IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA C.S. No. 29 of 2001. Reserved on: 12.3.2008. Date of decision: 23.4.2008. M/s Mountain Movers ... Plaintiff Versus The State of H.P. & Another … Defendants Coram : The Hon’ble Mr. Justice V.K. Ahuja, Judge. Whether approved for reporting?1 Yes. For the plaintiff: Mr. J.S. Bhogal, Senior Advocate with Mr. Suneet Goel, Advocate. For the defendants: Mr. J.S. Guleria, Law Officer. V.K. Ahuja J. : This is a suit for declaration and injunction filed by the plaintiff. The allegations made by the plaintiff are that the plaintiff is a Contractor, duly enlisted with the HP PWD, for execution of civil works relating to buildings and roads. The plaintiff had entered into a contract with the State of Himachal Pradesh through Executive Engineer, Theog Division HP PWD for execution of the work relating to “C/O Degree College building at Theog”. The said contract was reduced into writing between the parties and was numbered as Agreement No.1 of 1999-2000 in the office of defendant No. 2. It was further alleged by the plaintiff that his tender offer was duly accepted for and on behalf of defendant No. 1 by defendant No. 2 vide his letter dated 9.4.1999 with a time limit of 36 1Whether reporters of Local Papers may be allowed to see the judgment? Yes. 2 months for its completion. It was alleged that the said letter was received by the plaintiff towards the end of third week of April, 1999. Defendant No. 2 while accepting the tender unilaterally reduced the time for the execution of the work from three years to two years as a result of which the plaintiff did not sign the formal agreement prepared by the defendants with the reduced time limit. It was further alleged that as per the terms of the said agreement between the parties, the plaintiff was required to complete the work within a period of 3 years from the 15th day of issue of the letter of acceptance. The plaintiff firm was also required to execute the 1/8th of the work in 1/4th of the time stipulated, 3/8th of the work in ½ of the time and 3/4th of the work within 3/4th of the time. This work was required to be commenced by 24.4.1999 and completed by 23.4.2002. There was also a provision for extension of time which showed that the time stipulated for the completion of the work ceased to be of the essence of the contract. It was further alleged that the agreement also contained provisions relating to the manner in which the work was to be executed, the defendants were liable to make available the site for the work, the required designs, drawings and instructions for executing the work, required quantity of the stipulated materials like cement, steel and blasting material and there was provision regarding the payment to the plaintiff by the defendants every month by a fixed date. Thus it was submitted that the defendants were required to perform their part of the promises as detailed above, and then the plaintiff was expected to complete the work within the stipulated period. It was further averred that the site remained without approach, designs and drawings were made available partly only in the middle of June, 1999, the funds for the work were also not made available and running account bill passed by the Assistant Engineer in September, 1999 was paid only in December, 1999. It was alleged that the defendants failed 3 to provide the plaintiff with a set of designs and drawings required for executing the work and the plaintiff had to wait for the receipt of these drawings etc. and the plaintiff was prevented from executing the work on account of failure of the defendants to make available the site, designs, drawings and instructions, required stipulated material and payment for the work done and as such the plaintiff became entitled for the damages sustained due to said breach of contract. It was further alleged that as per the terms of the agreement in case the delay was attributable to the plaintiff, defendant No.1 was entitled to such amount of compensation not exceeding 10% of the value of the work as may be determined by the Superintending Engineer concerned. However, defendant No. 2 by usurping the powers of Superintending Engineer vide his letter dated 14.1.2000 illegally determined that plaintiff was liable to pay defendant No.1 as compensation a sum of Rs.12,62,052/- for delay in completion of the work. In addition to this, the agreement was rescinded by defendant No. 2 and he had also forfeited the security deposit amounting to Rs. 1 lac in favour of defendant No. 1. It was further alleged that the action of determination of the compensation and forfeiture of security deposit amount etc. is liable to be declared as null and void since the compensation was decided by defendant No. 2 by ignoring the settled principles and the reasons for delay were not considered by defendant No. 2. Hence the suit was filed by the plaintiff after issuance of notice under Section 80 C.P.C. upon the defendants and the plaintiff had prayed that the declaratory decree may be passed in his favour and against the defendants and the compensation awarded as well as the order of rescinding the work and forfeiting the security deposit may be declared as illegal. The plaintiff had also prayed for the relief of 4 permanent injunction, restraining the defendants from recovering this amount, as determined by defendant No. 2. Defendants No. 1 and 2 took preliminary objections in regard to maintainability, estoppel etc. On merits, the defendants pleaded that the stipulated time for completion of the work was 24 months after allowing 15 days to commence the work after completing the formalities. It was pleaded that the necessary drawings were supplied to the Contractor on 22.5.1999, 7.6.1999 and 22.6.1999 and the site was also handed over immediately and the work was started by the Contractor on 2.5.1999. It was further pleaded that during the period the plaintiff was asked to speed up the progress of the work since the work was awarded for a sum of Rs.1,26,40,521/- and 1/4th of the work was elapsed on 24.10.1999, but the plaintiff executed the work of Rs.6,74,804/- only upto 24.10.1999 against the stipulated time of 1/8th period to the extent of Rs.15,80,005/-. It was further pleaded that the plaintiff was constantly reminded to restart the work which was stopped since 4.11.1999 vide various letters and since the plaintiff was not in a position to complete the work within the stipulated period, the defendants had no other alternative except to levy compensation and rescind the work. It was further pleaded that the plaintiff had himself agreed to complete the work within 24 months during the negotiations held on 8.3.1999 and since he could not execute the 1/8th of the work to the extent of Rs.15,80,005/- in the 1/4th of the time stipulated which elapsed on 24.10.1999, the compensation was awarded and the agreement was rescinded and the security deposited was forfeited in favour of defendant No. 1. It was submitted that the plaintiff was not entitled to the relief since he had breached the conditions of the agreement and was fully responsible for the delay caused in the execution of the work. 5 Replication was filed by the plaintiff. On the pleadings of the parties, the following issues were settled by this Court:- 1. Whether the compensation for delay in completion of the work in the sum of Rs.12,62,052/- as imposed on the plaintiff is in exercise of the powers not vested in authority imposing the compensation and is against the principles of natural justice, as alleged? ….OPP 2. Whether forfeiture of the amount of security deposited by the plaintiff with the defendant is contrary to the principles of natural justice, as alleged? ….OPP 3. Whether the plaintiff is entitled to the declaration as prayed for? …OPP 4. Whether the plaintiff is entitled for the relief of permanent injunction, as prayed for? …OPP 5. Whether the suit is not maintainable because of failure of the plaintiff to exhaust the remedy available under the law, as alleged? …OPD 6. Whether the suit is bad for non-compliance of Section 80 of the Code of Civil Procedure? …OPD 7. Whether the plaintiff is estopped from filing the suit because of his act and conduct? …OPD 8. Whether the plaintiff has harmed the public interest by not completing the work within the stipulated period, therefore, the compensation has rightly been levied on him as per provisions of clause-2 and clause-3 of the agreement? …OPD 9. Whether the suit has not been properly valued for the purposes of court fee and jurisdiction? …OPD 10. Whether the plaintiff has no cause of action, as alleged?..OPD 11. Relief. 6 In support of these issues the plaintiff examined two witnesses including himself. The defendants examined two witnesses. I have heard Shri J.S. Bhogal, learned Senior Counsel for the plaintiff and Shri J.S. Guleria, learned Law Officer, for the defendants and have gone through the record. My findings on these issues are as under: Issue No. 1: The first point to be considered under these issues is as to whether the period for completion of work was three years as alleged by the plaintiff or it was two years as pleaded by the defendants. In support of this point PW-1, Parmod Sharma, partner of the firm, has stated that the stipulated period for completion of the work as per tender was three years. He has further stated that during the course of negotiations, before the acceptance of the tender, the defendants asked the plaintiff to reduce the rates as also the period of completion which was not accepted by the plaintiff. Since the defendants mentioned the period of completion as two years in the letter of acceptance, therefore, he as a representative of the plaintiff refused to sign the formal agreement. He has brought the original letter awarding the contract and photocopy of the same has been tendered in evidence as Ext. PW-1/E. A perusal of this letter shows that a letter was written by the Executive Engineer i.e. defendant No. 2 to the plaintiff intimating that the work should be completed within a period of 24 months. In cross-examination he has clearly stated that because of some dispute about the stipulation in the agreement, he had not signed the agreement. PW-2 Prem Chander Sharma, Junior Assistant in the office of Executive Engineer, HP PWD, Theog, has stated that as per records brought by him, the time for completion of the work was three years from the date of 15 day of the award letter. There was no suggestion to this witness that the period of completion of the work was fixed as 24 months and not as 36 months as stated by him. However, in his cross- 7 examination the defendants had proved a letter Ext. DA which shall be referred here-in-below. To rebut this evidence DW-1 P.K. Tandon, Executive Engineer has stated that the work was to be completed by the plaintiff within two years as agreed to in between the parties. However, he did not prove any such agreement vide which the plaintiff had agreed to complete the work within a period of two years. In cross-examination he admitted that as per the draft notice, a notice inviting tender was issued which is part of Ext. PW-1/O and the period of completion of the work was 36 months. He further stated that it was during negotiations that the plaintiff had agreed to reduce the completion period of 36 months to 24 months vide condition No. 4 of Ext. DW-1/B. This is the same letter as Ext.DA referred to above. From above discussion of the evidence led by the parties it is clear that when the notice inviting tender was issued, the period for completion of the work was fixed as 36 months. There is no dispute in regard to this fact. However, the defendants have pleaded that during negotiations the period for completion of work was reduced vide condition No. 4 of Ext. DA. It has to be seen as to whether this letter written by the plaintiff to defendant No. 2 proves that the period of completion of work was reduced to 24 months. A perusal of this letter shows that apart from three other conditions mentioned therein, under condition No. 4 it was mentioned by the plaintiff as under:- “We agree that all effort shall be made to complete the work within 24 months.” This is the only document relied upon by the defendants to prove that the period was reduced to 24 months for completion of the work. It is surprising that defendant No.2, who was holding the post of Executive Engineer did not deem it necessary to enter into any agreement in pursuance to the acceptance of the tender of the plaintiff mentioning 8 therein all the conditions for completion of the work. In fact no agreement in regard to condition No.4 as per the negotiations has been entered into between the parties. This should have been entered into since defendant No.2 was a literate person holding the post of an Executive Engineer and was aware of the meaning of the word that all effort shall be made to complete the work within 24 months. The word “effort” is used for completion of the work within 24 months. In case the defendants were of the opinion that the period has to be reduced in pursuance to the negotiations, the plaintiff should have been asked to give in clear words that the period has been reduced from 36 months to 24 months which is not so and the plaintiff had agreed only that all effort shall be made to complete the period within 24 months and had not agreed that the period to complete the work has been reduced to 24 months. Therefore, the defendants can be held to be liable for the misunderstanding, if any, since no agreement was got executed into writing, nor the plaintiff was asked to reduce the period for completion of the work to 24 months. Thus it follows from above discussion that the plaintiff had not agreed that the period for completion of the work was reduced to 24 months and as such the period for completion of work has to be considered as 36 months. Accordingly, it has to be seen as to how much delay was there on the part of the plaintiff in completing the work upto the date as detailed above. The second question which arises for consideration is as to whether there has been any delay in completion of the work and whether it was attributable to the defendants and how far the plaintiff is liable to pay the compensation and for forfeiture of the security deposit amount. Coming to the evidence in this regard the plaintiff as PW-1 has stated that the work was awarded to him vide letter dated 9.4.1999 Ext. PW-1/E, addressed by defendant No. 2 to the plaintiff. The plaintiff 9 was also advised vide this letter to start the work within 15 days and he was asked to contact Assistant Engineer, Theog for detailed drawings and site of building. Thus it follows that the work was to be started within 15 days from 9.4.1999 i.e. on or before 24.4.1999. The plaintiff as PW-1 has stated that the site was made available by the defendants about 45 days after the plaintiff received this letter. He has also stated that the drawings relating to the cutting were made available to the plaintiff in the month of June, 1999. Structural drawings were neither provided nor prepared at all. He also stated about the delay in making the payment of the bills which was passed by the SDO in September, 1999, but it was paid only in the following December. He also proves in evidence letter written by him explaining the delay for execution of the work which is Ext. PW-1/F. In this letter dated 5.11.1999 addressed to the Superintending Engineer, the plaintiff had alleged that the award letter of the work was received by him after three months of calling the tender, which in my opinion is not relevant since we are considering the award letter dated 9.4.1999 and the work was to be started within 15 days thereafter. Therefore, the period has to be reckoned from this letter and not three months after receiving of the tender. The plaintiff had also alleged that the first set of drawings was handed over to him during the first week of June, 1999 which were only partly and he also alleged that the road remained closed for more than one month and had also given other reasons that only 3-4 labourers were deployed to repair the road, no cement was made available for more than one month and had also pleaded that the payment has not been made available to him till December, 1999. It has to be seen as to whether these allegations of the plaintiff stand proved that the drawings were made available to him late i.e. only in June, 1999 and that too partly and as to whether the cement was made available to him late i.e. by one month as stated by him. On this 10 point the statement of PW-2 Prem Chander Sharma, Junior Assistant from the office of Executive Engineer can be said to be relevant, who has clearly stated that first drawings were issued to the plaintiff on 22.5.1999, though he has not proved any letter vide which these were sent to the plaintiff. This shows that the first drawings were made available to him after about 28 days from the date when the work was to start i.e. from 24.4.1999. Thus there was a delay of about one month in giving the drawings to the plaintiff. He further stated that there is no record about the issuance of further drawings. He also stated that the department has not kept the record regarding handing over of the site to the plaintiff. No such suggestions were put to this witness as when the drawings were handed over to the plaintiff or as to when the site was handed over to the plaintiff. The witness is from the department of the defendants and his evidence can be said to be relevant. Coming to the evidence of the defendants in this regard DW-1 P.K. Tandon, Executive Engineer, has stated that the site was handed over to the plaintiff on 9.5.1999 and the plaintiff commenced the construction. According to the award letter Ext. PW-1/E dated 9.4.1999 the work was to be started within 15 days i.e from 24.4.1999, but according to this witness the site was handed over to the plaintiff on 9.5.1999 i.e. after 15 days when the work was to be started. Therefore, this delay can be said to be attributable to the defendants and not the plaintiff. He further stated that the plaintiff had written a letter to them on 19.5.1999 for supply of the drawings, which showed that the drawings had not been supplied to the plaintiff till that date. The mode of proof of the document was objected to on the ground of late production, but as the document is in the record of the defendants and as such it is being read in evidence. He further stated that the drawings were supplied to the plaintiff vide letter dated 22.5.1999, copy of which is Ext. DW-1/D, which 11 was also admitted in evidence. These drawings were given after about 1 and ½ months of the award of the contract. In cross-examination he admitted that the date is mentioned in the measurement book but it does not bear the signature of the representative of the plaintiff in token of the delivery of the site. He denied his knowledge whether the excavation plan of the work was prepared in the office of Chief Enineer on 20.5.1999. He further admitted that alongwith letter Ext. DW-1/D key plan and the excavation plan of the foundation of the work were sent to the plaintiff Ext. DW1/D which is dated 22.5.1999. He further admitted that the details of the excavation plan of foundations were sent vide this letter, i.e. Ext. DW-1/D, which shows that these were sent to the plaintiff after one month of the period when he was to start the work. He admitted that in the absence of these plans, no work can be started at the site. He also denied his knowledge that the foundation details were issued to the plaintiff in the first week of June, 1999. No signatures of the plaintiff or his authorized representative have been proved to show that this letter was delivered to the plaintiff alongwith excavation plan on 20.5.1999 or in the first week of June, 1999. He further stated that the foundation details were to be furnished by the defendants after excavation plan and these foundation details were issued to the plaintiff in the first week of June, 1999. He stated that he cannot say whether such details were given to the plaintiff under any covering letter. In regard to the supply of cement, this witness has admitted that the record of the cement and steel to be supplied by the department is maintained by the concerned Junior Enineer and he cannot say when these were supplied by the department though the record of the cement, iron etc. is maintained by the department. He denied his knowledge whether cement was not available during the period July to October, 1999 for being supplied to the plaintiff. Once this record about the cement and steel is maintained 12 by the concerned Junior Engineer, it could have been easily proved by the defendants as to when the same was supplied to the plaintiff and in the absence of any evidence it has to be inferred that this was not made available within the time prescribed and the suggestion made that it was not made available during the period from July to October, 1999 has to be accepted as correct since the record is with the department which they have failed to produce. DW-2, Murari Lal, Additional Assistant Engineer, has admitted that the dates of supply of drawings to the Contractor are not mentioned in the measurement book. He further stated that in May 1999, 250 bags of cement were supplied to the plaintiff and 500 bag of cement were again supplied in July, 1999. Thus he stated that this quantity was supplied till September, 1999. In his cross-examination, he admitted that the register regarding the supply of cement is maintained at the site by the Junior Engineer concerned but no register is being maintained in the office of the concerned Executive Engineer. According to the terms of the agreement, the plaintiff was required to execute 1/8th of the work in 1/4th of the time stipulated i.e. within a period of six months in case the period for completion of the work is taken as 24 months and more than 4 months in case the period is taken as 36 months. The work was started in the month of May, 1999 and 1/8th of the work was to be completed by November, 1999 and the measurements were taken by the department as per DW-2. Thus according to the agreement 1/8th of the work was to be done for worth Rs.15 lacs against which it was done for worth Rs.8 lacs only. In regard to the delay the defendants have also led evidence to prove that some notices were sent by them to the plaintiff to complete the work. The defendants have proved in evidence telegrams dated 9.8.1999, 28.8.1999, 13.12.1999 and 17.12.1999 and letters dated 13 28.8.1999 and 9.12.1999. Photocopies of these telegrams and letters are Exts. DW-1/E to DW-1/L. These letters do suggest that there was a delay on the part of the plaintiff and rather