AI Structured Summary
Not yet generated for this judgment
Judgment
Heard Mr. M. Debbarma, learned Addl. G.A. appearing for the appellants. None appears for the respondent today, even though, on previous occasion Mr. A. Dasgupta, learned counsel who has entered in appearance for the respondent had submitted the written synopsis of his submissions, which this court would take into consideration for adjudication of the lis.
This is an appeal under Section 96 of the CPC which arises from the judgment dated 26.11.2014, pursuant to which, the decree dated 29.11.2014 was drawn up by the Civil Judge, Senior Division, North Tripura, Dharmanagar in Title Suit No.37 of 2010. The respondent is a reputed contractor and he had entered in a contract under No.CE/EE/I and FMD-VI/KLS/Agree/54 of 2004-05 for the work titled "High Capacity L.I. Scheme at Narendranagar under Damcherra Block/Job No.TR/MI/04/AIBP/2003-04/Gr-I/SH: Construction of Pump House, Intake Well, Protection of River Bank and Distribution System" with the Executive Engineer, IMFM Division No.VI Kailashahar now Water Resource Division No.VI,Kailashahar.
There is no dispute that the work order was issued on 22.11.2004 by the defendant No.2 i.e. the said Executive Engineer for the estimated value of Rs.1,40,99,355/- prescribing two years as the time for completion of the work. The plaintiff, the respondent herein, mobilized his resources to complete the said work within the stipulated time and to avert the escalation of material prices. But for the delay on the part of the defendants No.1 and 2, the site of intake well was handed over to the plaintiff on 20.12.2004 and that too without supplying the lay out and detailed drawings, which were given to the plaintiff on 20.12.2005 on repeated persuasions. Even the soil testing report was given belatedly. The plaintiffs in the meanwhile wrote several letters on 15.12.2004, 07.01.2005, 13.04.2005, 09.12.2005 etc. for early handing over the site for execution of the work but the defendant No.2, in particular, failed to hand over the site on the ground that the land was not available from the L.A. Collector. By the letter under No.F.4-4, F.7-4/EE/INFMD/KLS/88/35-37 dated 10.02.2005 the Executive Engineer informed the plaintiff that the other site cannot be handed over unless and until the intake well is completed till a certain stage. But the plaintiff pleaded in the plaint there was no such condition in the contract. Thus, the plaintiff was restrained from executing the work for a long period. When the plaintiff was proceeding with the work of intake well, in the month of July, 2006, the defendant No.2 stopped the said work as they had proposed to change the number of entry ports/pockets from 8 to 4, and the final decision was given on 16.11.2006 after a long gap about four months. For such undesirable action on behalf of the defendant No.2, the plaintiff suffered huge pecuniary loss. In such circumstances, the plaintiff had a detailed discussion with the defendant No.2 on 29.08.2006. On that discussion the defendant No.2 agreed to hand over the sites of the remaining sub-head works, lay-out etc. and DI Pipes to the plaintiff within two months but ultimately the defendants failed to their commitment.
On 06.11.2006 the plaintiff had requested the defendant No.2 for handing over the remaining sites and other necessary inputs with facilities for performance of the balance contractual works. On 16.11.2006, the defendant No.2 by his letter informed the plaintiff that for the remaining works, site would be handed over to the plaintiff as soon as the land was available from the L.A. Collector and the stipulated materials would be issued as soon as those were available in the government store. Without notice to the plaintiff, all related papers relating to the said contract were transferred to the jurisdiction of the defendant No.1 [the Water Resource Division No.VII, Pecharthal]. The defendant No.1 had served a notice under Clause-3 of the agreement for determination/rescission of the contract.
By the reply dated 01.02.2008, the petitioner disputed the allegation and per contra he had placed his case of negligence and failure on the part of the defendants [the appellants] in affording the work site and the resources were agreed to be supplied by them, after repeated persuasions made by the plaintiff. He has given details of his actions. Be that as it may, by the memorandum No.F.10(14)/EE/WRD-VIII/PTL/5053-60 dated 25.02.2009, the said contract was rescinded. The defendant No.3, the Assistant Engineer Water Resource Division, Dharmanagar was asked to measure the work done by the plaintiff and process the final bill. For such rescission the petitioner suffered further pecuniary loss on account of the resources he had mobilized.
The plaintiff served a demand notice under Section 80(1) of the CPC claiming compensation to the extent of Rs.33,18,618/-. When the demand was not met, the plaintiff instituted the suit being T.S.37 of 2010 for declaration of his entitlement to the damage and recovery of such damages as would be ascertained by the court against the claim of the plaintiff i.e. Rs.33,18,618/-.
The respondents denied their negligence and contended that the entire claim of the plaintiff is frivolous, baseless and as such, the plaintiff is not entitled to such damage. That apart, the defendants have stated that the letter dated 10.02.2005 was rightly issued as the intake well is the core structural construction of the contract. But the plaintiff was not at all inclined to complete the job of intake well and abruptly stopped the work of intake well on a lame excuse and demanded handing over other sites which were peripheral. All the averments are generally denied and seriously disputed by the defendants. However, it has been admitted that the plaintiff was ready and willing to complete the balance work, but the defendant No.1 did not agree to such proposal considering his past conduct. They have further denied that they had any intention to deliberately cause any loss to the plaintiff. They have categorically denied that the plaintiff had submitted his bills on 31.07.2009 on price escalation. The said claim was denied and disputed. The defendants have categorically stated that the claim of the plaintiff is grossly unreasonable, unsubstantiated, unfounded and unsustainable. In para-5 of the written statement, the defendants had asserted as follows :
"That, this court has got no jurisdiction to entertain the suit become of clear stipulation of Arbitration clause in the Contract Agreement entered upon between the Executive Engineer of the Department and the plaintiff stating that in that event of any disputes arising out of the agreement and during the course of its performance the disputes would be referred to the arbitrator who would be appointed as per the terms of the agreement. On this ground along a preliminary issue should be framed to decide as to whether the instant suit can be proceeded without exhausting the procedure under the Contract Agreement."
It is to be noted that the defendants No.1 to 4 and the defendants No.5 to 6 had filed separate written statements, but there was hardly any distinction. The defendants No.5 and 6 took the same defence like the other defendants.
On appreciation of the pleadings the following issues were framed :
ISSUES
(I) Whether the Distribution System and River Protection Works could be done simultaneously with Intake Well.
(II) Whether defendants committed breach of contract by failing to first perform their obligation to hand over site-land for distribution system and River Protection Works and prevented plaintiff to complete the Works & otherwise.
(III) Whether plaintiff is entitled to compensation for "loss of profit" and other compensatory reliefs as claimed.
(IV) Whether plaintiff is entitled to receive his dues on price escalation and final bill of work.
(V) Whether plaintiff is entitled to refund of the security deposit lying with defendants.
(VI) Whether plaintiff is entitled to costs, interest and any other relief."
It is apparent that no issue was framed on maintainability of the suit, even though the dispute arises from the execution of the contract, in which according to the defendants, there exists a clause for resolution of disputes by arbitration. That apart, the original contract was not submitted with the written statement but that [Exbt.A/16, the original agreement] was produced later on in the court at the insistence of the plaintiff. The plaintiff adduced two witnesses including him and the defendant adduced one witness. The plaintiff introduced as many as eighteen documentary evidence [Exbt.A/1 to Exbt.A/18].
While determining the issue No.1 it has been observed by the trial judge that the plaintiff did not invoke the arbitration clause. Despite non-framing of the issue of maintainability, the trial judge while determining the issue No.1 has observed that the plaintiff and the defendants admitted the fact that there was an arbitration clause in the agreement/contract [Exbt.A/16] and the plaintiff did not invoke that clause to resolve the dispute between the parties. The defendants having received the demand notice [Exbt.1/15] did not give any reply nor did they refer the matter to the arbitration. On institution of the suit, the defendant proceeded to contest the suit by filing the written statement and thus, they waived their right to insist this court to refer the matter to the arbitration in terms of Section 8 of the Arbitration and Conciliation Act, 1996. Further, the trial court while deciding the issue No.1, has quite categorically observed that there was no express provision in the agreement whether the works were to be done simultaneously or phase by phase. DW-1, Dilip Kumar Acharjee, Executive Engineer, DWS Department has admitted that to complete the work within time, it was required that the contractual work would be started simultaneously.
There is no dispute that by the work order dated 22.11.2004 the time as prescribed for completion of the work was two years. But it is partly admitted and partly established by the plaintiff that the defendants did not hand over work sites to the plaintiff at a time in spite of several reminders and persuasions. Despite assurances made by the defendant No.2, no action was taken to remove the difficulty of the plaintiff. That apart, from the notice as issued under Clause-3 of the agreement/contract, it would be apparent that the work was stopped by the defendants, not by the plaintiff. So far the delay is concerned, the various correspondences as made by the plaintiff would demonstrate that the delay is solely attributable to the defendants. Thus, the issue No.1 and 2 was decided in the affirmative and in favour of the plaintiff.
Having appreciated the issues No.3, 4 and 5, the trial court had observed that it was not possible to ascertain on the part of the court whether the plaintiff had purchased huge quantity of materials for completion of the contractual works or the actual expenditure the plaintiff had incurred towards payment of wages, hire charge of the machineries which were kept idle etc. The plaintiff had incurred a huge loss having been obstructed by the defendants. That apart, it has not been denied by the defendants that the plaintiff had deposited a sum of Rs.1,89,230/- as security to the defendants against the contractual work. It has been further observed by the trial court that the plaintiff is also entitled to get a sum of Rs.1,00,000/-from the defendants against the final bill. Thereafter, the trial court has observed that for sudden cancellation of agreement without any reasonable grounds, the plaintiff is entitled to get Rs.15,13,897/- from the defendants for loss of expected profit. Thereafter, the trial court has observed as under :
Section 73 of the contract Act deals with the compensation of loss or damage caused by breach of contract which provides that When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.‟
In the case of M/S A.T. Briz Paul Singh & brothers Vs State of Gujarat reported in AIR 1984 SC 1703 the Hon‟ble Supreme Court of India held that "in case of Breach of Contract in respect of works contract for construction of a portion of the road by the State, the contractor is entitled to claim damages on the basis of expected profit on balance of works contract. However measure of damages would depend on facts of each case".
In the case of State of Kerala vs K Bhaskaran reported in AIR 1985 Kerala 49 it was held by the High Court of Kerala that in the case of breach of contract by the Govt. where the entire work indicating Government‟s obligation to supply cement to the contractor and refusal by the Govt. to do so without proper reasons and ultimately cancellation of contract by the Govt. on the ground of non commencement of work by the contractor is a kind of breach of contract wherein the Government is solely responsible for such breach on contract as per provision of Section 73 of the Indian Contract Act.
So, in view of the aforesaid findings of the Hon‟ble Apex Court and the Hon‟ble High Court of Kerala and considering the facts and circumstances of the present suit I find sufficient reasonable grounds to decide the aforesaid issues in favour of the plaintiff and, accordingly, those are decided in favour of the plaintiff." [Emphasis added]
Since all the issues were decided in favour of the plaintiff, the trial court has returned the finding that the plaintiff is entitled to get 9% interest p.a. on the amount of money he is entitled to realize from the defendants. Thereafter, a sum of Rs.15,13,837/- has been awarded for loss of the expected profit from the contractual work, Rs.1,00,000/- towards the final bill on the basis of the works done by the plaintiff and further, the plaintiff has been declared to be entitled to Rs.1,89,230/- as refund of the security deposit. The total amount, thus, has been ascertained as Rs.18,03,067/-(Eighteen lakhs three thousand sixty seven) with interest at the rate of 9% p.a. from the date of institution of the suit i.e. 14.12.2010 till the date of realization.
Mr. M. Debbarma, learned Addl. G.A. appearing for the appellants has submitted that the court has no jurisdiction to try the suit as the dispute arose from the said contract where there is a specific arbitration clause in the agreement/contract. The duty of the court was to discard the suit from its jurisdiction by referring the same to arbitration. Mr. Debbarma, learned Addl. G.A. has further submitted that the trial judge has not appreciated the documents or has given any reason how he has determined Rs.15,13,837/- as the loss of expected profit from the contractual work. It would be apparent that the estimated cost of the work was Rs.1,18,59,160/-.The plaintiff had only completed a small part of the intake well. There was no hindrance whatsoever to complete the said part of the work, but he despite specific instructions raised untenable pleas. Hence, the said assessment of loss of expected profit cannot be affirmed in the appeal. That apart, the bill dated 16.11.2009 as raised by the plaintiff [Exbt.A/12] was completely ignored while assessing damage. The plaintiffs claimed therein as under :
Sl.No
Details of Claim
Amount Claimed
1.
For blockage of cash capital in cost of materials Rs.18,93,100/- as per Annexure-I for 3 years 9 months from December, 2004 to August, 2008 @ Rs.12% p.a.
Rs.8,51,895.00
2.
For daily wages paid to three chowkidars @ Rs.65/- each daily for 3 years 9 months from December, 2004 to August, 2008.
Rs.2,63,250.00
3.
For wharfage and storage @3% on cost of materials.
Rs.56,793.00
4.
For loss of spillage and damages by weathering and moss deposit during the period of storage @10% on cost of materials
Rs.1,89,310.00
Total
Rs.13,51,248.00
Mr. Debbarma, learned Addl. G.A. has further contended that there is no tenable foundation for assessing the damage and as such, such damage cannot be maintainable being in contrast to the provisions of Section 73 of Indian Contract Act.
Mr. Dasgupta, learned counsel in his written brief has contended that if Section 5 of the Arbitration and Conciliation Act, 1996 is read with Section 8 of the said Act, it would be apparent that there is no absolute bar but the right of the defendants have taken good care of, under sub-Section (1) of Section 8 of the said Act, which provides that the defendant may apply to the court, not later than when submitting his first statement on the substance of the dispute to refer to arbitration. But sub-Section (2) of the Section 8 of the said Act mandates that such application shall not be entertained unless it is accompanied by the original copy of the agreement or a duly certified copy thereof. The defendants have admittedly not followed that process. He has submitted that the several letters of the plaintiffs as brought on record would show that despite repeated insistence, the defendants failed to discharge their obligation by handing over the lay-out and detailed design and the sites of the work for a long time. Even on asking of the plaintiff, they did not hand over the other sites to complete the work within the stipulated time. Even the materials which were supposed to be supplied by the defendants were not supplied. In the letter dated 16.11.2006 [Exbt.A/5] the respondent No.2 has stated that the work site would be handed over the plaintiff as soon as the lands were made available to the department from the L.A. Collector. Even the appellants had failed to hand over the work site to the plaintiff till August, 2008. Therefore, the plaintiff could not be blamed for the delay or the non-completion of the work within time. DW-1 has admitted the said fact during his cross-examination. Mr. Dasgupta, learned counsel has defended the assessment as that has been done on the cost of the work including the rate above 18.89%.
Having appreciated the submissions for the counsel and the grounds of the appeal, this court is of the view the following questions are material for determining the appeal :
"1) Whether the suit is barred for existence of arbitration clause in the contract ?
2) Whether there is any breach of contract in question by the defendant?
3)Whether the plaintiff suffered loss or damage for such breach?
4) What would be the compensation for the loss or damage caused to him in the event of the breach of contract?
5) Whether the trial court has enquired into the relevant factors while determining the loss or damage?"
It is apparent that the defendants failed to hand over the requisite lay-out and design within a reasonable time, when in the work order it has been categorically stated that the plaintiff has to start the work within fifteen days positively from the date of issue of the work order and he had to complete the work within two years. It appears that in the agreement there is no mention of completing the work in a phase manner. Thus, it was the option left to the contractor (the plaintiff) to decide how to execute the work under instruction of the defendant No.2. It has been admitted by DW-1 that till August, 2008, the required sites except for the intake well, were not handed over to the respondent [the plaintiff]. So far the construction of the intake well is concerned, its construction was delayed by belated handing over of the lay-out and detailed design. Therefore, there cannot be any amount of doubt regarding the breach of contract. But the conduct of the plaintiff in construction of the intake well has to be verified in the light of the time taken by him and leaving the work incomplete for rescission of the said contract by the defendant No.1. Can failure to complete the work within the time of two years adding the period that was taken by the defendant No.2 in supplying the lay-out and the detailed design be considered composite in breach? Accordingly, the liability has to be adjusted. The defendants are liable to pay the loss in the circumstances, in terms of Section 73 of the Indian Contract Act but to what extent?
While making reference to the submission, the factual aspects have been restated at the cost of repetition. Mr. M. Debbarma, learned Addl. G.A., appearing for the appellants has contended that [1] It is for the obstinacy of the plaintiffs in the suit that the intake well and pump house could not be completed within the prescribed time, [2] the plaintiff-respondent has claimed that he has suffered Rs.15,13,897/- for the non-cooperation and delay in supplying site and drawing up the intake well and pump house. Thus, it has been pleaded that the plaintiff-respondent is entitled to Rs.15,13,897/- from the defendant-appellants. But there is no analysis how such loss had been suffered by the plaintiff-respondent, [3] there is no evidence regarding escalation of price of the materials and labour, which thus can be realized under Clause 10 CC of the contract.
Mr. Debbarma, learned Addl. G.A. has further submitted that the determination of the damage in the form of expected profit is without any foundation of evidence. That apart, the plaintiff-respondent without understanding the value of instruction given to him for completing the intake well including the pump house first had beendemanding for giving the design for the other part of the work in the periphery. Mr. Debbarma, learned Addl. G.A. has submitted that intake well is the main structure of the whole contract work. Only after completion of intake well and pump house, the plaintiff was required to undertake the distribution system and finally, the work for protection of the river bank. But the plaintiff was not at all inclined to complete the intake well and abruptly stopped the work of intake well voluntarily and requested for other sites which was not at all required at that time. The defendants have claimed that by the letters dated 15.12.2004, 07.01.2005, 07.02.2005, 13.04.2005 and 09.12.2005, handing over the sites of other subhead works namely distribution system, protection of river bank etc. were pressed, so that the plaintiff could proceed with the execution of the said work simultaneously, for gainful utilization of his procured materials, labour force and establishment for completing the work within the prescribed period. But the defendant No.2 had failed to hand over the sites inasmuch as the land acquisition collector could not give possession of the land required for completing the contractual work. The defendant-appellants even though denied such allegation, but from the latter part of their reply, it appears that the same was the plaintiff‟s approach. Finally, when the plaintiff-respondent stopped the work voluntarily and he showed gross disinclination to continue with the work, the work had been rescinded after giving the due notice by invoking the Clause-3 of the contract. Despite the frivolous allegations raised, the defendant-appellants tried to persuade the plaintiff-respondent to complete the work, but he did not show any progress.
Mr. Debbarma, learned Addl. G.A. has finally stated that the plaintiff-respondents‟ claim of loss for non-performance of the balanced part of the contract is unfounded. Denying such claim, but assuming that for non-performance, the profit has been lost. The profit cannot be disproportionate. The bill that was submitted for escalation of price on 31.07.2009 was not supported by any document. Even the claim for refund of the security deposit is subject to determination of the contract as the contract has been rescinded for non-completion of the work. The defendant-appellants may raise their liability for rescission. Mr. Debbarma, learned Addl. G.A. has referred to the following passage of the written statement :
"Defdts. Humbly state that plaintiff in his letter dated 1`7.11.2009 has demanded Rs.1,16,6,548/- for the work which he even did not undertake and as such he is not entitled to any amount as claimed by him. Further under the agreement the D.I. pipe would be supplied by the department and as no work was executed and there was no requirement of supplying the said D.I. pipe due to non performance of the contract by the plaintiff, the department did not supply the same and hence it is not understood how he claimed the cost of Rs.91,7,786/- against the high capacity L.I. scheme at Narendranagar. Further the plaintiff has not complete the intake well and stopped the work abruptly without completing the same. So, unless and until the work of intake well was is not completed the protection of the river bank and construction of the pump house did/does not arise and payment against those works cannot be considered." [Emphasis added]
Mr. Debbarma, learned Addl. G.A. has thus submitted that the suit was liable to be dismissed.
Mr. A. Dasgupta, learned counsel has filed the written submission against the grounds raised in this appeal. So far the jurisprudential objection as to the maintainability of the suit is concerned it has been stated that Section 5 of the Arbitration and Conciliation Act, 1996 has to be read with Section 8, which Section provides an exemption. A joint reading shows that there is no absolute bar in filing a suit. Even if, there is an arbitration clause in the agreement, sub-section (1) of Section 8 provides that in such case the defendant may apply to the court within the stipulated time, not later than the day of submitting his first statement on the substance of the dispute, to refer the case to the arbitrator. Sub-section (2) provides that such application shall not be entertained unless it is accompanied by the original copy of the arbitration agreement or a duly certified copy thereof, else the Civil Judge before whose court the suit is pending, may continue the process of adjudication. The defendant-appellants did never submit such application as contemplated under Section 8 of the Arbitration and Conciliation Act, 1996.
Mr. Dasgupta, learned counsel has further submitted that the appellants have taken an unsustainable plea to escape from their failure to act in terms of the agreement. Even though they were not in a position to hand over the site as the acquisition was still incomplete, they had arrogantly contended in the written statement that the distribution system and protection of river bank works could not be done simultaneously. In fact, the intake well was located on the bank of the river and the pump house was to be constructed over it. The distribution system [70% of the total contract work] was spread over 1300 mtrs. long pipe line to be used for irrigation of the paddy field and the protective construction for the river bank which was spread over 2,800 sq. mtrs. of the river apron and slope. Thus, the construction works were not inextricably related to the intake well and to be precise, independent of the construction of intake well, and it was technically feasible to carry out the works simultaneously. It has been succinctly stated that in the terms of the contract it had nowhere been provided that works to be done one after another, because of any technical reason. Moreover, there hanged a possibility of erosion of the work if the river banks were not protected. On 16.11.2006, the defendant No.2 had written a letter [Exbt.A/6] to the plaintiff-respondents by stating as follows:
"...the work site will be handed over to you as soon as the lands are made available to the department from the L.A. Collector."
There is no controversy that the appellants failed to give the work site even after that letter till August, 2008 and took a pretentious plea that the pipe-lines and protection work could not be done simultaneously, along with the Intake Well and thus, work sites for the same, would be given one by one after completion of Intake Well. The appellants took this unreasonable plea‟ to cover their lapses and failure to hand the work sites. Thus was contended by the plaintiff.
Mr. Dasgupta, learned counsel has further stated that the defendant-appellants were obliged to hand over the work sites to the plaintiff-respondent to commence work simultaneously. He has referred to the testimony of DW in his cross-examination and Exbt.A/5 to contend that the defendant-appellants failed to perform their obligation under the contract and such brazen breach of contract prevented the plaintiff-respondent from completing the work. But the plaintiff-respondent has admitted that D.I. and C.I. pipes were supposed to be supplied by the defendant-appellants against payment of cost. While the rate was floated by the plaintiff-respondent it was analyzed on the prevailing rate. But that did not stay in that level.
According to Mr. Dasgupta, learned counsel, the trial Judge has rightly ascertained loss of profit on the total cost of works at 18.89% against the works which was allotted to the plaintiff-respondent, but the plaintiff-respondent was prevented from executing the contract by various illegal means. Hence, the plaintiff-respondent is entitled to get the compensation to be assessed in terms of Section 73 of the Contract Act. It has been further asserted that D.I. and C.I. pipes were to be supplied by the defendant-appellants on payment by the plaintiff-respondent [the Contractor]. For no reason, the plaintiff-respondent can be made liable for failure of executing the work of the distribution system and protection of river bank. According to the plaintiff, that forms 78% of the total contract works to be completed within two years. When the time was initially stipulated for two years but, thereafter for failure of the defendant-appellants, the time was extended for further one and half year. In such circumstances, when there was escalation in the cost of materials and labour, and it occurred during the period of contract, as such, the plaintiff- respondent is entitled to price escalation under clause 10 CC of the said contract.
At this juncture, let this court examine how the plaintiff has justified the claim of damage to the extent of Rs.15,13,897/- as loss of profit, Rs.13,51,248/- for the loss occasioned to the plaintiff for materials remaining unutilized and blocking of capital, Rs.52,000/- for higher charge for the machineries, Rs.01,12,243/- for price escalation Rs.1,00,000/- against the pending final bill and Rs.01,89,230/- as refund of the security deposit. In paragraphs 13 to 18 of the plaint, the plaintiff has given the reasons and in the schedule the plaintiff has given the details of the damage or claim.
It has been stated by the plaintiff in para-13 of the plaint that as the defendant No.1 failed to give the sites and other inputs after waiting for a period of "two months", the plaintiff abandoned the site at the risk and responsibility of the defendants by communicating the same by the letter dated 27.08.2008. In para-14, the plaintiff has stated that the rescission was wholly unwarranted. However, by the communication dated 25.02.2009, the defendant No.3 was directed to process the final bill after taking the measurement. The plaintiff has succinctly stated that the defendants failed to provide the work sites and other sub-head works viz. distribution system, protection of river banks etc. and non-performance to that effect prevented the plaintiff from execution of the said works. Therefore, the defendant No.1 could not have called for completion of the performance. The plaintiff has stated that according to the usage of trade and standard practice, the contract consisted of 15% as the contractor‟s profit for the purpose of execution. On the basis of the standard practice over the estimated account, the plaintiff claimed Rs.15,13,897/- on account of loss of profit. The plaintiff detailed his claim in the schedule-A, which is reproduced hereinafter. The plaintiff has however admitted that the balance of work except the intake well and the pump house was never handed over to him. Thus, the plaintiff raised the bill of loss on 17.11.2009.
SCHEDULE-A
Cost of the following items of the Schedule of work‟ under the contract afreement could not be executed by the plaintiff for respondent‟s failure to provide the work-sites.
High capacity L.I. Scheme at
Narendranagar under Damcherra Block/
Distribution system-Item No.1 to 16= Rs.91,07,786.00
Protection of river bank-Item No.1 to 3= Rs.2,08,263,00
Construction of pump house-Item No.1 to 18= Rs.4,46,377.00
Rs.97,62,426.00
[email protected]% above As per the agreement (+) Rs.18,44,548.00
Total: Rs.116,05,548.00
Rates of above contract work items whether of T.S.R. or A.R. include 15% (fifteen) as contractor‟s profit for the purpose of execution.
Therefore, the loss of profit sustained by the plaintiff being prevented to execute the above item of works.
Rs.1,16,06,548 x 15 = Rs.15,13,897/-
115
Amount claimed = Rs.15,13,897/-
(Rupees Fifteen lakhs thirteen thousand Eight hundred ninety seven) only.
According to the plaintiff [para-16 of the plaint], after receipt of the work order, he made the assessment and procured materials [main items] for the whole work to ensure steady progress of the work and also to get advantage by procurement in bulk and to immune him from the price hike but for non-availability of the balance work from the defendants, the materials so procured for the work remained unutilized causing huge loss to the plaintiff. In Schedule-B, as reproduced below, the petitioner has made an attempt to show the materials remained unutilized from December-2004 to August-2008 waiting for the balanced work. When he raised the bill for this unutilized, the defendants denied to pay him.
Schedule-B
Sub-Schedule-B(I)
Statements of material purchased but remained unutilized from December-2004 to August-2008 waiting for the balance work-sited from the respondents;
1st Class Bricks-2,58,000 Nos. @ Rs.4000/- per 1000 Nos. Rs.10,32,000/-
Brick-bats(Jhama)-450 cum. @ Rs.900/- per cum. Rs.4,05,000/-
Stone chips-40 cum. @ Rs.1600/- per cum. Rs.64,000/-
Sand-642 cum. @ Rs.300/- per cum. Rs.1,92,600/-
Steel (assorted) for reinforcement 6650 Kg. @ Rs.30/- per Kg. Rs.1,99,500/-
Total = Rs.18,93,100/-
Sub-Schedule-B-(II)
Details of claim :
For blockage of cash capital in cost of materials Rs.18,93,100/- as per Sub-Schedule-I for 3 years 9 months, from December-2004 to August-2008 @ 12% p.a. Rs.8,51,895/-
For daily wages paid to three chowkidars @ Rs.65/- each for the above period Rs.2,63,250/-
For wharfage and storage @ 3% on cost of materials Rs.56,793/-
For loss by spillage and damage by weathering and moss deposit during the above period @ 10% on cost of materials Rs.1,89,310/-
Total= Rs.13,51,248/-
(Rupees thirteen lakhs fifty one thousand two hundred forty eight) only.
The plaintiff has claimed to get Rs.52,000/- as loss occasioned by the hire-charge for construction machineries. But the bill the plaintiff raised for the said hire-charge on 24.11.2009 was also not honoured. He has shown in Schedule-C the details, and hence the said Schedule-C is reproduced below :
SCHEDULE-C
Hire charge of 1 No. concrete mixer (7 to 10 cft.)idling from December-2004 to December-2005 waiting for lay-out plain and sites for other works @ Rs.3000/- per month 1x 13x/.3000/- = Rs.39,000/-
Hire charge of 1 No. concrete vibrator idling for above period and reason @ Rs.1000/- per month 1 x 13 x Rs.1000/- = Rs.13,000/-
Total = Rs.52,000/-
(Rupees fifty two thousand) only.
Even, the plaintiff has raised the bill for escalation of price on 21.07.2009 to the extent of Rs.1,12,243/-. Further, the plaintiff has asked for recovery of a sum to the extent of Rs.1,00,000/- [as the final bill]. The plaintiff has also asked for refund of the security deposit amounting to Rs.1,89,230/-.
The defendants, however, have categorically stated in para-17 of their written statement that after completing 7 to 8 mtrs. of the intake well, abruptly the plaintiff had stopped the work and withdrew all his labours from the work site and denied to continue the construction work. The defendants have denied that the plaintiff was compelled to abandon the site as he was made to wait for two months‟. The defendants have asserted that the matter or earning profit depends on the due performance on the contract works, which the plaintiff has miserably failed and on the contrary, caused loss to the defendants. The defendants are entitled to invoke the compensatory clause of the agreement. All other allegations have been denied. But they have stated that by the letter dated 17.11.2009, the plaintiff had demanded Rs.1,16,6,548/- for the works which he did not even undertake. There is no grounds, tenable or otherwise how the plaintiff has assessed cost of Rs.91,07,786/-against the high capacity L.I. Scheme at Narendranagar.
It would be apparent from the records that the plaintiff had adduced three witnesses including himself, in support of his claim. The plaintiff has stated as PW-1 the plaint-story and introduced eighteen documents but from the list of those documents it is apparent that he has not adduced any purchase vouchers or credit note to show that he has really purchased the materials against which he claimed the escalation etc.
PW-2, Gautam Pal, the Manager of the plaintiff has stated that in the agreement there were four schedules viz.(1) Distribution System [76% of the contract value] (2) Construction of Pump House [4% of the contract value] (3) Protection of River Bank [2% of the contract value] (4) Construction of Intake Well [78% of the contract value]. According to him, the site for the distribution system and protection of the river bank could not be handed over by the defendants. He has stated that for non-handing over the site, the workers remained idle and waited for a period of two months. The plaintiff was in the emerged circumstances compelled to abandon the site at the risk of the defendants. Thereafter, the defendants did not ask for the performance. Even this witness did not state anything about the purchase of the materials for the entire project and did not give the corroborative statement in respect of the unutilized materials.
PW-3, Md. Abdul Chupan was a construction worker who was engaged by the plaintiff for the said work at Narendrapur, Damcherra. According to him, when the site for the intake well was handed over, the plaintiff immediately started the work by soil testing etc., but the design lay-out was given after one year and the work of the intake well was stopped by the defendants in July, 2006, which statement is contrary to the statement of PWs-1 and 2. Thus, it has created the question about the integrity of the plaintiff‟s story.
For the defendant, one Dilip Kumar Poddar, Executive Engineer [DW-1] has stated that unless the construction of intake well and pump house were completed, the design for the distribution system could not have been finalized but the plaintiff did not complete the work of the intake well. He has denied that the defendant had stopped the work of the intake well. But he has admitted that the defendant No.2 by his letter dated 16.11.2006 had informed that the remaining work site would be handed over to the plaintiff as soon as the land would be available to the department by the L.A. Collector and the stipulated materials would be issued as soon as those were made available to the departmental store. DW-1 has categorically stated that no materials were found in the work site. Thus, the claim of the plaintiff is frivolous, baseless and therefore, unsustainable. DW-1 has stated that the suit is virtually a gamble in litigation. That is the reason why the plaintiff could claim Rs.91,07,786/- against the high capacity L.I. Scheme at Narendranagar not doing admittedly any work. He did not deviate from his statement made in the examination-in-chief. The Civil Judge, Senior Division after appreciating the evidence has decreed the compensation against Schedule-A, Schedule-B-(I), Schedule-B(II) and Schedule-C. Thus the total compensation as decreed is [Rs.15,13,833/- as loss of expected profit+ Rs.1,00,000/- on account of final bill + Rs.01,89,230 as refund of security deposit] =Rs.18,03,067/- with 9% interest from the date of institution of the suit i.e. 14.12.2010 till realization.
In this appeal the said determination has been challenged.
For deciding the relevant questions as are noted already, let us decide the question relating to the breach of contract first. It appears from the agreement that the work involved high skill and efficiency and at the same time the period for completion was very short as intake well were to be erected below river bed. During the rainy season such type of work cannot be executed. The works were construction of intake well, construction of pump house and laying of 1,370 mtr. D.I. pipe line. It has been categorically stated that the agency had to arrange all materials, machinery except D.I. pipes at his own cost. D.I. Pipes will be supplied by the department from Agartala at specified issue-rate. This court has noticed that the site for laying down of distribution system was not even in the control of the defendants. Without getting the possession of the land under their control, they had settled the contract and issued the work order with such a strict time-frame for completing the work. Even in the contract, there was no provision that only after construction of intake well and pump house, the lay-out and the materials for the distribution system along with design would be handed over to the plaintiff. Even, according to the plaintiff, the work order was issued on 22.11.2004 but the site was not handed over before 20.12.2005. during this period, the plaintiff addressed several letters dated 25.12.2004, 07.01.2005, 07.02.2005, 13.04.2005, 09.12.2005 asking for early handing over of the site for the entire work. But the site was not in their control. Even the design of the intake well was changed from eight entry ports to four entry ports and the final decision was given on 16.11.2006. For this period, according to the plaintiff the work got stalled. The plaintiff has admitted that on 29.08.2006 he had a detailed discussion with the defendant No.2 at Kailashahar and it was decided that the entire sight of design will be handed over to the plaintiff within two months but that was not given. On 26.11.2006, the defendant No.2 by his letter No.F.EE/WR/6/6 informed the plaintiff that the remaining work sites would be handed over as soon as the land was available to the department. But suddenly, by invoking clause-3 of the contract/agreement the work was proposed to be rescinded and for that purpose, a show cause was issued asking why the delay had taken place in completing the work. The plaintiff had given the reasons for such delay which was wholly attributable to the defendants inasmuch as till 07.06.2008, for want of the handing over of site, the remaining works could not be started. Thus, it appears that the defendants failed to comply with the provisions of the agreement and when they entered into the agreement they did not have control over the site for the distribution system. Even in the contract, there had been no stipulation that the work had to be executed stage by stage. As such, the defendants had committed breach of contract by failing to discharge reciprocal obligation.
Now let us take the question relating to the maintainability of the suit in view of Section 5 of the Arbitration and Conciliation Act, 1996. Section 5 of the Arbitration and Conciliation Act provides that notwithstanding anything contained in any other law for the time being in force in matters governed by Chapter-I, no judicial authority shall intervene except where so provided in that chapter [the part].
There is no dispute between the parties that in the agreement there exist an arbitration clause but the plaintiff did not take recourse to the said clause. But equally it is true that the defendant did not follow the procedure of Section 8 of the Arbitration and Conciliation Act which provides that a judicial authority before which an action is brought in a matter which is the subject matter of the arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting the first statement on the substance of the dispute, then notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.
Sub-section (2) of Section 8 categorically provides that the application referred to in Sub-Section (1) shall not be entertained, unless, it is accompanied by the original arbitration agreement or a duly certified copy thereof. In this case, admittedly, the defendant did not file such application with the arbitration agreement asking the trial Judge to send the dispute to arbitration. Therefore, the defendants cannot project the question of maintainability of the suit qua Section 5 of the Arbitration and Conciliation Act.
The another question which this court has framed for decision as regards the substance of the dispute is that whether under the agreement/contract, the plaintiff was supposed to get the entire site with design simultaneously for commencing the work. It has been noticed by this court that it was under the discretion of the authority how to provide the site or design. This court is of the view that such right has not been reserved in the contract. Having read the entire contract agreement it appears that the work was time bound and as such, it was only expected that the entire work site with material design would be handed over to the plaintiff [the contractor] but by not doing so serious impediment had been caused in execution of the work. Thus, the allegation of non-performance and consequential rescission cannot stand the scrutiny of law. The said act is failure of discharging the obligation in the realm of the contract by the defendants. Therefore, the rescission in the considered view of this court is not only unreasonable but also oppressive in nature. Hence, on the basis of such rescission, the plaintiff cannot be held responsible for any loss if at all caused to the plaintiff.
Whether the determination of the expected loss to the extent of Rs.15,13,897/- is sustainable? Since there is no provision for liquidated damage, Section 73 of the Indian Contract Act would be applicable for determining the damage, if any. Under section 73 of Indian Contract Act there can be three kinds of damages recoverable from the defendants and those are (1) nominal damages, (2) general damages and (3) special damages. Nominal damages are those which occur in cases where, for instance the sellers bring an action for non-acceptance of the goods, price of which has arisen since the contract was made. In such cases, no pecuniary loss has been sustained for a breach of contract, only nominal damages are the appropriate remedy. General damages are those which are awarded when the judge cannot point out any measure by which they are to be assessed except by the opinion and the judgment of a reasonable man. But the special damages are those which are given in respect of any consequences reasonably or probably arising from the breach of the contract complained of. As a general rule, the amount of damages recoverable is governed by the extent of the actual damages ascertained in consequence of the defendant‟s act.
In Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd., reported in (1949) 2 KB 528 the principles have been summarized in respect of test of remoteness of liability: (a) In cases of a breach of contract the aggrieved party is only entitled to recover such part of the loss as was at the time of the contract reasonably foreseeable as liable to result from the breach; (b) what was at the time reasonably so foreseeable depends upon the knowledge then possessed by the parties or at all events by the party who later commits the breach and (c) for this purpose knowledge possessed‟ is of two kinds viz. imputed and actual.
It is the admitted position that no work did commence for distribution system and protection of river bank, meaning 78% of the total work as the land could not be provided by the defendants. Out of the total work, [18% + 4%] 22 % works were taken up by the plaintiff and finally left incomplete which resulted in the rescission of the contract. It is to be mentioned that within two months of handing over the site for that 22% work, the plaintiff abandoned the work and thereafter he raised the claim for expected loss, loss for unutilized materials, loss for hire-charge of the machineries, loss for retaining the labourers, loss for price escalation etc. True, it is that the defendants did not hand over the entire site but the defendants had only handed over the site for 22% of the work. Thus, where the work did not commence and when there is no materials to show in respect of the purchase of the materials for the entire project together, mobilization of the labour for the entire work as we have not come across any payment register or any purchase voucher for which the plaintiff had to pay the higher price for the delay for purchasing the materials when in the market the price escalated. No voucher of payment for hiring machineries is in the record. Thus, it is very difficult to account for the expected loss. However, so far as 22% of the work is concerned the plaintiff would be entitled to 15% loss for the said work for 22%. PW-2 has on the basis of the contract vouched in the trial that from Schedule-A this court can gather the value of the intake well and pump house. The estimated cost is shown at Rs.4,46,377/-. With that amount 18.89% would be added. Thus the total value of that work would come Rs.5,30,697.61. As per the rate schedule, the contractor profit would be 15% of the said amount i.e. Rs.79,604/-. But for wasting two months by the petitioner another sum of Rs.1,50,000/- is awarded on general damages. Thus, the total loss would come to Rs.2,29,604/- .
Whether the plaintiff can get any extra amount for the price escalation under Clause-10CC of the agreement? There is no evidence of price escalation or purchase of the materials used for the work after such escalation and as such, the plaintiff is not entitled to get any amount under Clause-10CC of the agreement.
The last and final question is whether the determination in respect of other component is maintainable. The trial Judge has declared that the plaintiff is entitled to realize Rs.1,00,000/- as the pending final bill. The trial Judge has further declared that the plaintiff is entitled to Rs.1,89,230/- as refund of the security deposit. Since this court has observed that the breach has been committed by the defendants, the defendants cannot withhold any amount of the final bill or cannot forfeit the security deposit and as such there is no infirmity in the said determination by the trial Judge. Hence, those are affirmed. Thus, the plaintiff is entitled to recover a sum of Rs.5,18,834/- (Five lakhs eighteen thousand eight hundred thirty four) without any adjustment in the final bill, from the defendants. The said amount shall carry interest @ 6% p.a. from 14.12.2010 [the date of institution of the suit] till the date of realization.
Having observed thus, the judgment dated 16.11.2014 stands partly interfered with.
In the result, the appeal stands partly allowed. Draw the decree accordingly.
Send down the LCRs thereafter.