Ramachandra Narayan Nayak vs Karnataka Neeravari Nigam Ltd. & Ors

2. The brief facts are stated hereunder for the purpose of the rival factual and legal contentions that are urged by the learned counsel on behalf of the parties.For the sake of convenience, the parties are referred to in this judgment as per the ranking assigned to them in the plaints before the trial court.

The plaintiff, the appellant herein, is a Class I contractor. He undertakes the contract of construction of irrigation canals and other major works on a large scale. The plaintiff has constructed an irrigation dam across the Malaprabha river near Soundatti in Belgaum District. The water from the said reservoir is to be supplied to agricultural lands of the farmers in Dharwad and Belgaum Districts, through canals to be excavated and constructed for that purpose. For the construction of such canals in Ron taluka in Dharwad District, a Division is established at Ron headed by an Executive Engineer. A Chief Engineer was appointed to supervise work whose office was established at Belgaum.

3. The plaintiff submitted his tenders upon an invitation from the defendants, the respondents herein, for execution of the balance work of canals and his offer of bid was accepted. He has deposited the earnest money in the form of bank guarantee. On accepting the bid amount offered by the plaintiff, parties entered into a contract for execution of Alur combined branch and work of canal at K.M. no.1-6 and Malaprabha right bank canal works K.M. 97 and 102, as per the terms and conditions agreed between them and more particularly as stipulated in the tender notice.

4. Accordingly, the defendant no.4, Executive Engineer, Irrigation Department issued work orders to the plaintiff relating to various canals on 9.11.1988, 10.3.1989 and 16.3.1989 respectively. As per clause 2 of the agreement, the execution of work was to be completed within a period of 15 months from the date of handing over the site to the plaintiff excluding the monsoon season from 15th June to 15th September of the relevant years.

6. It is the further case of the plaintiff that as per the meeting which was held between the plaintiff and defendant no.4, the proceedings which are marked as Ex. P-20, revealed that the cement and cement materials were in stock and were available with defendant no.4, but he had purposely delayed the supply of cement and cement materials and he also did not authorize the plaintiff to procure cement from the open market and made certain false accusations against him. The plaintiff placed reliance upon clause 30 of the tender agreement wherein it is stated that the decision of the Chief Engineer in relation to the dispute is final.

7. It is the case of the plaintiff that despite repeated requests and demands made by him vide his letters referred to supra, the defendant no.4 failed to supply cement and cement materials required by the plaintiff to complete the work, therefore he had no option but to terminate the contract with the defendants. The plaintiff vide his aforesaid letter dated 9.5.1991 to defendant no.4, marked as Ex. P-42, asked to finalise the bill regarding the execution of work by him and to terminate the contracts without imposing any penalty.

9. The plaintiff, being aggrieved by the rescinding of the contract and failure on the part of the defendants to make payments for the work done and return of earnest money and security deposit amount, filed eight original suit nos. 35 to 42 of 1997 against the defendants before the Civil Judge (Senior Division) Gadag seeking for grant of declaratory relief that the order of rescinding the contract passed by defendant no. 3 in respect of works of canal is illegal and not binding on him. Further, the plaintiff sought decrees of permanent injunction restraining the defendants from either forfeiting or adjusting the earnest money and security deposit amount made by him and for payment of bill amount in respect of the work executed by him and also to restrain the defendants from recovering the alleged risk and cost amount from him from out of the amount due from the works executed by him in any other Division or Department (Exs. P-1 to P-6 produced in the Original Suits) of Alur combined branch and work of canal at K.M. no. 97 and 102 and Malaprabha right bank canal. He had further prayed for settlement of final bill amount in relation to the execution of work and return of earnest money and security deposit amount along with 18% interest and also on the withheld amount along with damages, costs and other reliefs.

11. It is further pleaded in the written statement that the plaintiff without following the terms and conditions of the contract, with an illegitimate motive, purposely stopped the work and abandoned it in the middle, knowing fully well that the balance work will be completed at his cost as per the tender clauses and he requested to terminate the work without any penalty to be imposed against him as per the contract agreement. Defendant no.4 further pleaded that the plaintiff was at fault and did not resume the work when he was requested to complete the work as per the agreement. As such, considering the facts and circumstances of the case, defendant no. 4 was directed to take action against the plaintiff as per the tender conditions of contract work and accordingly the contract was rescinded and he was informed of the action taken by the Chief Engineer by imposing maximum penalty upon him and forfeiture of earnest money and security deposit amount. Defendant no.4 denied the various allegations made by the plaintiff against him and prayed for dismissal of the suits both on merits as well as on the question of limitation, besides declaratory relief and other reliefs sought for by the plaintiff.

17. It is further submitted that it was nothing but high handedness on the part of the defendants that they have not only caused undue harassment to the plaintiff but also caused great loss to him by committing breach of the terms and conditions of the contract. Further, the High Court has failed to consider the evidence of the defendants who have supported the claim of the plaintiff which is referred to in para 19 of the judgment of the trial court. Further, the High Court erred in re-appreciating the evidence elicited from the defendants’ witnesses during their cross examination, wherein they have admitted that plaintiff has carried out all the earth work as per specifications. When he demanded cement and cement materials from defendant no.4 for execution of further work, the same were not supplied to him. Therefore, it is very clear that in spite of repeated demands made by the plaintiff, cement and cement materials were not supplied to him by defendant no. 4. Therefore, the impugned common judgment of the High Court is contrary to the facts and legal evidence on record. Hence, the same is not sustainable in the eye of law and is liable to be set aside.

31. It is needless to observe that the conclusion and findings arrived at by the High Court on the basis of re-appreciation of evidence is contrary to the pleadings and evidence on record, the trial judge being the fact finding authority has duly considered the entire evidence after proper analysis and it has recorded the finding of fact on the contentious issue nos. 1,2,3,5 and 6 in favour of the plaintiff.

Accordingly, the appeals are allowed, with no order as to costs.