IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 24-9-2008 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE M.VENUGOPAL O.S.A.Nos.15 and 268 of 2002 The Tamil Nadu Water Supply and Drainage Board, rep. by its Managing Director, No.31, Kamarajar Salai, Chennai-5. .. Appellant in OSA No.15/2002 and respondent in OSA No.268/2002 vs M/s.Venkateswara Associates a partnership firm rep. by its Managing Partner Easwaramoorthy No.2, Saibaba Colony, Coimbatore .. Respondent in OSA No.15/2002 and appellant in OSA No.268/2002 Original side appeals preferred under Order 36 Rule 1 of O.S. Rules read with Clause 15 of the Letters Patent against the judgment and decree of this Court dated 31.1.2001 made in C.S.No.1331 of 1993. Appellant in OSA No.15/2002 and respondent in OSA No.268/2002 : Mr.Sudarshana Sundar Respondent in OSA No.15/2002 and appellant in OSA No.268/2002 : Mr.Parthasarathy Senior Counsel for Mr.M.S.Sampath COMMON JUDGMENT (Judgment of the Court was delivered by M.CHOCKALINGAM, J.) This judgment shall govern these two appeals namely OSA Nos.15 and 268 of 2002, the former at the instance of the defendant and the latter at the instance of the plaintiff in C.S.No.1331 of 1993. 2.The respondent/plaintiff has filed C.S.No.1331 of 1993, seeking declaration and other reliefs, with the following averments: a)The plaintiff, a partnership firm, are engineering contractors. The defendant called for tenders for the work of suction well and pump house including all pipe connections and allied civil works under the Coimbatore Drainage Scheme. The tender of the plaintiff was accepted and the work was awarded to the plaintiff and the plaintiff was issued work order, dated 12.3.1990. The plaintiff entered into an agreement dated 22.6.1990, and the plaintiff also deposited Rs.10,750/- towards earnest money deposit and also furnished the details regarding security deposit and other particulars as early as on 9.4.1990, but the defendant did not finalise the agreement, and the same was done only on 22.6.1990. The plaintiff has completed 90% of the work and on the oral instructions of the defendant's Engineers and with a view to keep up the progress of work, the plaintiff excavated the hard rock. The plaintiff was able to enter into a supplemental agreement only after a period of one and half years. The designs were also changed without any intimation to the plaintiff and this resulted in an excess of Rs.2 lakhs over the original agreement. Whenever the plaintiff demanded payment, the officials of the defendant gave false promise and the defendant at every stage, committed breach. The defendant was called upon to make necessary arrangements to dewater, but they did not do so, and it was done at the plaintiff's own expenses, and they did not make any claim for the same. The plaintiff was very co-operative and wanted to proceed with the work smoothly, but due to the attitude of the defendant, the plaintiff was put to great loss and hardship. b)The defendant had called for tenders for construction of Anaerobic Lagoon and for providing in-let and out-let arrangement to anaerobic lagoon under Zone III of Coimbatore Drainage Scheme. The plaintiff's tender was accepted. The tender amount is Rs.16,09,339.70. The plaintiff was also issued work order, dated 28.03.1990, and he deposited a sum of Rs.32,200/- as earnest money deposit and also a security deposit of 2% of accepted contract value. The site was not handed over properly to the plaintiff by the defendant to enable the plaintiff to proceed with the work. Because of the breach committed by the defendant, the plaintiff was able to start the work only by 13.7.1990. The work could not proceed and had to be stopped because bed level for pond I and II was not fixed by the defendant and finally, the same was furnished by the defendant by letter dated 14.3.1991. As per the agreement, the bills amount are to be paid within a period of 14 days and the bill amounts to the tune of Rs.1.60 lakhs for work done have not been paid to the plaintiff. Further, since it was insisted that consolidation must be done using only sheep foot roller, the plaintiff sought for amendment of original agreement and there was no action on the part of the defendant. The work was done under the supervision and surveillance of the official of the defendant and at no point of time, the work was found fault with. Nearly 65 to 70% of the work has been completed. The plaintiff came to know that the consolidated soil was purported to have been sent for testing and the test results were not communicated to the plaintiff. c)The earlier bills of the plaintiff (upto L S V and part bill) were paid to the plaintiff. The defendant's stand for not paying the legitimate bills of the plaintiff is unsustainable. It is not the case of the defendant that the work of the plaintiff was bad. The Superintending Engineer has also certified in the measurement book that the work is in accordance with the agreement, specification and drawings. The attitude of the Executive Engineer of the defendant is highly deplorable. A meeting of the contractors was held on 6.1.1992 and 10.4.1992 and the use of sheep foot roller was discussed, and the department officials were explained in detail in this regard. The plaintiff carried out the work according to the specifications without any protest from the defendant department upto L.S.VI and part bill. A sum of Rs.1,39,480/- is due by the defendant to the plaintiff for the work done and for which, measurements have been taken. A sum of Rs.1,70,000/- is to be paid by the defendant in respect of work done, for which measurements have to be taken, recorded and billed in Lagoon II formation of Bund. d)The defendant has also awarded the work of laying of Sewers in Block 1-A and 2-A of Coimbatore Drainage Scheme to the plaintiff and the work order dated 2.7.90 was issued to the plaintiff. The work was done under the supervision, presence and directions of the defendant's officials. The bills were raised and certified by the official of the department before forwarding it for payment. The refilling cannot be done without conducting the funnel test and with a view to maintain a cordial relationship, the plaintiff agreed to do the said test. The defendant had committed breach at various stages of the agreement putting the plaintiff to great loss. The legitimate dues were not paid to the plaintiff and the defendant has been denying payment to the plaintiff. e)The defendant has sent three communications informing the plaintiff that the three contracts have been terminated. The plaintiff with all difficulties did the work under the supervision of the officials of the defendant. The defendant while granting extension of three contracts, have admitted the reasons given by the plaintiff. There were occasions when the work could not be proceeded with due to rain which was beyond the control of the plaintiff. The reason given for termination of contracts is unsustainable. The plaintiff is entitled for damages for illegal termination of the contract. The plaintiff has given a memo of calculation along with the notice for the loss suffered under various heads, but the defendant did not send any reply nor made any payment. Hence the plaintiff has filed the suit for a declaration that the termination of the three contracts is illegal and for a direction to the defendant to pay Rs.2,92,750/-, Rs.5,87,680/- and Rs.9,06,580/- respectively towards damages. 3.The defendant filed a written statement, inter-alia, stating that the single tender received by the plaintiff was accepted by the Chief Engineer, T.W.A.D., Western Region, Coimbatore; that the work order was issued by the Superintending Engineer; that the period of agreement is 6 months; that the plaintiff has completed the earth work only on 2.9.1990 and 2.11.1990, i.e. 2-1/2 months after the conclusion of the agreement, but there was no delay on the part of the defendant in finalising the agreement; that with regard to bailing out water during excavation work, an agreement was entered into between the parties, and the same has to be done by the plaintiff at his cost; that it is not correct to state that designs were changed without any intimation to the plaintiff; that it is also not correct to state that till date, neither payment has been made, nor the authorised extra works and omissions had been approved; that the allegation of the plaintiff that there was delayed supply of cement is far from truth, and in fact, the plaintiff has to return the unused quantity of 30.75 M.T. of cement; that the demand towards extra cost for dewatering is in violation of the agreement condition; and that the contention of the plaintiff that dewatering done by him is not covered by the agreement is unsustainable. 4.It is further stated by the defendant that for the construction of anaerobic lagoons and providing inlet and outlet arrangement to the anaerobic lagoon at disposal work site under Coimbatore Drainage Scheme Zone III, the tender submitted by the plaintiff was accepted, and he was issued work order dated 28.03.1990; that the site was handed over to the plaintiff on 9.4.1990; that the defendant denied the allegation that the plaintiff was able to commence the work only by 13.7.1990; that at no stage, the work had been stopped for want of any levels and the plaintiff was doing the work continuously and getting payments regularly for the works executed; that certain portion of works executed by the plaintiff had been rejected by the Executive Engineer during inspection on 8.8.1991, since the same has not been done as per specifications and hence payment to the tune of Rs.1,29,502/- had been withheld. The cement required for the work had been issued to the plaintiff from 18.7.1990 onwards. If the plaintiff had done the consolidation works, as per specification, using hand roller, the question of suggesting the use of sheep foot roller would not have arisen. 5.It is further alleged in the written statement that the work done by the plaintiff for the formation of top layer of the earthen bund was found to be faulty and hence necessary samples had been tested, and the plaintiff had never sought for copy of the test report. The defendant had taken all efforts and procured necessary materials and issued the same to the plaintiff in time. With regard to the work 'providing sewers in Block 1A and 2A under Coimbatore Drainage Scheme', the site for laying of sewers in block 1A and 2A was handed over to the plaintiff on 2.7.1990, but the plaintiff commenced the work on 15.10.1990 after a delay of 3 months. On completion of preliminary works, the plaintiff had been issued departmental materials. The plaintiff had conducted funnel test only for a length of 431.40 m., leaving a balance of 3046.90 m. The plaintiff agreed to conduct funnel test for the remaining length, but he has failed to do so till the termination of the contract. The plaintiff had committed certain irregularities in the execution of the works and he had also not resumed the works and hence further payments were stopped. The plaintiff had also dug pits and trenches for laying pipelines in an unplanned manner and did not care to follow the instructions of the departmental officers in this regard, and hence for the reasons stated above, the suit has got to be dismissed. 6.On the above pleadings the trial Court framed six issues, and the parties went on trial. The plaintiff examined P.W.1 and marked 91 exhibits. The defendant examined D.W.1 and marked 7 documents. The report of the Advocate Commissioner appointed by this Court is marked as Ex.C1. The trial Court after hearing the submissions made, partly decreed in respect of the amounts to which the plaintiff is entitled and dismissed the suit in respect of damages. Aggrieved over the disallowed portion of the judgment, the plaintiff has brought forth one appeal and the defendant who was aggrieved over the decree granted in favour of the plaintiff, has brought forth the other appeal. 7.Advancing arguments on behalf of the appellant in OSA No.15 of 2002 namely defendant in the suit, the learned counsel has made the following submissions: The judgment of the learned Single judge is contrary to law. The payment for the work done by the plaintiff under the first contract was withheld due to substandard execution of the work done by him. Similarly, the payment for the second contract was also withheld for the bad quality of work and the plaintiff has not proved his case. Further, the plaintiff did not complete the work on time as per the agreement, in spite of extension of time and hence the contract had to be terminated and given to the third parties for completion, thereby causing additional financial burden to the defendant. The amounts have been paid to the plaintiff from time to time. It is incorrect to state that the contractor was not in a position to carry out the contract because of non payment of dues by the defendant. The plaintiff is entitled to amount for the work measured and billed and therefore, that portion of the judgment of the learned Single Judge granting a decree in favour of the plaintiff has got to be set aside, by allowing the appeal filed by the defendant. 8.Contrary to the above contentions, the learned Senior Counsel for the respondent in OSA No.15 of 2002 namely the plaintiff in the suit, would submit that the judgment of the learned Single Judge in disallowing the balance claim made by the plaintiff is against the facts of the case; that the claim should have been allowed in full with regard to the Pump House contract; that having found that the plaintiff had done work which was beyond the scope of the contract, the claim should have been granted in full; that the evidence of P.W.1 should have been accepted; that payment was to be made under Ex.P.83, and no proof was filed to show that the department made payment to enable the plaintiff to proceed with the work; that there was lapse on the part of the department, and there was no fault on the part of the plaintiff; that the defendant had not measured the work done by the plaintiff at the time of termination of the contracts; that the work was done in the presence of the departmental officials; that excess work was done by the plaintiff; that the non production of M-Book is fatal and hence the appeal filed by the plaintiff has got to be allowed. 9.Admittedly, pursuant to the acceptance of the tender made by the plaintiff, three contracts were entered into by the parties with regard to three items of work namely (1) construction of pump house and suction well; (2) construction of Anaerobic Lagoon and providing inlet and outlet arrangement to anaerobic lagoon under zone III of Coimbatore Drainage Scheme and (3) laying sewers in block 1A and 2A under Coimbatore Drainage Scheme. In respect of the first work for the construction of suction well and pump house at Nunjundapuram, the work order was issued on 12.3.1990, and the value was fixed at Rs.5,35,638.18. The site was handed over on 9.4.1990 and the first measurement was recorded on 13.6.1990. An agreement in SECR No.2/90-91 was entered into on 22.6.1990. Pending the work, after exchange of communications, the said contract was terminated on 23.12.1992. 10.As far as the second item work regarding the construction of anaerobic lagoon and providing inlet and out arrangement was concerned, the work order was issued on 23.3.1990. The value was fixed at Rs.16,09,339.70. The site was handed over on 9.4.1990. An agreement in SECR/TWAD/3/90-91 was concluded on 26.6.1990. Pending the work, the same was terminated on 4.1.1993. 11.The third work order was issued on 2.7.1990 fixing the value at Rs.32,57,379/-, and the site was handed over. Pending the work, the contract was terminated on 1.12.1992. 12.In the said suit, the plaintiff has challenged the termination of all these three contracts apart from claiming compensation in that regard. The plaintiff has also claimed Rs.1.97 lakhs as amount due on the work done so far measured and billed including supplemental, additional and extra work done on item I, Rs.1,39,480/- as amount due on the work done so far measured and billed regarding item No.2, and also Rs.1.70 lakhs as per the measurement to be recorded and billed in formation of the pond, and insofar as the third item regarding block 1A and 2A, the amount due on the work done so far measured and billed Rs.1,59,430/- and for the work done, but measurement to be recorded Rs.1.30 lakhs and the work carried out on oral instructions Rs.1.26 lakhs. Insofar as the illegal termination of the three contracts, Rs.2,92,750/-, Rs.5,87,680/- and Rs.9,06,580/- respectively were claimed. On trial, granting the relief of declaration that the termination of these three contracts was illegal, the trial Court has granted a sum of Rs.50,999/- in respect of the first claim namely the amount payable by the defendant on the works done and Rs.1,39,000/- in respect of the second claim, In respect of the rest of the claim made, the suit was dismissed. Thus these two appeals have arisen. Challenging that part of the decree granting the relief in favour of the plaintiff, the defendant has brought forth the first appeal, while in respect of the disallowed portion of the claim, the plaintiff has brought forth the next appeal. 13.Perusal of all the termination orders of the contracts would indicate that they were terminated on the ground of slow progress in the work. The case of the plaintiff challenging the termination as per the averments in the plaint and also the evidence of P.W.1, was that after the work orders were issued in every case, the defendant has committed default in handing over the site; that though it was agreed that the amounts should be paid within 14 days from the date of the claim made under the bills, they were not at all paid in time; that the cement required for the work was not supplied in time; that the work could not be proceeded in view of the intervention of the unforeseen circumstances namely the water table and hard rock; that apart from that, there was a delay caused by the defendant in entering into supplemental agreement; that there was also a delay in furnishing of the invert level; that all would clearly indicate that it was the defendant who has breached the agreement by not following strictly the terms, and there was neither lapses on the part of the plaintiff, nor delay was caused by him, and under such circumstances, the termination was bad. 14.What was all contended by the defendant before the trial Court and equally here also is that as far as the first item of work was concerned, the work order was issued as early as 12.3.1990, and the site was handed over to the plaintiff on 9.4.1990; that though the preliminary work was commenced on the very next day i.e., 10.4.1990, the same was completed on 2.9.1990 and 2.11.1990 for suction well and pump house respectively; that the agreement was concluded on 22.6.1990 itself; that there was no delay in finalising the agreement; but, it was the plaintiff who completed the contract belatedly i.e., 2 = months after the conclusion of the agreement; that it was clearly agreed between the parties in Clause 3 of Schedule B of the agreement that the excavation work was to be done at the cost of the plaintiff and no extra amount would be paid by the Board, and hence the plaintiff cannot have any grievance since it was beyond the scope of the agreement; that an estimation for this work was prepared; that the agreement was also concluded on the probable quantity of the work to be executed; that according to Schedule F item 11, the quantity was to be accounted and paid to the plaintiff by drawing supplemental agreement; that pursuant to the supplemental agreement, the plaintiff was actually paid, and hence the claim on that count was baseless; that only after proper intimation there were some changes made in the design; that as per the condition (1) of page 7 of the agreement, the plaintiff would be paid as per the variations, alterations, additions, etc.,; that it is pertinent to point out that the plaintiff without any protest executed the work accordingly; that it is true that he has spent an excess amount of Rs.50,999/-; but, this amount was withheld since the work was not done according to the specifications made; that the contention put forth by the plaintiff's side that there was a delay in supply of cement was thoroughly baseless; that as per the delivery note from 13.10.1990 to 8.11.1991, 110 M.T. of cement was supplied and hence the said contention was of no basis; that as regards the further contention that there was a delayed payment and non-payment, a sum of Rs.5,86,171/- has actually been paid as per the bills claimed by the plaintiff; that insofar as the bailing and pumping water, it was clearly understood that there was no extra payment which could be made; that as far as the claim of Rs.1,97,000/- was concerned, the executed work was only to the extent of Rs.50,999/- in excess and nothing more; that the same was also withheld because of the defective execution of the work; that as far as the 2nd item was concerned, the site was handed over on 9.4.1990; but, the site was not cleaned and levelled as per the specifications till 2.6.1990; that bund lagoon was to be formed over the natural ground level available at the site only; that under the circumstances, the question of delay in handing over the site would not arise; that the work has actually commenced in the month of July 1990; that the work was to be stopped because the level for the pond I and II was not fixed by the defendant department; that after the commencement of the work the payments have been made regularly for the works executed; that five bills have been cleared as submitted by the plaintiff; that after receiving the payments regularly, the plaintiff cannot come forward to state that either there was a delay in payment or the bills to the tune of Rs.1.6 lakhs for the works done were not honoured; that the payment of Rs.1,29,502/- was withheld and not Rs.1.6 lakhs since the work was not done as per the specifications and on the basis of the rejection by the Executive Engineer of the works done during his inspection on 8.8.1991; that despite the condition in the agreement, though the plaintiff was put on notice for rectification of the work, the plaintiff did not come forward to do the same; that the re- consolidation was to be done for the top layer; but, the plaintiff did not do the same using the power roller and thus, the consolidation was found not done properly and as per the specifications; that the department has supplied cement, steel and A.C. Pipes in excess; that though they remained unused, they were not returned; that as far as the third item was concerned, though the site was handed over on 2.7.1990, the work was commenced only on 15.10.1990 after a delay of 3 months; that all the materials have been supplied in time; that immediately after the preliminary work, the plaintiff was issued departmental materials; but there was a delay; that not even 10% of the work was done actually; that the work done was also found to be defective; that under such circumstances, the department had no option than to terminate the contracts after putting the plaintiff on notice, and hence all the claims are to be rejected. 15.The Court analysed the evidence both oral and documentary adduced by both sides, and also considered the submissions made. 16.It is not in controversy that the work order for