the defendant proves that the termination of the contract was wrong and illegal?
11. What is order and decree?”
(H) On behalf of plaintiff, four witnesses were examined, they are as under:-
1. Shri.Bipinchandra M.Vyas, Executive Engineer
2. Shri.Arvindbhai K.Soni, Superintendent
3. Shri. Vinodchandra B. Makwana Executive Engineer
4. Shri.Y.G.Vyas, Additional Assistant Engineer
(I) On behalf of the defendant, one of the partners of the firm examined himself i.e. Shri.Vitthalbhai Chotabhai Patel.
(J) On appreciation and evaluation of the oral evidence as well as documentary evidence, the trial Court answered the issues accordingly:-
“1. Not pressed.
2. In the negative.
3. In the negative.
4. In the negative.
5. In the negative.
6. In the negative.
7. Not proves whole claim but proves claim of Rs.2,20,587.30 ps.
8. Not pressed.
9. In the negative.
10. In the negative.
11. As per final order.”
(H) Ultimately, learned Civil Judge partly allowed the suit of the plaintiff and directed the defendant to pay an amount of Rs.2,20,587.30 ps. to the plaintiff with running interest at the rate of 6% from the date of the suit till its realization.
(I) As substantial claim of the original plaintiff-State of Gujarat was turned down by the Trial Court, the plaintiff, therefore, thought fit to prefer the present appeal challenging the judgment, order and decree passed by learned Civil Judge (S.D.), Godhara dated 04.05.2000.
4. Contentions on behalf of the Appellant-State- original plaintiff:-
(A) Learned Assistant Government Pleader appearing for the State vehemently submitted that the Trial Court failed to appreciate the oral evidence as well as documentary evidence on record and without assigning any cogent reason allowed the claims only to the extent of Rs.2,20,587.30 ps. out of the total claim amount of Rs.44,06,601.51 ps.
(B) Learned Assistant Government Pleader contended that the work commenced from 08.12.1978 i.e. after the issuance of the work-order on 06.12.1978 and as per the terms of the agreement plaintiff was obliged to complete the same within 24 months i.e. on or before 5th December,1980. He submitted that the plaintiff worked at a very slow pace right from the beginning and had failed in respect of showing reasonable progress despite full cooperation from the Department. He submitted that the defendant's inability and inefficiency is apparent from various facts on the record of the case. He submitted that the say of the defendant that because of the inquiry proposed for reduction of spill way length, he could not ensure timely completion of the contract is absolutely false. He further submitted relying on the oral evidence of the witnesses examined by the plaintiff that necessary details pertaining to the work were being supplied to the defendant. He submitted that the work of the defendant was not satisfactory and whatever little work he could complete was also at a very slow pace and no efforts were made by the defendant to expedite the progress of the work.
(C) He, therefore, submitted that the appeal deserves to be allowed by quashing and setting aside the judgment and decree passed by the Trial Court and the entire amount as claimed in the plaint be awarded with interest.
5. Contentions on behalf of respondent-original defendant:-
(A) Learned advocate Mr.Dayani, learned advocate appearing for the defendant submitted that on termination of the contract agreement by the plaintiff, the defendant suffered a huge loss, and therefore, the defendant preferred Special Civil Suit No.44 of 1984 for recovering an amount of Rs.22,86,364.06 ps. under various heads. He submitted that the Trial Court by judgment and decree dated 26.04.1991, partly allowed the suit of the defendant and awarded sum of Rs.17,24,430.34 ps. with 9% interest from the date of suit till its realization. He submitted that, therefore, the appellant herein already suffered a money decree in a suit preferred by the defendant herein being Special Civil Suit No.44 of 1984 in which the very self same agreement was a subject matter of dispute in the earlier round of litigation between the same parties. He submitted that, therefore, since in the earlier suit preferred by the defendant, there is already a finding that the defendant contractor was not at fault, but it was the department who failed to perform contractual obligation the principle of res-juducata would apply. He submitted that against the said judgment and decree passed by the learned Civil Court in Special Civil Suit No.44 of 1984, the appellant herein preferred First Appeal No.23 of 1992 before this Court challenging the said judgment and decree passed against the State of Gujarat.
(B) He submitted that after one year from the date of the judgment and decree passed in Special Civil Suit No.44/84, the appellant herein thought fit to file a suit being Special Civil Suit No.143/92 against the defendant herein for recovery of Rs.44,06,601.15 ps. under various heads.
(C) He, therefore, submitted that there is no merit in this appeal and the same deserves to be dismissed by confirming the judgment and decree passed by the Trial Court. He submitted that the defendant has preferred Cross Objections No.225 of 2011 for an amount of Rs.2,20,587.30 ps. but, he is not pressing the cross-objections.
6. Analysis:-
(A) Having heard learned counsel for the respective parties and having gone through the materials on record, we are of the view that the controversy, which needs to be resolved in the present appeal is in a narrow compass more particularly taking into consideration the fact that in connection with the selfsame agreement, which is the subject matter of dispute in this appeal, the defendant herein first in point of time preferred Special Civil Suit No.44 of 1984 for recovering an amount of Rs.22,86,364.06 ps. and partly succeeded in obtaining a decree for sum of Rs.17,24,430.34 ps. with 9% interest from the date of suit till its realization. What is important is not the amount, which was awarded by the Civil Court in favour of the defendant for illegally terminating the agreement but, findings recorded by the Civil Court in Special Civil Suit No.44 of 1984. Thus, both the suits i.e. Special Civil Suit No.44 of 1984 and 143 of 1992 had arisen in respect of contract work undertaken by the plaintiff in the year 1978. Some of the key points relating to the above said work are as under:-
Name of the work: Construction of Masonary Dam including spilway, Head Regulators, Drilling and Grouting and Ancillary works of Umaria Irrigation Scheme.
Tender Cost: Rs.66,02,715/-
Estimated Cost: Rs.47,53,336/- Date of Work order: 06.12.1978 Stipulation date of Completion: 05.12.1980 Termination of Contract by Govt.: 17.12.1981
(B) Issues in Special Civil Suit No.44 of 1984:-
“(1) Whether the plaintiff firm is registered under the Indian Partnership Act?
(2) Whether Plaintiff proves that defendant has wrongly terminated the contract?
(3) Whether the plaintiff proves that defendant i.e. Government officers has committed breach of the contract agreement dated 02.02.197879?
(4) Whether the plaintiff proves that he is entitled to recover the amount of Rs.22,86,364.06 as shown in Para10 of the plaint?
(5) Whether the suit is time barred?
(6) What order and decree?”
(C) Issues in Special Civil Suit No.143 of 1992:-
“1. Whether the suit is barred by law of limitation?
2. Whether the plaintiff proves that due to the act of the defendant, the progress of the work was slow?
3. Whether the plaintiff proves that the defendant committed breach of contract?
4. Whether the plaintiff proves that the plaintiff proves that the plaintiff was entitled to take action under Clause-2 and 3 of the agreement.
5. Whether the plaintiff proves that the defendant abandoned the work?
6. Whether the plaintiff proves that the termination of contract is legal and proper ?
7. Whether the plaintiff proves its claim of Rs.44,06,601.15?
8. Whether the defendant, proves that the suit is not maintainable and is hit by the provision of res-judicata and constructive res-judicata?
9. Whether the defendant proves that the plaintiff could not give the line out of the entire work and could not give the drawings and designs and there was in the drawings and designs of spill way?
10. Whether the defendant proves that the termination of the contract was wrong and illegal?
11. What is order and decree?”
(D) In Special Civil Suit No.44 of 1984, Issue Nos.2, 3 and 4 and in Special Civil Suit No.143 of 1992 issue Nos.3, 4, 5, 6, 9 and 10 are main issues which relate to breach of contract and termination of contract by the Government. These issues are answered in favour of the contractor. In both the judgments the trial Court has held that the breach of contract is committed by the Government because after work order the department changed the drawings and designs of spilway from 110 mtrs. to 70 mtrs. Earthen dam was introduced which was not contemplated in the original contract. New drawings and designs could not be finalized and therefore, could not be given (until termination order) which resulted into the slow progress as due to change in length of various spillway various allied components of the dame also got affected in its location, number and designs etc. Secondly, the department failed to supply schedule “A” materials like copper plates and Gelatin. The department did not prepare the item-wise program. Clear site and line out was not given. Thirdly, due to the above reasons the progress of the work could not be achieved within the original time limit which expired on 05.12.1980. The contractor had applied for extension of time vide Exh.59, 62 and 66 and the same was rejected and the contract was terminated on 17.12.1981 without making the time essence of the contract. The slow progress is therefore, held to be attributable to the department and the termination of contract was held to be wrong and illegal.
7. Most importantly this Court vide judgment and order dated 08.02.2012 dismissed the First Appeal No.23 of 1992 preferred by the State of Gujarat holding that the appellant-State of Gujarat was not justified in terminating the agreement on account of alleged negligence of the defendant and incapability to perform the work as per the contract. While dismissing First Appeal No.23 of 1992, we have held that the contractor i.e. defendant herein, has been able to prove that due to non-cooperation on the part of the State Government in supplying the drawings etc., he was unable to carry out the work efficiently and within the prescribed time limit as per the agreement.
8. In view of the aforesaid facts, we do not find it necessary to discuss the entire evidence led by both the sides in Special Civil Suit No.143 of 1992. It is true that in Special Civil Suit No.44 of 1984 preferred by the defendant herein against the department, the department thought fit not to file any counter claim, but after suffering judgment and decree in Special Civil Suit No.44 of 1984 thought fit to file Special Civil Suit No.143 of 1992. We do not propose to say that the suit of the department is barred only on the ground that no counter claim was filed in Special Civil Suit No.44 of 1984, and therefore, the suit was not maintainable but, as the issues in both the suits are practically same and as we have dismissed First Appeal No.23 of 1992 arising from the judgment and decree passed by the trial Court in Special Civil Suit No.44 of 1984, the present appeal must fail applying the principles of res- judicata as explained under Section 11 of the Code of Civil Procedure, 1908.
9. Even otherwise, on over all reappreciation and re-evaluation of the entire evidence of oral as well as documentary on record, we are convinced that the trial Court is justified in granting the decree in favour of the Original plaintiff-State only to the extent of Rs.2,20,587.30 ps. out of the total claim of Rs.44,06,601.50 ps.
10. In the aforesaid view of the matter, the appeal fails and the same is hereby dismissed with no order as to costs. Cross-objections filed by the respondent-original defendant are also disposed of, as not pressed.
(BHASKAR BHATTACHARYA, ACTING C.J.) (J.B.PARDIWALA,J.) Girish