Food Corporation of India vs Shri Ravi Kant Mohta

D.G.R. Patnaik, J.—This appeal by the plaintiff / appellant, is directed against the judgment dated 30.1,1.1996 and its corresponding decree dated 6.12.1996 passed in Money Suit No. 22 of 1989 by the Sub-Judge-III, Ranchi, whereby the suit of the plaintiff was decreed in part in favour of the plaintiff and another part was decreed in favour of the defendant.

A counter appeal under Order 41 Rule 22 CPC has also been filed by the defendant/appellant against the same impugned judgment of the court below.

The case of the plaintiff is that the plaintiff had invited tender in the year 19X5 vide its tender notice No. S & C 13/1/85 dated 2.7.1985 for appointment of contractors for handling, transporting, loading and unloading of food grains and allied materials, etc from the railway head, Tatisilwai to the depot of the plaintiff at Tatisilwai. The contract was for a period of two years from the date of joining and the terms and conditions of the contract were appended to the tender notice, according to which, the contractor was to perform the work of loading and unloading of the food grains from the railway wagons, trucks, etc and stocking the same in bags, weighment handling and transporting the goods from the railway head to the Corporation''s go-downs. Such work was to be performed by the contractor by engaging and appointing labours and workers on his own and the corporation was in no way responsible for the same. The terms and conditions stipulated in the tender notice required the contractor to deposit earnest security money and also laid down the mode of execution of the contract job. In response to the tender notice, several tenders were received. The tender submitted by the defendant was accepted and formal agreement was entered into by and between the plaintiff Corporation and the defendant. The defendant was required to submit Labour Registration Certificate and Income Tax Clearing Certificate in addition to the deposit of security money as per the terms of the contract. By his letter dated 6.9.1985 the defendant had submitted his joining report and commenced execution of the work. One Shiv Charan Sharma was appointed as supervisor to look after the execution of the contract work on behalf of the defendant in the absence of the defendant. As required, defendant submitted Labour Licence Certificate and Income Tax Clearance Certificate in (he month of November 1986. After working for few months, the defendant began avoiding performance of the contract from March 1986 on the ground of labour problem. In spite of letter issued by the plaintiff dated 25.3.1 1986 calling upon the defendant to take all suitable steps for the safety of the food grains and its safe handling and transportation in terms of the contract, the defendant by his letter dated 30.3.1986 expressed his inability to execute the contract on the ground of labour problem. Plaintiff claims that there was express stipulation with regard to the engagement of labours and workers mentioned in tender notice itself and in the formal agreement executed by the defendant whereby the responsibility for engaging labours and workers for the execution of contract job was entirely on the defendant. Reminding the defendant of such responsibility, and refusing to own responsibility for employment of workers at its own level, the plaintiff called upon the defendant by written correspondence to resume the work without delay and to avoid loss on account of demurrage and wharfage. The defendant failed to execute the work in terms of the contract resulting in substantial loss to the plaintiff and finding no other alternative, the plaintiff approached other contractor for execution of the work for unexpired period of contract at the risk and cost of the defendant. The plaintiff thereafter got the work, left uncompleted by the defendant, done through one Jai Prakash Agrawal, a contractor. The plaintiff adds that besides suffering loss on account of demurrage and wharfage, the plaintiff had to incur expenditure for completion of the work through the contractor. By its letter dated 17/18.1.1987 the plaintiff called upon the defendant to pay the loss and expenses which the plaintiff had sustained till then and by another letter dated 10.2.1989 plaintiff called upon the defendant to pay a sum of Rs. 20.09,4 16.14 towards excess payment to the labour, demurrage and wharfage charges and payment for differential loss, for getting the work executed through another contractor. The demand having not been met by the defendant, the plaintiff found cause of action to file the suit and the suit was accordingly filed.

The defendant contested the suit by filing written statement, denying and disputing the entire claim of the plaintiff on the ground that the plaintiff has no cause of action and the suit is barred by principles of waiver, estoppel and acquiescence and is not maintainable. The defendant has acknowledged the fact that the plaintiff had issued tender notice, but denies its claim that the terms and conditions of the tender was appended to the tender notice. The defendant''s case is that his tender was accepted by the plaintiff, where-after he was called upon to submit his joining report for executing his contract job and in response, he had submitted his joining report to the depot include of the plaintiff at Ranchi on 16.9.1985, although no formal agreement was ever executed by and between the plaintiff and the defendant. The defendant has claimed that the contract did not stipulate for the engagement of labour and workers at the level of the defendant and neither can any such responsibility be imposed on the defendant in contravention of the provisions of Contract Labour (Regulation and Abolition) Act, 1970. The defendant asserts emphatically that there was no contract imposing any obligation upon him for engaging his own labour and workers. As a matter of fact, the entire labour force operating at the Tatisilwai railway head an Tatisilwai depot of the plaintiff, are members of a registered Rule union called Food Corporation of India Workers Union, Ranchi, and recognized by the plaintiff and the plaintiff is the principal employer of the labours and workers under the union. The defendant has further pleaded that at the backing and instance of the plaintiff corporation, these workers and labours had refused to allow the defendant to conduct the work as a result of which, it became utterly impracticable for the defendant to execute work and he had expressed his difficulty to the plaintiff vide his letter dated 30.3.1986. The defendant has claimed that it is the plaintiff who had caused frustration of the contract and, therefore, the plaintiff is not entitled, to any differential loss from the defendant particularly in the absence of any contract to that effect. Defendant has also disputed the plaintiffs demand as made by them in letter dated 17/19.1.1987, as being totally false, unfounded and imaginary besides being over exaggerated, inflated and untenable which the defendant by his reply letter dated 20.4.1987, had totally denied the claim of the plaintiff. The defendant has on the contrary, claimed refund of the sum of Rs. 50,000/- deposited by him by way of security money with the plaintiff and further sum of Rs. 1,25,000/- for the works executed by him, which amount have been withheld by the plaintiff. The defendant has therefore made a counter claim of the aforesaid amount against the plaintiff.

On the basis of the rival pleadings, learned trial court had framed following issues.

i. Whether the suit as framed and filed is maintainable?

ii. Whether the plaintiff has valid cause of action for the suit?

iii. Whether the suit is barred by the law of limitation as well as on the principles of waiver, acquiescence and estoppel?

iv. Whether there was any negligence or lapses on the part of the defendant in performing his part of the contract?

v. Whether the plaintiff is entitled to a decree for Rs. 20,09,416.14 with interest?

vi. Whether the defendant is entitled to a decree for counter claim to the tune of Rs. 1,75,000/-?

vii. What other relief or reliefs, if any, the plaintiff is entitled to?

The plaintiff has mainly relied upon the terms and conditions of the tender notice and the agreement executed by and between the plaintiff and the defendant. The plaintiff has disputed the defendants'' claim of the applicability of Contract Labour (Regulation and Abolition) Act, 1970 on the ground that since no notification under the Act was issued by the appropriate Government in respect of the workers engaged in loading and unloading of the food grains and other such workers in respect of the establishment of the plaintiff corporation, the provisions of the said Act do not apply.

On the issue No. iv, the trial court recorded its finding that the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 did apply to the plaintiffs establishment and the defendant could not be saddled with the responsibility of engaging contract labours in violation of the Act. The trial court on considering the evidences adduced by the parties, observed that non performance of the contract cannot be attributed as deliberate and willful act on the part of the defendant and that the labour force who were exclusively engaged at the railway head and go-down of the plaintiff not only refused to work for the defendant, but had also restrained any other labour even if engaged by the defendant, from working and under such circumstances, the defendant was prevented by genuine reasons from performing his part of the contract. The trial court also observed that the defendant had bona fidely written several letters (Ext.-A to A/4) requesting the plaintiff to solve the labour agitation, but I he plaintiff refused to offer any assistance or cooperation and on the contrary, had left the defendant in helpless situation which had ultimately lead to rescinding of the contract. The trial court observed further that even according to the admitted case of the plaintiffs witness (P.W.1), if during the period of contract, the contract is rescinded, the contractor would be called upon by the plaintiff to show-cause and the contractor thereafter gets an opportunity to satisfy that there is no negligence, mistake or lapses on his part. But in the present case, admittedly no such show-cause notice was served upon the defendant. The trial court had also taken note of the evidence of the plaintiffs witness that it is the plaintiff who used to make regular payments to the workers working at F.C.I, go-downs and that such workers are the own workers of the F.C.I. The trial court has also taken note of the evidence of the plaintiffs witness who has acknowledged that whatever demurrage was paid, it was paid on account of the latches of the Food Corporation of India. On the issue of the defendant''s liability, the trial court examined the tender notice (Ext.-8) and in particular, Clause-XII of the tender notice and recorded its findings that there was nothing in the evidence to show that the defendant was either negligent or that there was any lapse on his part in the performance of the contract and, therefore, the defendant could not be saddled with any liability to pay for loss suffered, if any, by the plaintiff.

On issue No. v relating to the plaintiffs claim for a sum of Rs. 20,09.416.14 with interest, the trial court had observed that the plaintiff has not filed any contract paper entered into between the plaintiff and the defendant, nor the agreement entered into with the other contractor namely Jai Prakash Agrawal, nor has filed reliable documents, as to what amount of money was paid to the second contractor and, therefore, the plaintiff is not entitled to recover from the defendant any differential amount paid purportedly to the Jai Prakash Agrawal between April 1986 to September 1987. However, by recording its observation that the F.C.I, had to pay wharfage charges in respect of the period-when the defendant was carrying out the work, the trial court recorded its finding that the defendant is liable to pay the amounts incurred by the plaintiff towards wharfage to the extent of Rs. 50,346/- and the plaintiff is entitled to this amount only.

As regards issue No. vi in respect of the counter claim of the defendant, the trial court has observed that the counter claim has not been made in accordance with the provisions of Order 8 Rule 6A of the CPC and not under Order 7 CPC and further, that the claim of the defendant is barred by limitation and recorded its finding against the defendant that the claim of the defendant for a sum of Rs. 1,75,000/- is not maintainable,

Thus, while allowing the plaintiffs claim for payment of the wharfage charges to the extent of Rs. 50,346/- only, the trial court had declined to allow the prayer of the plaintiff for the remaining amount.

The plaintiff/ appellant has assailed the impugned judgment of the trial court mainly on the ground that the finding of the trial court on the main controversy is not based on legal evidence and that such findings are perverse and unsustainable in law. Shri Salish Bakshi, learned Counsel for the plaintiff/appellant argues that the learned trial court has erred in failing to frame specific issues as to whether the terms and conditions of the contract appended to the tender notice, did form part of the contract, and whether offer by way of tender submitted by the- defendant and its acceptance by the plaintiff by issuing letter of appointment followed by deposit of earnest / security money by the defendant by way of consideration, did constitute a valid contract and if so, whether the defendant was bound by the contract? Learned Counsel argues further that the learned court below has seriously erred in conceiving that the issue No. 4 is a main issue to the dispute between the parties and has further erred in limiting the claim of the plaintiff by imposing liability upon-the defendant to pay the wharfage charges only and refusing to acknowledge the plaintiffs claim in respect of other amounts to which plaintiff is entitled on the ground of losses sustained due to breach of contract committed by the defendant. Learned Counsel argues further that the trial court has seriously erred in drawing its inferences and recording its findings on the inference that the plaintiff was the master or principal employer of the labours and workers at (he go-down and also in wrongly interpreting the provisions of Contract Labour (Regulation and Abolition) Act, 1970. Learned Counsel explains that no notification was issued by the appropriate Government prohibiting the employment of contract workers in the process of handling and transporting in the establishment of the plaintiff. Learned Counsel argues further that the plea taken by the defendant that he was prevented from performance of the contract on account of the labour agitation, should not have been accepted by the trial court as a ground of frustration of contract. Rather, the trial court ought to have considered that under the contract, it was no part of the plaintiff to provide the requisite labour force to enable the defendant to perform the contract and it was entirely upon the defendant to engage his own labour and execute the contract job. Learned Counsel argues further that the learned trial court has misinterpreted the terms in Clause-XII of the contract (Ext.-8) for denying the plaintiffs claim and has failed to appreciate that payment made by the plaintiff to the labourers while getting the job executed through the second contractor, was under compelling circumstances which was occasioned on account of the refusal of the defendant to perform the contract.

Shri P.K. Prasad, learned Counsel for the respondent / defendants on the other hand, while controverting the grounds advanced by the plaintiff / appellant, relics upon the findings of the trial court on the issues (other than finding on issue No. 5) and submits that there is no error or misinterpretation made by the trial court on the provisions of Clause-XII of tender notice (Ext.-8). Learned Counsel would explain that the plaintiff has not brought on record any such agreement claimed to have been executed by and between the plaintiff and the defendant. Rather, except the tender notice, which had indicated the work required to be executed and for which the tender was invited, there was no other terms or conditions mentioned in the tender notice. The defendant had submitted his tender and was later on informed by the plaintiff that his tender was accepted and that lie was called upon to join and execute the work and also to deposit the earnest money. In response to the direction, the defendant had joined and began executing the work but on account of abject non-cooperation on the part of the plaintiff and in the teeth of the non-cooperation of the workforce, the defendant despite his willingness to perform the contract, was rendered helpless. Learned Counsel argues that it is the plaintiff who was responsible for causing obstruction in the performance of the contract by the defendant and as such, no liability can be imposed upon the defendant for the alleged breach of contract. As regards the finding of the learned court below imposing liability upon the defendant to pay the wharfage charge, learned Counsel submits that no such liability can be thrust upon the defendant since it was nowhere stipulated in the lender notice that the defendant would be liable to pay the wharfage charges during the period of execution of the contract by him.

Admittedly, the parties had entered into a contract for execution of the work for which lender notice was invited by the plaintiff. The main issue which calls for determination is, what were the terms and conditions of the contract which could decide the obligations on the part of the respective parties to the contract for the performance? It would also be for consideration as to whether in the facts and circumstances of the case, the defendant would be deemed to have refused and failed to perform his part of the contract and if so, whether he could be made liable to compensate the plaintiff for the losses suffered by the plaintiff and what should be the quantum of compensation for the losses?

Admittedly, the plaintiff had issued the notice inviting tender for the execution of the work. The nature of the work being handling, loading and unloading of the food grains and transporting the same from railway head to the depot of the plaintiff. The involvement of the labourers and workers for executing the work was essentially required. The plaintiff has claimed that the terms and conditions applicable to the contract were appended to the tender notice and this document has been adduced in evidence marked as Ext.-8. The defendant on the other hand, has claimed that except the tender notice, no other document specifying any further terms and conditions other than those mentioned in the tender notice, was served upon him and made known to him, nor any separate form of agreement was signed and executed by and between the plaintiff and the defendant. From the evidence adduced by the plaintiff which appears to have remained uncontroverted, the terms and conditions of the proposed contract were appended to the tender notice and they did constitute the conditions and terms which were made known to the defendant at the time when the notice was floated. It has to be deemed therefore that terms and conditions of the proposed contract work was incorporated along, with the annexure (Ext.-8) to the tender notice.

Admittedly, the defendant had submitted his lender which were accepted by the plaintiff on the condition stipulated in the tender notice and its annexure. On acceptance of the lender submitted by die defendant, the contract was complete and binding upon the parties.

The plaintiff has claimed that under the terms of the contract, it did not own any responsibility of hiring or providing labour or workers to the defendant for (he execution of the contract, This assertion of (he plaintiff is based on the terms and condition of the contract mentioned in the Clause X(C) of the tender notice, which reads as follows:

X(C) The contractors shall be responsible to supply adequate and sufficient labour, scales/trucks/carts or any other transport vehicle for loading/unloading, transport and carrying out any other services under the contract in accordance with the instructions issued by the Senior Regional Manager or any Officer acting on his behalf. If the contractors fail to supply the requisite number of labour, scales and trucks/carts the Senior Regional Manager shall a! his entire discretion, without terminating the contract be at liberty to engage other labour, scales, trucks/carts, etc. at the risk and cost of the contractors who shall be liable to make good to the Corporation all additional charges, expenses, cost or losses that the Corporation may incur or suffer thereby. The contractors shall not, however, be entitled to any gain resulting from estrustment of the work to another party. The decision of the Senior Regional Manager shall be final and binding on the contractors.

It is also reflected from the contents of the Clause-XII of the tender notice which stipulates that all the persons employed by the contractor shall be engaged by him as his own employees / workers in all respects and responsibility under the Indian Factories Act, Workmen''s Compensation Act and Employees'' Provident Fund Act and other similar enactments in respect of other personnel will be that of the contractor. It is apparently under the terms of this Clause that the defendant on being engaged as a contractor by the plaintiff was called upon to deposit the Labour Registration Certificate which the defendant admittedly did, in response to the demand made by the plaintiff at the time when the contract was awarded to the defendant.

The terms and conditions in Clause X(C) are therefore binding upon the parties. The trial court while examining the terms of Clause-XII of the tender notice has drawn its inference that the conduct of the defendant cannot be said to be in any manner, negligent or unworkmanlike conduct in the performance and services under the contract and, therefore, the defendant is not liable to pay any cost, damages, demurrage, wharfage and forfeiture etc. For better appreciation, Clause-XII of the tender notice may be referred to, which reads as follows.

XII. Liability of con (melon for losses etc.,

Suffered by Corporation: (a) The contractor shall be liable for all costs, damages, demurrages, wharfages, forfeiture of wagon registration fees, charges and expenses suffered or incurred by the Corporation due to the contractors negligence and unworkmanlike performance of and services under this contract or breach of any terms thereof or their failure to carry out the work with a view to avoid incurrence of demurrage, etc., and for all damages or losses occasioned to the Corporation or in particular to any properly or plant belonging to the Corporation due to any act whether negligent or otherwise of the contractors themselves or their employees. The decision of the Senior Regional Manager regarding such failure of the contractors and their liability for the losses, etc., suffered by Corporation shall be dual and binding on the Contractors.

(b) The Corporation shall be at liberty to reimburse themselves of any damages, losses, charges, costs or expenses suffered or incurred by them due to contractor''s negligence & unworkmanlike performance of services under the contract or breach of any terms thereof. The total sum claimed shall be deducted from any sum then due or which at any time, thereafter may become due to the contractors under this or any other contract with the Corporation. In the event of the sum which may due from the Corporation as aforesaid being insufficient the balance of the total sum claimed and recoverable from the contractors as aforesaid shall be deducted from the security deposit furnished by the contractors as specified in para XI. Should this sum also be not sufficient to cover the full amount claimed by the Corporation the contractors shall pay to the Corporation on demand the remaining balance of the aforesaid sum claimed.

(c) In the event of default on the part of the contractors in providing labour, weighing scales, weights etc. and/or their failure to perform any of (he services mentioned in this agreement efficiently and to the entire satisfaction of the Senior Regional Manager or any Officer acting on his behalf the Senior Regional Manager shall without prejudice to other rights and remedies under the agreement have the right to recover by way of compensation from the contractors a sum of rupees one hundred or such lesser sum per day or part of a day of the default as the Senior Regional Manager in his absolute discretion may determine and the decision of the Senior Regional Manager on the question whether the contractors have committed such default or have failed to perform any of such services efficiently and are liable to pay compensation and as to the quantum of such compensation shall be final and binding on the contractors.

As per the case of the defendant, even though, the contract was for a period of two years, and he had commenced performance of the contract by engaging his own labour, but the workers who were regularly engaged at the go-down of the plaintiff had obstructed and refused to allow the labour engaged by the defendant to work at the go-down and since the plaintiff did not offer any assistance or cooperation in the matter of solving the problem, the defendant was rendered helpless and it was only after due notice to the plaintiff, that he had withdrawn from performing his part of the contract. The defendant claims that under the terms of the contract, it was the plaintiffs responsibility to provide labour to the defendant in case where defendant is unable to supply the requisite number of labour.

Learned Counsel for the defendant would argue that under such circumstances, non-performance of the contract was not on account of any negligence or unworkmanlike performance on the part of the defendant. 15. | From the evidences adduced by the plaintiff as also by the defendant and discussed by the trial court, it appears that admittedly, a group of workers used to function at the go-downs of the plaintiff Corporation. These workers were an organized force since they had their own union affiliated to the union recognized at the national level. This union of workers was also recognized by the plaintiff Corporation and the plaintiff used to engage such workers for the job of handling food grains at its go-downs. It is also in the evidence that though the defendant on commencement of the contract, had arranged and engaged his own workers and had managed to execute the work for few months, but later, on account of refusal by the union of the workers at the plaintiffs godowns to allow the defendant to engage his own labour and their insistence that it is they alone who have a right to be engaged and that too on payment of wages directly by the Corporation, the defendant could not possibly execute the work with the aid of his own workers. It has also come in evidence that the defendant had sought intervention of the plaintiff to resolve the problem which was created on account of the insistence of the union of workers that they alone be engaged and that their wages be paid only through the plaintiff corporation and not by the contractor, From the evidence, it is also apparent that despite such request of the defendant, the concerned representatives of the plaintiff had simply ignored the issue and had provided no assistance in the matter to the defendant at all, As to why did the concerned officials of the plaintiff failed to respond to the defendant''s request to attempt for a solution of the crisis faced by the defendant in order to ensure that the job assigned to the contractor is smoothly performed, there appears no explanation offered by the plaintiff.

Learned Counsel for the plaintiff submits that it was no part or concern of the plaintiff to intervene in the matter or to provide any work force to the defendant to enable him for performance of the contract. This stand taken by the plaintiff does not appear to be in consonance with the terms and conditions mentioned in Clause x(c) of the tender notice quoted herein-above. The clause though stipulates that the contractor shall be responsible for supply of adequate and sufficient labour, scales, trucks, carts or any other transport vehicle for loading and unloading and for transport or carrying out any other services under the contract in accordance with the instruction of the Senior Regional Manager or officer acting on his behalf, yet, it also stipulates that if the contractor fails to supply requisite number of labour, etc, the Senior Regional Manager shall at his discretion, without termination the contract, be at liberty to engage other labour, scales, etc at the risk and cost of the contractor who shall be liable to make good to the Corporation all additional charges, expenses, cost or losses that the Corporation may incur or suffer therein. The object of this stipulation, as would be apparent, was to ensure smooth progress of the work and the progress is not hampered on account of the contractors'' failure to supply the requisite number of labour, etc. By implication, this stipulation in the contract emphasizes that the Senior Regional Manager of the plaintiff was equally obliged to attend promptly to the issue not only for enabling smooth progress of the work without terminating the contract, but also to minimize the losses for which the contractor may be called upon to pay. It is not the case of the plaintiff that the defendant contractor had failed to supply either trucks or carts or other transport vehicle or had even refused to arrange for his own workers. On the contrary, even as admitted by the plaintiff, the defendant did engage his own workers, but it was the union of workers engaged at the go-downs of the plaintiff, having the benefit of being recognized by the Corporation itself, who had refused to allow the defendant to engage workers of his own. As rightly pointed out by the learned court below and reiterated by the (earned counsel for the defendant / respondent that the plaintiff has not been able to demonstrate any negligence or unworkman like conduct on (he part of the defendant contractor in the performance and services under the contract. The liability on the contractor for repairing the damages or payment of cost, demurrage or wharfage charges, etc. to the plaintiff, as per the stipulation in the Clause-XII of the contract, could therefore arise only where the contractor is shown to have indulged in any acts of negligence or unworkman like conduct in the performance and services under the contract. It is relevant to note here that even as admitted by the plaintiff, on the work being allotted to another contractor for the completion of the contract for the remaining period, the other contractor was not called upon to engage workers of his own. Rather, it was the plaintiff who had engaged the workers engaged at the go-downs and had paid the wages to them. It is apparent therefore that the plaintiff" had also acknowledged that the crisis had developed on account of the external pressure of the union of workers engaged at the go-down who had refused to allow the defendant contractor from engaging his own workers and on account of such impediment, the contract could not be performed by the defendant and even by the other contractor unless the union of workers were alone engaged for the work. I lad the concerned Senior Regional Manager of the plaintiff Corporation, without terminating the contract with the defendant, exercised his discretion to engage other labour, which he had done in the case of other contractor, even at the risk and cost of the defendant, there would not have been any occasion for the termination of the contract with the defendant, nor would the defendant have failed in performance of the contract.

The stipulation contained in the Clause-x(c) of the contract do contemplate a situation where the contractor may fail to supply the requisite number of labour, and in such event, the solution is also offered in the stipulation by casting responsibility on the concerned Senior Regional Manager of the plaintiff to engage other labour, albeit at the cost of the contractor. The stipulation may not strictly construe an obligation on the part of the plaintiff by way of reciprocal promise, but in the facts and circumstances of the present case, the reciprocal promise on the part of the plaintiff may certainly be implied.

The question which arises is, whether the crisis which had emerged on account of the refusal of the union of workers engaged at the go-down to allow the defendant contractor to engage his own workers, had rendered the performance of the contract on the part of the defendant impossible?

Section 56 of the Indian Contract Act provides that "A contract to do an act which after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful?"

The parties to an executory contract are often faced, in the course of carrying it out, with a turn of events which they, did not at all anticipate. If on consideration of the terms of the contract, in the light of the circumstances existing when it was made, shows that they never agreed to be bound in a fundamentally different situation which has unexpectedly emerged, the contract ceases to bind at that point. Even if the contract is remained in words which taken literally or absolutely, cover what has happened, nevertheless, if the ensuing turn of events was so completely outside the contemplation of the parties that the court is satisfied that the parties, as reasonable people, cannot have intended that the contract should apply to the new situation, then the court will read the words of the contract in a qualified sense. It will restrict them to the circumstances contemplated by the parties. It will not apply them to the uncontemplated turn of events, but will do therein what is just and reasonable.

In the instant case, the turn of events namely the prevention of performance of (he contract by the defendant on account of external intervention i.e. refusal of the union of workers at the go-down to allow the workers engaged by the defendant to carry out the work, was certainly not contemplated at the time when the contract was entered into by the defendant with the plaintiff and neither is it indicated in the terms and conditions of the contract that the parties had any such lurking suspicion of the possibility of any external interference. The stipulation in Clause x(c) of the Contract no doubt, contemplates a situation where the contractor may fail to supply the requisite number of labour and in such a event, there is an express obligation on the part of the concerned officer of the plaintiff to exercise discretion and make prompt arrangement for other labour without terminating the contract with the defendant. The turn of events had practically rendered the performance of the contract by the defendant impossible and the defendant was not in any manner able to execute the contract on account of the external interference which was beyond his volition. In other circumstances, strike by the workers cannot be held to be a reasonable ground to claim frustration of the contract and rendering it impossible for performance. The present one is not a case where the workers arranged for and engaged by the defendant had gone on strike. It was on the contrary, the external interference that had rendered the performance of the contract on the part of the defendant impossible. The failure on the part of the concerned officials of the plaintiff to provide necessary assistance to the defendant or even to exercise their discretion for prompt engagement of other labour which were readily available to the plaintiff, has to be deemed as a failure on the part of the plaintiff to perform its obligation as contained in the terms and condition of the contract stipulated under Clause x(c) of the contract. The defendant under such circumstances cannot be called upon to bear the responsibility or liability for payment of any cost or damage to the plaintiff on the ground of breach of contract.

Learned Counsel for the plaintiff / appellant would argue that it was the defendant who had expressly refused to perform the contract and that the termination of the contract did not emanate from the side of the plaintiff. This argument when considered in the light of the evidence adduced by the defendant reflected through several letters addressed to the plaintiff, would suggest that the plea as taken by the plaintiff is not altogether correct. On perusal of the letters, it would indicate that in each of the letters, the defendant had constantly expressed the difficulty faced by him on account of the unforeseen crisis due to external intervention and had requested the plaintiff for solving the problem by initiating dialogue with the recognized union of workers and it was only on the abject refusal of the plaintiff to extend any cooperation in the matter, that the defendant had to express that he was unable to perform the contract on account of the unforeseen impossibility which had developed.

As regards the measure of damages, plaintiff has claimed that it had to pay for the labour and also for the services rendered by the other contractor to complete the contract left unperformed by the defendant. The plaintiff has also sought to claim cost of demurrage and wharfage charges from the defendant. As observed above, the fact and circumstances of the case do categorically indicate that the defendant was prevented from performing his part of the contract on account of the external interference and the external interference was such as to render the performance of the contract by the defendant impossible. Under such circumstances, the defendant cannot be called upon to pay for any purported damages to the plaintiff for the non-performance of the contract by the defendant. On and from the date when performance of the contract was rendered impossible, the defendant was deemed to have been absolved from his responsibility and liability under the contract. The defendant therefore, cannot be saddled with any liability in respect of meeting the claim of the plaintiff for payment of the amount demanded by the plaintiff as damages. Therefore, the plaintiffs suit for recovery of a sum of Rs. 20,9,416.14 from the defendant, is not maintainable. Learned trial court has rightly answered this issue against the plaintiff and in favour of the defendant.

As to the finding of the trial court that the defendant would be liable to pay the plaintiffs claim towards wharfage charges for the period when the defendant had performed the contract, it appears that there is no such stipulation in the contract entered into by and between the plaintiff and the defendant that the contractor / defendant would be liable to pay wharfage charges during the subsistence of the contract with him. Learned trial court appears to have overlooked this aspect of the matter from the terms of the contract and had misconceived that the liability to pay wharfage charges was on the defendant. The finding of the learned court below on this issue and its decree directing the defendant to pay a sum of Rs. 50,346/- towards wharfage charges to the plaintiff, cannot therefore be sustained and the same is hereby set aside.

The objection taken by the defendant against the finding of the trial court on this issue relating to the payment of wharfage charges, as raised in the cross appeal, is well founded and is hereby allowed.

In the light of the above discussion, this appeal of the plaintiff/ appellant is without any merit and is, therefore, dismissed. The impugned judgment and decree of the learned court below in so far as it allows plaintiffs suit in part towards payment of wharfage charges to the extent of Rs. 50,346/-, as payable by the defendant, is also set aside. The cross appeal filed by the defendant/appellant is allowed.