: 1 : IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO.1373 of 1990 SUIT NO.1373 of 1990 SUIT NO.1373 of 1990 1. State of Maharashtra 2. Executive Engineer, Multi-storeyed Building Construction Division, having his office at Industrial Chemical Laboratory, Building, 1st Floor, Opp.Tata Colony, V.N.Purav Marg, Chunabhatti (East), Bombay - 400 022. .. Plaintiffs. Versus V.J.Kudalkar of Kolhapur carrying on business in the name and style of "Kudalkar Art Studio" at Mohini Bungalow 517/E, Shivaji Park, Kolhapur. .. Defendant. Ms.Geeta Shastri, A.G.P. for plaintiffs. : 2 : None for defendant. CORAM : R.Y. GANOO, J. CORAM : R.Y. GANOO, J. CORAM : R.Y. GANOO, J. DATE : 4th August, 2008. DATE : 4th August, 2008. DATE : 4th August, 2008. ORAL JUDGEMENT :- ORAL JUDGEMENT :- ORAL JUDGEMENT :- 1. Plaintiff No.1 is the State of Maharashtra and plaintiff No.2 is the Executive Engineer of the Multi-storeyed Building, Construction Division of the Govt. of Maharashtra. They have filed the present suit against the defendant for recovery of Rs.2,62,500/- alongwith interest @18% per annum and for costs as set out in the prayer clauses. 2. Brief facts of this case are as under :- 3. Defendant No.1 is a sculptor and the plaintiffs intended to install in the new Council Hall, a statue that of one farmer and his family. The plaintiffs had negotiations with the defendant and by Agreement dated 16.11.1981 at "Exh.P-1" "Exh.P-1" "Exh.P-1", it was resolved that defendant would prepare a statue as per the requirements of the plaintiffs. The total consideration payable was : 3 : Rs.1,87,500 and 20% of the consideration was to be paid to the defendant on signing the contract and placing the firm order. That was done by the plaintiffs that is to say, a sum of Rs.37,500/- was paid to the defendant. On 17.11.1981, the schedule of payment came to be revised on 16.3.1984 at "Exh.P-2" "Exh.P-2" "Exh.P-2". The defendant had signed the documents, namely, "Exh.P-1" "Exh.P-1" "Exh.P-1" dated 16.11.1981 and "Exh.P-2 Exh.P-2 Exh.P-2" dated 16.3.1984. The 50% of the total consideration, namely, Rs.93,750/- came to be paid to the defendant on 27.3.1984. Accordingly, the plaintiffs paid to the defendant in all a sum of Rs.1,31,250/-. The plaintiffs called upon the defendant to comply with the terms of the Agreement that is to say prepare a statue. Ultimately, the plaintiffs by their letter dated 3.6.1986 at "Exh.P-4" "Exh.P-4" "Exh.P-4" demanded a sum of Rs.1,31,250/- being the amount paid to the defendant and Rs.1,31,250/- being the amount towards the damages. The defendant demanded an additional sum of Rs.60,000/- by way of letter dated 25.9.1984 and the plaintiffs granted the said demand by letter dated 24.6.1987 at "Exh.P-5" "Exh.P-5" "Exh.P-5". Despite this, the defendant did not complete the job and the defendant by his letter dated 14.6.1988 demanded an additional amount of Rs.30,000/- which demand was rejected by the Govt. of Maharashtra by their reply dated 1.7.1988 at "Exh.P-9" "Exh.P-9" "Exh.P-9". : 4 : By letter dated 11.1.1989, the plaintiffs demanded a sum of Rs.1,31,250/- and an additional amount of Rs.1,31,250/- by way of damages by their letter at "Exh.P-11" "Exh.P-11" "Exh.P-11". Ultimately, the plaintiffs by their letter dated 27.9.1989 at "Exh.P-13" "Exh.P-13" "Exh.P-13" terminated the contract and instituted the present suit on 14.12.1989 for recovery of the monies as mentioned aforesaid. 4. The defendant appeared in Court and filed written statement and contested the suit. The defendant has exhaustively dealt with various facts and circumstances and admitted having received a sum of Rs.1,31,250/-. The defendant has also conceded that an additional sum of Rs.60,000/- was demanded by him and the same was granted by the plaintiffs. The defendant has also conceded the fact that he had demanded a sum of Rs.30,000/- by way of additional charges. The defendant has come out with some kind of explanation as to how he could not complete the contract within the specified time and as to how for want of sufficient funds, he could not complete the preparation of statue. The defendant disputes his liability and that is how, the defendant has contested the suit. 5. On the basis of the pleadings as aforesaid, issues : 5 : came to be framed on 20.12.2007. They are as follows :- i) Whether the plaintiffs prove that the defendant is liable to pay to the plaintiffs a sum of Rs.2,62,500/- alongwith the interest at the rate of 18% per annum? .. As per the operative .. As per the operative .. As per the operative part. part. part. ii) Whether the plaintiffs prove that the suit is within limitation? .. In the affirmative. .. In the affirmative. .. In the affirmative. iii) Whether the defendant proves that the termination of the contract by letter dated 27th September, 1989, was wrongful and unjustified? .. .. .. In the negative. In the negative. In the negative. iv) What relief? .. As per the operative .. As per the operative .. As per the operative part. part. part. v) What order? .. As per the operative .. As per the operative .. As per the operative part. part. part. 6. Answer to each of the issue is mentioned against the respective issue. 7. At trial, one Mr.Rajnikant Shinde, Executive Engineer, P.W.D. gave evidence. The defendant remained absent at the stage of evidence of Rajnikant Shinde, P.W.1 and that is how the evidence of P.W.1 was concluded. No other witness has been examined by the plaintiffs. No witness has been examined by the defendants whatsoever. REASONS :- REASONS :- REASONS :- ========== ========== ========== . Issue Nos.1, 2 and 3 :- . Issue Nos.1, 2 and 3 :- . Issue Nos.1, 2 and 3 :- : 6 : 8. It would be convenient to deal with these three issues jointly keeping in view the nature of litigation. 9. I have heard learned Advocate Ms.Shastri appearing on behalf of the plaintiffs . With her assistance, I have gone through the record. 10. A perusal of the written statement goes to show that the terms of the Agreement between the plaintiffs and defendant were in terms of document at "Exh.P-1" "Exh.P-1" "Exh.P-1", namely, "points discussed in the meeting". "points discussed in the meeting". "points discussed in the meeting". The schedule for payment was modified on 16.3.1984 being document at "Exh.P-2" "Exh.P-2" "Exh.P-2" and the said document bears the signature of the defendant and the correspondence between the parties would go to show that the defendant had in turn agreed to work on the basis of these two documents, namely, document dated 16.11.1981 and document dated 16.3.1984 as mentioned aforesaid. This will mean that between the parties, an Agreement was arrived at to pay to defendant a sum of Rs.1,87,500/- for preparing a statue and installing the same in the new Council Hall. 11. The evidence on record would clearly go to show : 7 : that the plaintiffs had paid to the defendant a sum of Rs.1,31,250/-. In paragraph 9 of the written statement, the defendant has admitted having received a sum of Rs.37,500/- being 20% of the total charges. In paragraph 22 of the written statement, the defendant has admitted having received a sum of Rs.93,750/- on 27.3.1984. This will go to show that the defendant has received an amount of Rs.1,31,250/-. 12. Once the defendant had received a sum of Rs.1,31,250/-, it was the duty of the defendant to proceed and prepare the statue and call upon the plaintiffs to pay the rest of the amount and take steps to install the statue in the new Council Hall. The plaintiffs by their letter dated 3.6.1986 at "Exh.P-4" "Exh.P-4" "Exh.P-4" indicated to the defendant that he should return the sum of Rs.1,31,250/- being the amount paid to him and an equal amount towards the damages. The plaintiffs had between 31.12.1984 to 25.4.1988 sent various letters demanding completion of the work. With this, it will be very clear that the plaintiffs were calling upon the defendant to comply with the terms of the Agreement. The defendant by letter dated 25.9.1985 demanded additional sum of Rs.60,000/-. The plaintiffs granted the said demand by letter dated : 8 : 24.6.1987. The defendant again demanded a sum of Rs.30,000/- by letter dated 14.6.1988 at "Exh.P-8" "Exh.P-8" "Exh.P-8". This will go to show that the defendant demanded more amount than what was agreed to be paid by the plaintiffs. 13. After having considered the entire record, one thing is clear that if the plaintiffs paid to the defendant a sum of Rs.1,31,250/-, the defendant ought to have shown progress in the matter and ought to have adhered to the terms, namely, the defendant should have prepared a statue and show willingness to install the same. The evidence on record clearly goes to show that no steps were taken by the defendant to show his readiness and willingness to comply with the terms of the Agreement reflected in documents at "Exh.P-1" "Exh.P-1" "Exh.P-1" and "Exh.P-2" "Exh.P-2" "Exh.P-2" as mentioned aforesaid. If this is so, the plaintiffs were right in coming to the conclusion that the defendant was not prepared to perform his part of the contract. 14. It is true that the plaintiffs granted an additional amount of Rs.60,000/- by letter dated 24.6.1987 at "Exh.P-5" "Exh.P-5" "Exh.P-5". Some grievance is made by the defendant that there was delay in granting the said amount of Rs.60,000/-. Still, the fact remains that the defendant : 9 : did not take steps to go ahead with the completion of the job and instead demanded further sum of Rs.30,000/- by letter dated 14.6.1988 at "Exh.P-8". "Exh.P-8". "Exh.P-8". This request was promptly rejected by the plaintiffs by their letter dated 1.7.1988 i.e. "Exh.P-9". At least by this time, the defendant should have realised that the plaintiffs are not interested in granting any more amount to the defendant and the defendant should have performed his part of the contract. The defendant failed and neglected to do so and, therefore, the plaintiffs were constrained to terminate the contract by letter their dated 27.9.1989 at "Exh.P-13" "Exh.P-13" "Exh.P-13" by giving reasonable opportunity to the defendant to comply with the terms of the contract. When the defendant failed to do so, the plaintiffs instituted the present suit on 14.12.1989. 15. The aforesaid discussion will clearly go to show that there was a breach of contract on the part of the defendant inasmuch as the defendant failed to comply with the terms of the Agreement and as such the plaintiffs got a right to recover from the defendant the monies which came to be paid by them towards the terms of the contract as Rs.1,31,250/-. To that extent, the claim of the plaintiffs will have to be granted without any hesitation. : 10 : 16. The plaintiffs have claimed a sum of Rs.1,31,250/- by way of damages. This claim of the plaintiffs can be perceived on the basis of the averments set out in paragraph 8 of the plaint. This would mean that the plaintiffs have been asking the defendant to pay a sum of Rs.1,31,250/- by way of damages. In order to test whether this demand of the plaintiffs as regards the damages is justified, one may have to see the evidence on record. After having gone through the evidence of Rajnikant Shinde, P.W.1, I am inclined to observe that the plaintiffs have not been able to discharge the burden cast on them to prove that the plaintiffs are entitled to damages. The relevant paragraph of the evidence is paragraph No.11. The same can be quoted for the sake of convenience to understand the case of the plaintiffs in the proper perspective. Paragraph No.11 is as follows :- "11. I say that in the interim period of 8 years from the date of the agreement till termination of contract the cost of raw material and labour has increased considerably and has become almost double as is evident from the rates mentioned in District Rates of Schedule published in the year 1989 when compared to the rate of 1981. I say that the amount of raw material and labour has become double and, therefore, the plaintiff is entitled also to payment of damages of a sum of Rs.1,31,250/- being the additional amount that the plaintiff will be required to pay. Hence, the defendant is liable to pay a total sum : 11 : of Rs.2,62,250/- with interest thereon at the rate of 18% from the date of the suit till payment". 17. The above word of Mr.Shinde, P.W.1 is not supported by any material. His bare word cannot be accepted. A perusal of this evidence will go to show that the plaintiffs have failed to discharge the burden insofar as question of damages is concerned. 18. It is also required to be noted that in the letter at "Exh.P-13" "Exh.P-13" "Exh.P-13" being the letter by which the Agreement was sought to be terminated, the plaintiffs have demanded the refund of the amount, namely, Rs.1,31,250/- and have generally referred to the damages of equal amount. No specific explanation is coming forth in the said notice and no evidence is placed before the court to support the case of the plaintiffs as to why they are claiming damages to the tune of Rs.1,31,250/-. To that extent, the claim of the plaintiffs will have to be rejected. Hence, I observe that the plaintiffs’ case to the extent of refund of monies of Rs.1,31,250/- can be granted. Plaintiffs case about damages cannot be granted and a decree accordingly will be passed. The plaintiffs have claimed interest @18% per annum. No material is placed before the court to show as to how the interest @18% per annum is : 12 : sought. Hence, the claim of the plaintiffs towards the interest @18% per annum cannot be accepted. No doubt, the plaintiffs will be entitled to recover interest on the sum of Rs.1,31,250/-. Considering the year of transaction and the monies paid from time to time, I am inclined to observe that if interest @12% per annum is granted to the plaintiffs from 27.3.1984 on Rs.1,31,250/- upto the date of filing of the suit, it would meet the ends of justice. Sofar as interest after filing of the suit is concerned, I am inclined to observe that if interest @6% is granted on Rs.1,31,250/- from the date of the filing of the suit till realisation, it would meet the ends of justice. Accordingly, the decree will be passed. 19. The question of limitation will have to be answered in favour of the plaintiffs. The sum of Rs.1,31,250/- was paid to the defendant on 27.3.1984. The defendant demanded a sum of Rs.60,000/- by letter dated 25.9.1985 and the said demand was accepted by the plaintiffs in terms of letter dated 24.6.1987. This date, namely, 24.6.1987 would be relevant inasmuch as a novatio came to be arrived at between the plaintiffs and defendants. Considering the facts and circumstances, the Article 113 of Limitation Act will be applicable. The : 13 : period of limitation is 3 years when right to sue accrues. In the present case, the right to sue accrued when the plaintiffs realised that defendant is not interested in performing the agreement. This is because the defendant demanded additional amount of Rs.30,000/- by letter dated 14.6.1988. In view of the above, suit filed on 14.12.1989 would be within the period of limitation. Even otherwise, the plaintiffs terminated the contract on 27.9.1989 and that is how, the contractual relationship between the plaintiffs and defendants come to an end and, therefore, institution of the suit on 14.12.1989 will have to treated as within the period of limitation. 20. As regards Issue No.3, it was the duty of the defendant to show that the letter dated 27.9.1989 was wrongful and unjustified. By this letter dated 27.9.1989, Agreement between the plaintiffs and defendants was terminated by the plaintiffs. No evidence is placed before this court by the defendant to show that the said letter was issued by the plaintiffs in a wrongful and unjustified manner. The plaintiffs gave sufficient chance to the defendant to perform his part of the contract. It is only when the plaintiffs were satisfied that the defendant was not showing any interest to perform his part : 14 : of the contract despite payment of substantial amount of Rs.1,31,250/-, the plaintiffs terminated the Agreement with the defendants. Hence, the defendant has failed to show that letter dated 27.9.1989 was issued by the plaintiffs wrongfully or in unjustified manner. 21. For the reasons mentioned aforesaid, the case of the plaintiffs for damages to the tune of Rs.1,31,250/- is rejected. Plaintiffs would be entitled to recover from the defendant a sum of Rs.1,31,250/- and interest @12% per annum from 27.3.1984 upto the date of filing of the suit on Rs.1,31,250/- and interest @6% per annum on Rs.1,31,250/- from the date of filing of the suit till realisation and hence the Issue No.1 is decided as per the operative part. The Issue No.2 is answered in the affirmative i.e. to say, the suit is filed within the period of limitation. Issue No.3 is answered in the negative. For the reasons mentioned aforesaid, I pass the following decree :- D E C R E E D E C R E E D E C R E E i) Defendant do pay to plaintiffs a sum of Rs.1,31,250/-. : 15 : ii) Defendant do pay to plaintiffs interest @12% per annum from 27.3.1984 upto the date of filing of the suit on Rs.1,31,250/-. iii) Defendant do pay to plaintiffs interest @6% per annum on Rs.1,31,250/- from the date of filing of the suit till realisation. iv) Defendant do pay to plaintiffs costs of the suit. (R.Y. GANOO,J.) (R.Y. GANOO,J.) (R.Y. GANOO,J.)