IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID WEDNESDAY, THE 9TH DECEMBER 2009 / 18TH AGRAHAYANA 1931 AS.No. 584 of 1999(A) --------------------- OS.807/1993 of PRINCIPAL SUB COURT,ERNAKULAM .................... APPELLANT: PLAINTIFF --------------------------------- K.V. GEORGE, GOVERNMENT CONTRACTOR KANAMPURAM HOUSE, VILANGU P.O, ERNAKULAM. BY ADV. SRI.K.BABU THOMAS RESPONDENTS/DEFENDANTS ------------------------------------------- 1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY, PUBLIC WORKS DEPARTMENT GOVERNMENT SECRETARIAT, TRIVANDRUM. 2. THE EXECUTIVE ENGINEER, PWD ROADS DIVISION, COCHIN-31. GOVERNMENT PLEADER SRI.T.K.SAJEEV FOR R1,R2 THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 09/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: HARUN-UL-RASHID, J. ---------------------------------------- A.S.No. 584 of 1999 ---------------------------------------- Dated this the 9th day of December, 2009 JUDGMENT The plaintiff in O.S. No. 807/1993 on the file of the Principal Sub court, Ernakulam is the appellant. The suit was filed for refund of security deposit and for recovery of money under different heads The trial court dismissed the suit. Hence the appeal. The parties hereinafter are referred to as plaintiff and defendants. 2. The defendants issued notification inviting competitive tenders for the performance of works of improvements to Pookattupady junction- Construction of deviation road. The plaintiff's bid is approved. On 20.12.1991 the plaintiff and the 2nd defendant entered into an agreement. The plaintiff deposited Rs.15,500/- towards the security amount for the due performance of the contract. The agreement interalia stipulated a period of 4 months for completion of the work, reckoned from the date of handing over of possession of the site. Probable amount of contract is Rs. 3,09,742/-, stipulating conditions, special conditions, MDSS, reciprocal promises and obligations on either side, schedule of works enumerating the respective items, specifications, quantities, types, unit rates , estimated amounts thereof for various works, materials to be supplied, the manner and method of measurements of quantities, effecting payments,order of performance of works, etc. The details of materials to be A.S.No. 584 of 1999 -2- supplied for the work and the rate of each material and other conditions are mentioned in Form No.83 attached to Ext.B1 agreement. The tender schedule attached to Ext.B1 agreement in detail classified the works to be done one by one. The starting work to be done is the earth work cutting in all classes of the soil. It can be seen from the tender schedule, the quantity of earth cutting work is 1600 Cubic metre , unit is 10 Cubic metre , rate at Rs.397/- and the estimated amount is Rs.63,520/-. The rates quoted by the plaintiff were with reference to the time schedule stipulated in the agreement of 4 months. The particulars of other works in the tender schedule are also mentioned one by one. According to the plaintiff by virtue of clause 58 of Madras Detailed Standard Specifications (for short MDSS) the defendants were bound to hand over unhindered possession of the entire site to the plaintiff within 2 months from the date of execution of the Ext.B1 agreement. Clause 4 of the Articles of the Agreement which was marked as Ext.B1(a) stipulates that time shall be considered as the essence of the agreement and the Contractor hereby agrees to commence the work as soon as this agreement is accepted by competent authority as defined by the Kerala Public Works Department Code and on handing over the site (or premises) as provided for in the said conditions and agrees to complete the work within 4 months from the date of such handing over of the site(or premises) and to show the progress as defined in the tabular statement. 3. The agreement was executed on 20.12.1991 and the period of two months referred to in clause 58 of the MDSS expired on 20.2.1992 . In terms of the agreement the plaintiff/contractor is bound to complete the A.S.No. 584 of 1999 -3- work on or before 5.6.1992. It is alleged in the plaint that the defendants were not possessed of the entire site on the date of inviting competitive tenders or even on the date of executing the agreement and that the defendants could not hand over possession of the entire site even on 1.7.1993 in stead of 20.2.1992,i.e the outer limit of time stipulated in clause 58 of MDSS. According to the plaintiff, the defendants under persuasion obtained his signatures in the prescribed forms of handing over of possession of the site of work . 4. The grievance of the plaintiff is that, in order to start the work basically two conditions shall be satisfied by the Department. Firstly, the Department shall take initial level measurements, so that the plaintiff can begin his work, since the work in this contract includes earthwork cutting in all classes of soil. According to the plaintiff for taking measurement of the work to be done by the plaintiff the initial level measurement is necessary. The Department also has no case that the initial level measurement is not necessary for commencing the work. Admittedly, the initial level measurement was done only on 3.8.1992. 3.8.1992 is a date far ahead of the date fixed for completion of the work. Secondly, the handing over of the work site. Admittedly the entire site was not handed over to the plaintiff. The plaintiff alleged that telephone posts and 11 KV line are situated on the work site . A bunk and other encroachers also occupied the site at the time of execution of the agreement .Besides the above in O.S. No. 232/1992 which was filed by the encroachers, the civil court injuncted the plaintiff and Assistant Engineer from in any way entering into or carrying out the work in the site. A.S.No. 584 of 1999 -4- 5. In the joint written statement filed by the defendants the acceptance of the tender and the execution of the agreement are admitted. It is stated that the agreement was executed on 20.12.1991 and the site of the work was handed over to the plaintiff on 6.2.1992. It is also averred that the work has to be completed on or before 5.6.1992 and that the contractor is bound to commence and carryout the work as per the conditions laid down in the agreement. It is further averred in the written statement that the plaintiff has failed to make the preliminary arrangements and to commence the work in time, that materials and skilled labourers are required only after the completion of the earthwork cutting for the road formation, that the plaintiff did not even start the work of earthwork excavation and that the plaintiff under no circumstances be entitled to claim any damages from the Government. According to the defendants the plaint schedule property in O.S. No. 233/1992 on the file of Musiff Court, Aluva, pertains to only a small portion of one side of the road at one end and that there was no obstruction to commence and complete the work in other portions. The defendants also contended that initial levels were taken in time and the same was check measured and approved by the 2nd defendant and that the plaintiff was permitted to commence and carry out the work immediately on taking the initial levels. It is also contended that the plaintiff has abandoned the work and committed breach of the contract and therefore he is liable for the loss sustained to the Department in re-arranging and completing the works and therefore the termination order is valid and binding on the plaintiff. 6. The evidence in this case consists of the oral evidence of A.S.No. 584 of 1999 -5- PWs 1 to 6, DW1 and the documentary evidence of Exts. A1 to A26 and B1 to B12. 7. The facts necessary for the disposal of the case are stated in detail in the preceding paragraphs. The work tendered is “improvements to Pookkattupady junction -Construction of deviation road” The plaintiff had deposited the security amount of Rs. 15,500/- and executed Ext.B1 agreement on 20.12.1991 agreeing to complete the work within 4 months from the date of handing over of the site. Ext.B1(a) is the relevant portion which stipulates that the time shall be considered as the essence of the agreement and the contractor is bound to commence the work as soon as the site is handed over to him. The case of the plaintiff is that the defendants failed to hand over the entire site for commencing the work. The important issue to be examined is as to whether the plaintiff failed in commencing the work in terms of Ext.B1 agreement. The nature of work includes earthwork excavation in all classes of soil. The approximate quantity is 1600 Cubic metres 8. As I have already observed, the department is duty bound to take initial level measurement for carrying out the work undertaken by the plaintiff. In the PWD manual; it is stipulated that if the quantity of earth work cutting measure is more than 300 cubic metres, the actual quantity of work to be done after taking initial field level measurements . The learned counsel for the plaintiff/appellant submitted that since the quantity of earthwork cutting as per tender schedule is 1600 cubic metres and hence the earthwork cutting can be commenced only after taking initialfield level measurement. According to the learned counsel for the A.S.No. 584 of 1999 -6- plaintiff the work of initial level measurement commenced on 3.8.1992 and completed on 24.8.1992. From the above submission of the learned counsel, it is clear that the initial level measurement was taken long after the expiry of the period fixed for completing the work as per Ext.B1 agreement. Ext.B11 level field book shows that the initial level measurement was done during the period from 3.8.1992 to 24.8.1992 9. This Court's attention is also invited to clause 11 of the MDSS which forms part of the agreement. Clause 11 stipulates that the quantities mentioned in tender notices and given in agreement schedule A are worked out from the relevant drawings in a Public Works Department office and may or may not be actuals required for execution The Executive Engineer does not expressly or by implication agree that the actual amount of work to be done will correspond therewith but reserves the right to increase or decrease the quantity of any class or portion of the work as he deems necessary. Going by this course, it is not certain about the actual amount of work to be done. The quantity of earthwork cutting may be more or less than the quantity fixed in schedule A and in such circumstances the initial level measurement must be taken. It is not possible for the Department to assess the actual earth work cutting done by the contractor without taking intial level measurement. Going by the above said clause and Ext.B1 agreement it is clear that the Department is duty bound to take initial level measurement before permitting the Plaintiff/Contractor to commence the undertaken work . Admittedly, the initial level measurement was taken during the period between 3.8.1992 and 24.8.1992 The conduct of the Department in not taking the initial A.S.No. 584 of 1999 -7- level measurement is also one of the reason which prevented the contractor from commencing the work 10. In paragraph 15 of the plaint it is specifically pleaded that the initial field level measurements of earth work excavation were check measured on 27.8.1992 in filed book No.35/89-90 for 1657 cubic metres. It is also averred in the same paragraph that the quantity has to be approved by the 2nd defendant for enabling the commencement of earthwork cutting which was not done till 1.7.1993. 11. The next important question to be considered is whether the site was handed over by the defendants as agreed in Ext.B1 agreement. It has come out in evidence that the electric posts were removed after 9.8.1994 and telephone posts by 20.11.1994. The above said obstructions are removed long after the date fixed for completion of the work . A small portion of the work area is occupied by the bunk. Though the plaintiff attempted to commence the work immediately he was threatened and obstructed by the owner of the bunk and other encroachers. . O.S. No.233/1992 was filed by 7 plaintiffs, which was pending on the file of the Munsiff Court, Alwaye. An order of injunction was passed against the plaintiff and the Assistant Engineer from in any way entering into or carrying out the works in the properties. The order of injunction passed by the civil court also caused hindrance in doing or completing the work. Besides this, the non- removal of the 11 KV line from the work site also caused hindrance for the commencement of the work. Since these hindrances are in existence in the work- site, it cannot be said that the work-site is free from obstruction for the purpose of A.S.No. 584 of 1999 -8- commencing the work. As per the terms of the agreement the defendants ought to have handed over the site free from all obstructions so as to commence the work which in this case did not happen. Since there were various obstructions in the work site, admittedly, the department could not allot the site to the plaintiff free from all hindrances. It may be or may not be true that some portions of the site was handed over to the plaintiff, but such act shall not fulfil the terms of the agreement and obligation on the part of the department. 12. The trial court in paragraphs 6 to 8 in detail discussed the question as to whether the plaintiff is entitled to a declaration as prayed for. The trial court accepted the department's stand that the possession of the property was handed over to the plaintiff. The learned Sub judge also noted that there are obstructions in the work site and the entire site was not handed over as per the terms of the agreement. Though the learned judge though found that there are obstructions at the site , it is unfortunate to say that the plaintiff/contractor do not made the preliminary arrangements for the commencement of the work, Besides the above,the learned Sub judge accepted the contentions of the defendants. The trial court found fault with the plaintiff in not making preliminary arrangements and not starting the work in time. The question of making arrangements or preliminary arrangements as the case may be, arises only when the preliminary duties as in the clause 58 of the MDSS and the relevant clauses in Ext.B1 agreement are complied with by the department. The trial court was more concerned with the commencement of the work by the contractor. There is no justification for the court below to say that the A.S.No. 584 of 1999 -9- plaintiff/contractor did not made the preliminary arrangements in a case where the contractor was unable to commence the work since the work site was not handed over free from obstructions. This Court is of the view that in such a situation the Department cannot terminate the work and forfeit the security deposit. In this connection clause 58 of MDSS is also relevant for consideration. Clause 58 mandates that on notification of possession of the site(or premises) being given to the contractor he shall forthwith begin the work, shall regularly and continuously proceeded with them, by the date of completion, as defined in the “Articles of Agreement” subject, nevertheless to the provisions of extension of time mentioned in the next clause and the contractor shall have the right to withdraw from the contract and obtain refund of his security deposit if such intimation of the handing over of the site is delayed more than two months from the date of acceptance of the agreement by competent authority. The said clause also contains other provisions namely that the contractor shall under no circumstances be entitled to claim any damages from Government If he incurs any expense or liabilities under the contract before the date of commencement as defined above. The finding of the trial court that the plaintiff can commence and continue the work in the portions where there were no obstructions is not sustainable since electric posts and the 11 KV line were removed long after the period of contract that is to say on 28.1.1995 The observation of the trial court that the contractor can commence and complete the work as agreed in Ext.B1 agreement does not stand to reason. In such circumstances it is evident that the plaintiff was unable to complete the work within the period fixed by the parties or A.S.No. 584 of 1999 -10- within one or two years to come. For all these reasons the findings of the trial court that the plaintiff has not made any preliminary arrangements to commence the work and that the termination of the contract is lawful and that the plaintiff is bound to pay the damages sustained by the department to rearrange the work are unsustainable. It has to be noted that the plaintiff was all along been ready and willing to carry out and complete the work within a reasonable time even after 5.6.1992 and he requested the defendants either to afford facilities , the defendants failed to do either of it till 1.7.1993. Since there was no occasion for commencing the work, I do not think that the plaintiff can claim 10% of the value of the contract towards gains deprived. Similarly the amount of Rs. 12,200/- towards advances made which according to the plaintiff have become irrecoverable consequent to the prevention of performance of the contract is also not allowable. The prayer number C is for recovery of 15,500/- paid as security deposit is allowable 13. Hence, in view of the findings recorded above, the plaintiff is entitled to refund of Rs. 15,500/- deposited with the department. . The security amount was deposited on 18.12.1991. So this Court is of the view that the plaintiff is entitled to realise the security amount with interest at the rate of 12% from the date of deposit till the date of suit and 9% interest from the date of suit till realisation 14. The learned counsel for the plaintiff/appellant submitted that the in respect of some other completed projects certain amounts are due from the department. This Court by judgment dated 23.10.1998 in O.P No. 10131/1993 observed that by virtue of interim order dated 27.8.1993 in A.S.No. 584 of 1999 -11- C.M.P. No. 18301/1993 an amount of Rs. 1 lakh is retained with the respondents. In the said judgment this Court directed the civil court to take note of the said judgment and pass appropriate order in the suit itself (i.e O.S. No. 807/1993), In this appeal this Court finds that no amount is due to the defendants from the plaintiff. In view of the judgment in this appeal the plaintiff/appellant is entitled to get back the retention amount i.e Rs.1,00,000/-(Rupees One Lakh only). The retention amount shall carry 9% interest . In the result, the judgment and decree passed by the trial court are set aside The appeal is partly allowed. A decree is passed permitting the plaintiff to realise Rs.15,500/- with interest at the rate of 12% from the date of deposit till the date of filing of the suit and 9% interest from the date of suit till realisation from the defendants. The plaintiff is also entitled to proportionate costs. It is made clear that the respondents in O.P No.10131 of 1993 shall disburse the retention amount of Rs.1,00,000/- with 9% interest within one month from today, if not disbursed till date. (HARUN-UL-RASHID, JUDGE) es. HARUN-UL-RASHID, J. --------------------------- A.S.No. 584 of 1999 ---------------------------- JUDGMENT 9th December, 2009