State Of Kerala & Ors. vs M/s. Highway Contractors Pvt. Ltd.

Sathish Ninan, J.

The suit for money was decreed in part. The defendants are in appeal and the plaintiff is in cross objection, challenging the respective part of the decree against them.

On 04.03.2004, an agreement was entered into between the plaintiff and the defendants for the work of construction of roads. It was the balance work that remained uncompleted by an earlier contractor. The work was to be completed within a period of 8 months from the date of handing over of the site. Due to the pendency of a writ petition before this Court by another tenderer, as W.P. (C)No.8185 of 2004, the site was handed over only on 01.04.2004. Therefore, the work was to be completed before 01.12.2004. Alleging failure on the part of the plaintiff to complete the work, the agreement was terminated at the plaintiff's risk and costs. The plaintiff has instituted a suit for a declaration that the termination is bad in law and for recovery of money allegedly due to him under the work.

The defendants filed a written statement denying the plaint claim and alleging that there was delay on the part of the plaintiff in performing the contract, resulting in breach, and consequential termination. The work had to be re-arranged and the defendants had sustained damages.

The trial court found that the plaintiff was not responsible for the non-performance of the contract within the stipulated period. The claims of the plaintiff were substantially granted. Challenging the same, the defendants are in appeal. Insofar as the plaintiff's claim was negatived, he has filed a memorandum of cross objection.

We have heard Shri.Ahamed Fazil, the learned Senior Government Pleader for the appellants-defendants and Shri.S.V. Balakrishna Iyer, the learned Senior Counsel for the respondent-cross objector-plaintiff.

The points that arise for determination in this appeal are:

The site was handed over on 01.04.2004, and the period of completion being 8 months, expired on 01.12.2004. The plaintiff alleged that there was inordinate delay on the part of the defendants in taking initial level measurements, which prevented him from carrying out the work. Ext.A18 is the letter dated 18.01.2005 by the 3^rd defendant, approving the initial level measurements. Evidently, that is well beyond the period fixed for completion of the work.

Though the defendants would contend that the approval in taking the initial level measurements is not necessary for the plaintiff to carryout the work, it requires no explanation to find that the said contention is without any substance. Unless the initial measurements are taken and approved, the work done by the plaintiff cannot be assessed for the preparation of the final bill. Though an attempt was made to thrust upon the plaintiff the level measurements recorded regarding the earlier contract, the plaintiff was justified in not accepting the same, he being not aware of the same. Therefore, the plaintiff cannot be faulted for the delay caused due to the non-approval of initial level measurements.

The plaintiff alleges that there were various encroachments into the site, which interfered with the work. Effective steps were not taken by the defendants for the removal of encroachments, it alleged. C.S.No.48 of 2006 before the Munsiff Court, Devikulam is a suit filed by the land owner interfering with the work. The District Collector and the plaintiff herein were the defendants in the suit along with others. The obstruction by the local residents is thus established.

Forest trees were standing on the site. Consent from the Forest Department was required for cutting down the trees. Ext.A4 dated 18.04.2007, Ext.A20 dated 22.01.2005, Ext.A24 dated 03.06.2005, Ext.A29 dated 11.06.2005 and Ext.A46 dated 22.12.2005 are the communications in the said regard by the plaintiff to the defendants, voicing the grievance. This also establishes that the plaintiff was not responsible for the delay and that he was taking all possible efforts.

Various electric posts were situated in the site, which were required to be re-located. The plaintiff had, as evidenced by Ext.A5 communication dated 22.08.2007 and Ext.A53 dated 25.01.2006, taken up the issue with the concerned. The hindrance caused to the work due to the existence of electric posts is evidenced by Ext.A67, the minutes of the project implementation unit dated 11.10.2006. Ext.A5 letter dated 22.08.2007 evidences that, even in 2007, the electric posts were not shifted.

With regard to the first 400 meters of the approach road, due to its unscientific gradients, the plaintiff was unable to take men and materials to the site. The defendants on realising the same, included the said 400 meter approach road also within the scope of the work. Ext.A14 report of the Assistant Executive Engineer and Ext.A13 letter by him, evidences the same.

Cross drains with 1200 mm Dia in Np3 pipes were proposed. However, due to the lack of earth cushioning, the pipes of the said diameter could not be laid. As evidenced by Ext.A32 letter dated 08.07.2005, the Department varied the width of the pipe to 600 mm Dia.

Ext.A46 application dated 22.12.2005 by the plaintiff, seeking extension of time for completion, reveals the delay in sanctioning of earth work levels and the quantity. Admittedly, the time for completion was extended five times without imposing any penalty on the plaintiff. Therefore, evidently, the plaintiff was not responsible for the delay.

Ext.A81 minutes of the meeting of the project implementation unit dated 29.12.2004 evidences the various hindrances caused for carrying out the work and the delay having been caused from the part of the defendants.

Ext.A24 dated 03.06.2005, Ext.A30 dated 21.06.2005, Ext.A44 dated 15.12.2005, Ext.A50 dated 18.01.2006, Ext.A52 dated 20.01.2006, Ext.A54 dated 03.02.2006, Ext.A74 dated 05.04.2007, etc., are the copies of the requests made by the plaintiff to the defendants, pointing out the delay in preparation and payment of the bills. Though the defendants' attempted to cast the liability on the plaintiff for the delay, there is no reason why the plaintiff would have delayed such preparation, which would only be to its prejudice. The contention of the defendants cannot be accepted.

The work in question was carried out under the Pradhanmantri Gram Sadak Yojana Scheme (PMGSY). Ext.A85 is the report dated 23.11.2005 upon the inspection by the authorities. Therein, the delay on the part of the defendants in taking the initial level measurements has been noted. Ext.A86 is yet another report dated 11.02.2006 on the same lines. The 3^rd defendant has countersigned the said report.

On the above discussions, we find that the plaintiff was not responsible for the delay and that the termination of the contract by the defendants alleging breach by the plaintiff, was illegal and unjustified. We concur with the trial court in having held the termination as illegal.

Now, coming to the claim for money, during the period of delay, the Public Works Department had revised their rates by approximately 30%. Anyhow, since there is no claim by the plaintiff for enhancement of the rates consequent on the delay, it is not of relevance. The claim of the plaintiff is that, even the works recorded in the M-book remain unpaid, and that various works done by him are not entered therein. An Advocate Commissioner along with an Expert was deputed by the Court to conduct a site inspection, to ascertain the factual details alleged by the plaintiff. Exts.C1 series, C2 series and C3 are the reports. No objections were filed by the defendants to the reports. The Expert was a retired Assistant Executive Engineer of the Public Works Department. Neither the Commissioner nor the Expert were examined. No factual errors could be pointed out in the reports of the Commissioner and the Expert. Exts.C1 and C2 amply substantiate the plaintiff's claim. It could not be demonstrated before us by the appellants that the decree granted by the trial court is liable to be interfered with on any count.

The plaintiff has filed a cross objection under two heads; one regarding the non-payment of the value of 36 mm metal stacked by the plaintiff for the purpose of the work; and the other relates to the rate of interest payable on the amounts due.

As per the contract, the plaintiff is required to supply 36 mm metal. It is an item included in the “Bill of Quantity” in the schedule to the contract, item No.5 therein. The fact that the plaintiff has supplied the metal at the site, is not in dispute. It is also evidenced by the Commissioner's report. Since the contract with the plaintiff was terminated by the defendants, the same remained un-utilised. The defendants have no contention that the said metal were not utilised by the subsequent contractor. The claim for its value, amounting to Rs.6,68,806.32/-, was declined by the trial court relying on clause 33 in Form No.83 in the Notice Inviting Tender.

The sentence in clause 33 relied on by the trial court reads thus:

The trial court held,

However, it is seen that the trial court had read one sentence in clause 33 in isolation. Clause 33 in its entirety reads thus;

Evidently, the clause relates to the departmental materials, i.e., the materials supplied by the Department and not for materials procured by the contractor. Therefore, the said clause has no application to the issue at hand. The trial court erred in relying upon the same to negative the claim. So also, as was noticed above, the defendants do not dispute that the said quantity of the material was utilised by the subsequent contractor. Therefore, at any rate, the plaintiff is entitled for a decree under the said head.

Coming to the claim for interest, the trial court has granted interest at the rate of 9% per annum from the date of suit till the date of decree, and thereafter at 6% per annum. The plaintiff claims interest at 12% per annum. Considering the prevailing rate of interest in banking and the commercial transactions, and having due regard to the entirety of the circumstances, we are of the opinion that the rate of interest granted by the trial court is just and reasonable. The same warrants no interference.

In the result, the appeal is dismissed and the cross objection is allowed in part. In addition to the decree granted by the trial court, the plaintiff is granted a decree for realisation of an amount of Rs.6,68,806.32/- with interest at the rate of 9% per annum from the date of suit till the date of decree, and thereafter at the rate of 6% per annum till realisation. The plaintiff shall be entitled for proportionate costs throughout.