Case: M/s. A.T. Brij Paul Singh and Others Vs. State of Gujarat

by the learned civil Judge in computing the loss of profit at 15% on the value of the remaining work contract cannot be said to be unreasonable. In fact, the High Court had noticed that this computation was not seriously challenged by the State, yet in the judgment under appeal the High Court observed that actual loss of profit had to be proved and a mere percentage as deposed to by the partner of the appellant would not furnish adequate evidence to sustain the claim. In this connection the High Court referred to another judgment of the same High Court in First Appeal No. 89 of 1965 but did not refer to its own earlier judgment rendered by one of the Judges composing the Bench in First Appeal No. 384 of 1962 rendered on 3/6 July, 1970 between the same parties. When this was pointed out to Mr. Mehta, his only response was that the Court cannot look into the record of the cognate appeal. We find the response too technical and does not merit acceptance. We are not disposed to accept the contention of Mr. Mehta for two reasons : (1) that in an identical contract with regard to another portion of the same. Rajkot-Jamnagar road and for the same type of work, the High Court accepted that loss of profit at 15% of the price of the balance of works contract would provide a reasonable measure of damages if the State is guilty of breach of contract. The present appeal is concerned with the same type of work for a nearby portion of the same road which would permit an inference that the work was entirely identical. And the second reason to reject the contention is that ordinarily a contractor while submitting his tender in response to an invitation to tender for a works contract reasonably expects to make profits. What would be the measure of profit would depend upon facts and circumstances of each case. But that there shall be a reasonable expectation of profit is implicit in a works contract and its loss has to be compensated by way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid. In this case we have the additional reason for rejecting the contention that for the same type of work, the work site being in the vicinity of each other and for identical type of work between the same parties, a Division Bench of the same High Court has accepted 15% of the value of the balance of the works contract would not be an unreasonable measure of damages for low of profit. We are therefore, of the opinion that the High Court was in error in wholly rejecting the claim under this head. 11. Now if it is well-established that the respondent was guilty of breach of contract inasmuch as the rescission of contract by the respondent is held to be unjustified, and the plaintiff-contractor had executed a part of the works contract, the contractor would be entitled to damages by way of loss of profit. Adopting the measure accepted by the High Court ha the facts and circumstances of the case between the same parties and for the same type of work at 15% of the value of remaining parts of the works contract, the damages for loss of profit can be measured. 12. Mr. Aneja then attempted to take us through the maze of evidence and requested us that the claim under this head in the amount of Rs. 4, 30, 314/- is reasonable, fair and just. The value of the works contract was Rs. 16, 59, 900/- and the appellant had offered the rate at 71/2% less of the estimate made by the State. The appellant had executed some part of the contract. How much work he had completed and what was the balance of the works contract was attempted to be spelt out by a reference to Ext. 77/1 (Line Plan of Road) read with Exts. 77/2 and 77/3 showing the widening of the side strips near Kankawati Bridge as well as Longitudinal Sections of the Roads. In our opinion, while estimating the loss of profit that can be claimed for the breach of contract by the other side, it would be unnecessary to go into the minutest details of the work executed in relation to the value of the work contract. A broad evaluation would be sufficient. We in this connection, invited both Mr. Aneja, learned counsel for the appellant and Mr. T. U. Mehta, learned counsel for the respondent to give broad features of the work as well as the portion of the work executed by the appellant. Having heard them, we are satisfied that the appellant should be awarded Its. 2 lakhs under the head loss of estimated profit for breach of contract by the respondent. 13. Mr. Aneja next contended that the High Court was in error in substantially rejecting the claim in the amount of Rupees 1, 19, 686/- by way of compensation for loss sustained while executing the work and the claim of Rs. 1 lakh for extra items executed by the contractor while performing the contract. The High Court has examined the claim under both the heads. The items claimed under various sub-heads under each major head have been separately examined by the High Court bringing to bear upon each sub-head the detailed evaluation of the evidence. In the process the High Court had allowed an amount of Rs. 12, 055.90 p. under various sub-heads under major heads 2 and 3. While reaching this conclusion, the High Court minutely examined, the evidence and substantially rejected the claim. Having read the judgment we are not disposed to take a different view of the matter Therefore, the claim under these two heads except to the extent allowed by the High Court have been rightly rejected and we agree with the reasoning and conclusion of the High Court in this behalf.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We find the response too technical and does not merit acceptance. We are not disposed to accept the contention of Mr. Mehta for two reasons : (1) that in an identical contract with regard to another portion of the same.r road and for the same type of work, the High Court accepted that loss of profit at 15% of the price of the balance of works contract would provide a reasonable measure of damages if the State is guilty of breach of contract. The present appeal is concerned with the same type of work for a nearby portion of the same road which would permit an inference that the work was entirely identical. And the second reason to reject the contention is that ordinarily a contractor while submitting his tender in response to an invitation to tender for a works contract reasonably expects to make profits. What would be the measure of profit would depend upon facts and circumstances of each case. But that there shall be a reasonable expectation of profit is implicit in a works contract and its loss has to be compensated by way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid. In this case we have the additional reason for rejecting the contention that for the same type of work, the work site being in the vicinity of each other and for identical type of work between the same parties, a Division Bench of the same High Court has accepted 15% of the value of the balance of the works contract would not be an unreasonable measure of damages for low of profit. We are therefore, of the opinion that the High Court was in error in wholly rejecting the claim under this headHaving heard them, we are satisfied that the appellant should be awarded Its. 2 lakhs under the head loss of estimated profit for breach of contract by the respondent13. Mr. Aneja next contended that the High Court was in error in substantially rejecting the claim in the amount of Rupees 1, 19, 686/by way of compensation for loss sustained while executing the work and the claim of Rs. 1 lakh for extra items executed by the contractor while performing the contract. The High Court has examined the claim under both the heads. The items claimed under variouss under each major head have been separately examined by the High Court bringing to bear upon eachd the detailed evaluation of the evidence. In the process the High Court had allowed an amount of Rs. 12, 055.90 p. under variouss under major heads 2 and 3. While reaching this conclusion, the High Court minutely examined, the evidence and substantially rejected the claim. Having read the judgment we are not disposed to take a different view of the matter Therefore, the claim under these two heads except to the extent allowed by the High Court have been rightly rejected and we agree with the reasoning and conclusion of the High Court in this behalf.