Case: Atma Das Vs. Suriya Prasad

1. By order, dated March 20, 1968, we called for findings from the High Court of Madhya Pradesh on the following three issues :"(1) Whether the work undertaken by the appellant under the contract, dated February 25, 1954, had been completed before January 19, 1967, departmentally or through other contractors ?(2) If the work was not completed on January 19, 1967, has the project in respect of the incomplete work been abandoned ?(3) If the project was not abandoned, was it intended to get the same completed through the appellant under the terms of the contract, dated February 25, 1954 ?"The parties were given liberty to lead evidence on those issues. Accordingly the parties led oral evidence and produced a mass of documentary evidence2. The learned judge found the first issue against the appellant; on the second issue he held that the project was abandoned; and recorded on finding on the third issue.

Court's reasoning:
4. Under the terms of the contract the appellant had undertaken to raise the height of the Burj to 46 feet. It is common ground that he did not raise the height of the Burj above 35 feet. The authorities were dissatisfied with the work done by him till the end of March 1956. Work was inspected by the Archaeological Engineer in 1957 and was found to be "defective, unsatisfactory and incomplete". The Archaeological Engineer made adverse remarks against the appellant and further work was discontinued. The Director-General visited the site in July 1958 and found the work incomplete, unsatisfactory and defective. He remarked that the contractor may "be categorically told that he is not to proceed with the work", and that "the remaining work which may include the heightening of the Burj by not more than two feet, filling up its interior and rendering its top water-tight may be done by departmental labour". Accordingly the appellant was informed by letter, dated August 13, 1958, that he was "not to proceed with the work any more". The appellant was clearly informed that he was not to raise the height of the Burj up to 46 feet as originally agreed : he was only asked to rectify the defects in the construction work executed by him. This was unmistakable evidence of determination of the contract10. It appears, however, that nothing concrete was done, and on April 12, 1961, the appellants lawyer addressed a letter to the Director-General, Department of Archaeology, asserting that the appellant had completed his "part of the work almost entirely" and that he was shown certain defects which he had also removed, but when the appellant demanded payment for the work done the Department asked him to do certain other things which were not to be done by him. He denied that the work done by him was defective. He also stated that if the defects were not intimated to him in writing and their photographs were not supplied within a month from the receipt of the letter, it will be presumed that there were no defects in the work done and that he will be entitled to receive the full amount for the work done11. This correspondence clearly evidences an intention to treat the original contract as determined. The appellant was told that the amount payable to him if he returned the building materials and the tools supplied to him, and rectified the defects pointed. The letters do not evidence a subsisting contract; they emphasise that the contract was treated as determined12. After April 12, 1961, there is on the record no correspondence between the appellant and the Government. The Government had claimed damages against the appellant for defective work executed by him and for return of certain materials supplied and the value of the tools and had called upon the appellant to carry out the repairs. The appellants claim was that he was entitled to payment for the work done by him, and that he had carried out the repairs. The security deposit had not been returned to the appellant, nor has he been paid the amount claimed by him. The amount alleged to be due by the appellant on account of defective workmanship and for the value of the materials supplied to him has also not been demanded by the Government. Failure to settle the respective claims does not evidence an intention to keep the original contract as subsisting. For more than 5 years 8 months the appellant and the Government of India have not taken steps for settlement of their respective claims. The alience was evidence of [acquiescence in the abandonment of the contract, an not of a subsisting contract. Even if the demand that the defects pointed out in the work executed by the appellant be repaired and the offer made by the appellant to carry out the repairs establish a contractual relation, inaction for nearly six years on the part of the Government and the appellant is evidence of abandonment of the contractual relationThe two letters, dated July 23, 1958 and August 13, 1958, clearly evince an intention on the part of the Government to determine the contract, and the demand for rectification of the defects did not evidence an intention either to keep the original contract outstanding or to enter into a fresh contract for carrying out the repairs in the work already executed. Even if insistence upon rectification of the defects be treated as an offer, and the willingness of the appellant to carry out the repairs he treated as acceptance of the offer, studied inaction for nearly six years by the appellant as well as by the Government in our judgment leads to an inference of abandonment. We accordingly agree with the finding recorded by the High Court on the second issue.