IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID MONDAY, THE 22ND MARCH 2010 / 1ST CHAITHRA 1932 AS.No. 52 of 2002(E) -------------------- OS.445/1995 of PRL.SUB COURT,TRIVANDRUM .................... APPELLANT/ PLAINTIFF: ----------------------- M.P.NARAYANAN NAIR, S/O.PARAMESWRAN NAIR AGED 43 YEARS, RESIDING ATSREENILAYAM,CHERUVATHOOR KOTHAMANGALAM. BY ADV. MR.R.S.KALKURA RESPONDENTS/DEFENDANTS: -------------------------------- 1. THE CHIEF SECRETARY, GOVERNMENT OF OF KERALA, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. 2. THE SUPERINTENDING ENGINEER,PROJECT CIRCLE, MUVATTUPUZHA GOVERNMENT PLEADER MR.P.K.BABU FOR R1 & R2 THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 22/03/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: HARUN-UL-RASHID, J. ----------------------------------- A.S.No.52 of 2002 --------------------------------- Dated this the 22nd day of March, 2010 J U D G M E N T Plaintiff in O.S.No.445 of 1995 on the file of the Sub Court, Thiruvananthapuram, is the appellant. Suit is filed for recovery of money. The suit was partly decreed by the court below allowing the plaintiff to recover a sum of Rs.10,157/- with interest. Recovery of amounts under other heads are declined. Aggrieved by that part of the judgment and decree negativing the claim under other heads, the plaintiff has preferred the appeal. Parties are hereinafter referred to as the plaintiff and defendant as arrayed in the suit. 2. The contract work relates to 'PVIP constructing Mulavoor Branch Canal Vth km. for constructing a field canal from 0 to 1020 M of Vazhangoli parambu padasekharam'. The tender submitted by the plaintiff was accepted by the defendants. The plaintiff remitted Rs.18,800/- as security deposit on 24.9.1984. The plaintiff entered into an agreement with the first defendant on 25.9.1984. The agreement is marked as Ext.B1. The accepted probable amount of contract is Rs.4,69,159/- which is A.S.No.52 of 2002 - E 2 10.9% above the estimate rate based on the scheduled rate of 1982 less the cost of departmental materials. The period of contract is 12 months from the date of handing over the site. It is the plaintiff's case that he made all arrangements to complete the work within the stipulated period. But, he was prevented from doing so on account of the failure of the authorities to duly perform, honour and discharge the guaranteed obligations and assurances to be so done on their part in the contract. 3. It is pleaded by the plaintiff that though the agreement is executed on 25.9.1984 the site was handed over to the plaintiff only on 7.12.1984. MDSS contemplates that possession of the entire site shall have to be handed over within 16 days from the date of selection notice. The site was handed over on 7.12.1984. It is further pleaded that the department failed to fix the alignment in time; after much persuasion and request to the field officer he has finalised the canal set out belatedly. As per the rules, the earth work escavation can be commenced only after the approval of the initial levels by the competent authority. The initial level, according to the plaintiff, was approved belatedly. The plaintiff commenced the earth work A.S.No.52 of 2002 - E 3 escavation as per the instructions of the filed officers. The authorities have instructed the plaintiff to start the work only on 27.4.1985. It is pleaded in the plaint that going by the above facts stated, he was permitted to commence the work only after seven months from the date of execution of the agreement. According to him, the departmental authorities are responsible for the said delay and therefore the department is liable to make good the loss suffered by the plaintiff. 4. The plaintiff further stated that he started the escavation work and after completing major portions of the escavation work, a part bill was prepared. But, payment of the part bill was delayed for four months and paid only on 15.12.1986, which is long after the preparation of the bill. It is also pleaded by the plaintiff that he have to pay exorbitant rate of interest for the amount borrowed from South Indian Bank and the delay in making part payment caused the plaintiff huge loss. According to him, the non-availability of finance and consequential delay in making payment in time lead to financial problems and delay and disruption of the construction for which according to him, the department alone is responsible. It is the A.S.No.52 of 2002 - E 4 case of the plaintiff that after completion of the earth work, he requested the authorities to take the initial level of the rock and to approve the same so as to commence the blasting operations. The initial levels of rock was approved on 11.6.1987. But, the department took the stand that the initial levels of rock was approved on 21.3.1986, which according to the plaintiff is not correct. The plaintiff further alleged that the approval of initial levels of rock was conveyed to the plaintiff only on 11.6.1987 which is after a lapse of 15 months and further stated that the approval is a back dated one. Before commencing the blasting operations the Holly Spirit Sisters Community approached the Munsiff Court, Muvattupuzha and obtained an injunction order restraining the plaintiff from doing any blasting work at or nearby the convent. The plaintiff by letter dated 8.4.1986 intimated this fact to the Superintending Engineer and sought further instructions in the matter. He has pointed out that the balance work to be carried out are blasting work and certain C.D works, which could be done only after blasting work. The plaintiff further alleged that the departmental authority did not sanction the rock blasting under protective arrangement and the A.S.No.52 of 2002 - E 5 construction is stopped on account of the order of the civil court. According to the plaintiff, impossibility of execution was caused at site and his entire establishment idled at site. According to him, unless the injunction order of the civil court is vacated and sanction for controlled blasting operation is accorded further work could not be carried out. Meanwhile cost of construction also increased due to price spiral. 5. The validity period of the agreement expired on 2.7.1986. On 25.6.1992, the second defendant issued notice intimating the plaintiff that the agreement was terminated at the risk and cost of the plaintiff. The plaintiff denied the allegations in the notice and issued a reply notice requesting the authority to relieve him from all contractual obligations. According to the plaintiff the second defendant had terminated the agreement at the risk and cost of the plaintiff vide proceedings dated 20.10.1992. The plaintiff further allege that the order of termination is in respect of a contract of which the validity period has already been expired and no contract is subsisting. Therefore, the plaintiff claimed Rs.18,800/- due to him as security deposit with interest at the rate of 8.5% per annum A.S.No.52 of 2002 - E 6 totalling to Rs.35,579/- and a sum of Rs.10,838/- sought to be recovered being the part bill retension amount. The plaintiff further claimed that he is entitled to Rs.4,230/- towards the sum spent for rock blasting, Rs.20,000/- was claimed being 10% of the balance work under the head preventive gains, thus, the plaintiff prayed for declaration that the proceedings dated 20.10.1992 of the Superintending Engineer, Project circle, Muvattupuzha is ab initio null and void and the plaintiff is exonerated from executing the balance work after relieving him from all contractual obligations. Prayers (b), (c), (d) and (e) are referred above. 6. In the written statement filed by the contesting defendants, the awarding of contract, execution of agreement and remittance of security deposit are admitted. It is also admitted that time for execution is 12 months from from the date of handing over the site. It is pleaded that the plaintiff took possession of the site on 7.12.1984 that he should have completed the work on or before 6.12.1985, that the plaintiff failed to complete the work even after the extended period and that the department has rendered all assistance and co-operation A.S.No.52 of 2002 - E 7 for the completion of the work in time. According to the defendants, the initial level was approved by the second defendant on 19.3.1985 and that there was no delay in making the part payment. It is admitted that the civil court passed an order of injunction; by virtue of injunction the plaintiff was prevented from carrying out the work to a quantity of 865 m³ only whereas as per the contract the plaintiff had to carry out rock blasting for 3350 m³. According to the department, there was no hindrance for carrying out work in other areas, but, the plaintiff deliberately failed to carry out the major quantity of work and thus committed breach of contract. The department further alleged that the plaintiff had stopped and abandoned the work without valid reason and hence committed breach of contract. It is admitted that the time was extended up to 2.7.1986 and that supplemental agreement was executed. In spite of repeated demands the plaintiff did not complete the work and therefore the agreement was terminated as per the order dated 20.10.1992, marked as Ext.A20. The defendant prayed for dismissal of the suit. A.S.No.52 of 2002 - E 8 7. The evidence consists of the oral testimony of PW 1 and DW1. Exts.A1 to A21 and B1 to B4 were marked. 8. The trial court examined the question whether the plaintiff has committed breach of contract and whether Ext.A20 order of termination of contract is valid and whether the plaintiff is entitled to any amount as claimed in the plaint. Ext.B1 is the agreement executed by the plaintiff on 25.9.1984. On the previous day he deposited the security amount of Rs.18,800/-. As per the terms of Ext.B1 agreement the contract work has to be executed within 12 months from the date of handing over the site. The site was handed over on 7.12.1984. Ext.A11 is the letter issued by the plaintiff addressed to the Superintending Engineer. In Ext.A11 it is stated that the plaintiff could not do any further work due to the stay and injunction order in the suit ; therefore he could not complete the work within the stipulated time for completion and requested the Superintending Engineer to extend the time of completion of the work by one more month. Ext.A11 is dated 2.6.1986. On the basis of the request made in Ext.A11, time was extended up to 2.7.1986. Supplemental agreement was also executed fixing the time limit. Ext.A12 is the A.S.No.52 of 2002 - E 9 letter dated 31.12.1989 addressed to the Superintending Engineer. It is stated in Ext.A12 that the department is not making any arrangement to resume the work; that though a part bill was prepared for the work done, the payment was objected on the ground that the time for completion of the work has expired. In that context the plaintiff was forced to apply for extension of time. According to the plaintiff since the department was not co-operating to resume the work already started but not continued due to several reasons including the order of injunction passed by the civil court, the plaintiff informed the defendants to terminate the contract and to redress his grievance and recoup the loss caused to him. Ext.A12 letter addressed to the Superintending Engineer is dated 31.12.1986. 9. The plaintiff's case is that there was breach of contract on the part of the officers of the department in handing over the site, supplying the materials, approving the initial levels and taking steps to vacate the order of injunction. It is an admitted fact that due to the order passed by the civil court the plaintiff was unable to carry out the blasting work at the site. The department took the contention that the plaintiff was prevented A.S.No.52 of 2002 - E 10 by the order of injunction from doing the work only with regard to a portion of the site. The submissions of the defendants may be true, but, there is no meaning in carrying out part work unless the entire site is ready for doing work. Even if he does the work in a portion he cannot complete the work within the extended time or thereafter. The department also has no case that they have informed the plaintiff to commence and continue the work in portion of site not affected by the civil court order. Therefore it is not fair to put liability on the plaintiff for not completing the work within time. This may be reason why he had issued Ext.A12 letter requesting the department to terminate the contract and to compensate the damages caused to him. The contention of the department that the injunction order does not prevent the plaintiff from completing the work because injunction order will not affect the major part of the work area therefore cannot stand. The pleadings, facts and the attendant circumstances would go to show that the plaintiff was unable to perform his obligations due to the various events that took place during the period of contract. The contract work relates to the 'PVIP constructing Mulavoor Branch Canal Vth km. for constructing a A.S.No.52 of 2002 - E 11 field canal' which includes escavation of earth and blasting of rocks. It is an admitted case that the plaintiff had executed earth work for forming the field channel and what remaining is blasting of rock. Ext.A4 is the copy of the injunction order in O.S.No.179 of 1986 on the file of the Munsiff Court, Muvattupuzha filed by Holly Spirit Sisters Community. The order of injunction was passed on 1.4.1986. The order continue to be in force till the order passed by the department terminating the contract at the risk and cost of the plaintiff and thereafter. Injunction order prevented the plaintiff from carrying out or completing the work undertaken. Ext.A5 is the letter issued by the plaintiff on 8.4.1986 to the Superintending Engineer intimating him to take necessary steps to enable him to carry out the work. The department also did not take any action to vacate the order of injunction passed by the civil court. So long as he could not carry out the work not due to his own fault it cannot be said that the plaintiff had committed default in doing the work. Though the extended period fixed for completion of work expired on 2.7.1986 it is seen that nothing has been done thereafter by the department for a long period of time. Since the plaintiff could not A.S.No.52 of 2002 - E 12 complete the work within the period fixed for the same due to several reasons discussed above, the plaintiff cannot be blamed for non-completion of the work. After 2.9.1986 it is not known why the department took around 6 years for terminating the contract. The department terminated the contract in the year 1992 at the risk and cost of the plaintiff. The order is Ext.A20. It is the case of both sides, in the nature of the contract, time is considered to be essence of the contract and hence as on 2.7.1986 parties are relieved from the contractual obligations and the contract itself is terminated. In the facts of this case, the termination of the contract by the State Government at the risk and cost of the plaintiff is illegal and wrongful. This is a case where the attendant circumstances clearly show that the plaintiff was prevented from doing the work due to various factors including the latches on the part of the department in co- operating with the plaintiff to complete the work. It is both sides case that time was considered as the essence of the contract as per the express provision and that at the request of the plaintiff time was extended up to 2.7.1986. Thereafter the plaintiff requested the department to relieve him from all contractual A.S.No.52 of 2002 - E 13 obligations finding that he was unable to complete the work for the facts and circumstances stated above. In such circumstances the termination of the agreement is not legal. The learned counsel for the appellant submitted that the last date fixed for completion of the contract expired on 2.7.1986, the department did not take any action to terminate the contract within a period of three years thereafter. The contract was terminated at the risk and cost after 6 years. For this reason also the termination is not sustainable under law. 10. The trial court granted a decree allowing the plaintiff to recover a sum of Rs.10,838/- by way of return of retension amount. In the light of the conclusions arrived at by this Court, the plaintiff is entitled to recover a sum of Rs.35,579/- by way of return of security deposit with interest and also entitled to recover Rs.20,000/- by way of prevented gains. Thus, the plaintiff is entitled to declaration of prayers (b) and (e) of the plaint. As per the clauses in the agreement the department offered to give preventive protection for blasting of rocks. A.S.No.52 of 2002 - E 14 In the result, the appeal is partly allowed. The judgment and decree stands modified. The plaintiff is allowed to recover Rs.35,579/- with interest at the rate of 9% from the date of suit till the date of decree and future interest at the rate of 6% from the date of decree till realisation. Plaintiff is also allowed to recover Rs.20,000/- with interest at the rate of 9% from the date of suit till the date of decree and future interest at the rate of 6% from the date of decree till realisation. It is declared that Ext.A20 proceedings dated 20.10.1992 of the Superintending Engineer, Project Circle, Muvattupuzha is illegal. HARUN-UL-RASHID, JUDGE. bkn/-