IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No 34 of 1992 with CROSS OBJECTION NO. 12 OF 2000 For Approval and Signature: Hon'ble MR.JUSTICE D.K.TRIVEDI and Hon'ble MR.JUSTICE K.M.MEHTA ============================================================ 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 : NO 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? -------------------------------------------------------------- THE CHIEF SECRETARY THE STATE OF GUJARAT GANDHINAGAR Versus M/S KOTHARI AND ASSOCIATES -------------------------------------------------------------- Appearance: 1. First Appeal No. 34 of 1992 MR. PUJARI, A.G.P. for the appellant. MR. P.M. THAKKAR, SR. COUNSEL, for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE D.K.TRIVEDI and MR.JUSTICE K.M.MEHTA Date of decision: 30/07/2003 C.A.V. JUDGEMENT (Per : MR.JUSTICE K.M.MEHTA) The State of Gujarat, appellant, original defendant, has filed this appeal under Section 96 of the Code of Civil Procedure, 1908 against judgement and decree dated 4.5.1991 passed by the Civil Judge (S.D.), Anand, in Civil Suit No. 22 of 1985 filed by M/s. Kothari and Associates, original plaintiff. The learned Judge by his impugned judgement was pleased to partly decree the suit of the plaintiff. The learned Judge was pleased to direct that the defendants do pay to the plaintiff Rs. 13,61,574.00 (Rupees thirteen lakh sixty one thousand five hundred seventy four) together with interest on the said amount at the rate of 12% per annum from 7.8.1983 till realisation of decretal amount. 2. The facts giving rise to this appeal are as under: 2.1 M/s. Kothari & Associates, original plaintiff (hereinafter referred to as "the plaintiff") is a registered partnership firm carrying on the business of Engineers and Contractors. The Executive Engineer, Anand, Irrigation Division, Anand, invited tenders publicly for the work of providing lining to main canal mile 36 to 46 between 36 M and 41.2 M Section I. The plaintiff submitted the tender form for the same. The State of Gujarat through Executive Engineer accepted tender of the plaintiff amounting to Rs. 33,71,213.91 ps. against the estimated cost of Rs. 29,51,737/-. Thereafter a regular agreement was entered into between the plaintiff in B2 form bearing agreement No. B2-1 of 1976-77 and the State Government. The said agreement has been produced at Exh. 234. One of the important conditions of the contract was Clause 45 which reads as under: "Clause 45 - Condition to provide canal for carrying work of lining as order - The lining work to be done is in the existing canal from where the Kharif irrigation is being done. Probable period for kharif season is 15th June to 14th November. As such, the contractor will get normal working period of about 7 months from 15th November to 14th June next. Even during this period, the canal does not get dry, the contractor shall be liable to maintain the progress of work and the reason for not getting the canal dry, shall not be put forth for extension of time limit." 2.2 The State Government, thereafter, issued work order on 24.9.1976 to the plaintiff and the work was required to be completed within stipulated period of 18 months i.e. on or before 23.3.1978. (Exh. 45 ) 2.3 It is the case of the plaintiff that the contract creates certain mutual bilateral reciprocal contractual obligations inasmuch as certain reciprocal contractual obligations were required to be performed by the plaintiff and certain reciprocal contractual obligations were required to be performed by the Department. 2.4 It was the case of the plaintiff in the plaint before the trial court that as there was a delay in handing over the site to the plaintiff by the Government, the plaintiff could not complete the work within the stipulated time. Hence due to delay on the part of the Government the plaintiff had incurred other expenditure and therefore the plaintiff had filed suit for damages on various grounds and hence the plaintiff filed suit for damages. The details of the said suit are as under: 2.5 The first season begins from 15th November 1976 to 14th July, 1977. Ordinarily, the site would be working for 213 days, if the same is made available in time. However, the site was made available on 15th January, 1977. 2.6 It was further submitted that for construction of dam certain materials were to be supplied by the Government. The plaintiff stated that Material Supply Register produced on record which is described as USR Statement which at page 5 shows that the first issue of cement was made on 31.1.1977 of 2.50 M.T. However, the work could not be commenced because the site was handed over as late as on 15.1.1977 and the cement was issued for the first time on 31.1.1977. In view of the same, the working days made available to the plaintiff were 135 days being the period between 10th to 31st January, 1977 and 14th June, 1977 as against 213 days which would have been normally available. Thus, on account of no fault on the part of the plaintiff and on account of late handing over of the site, late supply of cement, the plaintiff could work only 135 days as against 213 days. Thus, there was a loss of 78 working days. 2.7 As regards second season, it is submitted that the period for this season is 15th November, 1977 to 23rd March, 1978. In this case 129 working days were available in the second season. However, it has been stated that the site was handed over on 15.3.1978 i.e. just couple of days before the second season was to end on 23.3.1978 and since water was flowing, which took 15 days to dry. Thus, it became clear that there was not a single day available for working in this season as per the contract period. Thus, there was no default on the part of the plaintiff for not working in the second season. 2.8 It was further stated that in the second season that after extension of contract period, the second season begins from 24.3.1978 to 14.6.1978. In that case the extension was granted by letter at Exh. 249 dated 15.3.1978 only. However, the plaintiff could not work fully because of late handing over of the site as well as non-availability of cement, without any contributory default on the part of the plaintiff. 2.9 The plaintiff stated that the period of third season was between 15.11.1978 to 14.6.1979. In that case also the site was handed over on 15.3.1979 and after drying period, work commenced on 31.3.1979 and 76 working days were available in the said season. 2.10 So far as the fourth season is concerned, the said seasons begins from 15.11.1979 to 29.6.1980. The site was made available on 15.3.1980 instead of 15.11.1979 i.e. almost after making allowance for drying period, the work started on 1.4.1980. Thus, without any default on the part of the plaintiff, the plaintiff could complete the work on 20.6.1980 i.e. only in 76 days' working. 2.11 In view of the aforesaid aspect, it was submitted on behalf of the plaintiff that 342 working days would have been available if one has to consider the contract period and the site and cement were made available in time. However, in spite of delay in handing over the site and cement, and non-availability of cement, the work was completed by the plaintiff in 288 working days which clearly proved the fact that there was no laxity on the part of the plaintiff and on the contrary, time less than what the plaintiff was entitled to, was utilised for by the plaintiff to the satisfaction of the defendant. 2.12 In support of the aforesaid contentions the learned counsel for the plaintiff has relied on the following documents. (i) The plaintiff has addressed a letter dated 28.9.1976 to the Executive Engineer (Exh. 256) in which the plaintiff requested that only the date of handing over the site may be taken for completion of the contract. In the said letter the plaintiff complained that the site for working has not been handed over to him. The plaintiff also relied on the letter dated 21.12.1976 addressed by the Deputy Engineer to the plaintiff (Exh. 47) in which the office of the defendant had admitted that the main canal has been closed from 1.1.1977 and the site will be made available to the plaintiff thereafter (at Exh. 47). The plaintiff thereafter also addressed a letter dated 13.1.1977 to the Deputy Engineer (at Exh. 268) in which the plaintiff complained of late handing over of the site. The plaintiff addressed another letter (at Exh. 257) dated 16.7.1977 to the Executive Engineer in which also it was stated that for the late handing over of the site, the plaintiff could not be able to complete the work. The plaintiff also relied on a letter (at Exh. 258) dated 18.7.1977 addressed by the plaintiff to the Executive Engineer against late handing over of the site. The plaintiff addressed a letter dated 16.11.1977 (at Exh. 265) to the Superintending Engineer in which it was stated that due to late handing over of the site and late drying of the canal, the plaintiff shall be put to a lot of inconvenience and heavy monetary loss and it would not be possible for the plaintiff to complete the work in time. The plaintiff also relied on a letter dated 28.11.1977 (Exh. 48) addressed by the Superintending Engineer to the plaintiff in which it was admitted that canal is closed upto 30.11.1977 for the casual watering for Rabi season as per the irrigation programme approved by the Government. (ii) The plaintiff also addressed another letter dated 6.1.1978 (at Exh. 241) to the Superintending Engineer in which the plaintiff requested that the government shall have to grant extension and shall have to pay heavy monetary loss made to the plaintiff for delaying the work for the Government reasons only. The Executive Engineer by his letter dated 16.2.1978 addressed to the plaintiff (at Exh. 70) informed that the plaintiff's request for extension of time is under consideration. The plaintiff has also relied on a letter dated 16.2.1978 (at Exh. 238) addressed by the Executive Engineer to the Superintending Engineer in which the authority has recorded reasons as to why extension period was granted to the plaintiff. The plaintiff also relied on office order dated 26.2.1978 (at Exh. 249) wherein extension of time limit has been granted by the Superintending Engineer. The authority has granted time limit for the period from 24.3.1978 to 7.8.1978. The plaintiff has also addressed a letter dated 13.3.1978 (at Exh. 259) to the Executive Engineer in which the plaintiff has stated that because the Government was not able to supply cement in sufficient quantity and the Government was not able to supply Government controlled item like coal, the plaintiff requested to give sufficient extension of time limit and also to pay reasonable and just compensation to the plaintiff. The plaintiff has also relied on the communication and the telegram dated 17.3.1978 (at Exh. 260) addressed by the plaintiff to the Executive Engineer wherein the plaintiff requested to supply cement as work of the plaintiff has started. The plaintiff also relied on memorandum dated 6.4.1978 (at Exh. 239) in which second extension of work was granted to the plaintiff on the ground that there was a delay in handing over the site after Khari Season of 1976 and 1977 for carrying out lining work. The plaintiff also relied on the letter dated 19.4.1978 (at Exh. 240) of the Executive Engineer addressed to the plaintiff in which it is stated that extension of time limit is granted to the plaintiff on the ground that delay in handing over the site after Kharif season of 1976 and 1977 for carrying out lining work. The plaintiff has further relied on letter dated 1.9.1978 (at Exh. 261) addressed by the plaintiff to the Executive Engineer. The plaintiff also relied on letter (at Exh. 52) dated 18.9.1978 addressed by the Executive Engineer to the plaintiff. The plaintiff also relied on letter dated 27.2.1979 addressed by the plaintiff to the Executive Engineer (at Exh. 242) requesting to extend time limit upto 31.7.1979. The plaintiff also relied on the detailed reasons for extension of time limit in the letter dated 30.1.1980 which has been addressed by the Executive Engineer to the Additional Engineer which is produced at Exh. 245 where the Government itself has considered that there was a delay due to not handing over of the site to the plaintiff. (iii) It may be noted that the Government has decided to grant extension of time limit to the plaintiff from 1.8.1979 till the date of completion on the ground that the plaintiff is liable to pay compensation of Rs. 5/- per day from 1.8.1979 till the date of completion of the work is recommended. The plaintiff also relied on letter dated 8.2.1980 addressed by the Additional Engineer to the Chief Engineer where the Department itself has considered that there was a delay in handing over the site and extension has been granted to the plaintiff. The letter is produced at page 501 of (Exh. 238). (iv) It appears that the plaintiff has completed the work on 26.6.1980. The plaintiff has informed the defendant about the same by the letter dated 26.6.1980 which has been produced at Exh. 238. The plaintiff has also relied on the communication from the Chief Engineer to the Superintending Engineer dated 21.4.1981 (at Exh. 243). The plaintiff has also relied on letter addressed by the Chief Engineer to the Superintending Engineer dated 29.6.1981 which has been produced at Exh. 238 at pages 747 in which the Government has also recorded reasons for delay in handing over the site to the plaintiff. The plaintiff has also relied on letter dated 13.10.1981 addressed by the Executive Engineer to the plaintiff (at Exh. 244) where the Government has considered that there was a delay in work by the plaintiff but the Government is not liable to pay compensation in this regard. The plaintiff also relied on the communication dated 16.10.1981 (at Exh. 248) addressed by the Executive Engineer to the plaintiff where penalty of Rs. 5/- per day has been imposed by the Additional Engineer effective from 14.5.1980. The plaintiff has also relied on letter dated 5.3.1982 (at Exh. 262) addressed to the Executive Engineer wherein various claims for damages have been stated. The details of the claims will be stated hereafter. (v) In view of the aforesaid submissions the plaintiff submitted that the work was completed on 20.6.1980. Final bill was accepted under protest on 1.1.1982 and security deposit was refunded by Government to the plaintiff on 27.1.1982. The plaintiff had addressed a letter dated 5.3.1982 (Exh. 262) claiming damages and also interest at the rate of 18% per annum from the date of completion of work i.e. 20.6.1980. The plaintiff thereafter addressed a statutory notice under Section 80 of the C.P.C. dated 7.8.1983 to the defendant claiming damages. In the said notice the plaintiff claimed interest from the due date i.e. 5.3.1982, the date on which he addressed a letter at Exh. 262. The plaintiff filed suit on 25.1.1985 and therefore claimed that the suit is within the period of limitation. 2.13 The details of claims are as under:- Claim No. 1: Amounting to Rs. 1,99,681/- on account of price escalation in labour due to prolonging of the work: 2.13A The plaintiff stated that the work was prolonged abnormally. The work was required to be completed within 18 months i.e. on or before 23.3.1978 but the work was actually completed on 20.6.1980. Thus, there was a delay of 27 months. The delayed performance was due to preventions partly and/or fully created by the department for the reasons that there was delay in handing over the site of canal i.e. the department gave the line out very late in the initial stage and the department intentionally did not handover the site in time to keep the canal running for Rabi crop. The Department failed and neglected to supply coal which was only available from nationalised quarries in time and there was heavy shortage of diesel. There was heavy interruption of electricity supply. The Department itself is to be blamed for delay and therefore the plaintiff claimed damages on this account. Claim No. 2: Amounting to Rs. 43,712.80 ps. on account of price escalation in fuel lubricants etc. 2.13B The plaintiff has made a claim on account of price escalation in fuel lubricants. It was submitted that there was heavy delay due to the departmental reasons only and hence the compensation due to rise in price of fuel, lubricants etc. was demanded. Claim No. 3: Amounting to Rs. 4,68,750/- on account of overstay of capital and machinery. 2.13C It was submitted that due to breach of the contract made by the department in not handing over the site in time, the plaintiff claimed damages on account of overstay of capital and machineries etc. Claim No. 4: Amounting to Rs. 4,64,868.72 ps. on account of overhead i.e. staff, kitchen, office and site office maintaining etc. 2.13D It was submitted that due to delayed performance the department committed breach of contract and there was overstay of overheads for 27 months. The plaintiff therefore suffered damages to the tune of Rs. 4,64,868.72 ps and claimed damages of the said amount. Claim No. 5: Amounting to Rs. 73,695/- on account of interest on security deposit, final bill, bank commission charges etc. 2.13E The plaintiff stated that due to prolonging of the work by 27 months, there was delayed performance. The plaintiff therefore claimed amount of Rs. 73,695/- on account of interest on security deposit, final bill, bank commission charges etc. Claim No. 6: Amounting to Rs. 1,625/- on account of wrongful recovery towards penalty. 2.13F It was stated that delayed performance was due to breach committed by the Department. The plaintiff therefore claimed that Rs. 1,625/- on account of wrongful recovery towards penalty may be refunded to the plaintiff. Claim No. 7: Amounting to Rs. 61,168/- on account of excess quantity above the tender: 2.13G It was stated that the plaintiff has claimed Rs. 61,168/- on account of excess quantity above the tender. Claim No. 8: Amounting to Rs. 39,798.75 ps. on account of wrongful deduction of quantity from item No. 2. 2.13H The plaintiff has claimed the said amount on account of wrongful deduction of quantity from item No. 2. Claim No. 9: Amounting to Rs. 1,22,490/- on account of change in item No. 4 instead of brick lining. 2.13-I The plaintiff has made a claim of Rs. 1,22,490/on account of change in item No. 4, i.e. cement lining instead of brick lining. Claim No. 10: Amounting to Rs. 12,351.75 ps. on account of reduced rate in Schedule "B" items and 18% interest on it from due date till its payment. 2.13J It was submitted that the plaintiff has carried out the work according to the drawings, designs, specifications and the instructions of Engineer in-charge of the Department but the plaintiff was paid the amount at reduced rate. Therefore, the plaintiff has made the said amount on this account. Claim No. 11: Amounting to Rs. 11,417.20 ps. on account of wrongful recovery and difference in rate actually deducted in Schedule A. 2.13K It was submitted that as per Schedule A of the tender the plaintiff was to be issued cement at fixed price. The department has paid the amount at deducted rate. Therefore, the plaintiff has made the claim of Rs. 11,417.20 ps. on account of wrongful recovery. Claim No. 12: Amounting to Rs. 11,632.30 ps. on account of wrongful recovery of additional cement bags. 2.13L It was submitted that the Department paid reduced rate than the rate at which the plaintiff has made his claim. The plaintiff therefore claimed Rs. 11,632.30 on account of wrongful recovery of the impugned amount. Claim No. 13: Amounting to Rs. 12,40,702/- on account of interest on the above claims from the date of completion till the date of filing of the suit. 2.13M As far as claim No. 13 amounting to Rs. 12,46,702/- is concerned, the plaintiff has claimed the said amount on account of interest on all the items which I have stated above, from the date of completion of the work i.e. 20.6.1980 till the date of filing of the suit i.e. 26.1.1985. It is submitted that the above amount is required to be paid to the plaintiff when the plaintiff had completed the work i.e. on 20.6.1980 but the Department has not paid the amount in time. Thus, the plaintiff had suffered damages on the above amount by loss of interest at the rate of 15% per annum. The plaintiff stated that all these claims 1 to 11 comes to about Rs. 15,11,154.52 ps. Thus, the plaintiff is entitled to Rs. 12,46,702/- by way of damages i.e. 5% interest from the date of completion till the filing of this suit. 2.14 In support of the aforesaid contention the plaintiff has examined one Praful M. Gandhi, partner, at Exh. 43. The oral evidence on behalf of the plaintiff also supports the case of the plaintiff, namely, that there was default on the part of the Government regarding late handing over of the site of which the plaintiff had no contribution in any way. The plaintiff's evidence also supports the case of the plaintiff that the Material Supplied Register showed that there was not enough supply of coal as well as diesel to the plaintiff by the Department. The plaintiff's evidence supports the case of the plaintiff that the site was handed over to the plaintiff on 15.3.1978. So the plaintiff could not do any work between 15.3.1978 to 23.3.1978 which has been the period of second season. The plaintiff's evidence supports that the plaintiff could do work only during the period of extension in the second season. Regarding third and fourth season also oral evidence of the plaintiff supports the case of the plaintiff. 2.15 Substantial part of evidence of the plaintiff regarding delay has not been challenged in cross-examaination. The plaintiff's oral evidence has also supported various claims of damages which have been stated by the plaintiff in the plaint. 2.16 The defendant filed written statement at Exh. 24 and denied the contentions raised by the plaintiff. It was the main contention of the defendant that though there was a delay but in view of clause 45 of the Contract the plaintiff is entitled to any damages. It was the case of the Department relying on the same document that the plaintiff did not employ proper arrangement and sufficient material and machinery and therefore there was delay in completing the work and for that purpose the Department is not to be blamed and therefore the plaintiff is not entitled to any damages in this behalf. It was also submitted that there was delay on the part of the Government in handing over the site. It was the case of the Department that during that period the plaintiff could have utilised that time in other preparation and in view of Clause 45 the plaintiff is barred from claiming any damages. According to the department, they have supplied sufficient quantity of coal and diesel and there was no negligence on the part of the department. 2.17 The defendant also contended that several running bills were given to the department and without making any grievance the same were signed by them accepting the rate therein. While accepting the running bill the plaintiff did not make any grievance about extra rate for the so-called expenditure and price escalation and therefore the plaintiff is not entitled for damages. 2.18 In this connection, the defendant has also relied on letter dated