IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN MONDAY, THE 12TH JANUARY 2009 / 22ND POUSHA 1930 AS.No. 337 of 1997(E) -------------------------- OS.8/1995 of SUB COURT, KASARAGOD .................... APPELLANT(S)/DEFENDANTS: ------------------------------------ 1. THE STATE OF KERALA, REP. BY THE SECRETARY, TO GOVERNMENT, PUBLIC WORKS DEPARTMENT, THIRUVANANTHAPURAM. 2. THE EXECUTIVE ENGINEER, P.W.D. (ROADS), DIVISION, KASARAGOD. BY GOVERNMENT PLEADER SRI. BENNY VARGHESE. RESPONDENT(S)/PLAINTIFF: -------------------------------- A.C. MOHAMMED KUNHI, S/O ABOOBACKER, MUSLIM P.W.D. CONTRACTOR, MUTTUTHODI VILLAGE, KASARAGOD TALUK, P.O. ALAMPADY. ADV. SRI.K.L.VARGHESE SRI.MARTIN D.ALUMKARA FOR SMT.SANTHA VARGHESE THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 12/01/2009 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.N. KRISHNAN, J. = = = = = = = = = = = = = = = A.S. NOs. 337 OF 1997 = = = = = = = = = = = = = = = Dated this the 12th day of January, 2009. J U D G M E N T This is an appeal preferred against the judgment and decree in O.S.8/95 of the Subordinate Judge, Kasaragod. The suit is one for realisation of an amount of Rs.1,28,000/-. There is no dispute between the parties to the effect that the plaintiff had been entrusted with the contract with respect to the construction of culverts at Kolikkal and Areekara in Balal Panchayath. The estimated cost was Rs.3,43,628/-. The contract was entrusted on 13.3.92 and as per the terms of the contract the work was to be completed before 25.5.92 and there was a specific agreement to the effect that steel and cement will be supplied by the Department. Due to the failure of the supply by the Department the plaintiff was forced to purchase steel and cement from outside. The Department fully reimbursed the amount due as cost of the steel but only reimbursed at a lesser rate for the cement thereby causing a A.S. NO. 337 OF 1997 -2- loss of Rs.27,100/- to the plaintiff towards the cost of the same. Ultimately on 1.7.93 the contract was terminated and thereafter the plaintiff had moved a suit for realisation of Rs.1,28,000/- under four heads namely: (1) The difference in price of cement. (2) The breach in non-payment of bills on a monthly basis. (3) The security deposit of Rs.14,100/- and lastly with respect to the retention of amount of Rs.7,600/-. 2. On the other hand the defendant would contend that the breach of contract was committed by the plaintiff and he is not entitled to the difference of price of cement and as he has committed the breach of contract they are entitled to forfeit the deposit as well as retention amount. 3. Before the trial court the question regarding the payment of amount on a monthly basis was not pressed into service by both sides as it required some measurement or other aspects and ultimately the trial court found in favour of the plaintiff with respect to the other contentions namely A.S. NO. 337 OF 1997 -3- Heads No. 1, 3 and 4 and granted a decree. It is against that decision the defendants have come up in appeal. 4. The points that arise for determination are; (1) Whether the trial court was justified in granting the difference of amount with respect to the cost of the cement? (2) Whether the plaintiff has committed breach of contract so as to disentitle him to get back the deposit as well as the retention amount. Points 1 and 2: 5. For the sake of convenience they are answered jointly. Admittedly the plaintiff and the defendants have entered into a contract on 13.3.92 for the construction of culverts. There was a stipulation in the agreement that the Government would supply steel as well as cement from the Department. As there was scarcity for cement in the Department ultimately due to the persuasion of the plaintiff the Government permitted him to purchase the cement and steel from the open market. Accordingly the cement and steel were purchased and the amount due for the purchase of steel A.S. NO. 337 OF 1997 -4- was reimbursed. So far as the cement is concerned 1100 bags of cement was purchased at a cost of Rs.1,26,000/- and the Department reimbursed only Rs.99,500/- thereby the plaintiff claims the balance amount of Rs.27,100/-. It is to be remembered that there was an obligation cast on the defendants to supply cement for the work. It is also to be remembered that the contract work was with respect to the construction of culverts which badly require steel and cement. When the Department nodded, plaintiff purchased cement from open market and produced the bills. But at the stage of payment the Department stated that it will only pay the amount at a rate supplied to the Government thereby causing a deficit of Rs.27,100/-. The doctrine of unjust enrichment is a policy known to the contract. Here, by depriving a person by the amount due to him legitimately for the purchase of cement for which he had expended money from his pocket the Government had taken a very strange stand holding that it will not pay the amount for which the cement had been purchased. I think large number of decisions are not required to be cited A.S. NO. 337 OF 1997 -5- because it is the fundamental principles of equity that the plaintiff has to be compensated for the amount for which he had purchased the cement. It is also to be stated that the plaintiff did not go out of the way or did commit any breach of terms of contract by purchasing the cement from outside the department and therefore the finding of the trial court that the plaintiff is entitled to get the balance amount towards the cost of cement is sustainable in law as well as on facts and therefore it does not call for any interference. The answer to the second question depends upon the decision whether the plaintiff has committed any breach of contract. Large number of documents are produced by the plaintiff and the plaintiff had been knocking at the doors of the Department for the purchase of cement and steel. We find one letter Ext.B2 dated 23.4.93 intimating the plaintiff that the Department is ready to supply the required cement and steel for the work subject to the availability of the materials in the Departmental Store. So even as late as on 23.4.93 the Department is not in a position to tell the plaintiff that the A.S. NO. 337 OF 1997 -6- cement and steel are available and that it will supply so that he can proceed with the work. Even there only a formal letter intimating the willingness of the Department to supply the materials if available is shown there. It is a consistent case of the plaintiff that the work could not be proceeded in the required manner for want of sufficient cement and steel and even for the cement which he had purchased from the open market he had been grossly under paid by not even paying the amount which he had expended for the purchase of the cement. In such a situation one would not expect the contractor to purchase the cement at a higher cost and get a lower rate from the Government thereby only resulting in total loss of the project which he had undertaken. Therefore there is no much force in the Government's contention that it was the plaintiff who had committed the breach of contract. Having undertaken to supply the required cement and steel and thereafter failing to supply them and putting the blame on the plaintiff for non completion of the work in time is only an excuse to get out of the contract which cannot be entertained. A.S. NO. 337 OF 1997 -7- Governmental agencies are expected to act in a better and judicial manner when it realizes its own fault of non supply of materials in time. Further to crown all these things 14 months after the date mentioned in the contract in May 1992 a notice was issued terminating the contract. So the very conduct of the defendants would reveal that the time was not the essence of the contract and if really it was the essence of contract they would have acted prudently and taken action earlier for re- auctioning the work after cancellation of the work and thereafter would have claimed the difference of loss that is sustained to the Department. But on the contra their attitude is to cancel the contract after a long period of 16 months which shows that the real intention is that the time was not the essence of the contract but they were to get the work done some how or the other. Therefore the plaintiff cannot be found fault with and the defendants should have been more reasonable in that aspect. So the finding of the trial court that the plaintiff is entitled to the security amount as well as the retention amount also is in order and that does not call for any A.S. NO. 337 OF 1997 -8- interference. From these materials I do not find any materials to interfere with the decision and therefore the appeal is devoid of merits and it is dismissed but taking into consideration the facts and circumstances of the case I direct the parties in the appeal to bear their respective costs. M.N. KRISHNAN, JUDGE. ul/- A.S. NO. 337 OF 1997 -9- M.N. KRISHNAN, J. = = = = = = = = = = A.S. NO. 337 OF 1997 = = = = = = = = = = = J U D G M E N T 12th January, 2009.