Case: SHRIPATI LAKHU MANE Vs. THE MEMBER SECRETARY, MAHARASHTRA WATER SUPPLY AND SEWERAGE BOARD &amp; ORS

1872 makes it clear that if any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal. Section 67 together with the illustration contained there under reads as follows:- 67. Effect of neglect of promisee to afford promisor reasonable facilities for performance.—If any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to any non--performance caused thereby. Illustration A contracts with B to repair Bs house. B neglects or refuses to point out to A the places in which his house requires repair. A is excused for the non--performance of the contract, if it is caused by such neglect or refusal. 18. In the case on hand, the respondents issued the work order on 03.07.1986 but directed the work order to be kept in abeyance by a subsequent letter dated 28.07.1986. After this stalemate was lifted by a letter dated 17.12.1986, two things happened namely, (i) a change in the diameter of the pipes supplied by the respondents for carrying out the contract; and (ii) request for the performance of additional work without finalization of the modified rates. Therefore, the respondents cannot even accuse the appellant of non--performance of the contract. 19. It is fundamental to the Law of Contract that whenever a material alteration takes place in the terms of the original contract, on account of any act of omission or commission on the part of one of the parties to the contract, it is open to the other party not to perform the original contract. This will not amount to abandonment. Moreover, abandonment is normally understood, in the context of a right and not in the context of a liability or obligation. A party to a contract may abandon his rights under the contract leading to a plea of waiver by the other party, but there is no question of abandoning an obligation. In this case, the appellant refused to perform his obligations under the work--order, for reasons stated by him. This refusal to perform the obligations, can perhaps be termed as breach of contract and not abandonment. 20. It is interesting to note that the respondents did not choose, (i) to allege breach of contract against the appellant; and (ii) consequently to invoke the right to rescind the contract under clause 3(a). The respondents, if they were justified in doing so, could have taken recourse to the remedy available under Section 75 of the Contract Act and sought compensation for the damage sustained through the non--fulfillment of the contract. On the contrary they attributed abandonment to the appellant (without understanding the true purport of the word abandonment) and refused to honour the claims made by the appellant. 21. The finding of the High Court that there was abandonment of contract, was on the basis that after the second bill was cleared in May, 1987, the work under the main contract did not progress. This finding goes completely contrary to yet another finding that the period of the contract was up to June, 1989 and that the respondents themselves granted extension of time to complete the contract up to 31.12.1989, despite there being no request from the appellant. We fail to understand as to how a person who abandoned the contract in May, 1987 could be granted extension of time up to December, 1989 on the very understanding of the respondents that the contract was up to June, 1989. In fact, the High Court recorded a finding in paragraph 9 of the impugned judgment that according to DWs 3, 4 and 5, the power to rescind under clause 3(a) of the tender was invoked and the security deposit forfeited. This was not how the respondents pitched their claim even in the written statement. In any case such a finding cannot co-exist with the specific stand of the respondents that the period of contract was extended up to December, 1989. 22. The refusal of a contractor to continue to execute the work, unless the reciprocal promises are performed by the other party, cannot be termed as abandonment of contract. A refusal by one party to a contract, may entitle the other party either to sue for breach or to rescind the contract and sue on a quantum meruit for the work already done. Paragraph 694 of Volume 9, Fourth Edition of Halsburys Laws of England, may be usefully extracted to highlight the remedies available to a party to the contract, if the other party absolutely refuses to perform his part of the contract. 694. Work done under a contract terminated for breach. Where one party has absolutely refused to perform, or has rendered himself incapable of performing, his part of the contract, he puts in the power of the other party either to sue for a breach of it, or to rescind the contract and sue on a quantum meruit for the work actually done. Thus, where a publisher engaged an author to write a work but abandoned the project, the author was entitled to recover reasonable remuneration without tendering the completed work; and where a defendant wrongfully revoked the plaintiffs authority to sell his land after the latter had found a purchaser, the plaintiff recovered reasonable remuneration for his work and labour up to that date. This type of quantum meruit claim is analogous to claims for the repayment of money on total failure of consideration. In both cases, the contract must be at an end before the claim can be brought; but once the contract is at an end there is a logical difficulty in saying that the claim is contractual. The respondents did not choose the option of rescinding the contract and suing for damages in terms of clause 3 (a) and (b). It was the respondents who made it difficult for the appellant to execute the contract as per the terms originally agreed.

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

Explanation:
1[ds]13. As could be seen from the above table, what was allowed by the Trial Court under three heads of claims namely, (i) the release of security deposit to the tune of Rs.2,21,000; (ii) over-heads for the period from January 1989 to 30.09.1990 to the tune of Rs. 5,63,115/--; and (iii) loss of profits to the tune of Rs.9,73,250/--, were disallowed by the High Court. Therefore, the appeal before us is actually confined only to these 3 heads of claims.14. The main and perhaps the only reason why the High Court rejected the claims under the aforesaid 3 heads, was that the appellant had abandoned the work under the main contract and that therefore neither the question of release of security deposit nor the question of payment of overheads nor the question of allowing a claim for loss of profit, did arise.16. The entire sequence of events narrated in the preceding paragraph would show that the appellant was not guilty of anything including abandonment. Admittedly, Clause 3(a) of the contract enabled the respondents to rescind the contract, forfeit the security deposit and entrust the work to another contractor at the risk and costs of the appellant. This clause was never invoked by the respondents. Therefore, we are surprised, especially in the light of the communications from February, 1988 up to October, 1989 as to how the High Court could have found the appellant guilty of abandonment.18. In the case on hand, the respondents issued the work order on 03.07.1986 but directed the work order to be kept in abeyance by a subsequent letter dated 28.07.1986. After this stalemate was lifted by a letter dated 17.12.1986, two things happened namely, (i) a change in the diameter of the pipes supplied by the respondents for carrying out the contract; and (ii) request for the performance of additional work without finalization of the modified rates. Therefore, the respondents cannot even accuse the appellant of non--performance of the contract.In this case, the appellant refused to perform his obligations under the work--order, for reasons stated by him. This refusal to perform the obligations, can perhaps be termed as breach of contract and not abandonment.20. It is interesting to note that the respondents did not choose, (i) to allege breach of contract against the appellant; and (ii) consequently to invoke the right to rescind the contract under clause 3(a). The respondents, if they were justified in doing so, could have taken recourse to the remedy available under Section 75 of the Contract Act and sought compensation for the damage sustained through the non--fulfillment of the contract. On the contrary they attributed abandonment to the appellant (without understanding the true purport of the word abandonment) and refused to honour the claims made by the appellant.21. The finding of the High Court that there was abandonment of contract, was on the basis that after the second bill was cleared in May, 1987, the work under the main contract did not progress. This finding goes completely contrary to yet another finding that the period of the contract was up to June, 1989 and that the respondents themselves granted extension of time to complete the contract up to 31.12.1989, despite there being no request from the appellant. We fail to understand as to how a person who abandoned the contract in May, 1987 could be granted extension of time up to December, 1989 on the very understanding of the respondents that the contract was up to June, 1989. In fact, the High Court recorded a finding in paragraph 9 of the impugned judgment that according to DWs 3, 4 and 5, the power to rescind under clause 3(a) of the tender was invoked and the security deposit forfeited. This was not how the respondents pitched their claim even in the written statement. In any case such a finding cannot co-exist with the specific stand of the respondents that the period of contract was extended up to December, 1989.The respondents did not choose the option of rescinding the contract and suing for damages in terms of clause 3 (a) and (b). It was the respondents who made it difficult for the appellant to execute the contract as per the terms originally agreed.