IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No 2038 of 1983 with CROSS OBJECTIONS NO. 36 OF 2002 For Approval and Signature: Hon'ble MR.JUSTICE KSHITIJ R.VYAS and Hon'ble MR.JUSTICE H.K.RATHOD ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : YES of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- GOVT. OF GUJARAT Versus R L KALATHIA & CO. -------------------------------------------------------------- Appearance: 1. First Appeal No. 2038 of 1983 MR. M.K.PATEL, AGP for Petitioner No. 1 MS MAYA N BHAVNANI for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE KSHITIJ R.VYAS and MR.JUSTICE H.K.RATHOD Date of decision: 07/10/2002 ORAL JUDGEMENT (Per : MR.JUSTICE H.K.RATHOD) Heard learned Assistant Government Pleader Mr.M.K. Patel for the appellant State of Gujarat; Mr.G.T.Dayani for Ms. Maya Bhavnani for the respondent original plaintiff. In this first appeal, the appellant original defendant has challenged the judgment and decree passed by the Civil Judge, (S.D.), Jamnagar in Special Civil Suit NO. 30 of 1977 dated 14th December, 1982 wherein the trial court has directed that the plaintiff shall recover from the defendant a sum of Rs.2,27,758.00 with proportionate costs and interest at the rate of 6 per cent per annum from the date of the suit till realization in full. Under the said decree, the appellant original defendant was directed to bear its own costs. Brief facts leading to the filing of the present appeal are to the effect that the present respondent original plaintiff entered into an agreement with the Executive Engineer, Irrigation Division, Jamnagar for the work of construction of Earthen Dam, Wasterweir and outlet of Fulzer II Irrigation Scheme. Said contract was entered into B-2 Form which is a usual Public Works Department's Form. Said agreement contains mutual bilateral reciprocal contractual obligation on the part of the parties. The plaintiff was required to perform certain works and certain obligations were also put up on the shoulder of the defendant. The plaintiff claims that it completed the work in all aspects on30.8.1973 and this date has been considered as a date of completion of the said work by the defendant also. Then, the defendant was required to prepare final bill as per Clause 8 of the said Contract and the payment thereof was required to be made on or before 31st March, 1974. As per the averments made by the plaintiff in the plaint, said bill was actually prepared and was accepted by the present plaintiff under protest because according to the case of the plaintiff, said bill did not represent true and correct picture of the payment, measurements etc. It has also been alleged that on referring to the said final bill, the plaintiff come to know for the first time that certain disputes were raised by the defendant in the said final bill dated 31.3.1974; that even during the execution of the work, certain claims cropped up and they were put forward by the plaintiff before the defendant but after a protracted correspondence, the things were not settled. Therefore, according to the plaintiff, since the final bill was paid on 31.3.1974, the plaintiff came to know that the said disputes would not be settled by the defendant and, therefore, the plaintiff has filed the said suit before the trial court for recovery of the amount of 3,66,538.05 ps. against the defendant on the following heads : Rs.3600.00 For executing the extra work of change. Rs.1800.00 In connection with COT Filling additional depth at the rate of Rs.1.00 per claim No.1. Rs.15625.00 In connection with excavated stuff. Rs.7585.00 In connection with the guide bunds which were considered for the payment in the Running Account Bills but abandoned from the payment of the Final Bill. Rs.5640.00 In connection with excavation for pitching work. Rs.13244.00 In connection with providing sand filte in river portion. Rs.1375.00 In connection with waste weir back filling. Rs.30600.00 In connection with less rate paid for extra item of masonary. Rs.14339.84 On account of breach of condition for irregular payments for which3/4 % of rebate was given. Rs.12386.64 In connection with providing very excessively heavy gate than that of required as per the design. Rs.137478.17 Due to exclanation on account of rising of price in materials labour wages during the period of one year due to statutory rise in excise duty etc. Rs.30000.00 On account of establishment charges during the period from 1.8.1972 to 31.8.1973. Rs.93,049.76 Towards interest. ------------- Rs.3,66,538.05 Total claim as per aforesaid heads. The suit of the plaintiff was resisted by the defendant by filing written statement at Exh. 13 before the trial court wherein it has been contended that the plaintiff has no cause of action for filing the suit; that the notice under section 80 of the Code of Civil Procedure is defective and, therefore, the suit is liable to be dismissed; that the agreement has taken place in Form B-2 between the parties. It has been denied that the plaintiff has completed the work in question in all respects on 30.8.1973. The defendant has also denied that it has considered this date to be the date of completion of work by the plaintiff. It has also been denied that the final bill did not contain true and correct picture of payment and measurement. It has also been denied that the under payment has been made to the plaintiff. It has been submitted that as per clause 10 of the Contract, all the Running Account Bills were required to be submitted by the contractor and if he did not do so, the Engineer in charge can prepare the bill which would bind the contractor also. It has also been contended that as per clause 8, final bill was also required to be submitted within one month from the date of completion of work otherwise the Engineer in charge can charge certificate of measurement of the work to be treated as final and binding. It has been contended that the plaintiff never submitted any Running Account Bills ("RA Bills" for short) and, therefore, the Dy. Engineer had prepared such RA Bills from time to time. According to the defendant, even the Final Bill was also not prepared by the plaintiff and the same was prepared by the Engineer of the defendant and it was signed by the plaintiff in token of acceptance. According to the defendant, since the plaintiff has accepted the payment of RA Bills and the Final Bills, the plaintiff is guilty by not preferring RA Bills and Final Bills. It has been denied that there is no provision for performance of contractual obligation. It has also been denied that the defendant has not considered the claims of the plaintiff but as per the case of the defendant, it has scrutinized all the claims properly and due amounts were paid to the plaintiff either in the RA Bills or in the Final Bill. The defendant has also raised contention in its written statement that the RA Bills or the Final Bills were prepared by the defendant's Engineer after scrutinizing relevant record and the same were accepted and signed by the original plaintiff and, therefore, the plaintiff is estopped from challenging the contents of the said bills. According to the defendant, all the claims of the original plaintiff were properly scanned and scrutinized and appropriate decision has been taken on merits and, therefore, according to the defendant, original plaintiff is not entitled to bring the suit. According to the defendant, the suit is barred by the law of limitation and the civil court has no jurisdiction to entertain the claim of the plaintiff and, therefore, suit of the plaintiff is required to be dismissed. On the basis of the pleadings before it, the trial court has framed 18 issues as per Exh. 16. Before the trial court, on behalf of the original plaintiff, one Shri Harshadrai Laljibhai Kalathia was examined at Exh. 66 and on behalf of the defendant, one Shri Ram Chelaram Advani was examined at Exh. 165. Except these two witnesses, no other witness has been examined before the trial court by the either side. Relevant record was produced before the trial court which includes tender agreement, final bill, RA Bills and other relevant documents. When the appeal was admitted, at the relevant time, records and proceedings were called for from the District Court, Jamnagar.At the time of final hearing of this appeal, when the original record was perused by us, certain important documents are missing. Alongwith the record and proceedings, copy of agreement, RA Bills, Measurement, Final Bill and other exhibits are not attached to the record and, therefore, directions were issued to the District Court, Jamnagar to supply the said documents but ultimately, the District Court, Jamnagar wrote a letter to this Court that they are not able to trace out the said documents from the court. Therefore, it was suggested to the learned AGP Mr. Patel to call for the relevant record from the department and the matter was therefore adjourned for three to four times. Ultimately, learned AGP Mr.Patel has been able to get only one document namely Tender Agreement arrived at between the parties and except that, no other documents are available which are relevant for the perusal of this Court. According to the oral evidence of the plaintiff witness Shri H.L. Kalathia at Exh. 66, the contract was given to the original plaintiff on 29th November, 1970 and the same was required to be completed within 20 months i.e. on or before 28th July, 1972 but the work was completed in the end of August, 1973. It was also deposed by him at Exh.66 that the payments were required to be made by the Executive Engineer and the Measurement Book was written by the Executive Engineer according to the work carried out by the plaintiff, in presence of the plaintiff. It has been admitted by him that whatever measurements recorded by the Executive Engineer in the Measurement Book are correct and that bears the signature of the witness. According to him, on the basis of the said measurement book, the defendant present appellant had prepared the RA Bills which were in prescribed Form. According to the said witness, said bill was required to be prepared by the defendant as per the practice and it was also bearing signature of the original plaintiff; the original plaintiff has not prepared any bill either RA Bills or the Final fill and all the bills were prepared by the concerned officer of the defendant. According to the said witness, after completion of the work, within three months, final bill was required to be prepared and the final bill in respect of the work in question was prepared on 31.3.1974 which was produced before the trial court at Mark 46/3 and it was admitted vide Exh. 69. According to the said witness, said final bill was shown to the said witness and it was signed by the Executive Engineer Shri Advani. Alongwith the final bill, there was technical note to justify that the final bill is correct according to the technical note. Said final bill and the technical note were examined by the employees of the department of the defendant. It was shown to the said witness examined at Exh. 66 and it was admitted by the said witness that the final bill and the technical note were correct but it was his defence that all the amounts were not mentioned for which the original plaintiff was entitled and, therefore, he accepted the final bill alongwith payment under protest. According to the said witness, whatever payments made by RA Bills were considered as advance payment and the some of the amounts were not included in the final bill and, therefore, the plaintiff wrote letters to the defendant, produced at Exh. 70 and 71 but according to him, no reply was given by the defendant and, thereafter, notice Exh. 72 was given to the defendant. Thereafter, said witness has narrated details about each claim made in the suit. Said witness has also admitted that as and when the tender was filled up by the contractor, whatever details and conditions, items and specifications mentioned in the tender are binding to each contractor. It was also admitted by him that in case if any quantity is less or in case if some more work is required to be performed, for that, normally, they were not claiming any more amount from the department. It has been admitted by the said witness that the additional claim was not made before the department in respect of each item. He has also admitted that because of these disputes, the work entrusted to him has not been abandoned by him and he completed the work. He also admitted that according to the agreement, if the quantity is less or more, they are bound by the terms and conditions of the agreement and they have to complete the work as per the terms and conditions of the agreement. He also admitted in his evidence at Exh. 66 that certain objections were raised by him against the measurement and according to the agreement, RA Bills and the final bills were required to be prepared by the original plaintiff. He has denied that the RA Bills and the Final Bills were accepted by the original plaintiff without any objection. He has also admitted that there was no such condition in the agreement to give interest to the original plaintiff but he was required to borrow the fund for completion of the work and, therefore, he is claiming interest upon the said amount. On behalf of the defendant, one Shri Ram Chelaram Advani has been examined at Exh. 165. Shri Advani was working as Executive Engineer in Jamnagar Irrigation Division for a period from 1973 to 1977. Said witness had prepared the final bill of the said contract. Said contract was executed in Form B-2 In the contract form, price of each item was mentioned and that was filled up by the original plaintiff. In tender agreement, specification of each of the items has been given and according to that, the original plaintiff was required to work and work progress was required to be given by the original plaintiff. According to the agreement, RA Bills and the final bill were required to be prepared by the contractor and if the contractor is not able to prepare the same, then, the department is required to prepare the RA Bills and the final bill. Alongwith the final bill, technical note was submitted by the overseer which was required to be considered by the sanctioning authority at the time of sanctioning the final bill. There was no condition in the agreement about rebate. There was no condition in the agreement that in case if the price is increased, then, the department has to pay any additional amount for increase in the price of each item. According to him, the defendant has not committed any breach of the agreement. Under the agreement, the work was required to be completed by the contractor as per the measurements. He has also admitted that there was delay in completion of the work by the contractor but that was satisfactory and therefore, no fine was imposed against the contractor. Otherwise, the department is entitled to impose fine for non completion of the work in time as per the contract. According to his evidence, the work was required to be completed within twenty months from 29.11.1970 to August, 1973 but it was not completed by that time and there was delay of about thirteen months in completing the work but for that, no fine has been imposed by the department upon the original plaintiff. He has also admitted that no dispute was raised by the original plaintiff till the date of receiving final payment on 31st March, 1974 but subsequently dispute was raised by the original plaintiff. Though the letter was written in July, 1974 by the plaintiff, but before that time, payment was already made to the original plaintiff and the department has given reply to the original plaintiff vide Exh. 71. As per his evidence, though the plaintiff has raised objection against the final bill and accepted under protest, but it was not disclosed by the plaintiff before the department as to under which protest, he has been raising objection and why he has been accepting it under protest. According to his oral evidence, if any additional amount or excess payment was made to the contractor in the RA Bill, same was required to be adjusted by the department while preparing the final bill. Alongwith the final bill, technical note which was prepared by the department was accepted by him and for that, necessary endorsement has been made by him. In light of the above oral evidence and the documents produced by the parties before it, the trial Court has examined the merits of the matter. Learned A.G.P. Mr.M.K. Patel has submitted that as per clause 8 and 10 of the Agreement, RA Bills and the Final Bill were prepared by the Department and the same was accepted by the plaintiff under protest and, therefore, in such circumstances, according to the specific condition mentioned in both the clauses of the agreement namely clause 8 and 10 of the agreement, original plaintiff is not entitled to any amount from the appellant as alleged in the suit. He has also submitted that there was estoppel against the original plaintiff on the basis of the fact that the original plaintiff has accepted the RA Bill and the final bill prepared by the department and, therefore, original plaintiff is now not entitled to raise any objection against the payments which were made by the appellant in RA Bills and the Final Bill. He has also submitted that mere endorsement made in the final bill for accepting the payment as per final bill under protest is not sufficient for the plaintiff unless the same is substantiated and it is disclosed as to what is the objection of the original plaintiff against the final bill. According to him, in absence of such disclosure - specific objection, mere protest is not sufficient and the plaintiff is not entitled to claim or receive any amount from the appellant. He has also submitted that the final bill was accepted by the plaintiff on 31st March, 1974 and, thereafter, the plaintiff remained silent upto 16th July, 1976. On 16th July, 1976, the plaintiff served one notice and then served statutory notice to the present appellant on 4th January, 1977. In view of these facts, learned AGP Mr. M.K. Patel has submitted that the the original suit was the result of after thought of the original plaintiff because the plaintiff remained silent for a period of about two years and raised no objection for two years against the said payment and the moment period of three years was likely to expire, the plaintiff issued notice and then statutory notice as stated above and then filed the suit against the appellant before the trial court. Therefore, according to his submission, conduct of the original plaintiff is also required to be taken into consideration. He has submitted that if the conduct of the original plaintiff is viewed, initially, the plaintiff failed to submit the RA Bills and then Final Bill to the department and, therefore, the department prepared the RA Bills and the Final Bill in terms of the agreement and thereafter, the plaintiff accepted the amount as per the final bill under protest without disclosing as to what was the nature of objection. After accepting the payment under protest, the plaintiff remained silent for a period of about two years and then issued notice and then statutory legal notice and filed the suit and therefore, on the basis of the conduct of the plaintiff, the department paid the amounts as per the RA Bills and the Final Bill and on that basis, entire agreement has been over and subsequently the plaintiff has raised objection and, therefore, in such circumstances, there was bar of estoppel against the plaintiff. He has submitted that the trial Court has considered two decisions as mentioned in paragraph 61 of the judgment one is the decision reported in AIR 1981 Calcutta 101 and the another is the decision reported in AIR 1974 SC 158. According to his submission, the trial court has committed error in relying upon the said decision while considering the aspect of estoppel and the said decisions were not applicable in the facts and circumstances of the case. According to him, the trial court has committed error in coming to the conclusion that the principles of estoppel is not applicable to the facts of the present case. He has also submitted that the trial court has erred in coming to the conclusion that it cannot be said that the plaintiff is estopped from filing the present suit after accepting the amount of final bill and after signing the bill. According to his submission, in view of the facts of the present case, the trial court ought to have held that the suit of the plaintiff is bared by the principles of estoppel and it ought not to have examined other aspects of the matter and the suit of the plaintiff ought to have been dismissed on that count without answering the other issues. Learned advocate Mr. Dayani appearing for the respondent herein - original plaintiff has submitted that the trial court was right in appreciating the evidence on record; the trial court was right in relying upon the documents produced before it by the respective parties; trial court was right in answering issue no.15 and was also right in relying upon the decisions reported in AIR 1981 Calcutta 101 as well as AIR 1974 SC 158. According to him, the final bill though it was prepared by the department, same was accepted by the plaintiff under protest and, therefore, the plaintiff is entitled to sue the defendant and to claim the suit amount from the defendant if he is satisfying and proving his claim before the trial court. He has also submitted that the plaintiff is entitled to claim the damages and the principles of estoppel would not come in his way because the plaintiff has proved the damages suffered by him. He has also submitted that the trial court was deciding the suit as a whole and was not deciding the issue of estoppel as a preliminary issue and, therefore, the trial court was perfectly justified in examining each claim made by the plaintiff and was also right in answering issue No.15 as well as the other issues in favour of the plaintiff. Before examining the merits of the matter, it is necessary to consider first the contention raised by the learned AGP Mr. Patel that there was bar of estoppel against the plaintiff. It is the submission of Mr. Patel that the plaintiff was estopped from claiming damages against the department as the final bill was accepted by the original plaintiff; legal notice was served after about two years and the statutory notice was served upon the defendant by the original plaintiff on 4th January, 1977. For appreciating this contention raised by Mr. Patel, it is necessary to consider Clause 8 and 10 of the Agreement. It is not in dispute that the agreement was arrived at by and between the parties in Form No.B-2. As per clause 8, payments on intermediate certificate to be regarded as advances. Clause 10 of the agreement is relating to the bills to be submitted monthly. Clauses 8 and 10 of the said agreement are, therefore, reproduced