THE HON’BLE SRI JUSTICE C.V.RAMULU APPEAL SUIT No.1031 OF 1992 DATED: 03-03-2010 Between: The State of Andhra Pradesh, Rep.by the District Collector, Kurnool & another. .....APPELLANTS AND Ayalur Vadde Labour Contract Society, Rep.by its President-V.Madduleti, Kurnool District. .....RESPONDENT ORDER This Appeal Suit is directed against the judgment and decree, dated 03-02-1992 made in O.S.No.39 of 1987 on the file of the learned Subordinate Judge, Nandyal, whereunder the suit filed by the respondent herein was decreed declaring the notices, dated 13-11- 1985 and 16-05-1986 issued by the 2nd defendant to the plaintiff as invalid, inoperative and not maintainable. 2. Appellants herein are the defendants and the respondent is the plaintiff. According to the plaintiff, it is a Cooperative Society formed under the A.P.Cooperative Societies Act by persons belonging to Vadde community. The 2n d respondent-2nd defendant has taken the contract work of minor irrigation tank pertaining to a local vagu near Brahmanakotkur village in Nandikotkur taluk and also for the formation of an irrigation channel therefrom. Pursuant to the said contract, plaintiff had contracted cement, stones and concrete and got ready with all necessary material required for completion of the work and in fact, plaintiff had completed three fourth of the channel digging work and also completed one foot depth excavation of the tank bund. Before the plaintiff started the said work, the ryots of Brahmanakotkur, in whose lands the channel was to be formed objected to the said operation on the ground that the Government had not given any acquisition notices and had not paid the compensation. However, the plaintiff, with the assistance of some elders, pacified the ryots assuring that the Government would pay the compensation and completed three fourth of the work. Thereafter, the ryots came upon the land and committed acts of vandalism and obliterated the traces of the channel dug by the plaintiff. Plaintiff by its letter, dated 19-07-1981 informed the 2nd defendant about it and requested to take steps to remove the obstructions, but the Government had not taken any steps to enable the plaintiff to proceed with the work and complete it. Due to the obstruction caused, the plaintiff suffered heavy loss. As the ryots are very powerful and the plaintiff was helpless it had to give up the work also. 3. The plaintiff Society was also financially not in a position to make any advance payment to meet the labour and other charges. Subsequently, during the year 1983-84 another contractor-D.C.Nagireddy was entrusted with the said work by the defendants but the said Contractor also could not complete the work due to obstruction caused by the land owners. Some of the ryots have also filed suits against the defendant and the said Contractor and obtained temporary injunction orders restraining them from entering into the lands. In the year 1984-85, the defendants entrusted the said contract work to another Contractor by name M.Subbanna and by that time the land compensation amount was paid and the said contractor was able to finish the work. Thus the plaintiff could not complete the work due to circumstances beyond its control. The plaintiff was demanding the 2nd defendant for payment of Rs.20,000/- for the work already done by it and the 2nd defendant was promising to pay. While so, the 2nd defendant got issued notices, dated 13-11-1985 and 16- 05-1986 informing the plaintiff that on account of the failure of the plaintiff to complete the work, the department sustained loss of Rs.52,836/- and demanded the plaintiff to pay the said amount of Rs.52,836/- towards penalty, being the differential cost of work involved in getting the same executed through other agencies. The notices issued by the 2nd defendant are highly illegal, inoperative, invalid and opposed to all cannons of justice and equity. Instead of paying the amount due to the plaintiff for the work partly done, the 2nd defendant got issued the above notices. Not satisfied with it, the 2nd defendant also addressed letters to the Executive Engineer, Roads and Buildings, Kadapa, Executive Engineer, S.R.B.C., Nandyal and Executive Engineer, Tungabhadra Division, Adoni requesting them to withhold payment of amount payable by them to the plaintiff under the contracts concerned with them, as a result of which the other heads of Engineering departments withheld payment of the amounts due to the plaintiff. The plaintiff was unable to complete the work due to the circumstances beyond its control. The land owners prevented the plaintiff from executing the work and completing it. 4. The 2nd defendant filed a written statement stating that the contract work was taken up by the plaintiff, but it is false to say that the plaintiff gathered all the material and completed three fourth of the channel digging work. The plaintiff had done the same work at rough stone escape and at head sluice costing Rs.5410/- only. The plaintiff after taking over the site on 28-06-1981 for channel and on 22-07-1981 for tank bund, had stopped the work from 27-07-1981 onwards after working for four or five days, however it is true that before starting the tank work, the ryots of Brahmanakotkur objected the contractor from proceeding with the work. Plaintiff addressed a letter, dated 19-07-1981 to the 2n d defendant in that regard. Immediately, the 2nd defendant got the doubts of the ryots cleared and stated that they will be paid the compensation amount and thereafter the ryots never objected the plaintiff. 5. Later on, the plaintiff worked for four or five days in a part of work and rough stone escape and at head sluice. The work done by the plaintiff was evaluated by the defendant. Thereafter, plaintiff did not do any work. It is false that the ryots came upon the land and obliterated the traces of the channel dug by the plaintiff. As there was no progress and as the plaintiff suspended the work, this defendant issued reminders through the Deputy Executive Engineer to the plaintiff on 16-05-1982 and 28-08-1982 asking him to complete the work. Even prior to this, the Superintending Engineer also reminded the plaintiff to complete the work. In spite of the reminders issued by the department, the plaintiff has not done the work worth Rs.20,000/-.He has done the work worth Rs.5410/- only. It is not correct to state that the defendant did not take any steps to facilitate the plaintiff to complete the work. The reason for the plaintiff giving up the work is not due to the obstruction caused as alleged. In its letter, dated 30-12-1982 the plaintiff had categorically expressed its inability to complete the work due to personal and financial difficulties and thus requested the 2nd defendant to get the work done by another contractor. Then this defendant deleted the tank bund from the plaintiff and entrusted it to D.C.Nagireddy. However, the plaintiff was directed to complete the canal work. Meanwhile, the land owners filed a suit in O.S.No.31 of 1983 on the file of the Principal District Munsif, Nandikotkur and obtained a temporary injunction restraining the contractor from proceeding with the work. Due to the injunction order, the said contractor- Nagireddy expressed that he could not proceed with the work. Thereafter, this defendant got the tank bund work done by another contractor. As per the terms and conditions of the agreement executed by the plaintiff he agreed to provide by the provisions of the Andhra Pradesh Detailed Standard Specifications. 6. By virtue of clause 60 (c) of the said specifications, this defendant is entitled to ask the plaintiff the differential cost of the work involved in getting the same executed through other agencies. Therefore, the 2nd defendant got issued the notices as alleged by the plaintiff demanding the plaintiff to pay Rs.52,836/- The said notices are legal and valid. It is also true that the 2nd defendant also addressed letters to other heads of Engineering departments requesting them to withhold payment of the bills due to the plaintiff. The plaintiff never gave a written representation, dated 30-12-1982 and the Superintending Engineer never agreed to it. The plaintiff had committed breach of the contract as he did not complete the work due to his latches which are deliberate and intentional. It is false and incorrect to state that the contract had become impossible of performance and that there was frustration of contract or the plaintiff had done work costing Rs.5410/- only and the said amount is forfeited by this defendant as per the terms of the contract. On the other hand, the plaintiff itself is due Rs.52,836/- to the 2nd defendant as demanded in the notices. 7. On the basis of the above pleadings, the Court below framed the following issues: 1. Whether the plaintiff could not execute the contract on account of failure of the defendants to perform their part of the contract? 2. Whether the contract was frustrated on account of the omissions and commissions on the part of the defendants? 3. Whether the defendants suffered loss on account of the failure of the plaintiff to perform his part of the contract? If so, what is the quantum of loss they suffered? 4. Whether the plaintiff is entitled to permanent injunction restraining the defendants and their subordinates from recovering or collecting the sum of Rs.52,836/-? 5. Whether the plaintiff is entitled to the declaration that the impugned notices, dated 13-11-1985 and 16-05-1986 issued by the 2nd defendant to the plaintiff are illegal? 6. To what relief? 8. On behalf of the plaintiff, P.Ws.1 to 4 were examined and Exs.A1 to A7 were marked and Ex.X1 was marked. On behalf of the defendants, D.Ws1 and 2 were examined and Exs.B1 to B11 were marked. 9. After detailed consideration of the oral and documentary evidence, the trial Court came to the conclusion that the contractor is frustrated in view of the obstructions created by the land owners and therefore, the notices issued are arbitrary and invalid and therefore decreed the suit declaring the letters, dated 13-11-1985 and 16-05-1986 as arbitrary, illegal, invalid, inoperative and unenforceable. The defendants and their men are restrained by means of permanent injunction to recover or collect the said amount of Rs.52,836/- from the plaintiff. Aggrieved thereby, the present Appeal Suit is filed. 10. Learned counsel appearing for the appellant strenuously contended that the Court below has not considered Ex.B1-letter addressed to the Executive Engineer intimating the plaintiff to complete the work and if they fail to execute the same, penal action would be initiated against the Society and the evidence was not properly appreciated and there was no obstruction created by the ryots or anybody and there was no frustration of the contract and as such, the Court below ought to have dismissed the suit. Whereas, the learned counsel appearing for the respondents supported the judgment of the Court below and stated that absolutely there was no evidence to show that as on the date of execution of the agreement, the land was acquired and the compensation was paid to the land owners. On the other hand, even when the contract was entrusted to the second contractor-D.C.Nagireddy, the land owners have filed a suit and obtained injunction. The said Nagireddy and the department did not proceed with the matter. Only when the land was acquired and compensation was paid, the department was allowed to proceed with the matter and complete it. Under those circumstances, the trial Court has rightly found that the contract was frustrated, in view of the circumstances, existing as on that day. Therefore, under Section 56 of the Contract Act, it must be deemed that the contract was frustrated and therefore the notices issued are invalid and unenforceable. 11. I have given my earnest consideration to the respective submissions made by the learned counsel and perused the impugned judgment and other material made available on record. There is no necessity of going into all the details. The findings recorded by the Court below against the issue Nos.1 and 2 would suffice to show that the contract was frustrated and therefore the issuance of notices was not valid under law and they are unenforceable. The findings recorded by the Court below against the issue Nos.1 and 2 read as follows: “………….In view of the pleadings, it was established by the plaintiff that there was substantial obstruction by the land owners for the continuation of the work and the same was intimated to the defendants in writing by the plaintiff, under Ex.B1. It was also established by the plaintiffs that the defendants having received such intimation and having accepted the obstruction, failed to remove the said obstruction and there is no recorded evidence on behalf of the defendants to show that they have removed the said obstruction of the land owners by way of issuing letters to the plaintiff society. Even though both parties exchanged so many letters, there is no whisper in any of the letters issued by the defendants about the removal of the obstruction caused by the land owners by the department. Thus there was impossibility of performance of contract in this regard and the same was established by the plaintiff. The impossibility of performance is one of the modes of discharge of the contract. When a contract to perform certain thing becomes impossible of fulfillment, owing to some supervening circumstances, or circumstances the party liable to be discharged from performance. If for any reason the state of things at the time of performance is altered by no fault of either party and consequently the performance originally stipulated for, is not possible, then the party obliged is discharged from his obligation for the parties are deemed to have contracted only on the basis of certain fundamental assumptions and to have consented that on the failure of those assumptions there shall be no obligation to perform the contract. In the present case on hand, it was established by plaintiff society that there was obstruction by land owners to continue the work, as they have not been paid the required compensation. The defendants also admitted the obstruction in their pleadings as well as in the evidence and in their correspondence, but they have not intimated the plaintiff about the removal or such obstruction in abutting. It is seen from Exs.A1 and A2, even though they are not relevant and valid, the obstruction continued till that date and even thereafter due to the injunction granted by the Court and thus P.W.4 who was entrusted with the work after the plaintiff left it, also failed to complete the work. It is not disputed about the work being entrusted by the department to P.W.4. It was also not suggested to P.W.4 that no work was done by him, even though he asserted to have done work worth Rs.25,000/-. Thus the recorded evidence supported by oral evidence, clearly indicates about the impossibility of performance of the contract. Admittedly the plaintiff society commenced and conducted some portion of the work. When changed circumstances prevented the plaintiff society by way of strong obstruction from the land owners and the same was admitted by the defendants, there will not be any obligation on the part of the plaintiff to perform its part of the contract. Thus the changed circumstances, it is said, make the performance of the contract impossible and the parties are absolved from the performance of it, as they did not promise to performance impossibility. Thus the facts narrated by P.W.1 supported by the documentary evidence under Ex.B1 and also the oral evidence of P.Ws.2 to 4 and also the admissions made in para 5 of the written statement and there correspondence of the defendants, conclusively establish that there was an obstruction and the plaintiff was unable to continue the work due to the obstruction and the very obstruction of the land owners is a supervening event to take away the basis of the contract, and it was of such a character, that it strikes at the very root of the contract. Apart from that, the plaintiff society also expressed their inability to conduct the work under Ex.B2-letter and also assigned reasons stating that their financier died suddenly and their president became sick and thus wanted to be discharged from the contract without any penalty. This letter under Ex.B2 is dated 30-12-1982. Thereafter, even though the plaintiff informed by its letter, dated 21-02-1983, the defendants have not terminated the contract. No such information was available from the letter under Ex.B6 about the termination of the contract or to take further or penal action against the plaintiff. Thus the above stated facts are conducive enough to draw a conclusion that there was frustration of contract has been frustrated by the instruction or occurrence of an unexpected event creating a state of things, in which the parties could not have reasonably intended that the contract, as they made it, should be operative. As it was established by the plaintiff firm that the obstruction from the land owners continued for substantially good period as could be seen from Exs.A1 and dA2, it can be concluded that the plaintiff established that they failed to perform their part of the contract due to frustration and impossibility and therefore it can be held that the plaintiff was prevented to continue the work in this regard. It is also to be noted in this connection that even though the defendants initiated penal action and issued notices dated 13-11-1986 and 16-05-1986 claiming damages on the ground that they sustained loss due to non performance by plaintiff if we scrutinize the facts mentioned above analytically, the defendants, as a matter of fact, also are not entitled to issue said notice. It is so because the relevant dates under those transactions clearly indicate that the plaintiff had not conducted any work after the agreement was entered into and thus the contract has not been acted upon. The analysis of the evidence of the defendants clearly indicates that the plaintiff already commenced and completed some portion of the work even before entering into the agreement. Admittedly, they entered into agreement on 20-03-1982. There was no record to show that the plaintiff continued the work after entering into agreement. It is also accepted by D.Ws.1 and 2 and in the course of arguments also. Thus the very facts indicate that what all work that was done by the plaintiff, was commenced and completed even before entering into the agreement. When the plaintiff did not do any work at all after the agreement, the plea of the defendants that the plaintiff commenced some work after entering into agreement dated 20-03-1982 under Ex.B8 and therefore the plaintiff is liable for penalty, is not tenable. It was specifically mentioned in para 5 of the written statement that the plaintiff suspended the work and did not start again. Thereafter the plaintiff issued letters dated 16-05-1982 and 28-08-1982 and prior to these letters the Superintending Engineer also in his letter dated 20-03-1982 asked them to resume work. Thus having done part of the work, the plaintiff did not resume the work as per the very contention of the defendants. It is not out of place to comment here that the defendants did not file material papers to show what portion of the work was conducted by the plaintiff, in spite of the fact that the plaintiff asserted three fourth of the work was completed. Admittedly the defendants will note the particulars of the work conducted by the contractor from stage to stage and the said record will be maintained by them. But it is unfortunate in this case that the defendants did not file such material papers to indicate about the portion of the work they have done under the agreement and thus the claim of the defendants from the plaintiff that by virtue of clause 60 (c) of the A.P.D.S.S. the defendants are entitled to ask plaintiff to pay them the differential cost of work involved in getting the same executed through other agencies, is doubtful and cannot be sustained. Apart from that the plaintiff also established the frustration of the contract by explaining the circumstances and therefore the defendants are not entitled to forfeit the amount payable to the defendants and initiate any action in asking the other departments to withhold payment of the amounts payable to the plaintiff. It is also clearly noted in Ex.B2 letter that the plaintiff expressed its inability to complete the work, but the defendants immediately did not terminate the contract and did not take steps to penalize the plaintiff society. Thus the above analysis of the facts clearly indicates that the plaintiff society was unable to perform any contract work as the defendants failed to remove the obstruction of the land owners and in my opinion the contract between the plaintiff and the defendants was frustrated in view of the existing circumstances and therefore I hold these two issues in favour of the plaintiff”. 12. The learned counsel appearing for the appellants could not bring to the notice of the Court any error, in recording the evidence and in appreciation of the evidence. Under those circumstances and in view of the above findings recorded by the Court below, I am of the opinion that the impugned judgment and decree do not call for interference of this Court. Appeal Suit is devoid of merits. 13. Accordingly, Appeal Suit is dismissed and the judgment and decree passed by the trial Court are confirmed. ________________ C.V.RAMULU,J 03rd March, 2010 Tsy