K. Abdulkhader vs State and Others

G. Rajasekharan, J.—Plaintiff in a Suit for money, is the appellant. Plaintiff is a contractor, who entered into a contract with the Government on 13-10-1981 for the work in connection with the Kuttiyadi Irregation Project - Improvements to Mokeri - Kayakkodi Road from 0/00 kms. to 4/700 Kms. The total cost of the work was Rs. 4,87,582/-. The work was to be completed on or before 16-4-1987 i.e. within five months from the date of the site was handed over. THE work could not he completed within the stipulated period. There was extension of time for completion of the work till 30-9-1982, and within that date also, the work could not be completed. After that by issuing Ext. A10 dated 19-2-1984, the plaintiff terminated the contract on various allegations. It was inter alia stated that the Government was not interested in the execution of the balance work under the contract, which amounted to unlawful repudiation of the contract, and that the plaintiff was treating the contract as repudiated by the Government. Then, by issuing the proceedings dated 16-6-1984, the Superintending Engineer, P. W. D. Project Circle, Calicut terminated the contract, saying;

Under the above circumstances, the contract of Sri K. Abdulkhader, P. W. D. Contractor............is hereby terminated at his risk and cost and security deposit of Rs. 19,550/- furnished by contractor.........is forfeited to the department. The balance work will be rearranged and if the Department sustains any loss on account of such rearrangement, the loss will be made good from Sri. K. Abdulkhader, contractor."

After waiting till 7-5-1985, as per the original of Ext. All Suit notice, the plaintiff called upon the Government to settle his claims, failing which the proposed Suit was intimated. Ext. A12 is the reply to suit notice, which repudiated the claim made by the plaintiff.

According to the plaintiff, the Government has committed breach of contract, entitling him to terminate the contract and also claiming damages. But according to the government, it was the plaintiff who committed breach of the contract and the contract was rightly terminated by the Government and security deposit forfeited.

In the Suit, the reliefs prayed for are:

(a) to direct the defendants to pay a sum of Rs. 67,184/80 to the plaintiff with future interest at 12 per cent per annum;

(b) to declare that any re-arrangement of the work if any, after termination of the contract SE (P) 20/81-82 shall not be at the risk of the plaintiff as to costs and consequences;

(c) to restrain the defendants by an order of injunction from taking proceedings for realisation of any amount by way of damages pursuant to the termination of the contract;

And for incidental reliefs.

The trial court raised eighteen issues as arising out of the pleadings. The evidence before the trial court consists of PW1 and Exts. A1 to A14, B1 to B5 and C1.

The agreement in original along with the special conditions, notice inviting tenders, schedule etc. was produced as called for by the plaintiff. But the trial court omitted to mark this document. In the judgment of the trial court, in summarising the pleadings, there are references to item number in the Agreement schedule. In paragraph 10 of the judgment, the trial court refers to clauses 6 & 7 of the terms of the contract, and the trial court was also relying on this original agreement, even though it omitted to mark that. Both the counse1 agreed that this also may be marked in evidence in this Court. In the circumstances, the agreement in original is marked as Ext. B6.

Issues 2 & 4 to 14 were considered together by the trial court and it held that in all respects the plaintiff was the defaulter in executing the work as per the contract entered into between himself and third defendant. In answer to issue No. 3, the court found that the termination of the contract by the department cannot be treated as illegal or against terms and conditions of the agreement. On these findings, the plaintiff was non - suited. Aggrieved by that, the Appeal is preferred.

The main argument advanced by the learned counsel for the appellant is that the contract consists of reciprocal promises and without the performance of the promise on the part of the Government, the plaintiff was not In a position to proceed with the work and complete the same, and that resulted in the failure in completing the work within the stipulated time, as also by the extended time and thereafter and for that reason the Government has committed breach and plaintiff was within his powers to terminate the contract and is entitled to the reliefs claimed in the plaint.

The work to be carried out by the plaintiff was the improvement of the road mentioned earlier, and that takes in soling, metalling, remetalling and then providing 20 mm pre mixed chipping carpet using 12mm broken stones, sand mixed with hot bitumen. Cutting drainage on the sides of the road, was another item of work. Then, construction of a cross drainage on a stream was yet another item of work.

According to the plaintiff, the road work as such extending to a length of 4.7 kilometres was to be completed from one end to the other in different spans i.e. for a particular length metalling, remetalling etc. will be done and thereafter the bitumen work will be taken up and then proceed to do the same items of work for the next length or the next span. In other words, it was not a case of soling the entire length of 4.7 kilometres, then metalling the entire length and remetalling and then doing the bitumen work This proposition is not disputed by the learned Government pleader appearing for the oilier side. So, according to the plaintiff, for the first kilometres, the works upto remetalling were completed by December 1981 i.e. within one month from the date of commencement of the work, and at that time, bitumen was required for the next stage of the work, but the defendants failed to supply the bitumen which was one of the material to be supplied by the Department as per the terms and conditions of the contract The contention put forward by the defendants is that the requirement of bitumen came only sometime in July 1982 and at that time the supply was arranged, to be taken delivery of from Badagara Stores of the Department. It is the further case of defendants that the plaintiff failed to take delivery of that deliberately and committed default and breach of the contract. It is yet another case of the defendants that bitumen was not required at any point of time before July, 1982 and non - supply of bitumen prior to that time, does not constitute default or breach on the part of the defendants.

It is admitted case that steel, cement and bitumen required for the work were to be supplied by the defendants and the first two items had to be taken delivery of from the Badagara Stores, and bitumen from the Kuttiadi Store of the Department. It is also the admitted case of the defendants that the defendants were not ready to supply bitumen from Kuttiady Stores because of paucity of stock and so, as is done usually, the plaintiff was called upon to collect bitumen from the Budagara stores, and an authorisation was given for that purpose, and bitumen became necessary for the progress of the work only at that point of time and so, there was no default on the part of the defendants. This contention of the defendants is found to be against the documentary evidence available in the case.

The first part-bill was prepared and measurements for that purpose were taken on 30-12-198(sic). Pages i to 82 in Ext. B4 measurement book contain the measurements of the works carried out by the plaintiff upto-that date. From pages 25 to 32 it is seen that 12 mm metals were collected from O change upto 2 kilometres. That metal was required only for the bitumen work i.e. providing 20 mm thick premixed chipping carpet. That stage of the work was to be starred only after soling, metalling, remetalling etc were completed. Pages 63 to 65 of Ext. B4 would show that remetalling for a quantity of 7248.90 Sq. Metres was completed by the time that measurement was taken on 30-12-1981 That would mean that the plaintiff was ready to take up the next stage of the work using 12 mm metal for providing pre-mixed chipping carpet with the mixture of sand, metal and hot bitumen. This quantity was measured and paid for by the Department. The total quantity of remetalling work for the entire length of 4.700 Kilometres was 13320 Sq. Metres. That the work on the aforesaid portion has already been carried out, is clear from the fact that the length of 2 kilometres'' remetalling was completed and the next work to be carried out required bitumen.

On 17-12-1981, as per Ext. A1, the plaintiff requested the Departmental Authorities to provide him with bitumen for the next stage of the work. In Ext. A1 the plaintiff was making mention that the Department should have supplied bitumen when the agreement was signed, or atleast when the work has commenced, and was complaining that the required quantity of tar was not supplied, and he called upon the Department to supply the tar required for the work at least within a month, failing which he may be exempted from executing that work. There was no prompt reply to this letter, nor supply of bitumen was made available till the contract period was over on 16-4-1982. As noticed earlier, the period was extended upto 30-9-1982. For Ext. A1 letter the first response from the side of the Department was sometime in July, 1982 i.e. just two months before expiry of the extended period. It is common knowledge that the month of July is the peak monsoon season. It was then that the plaintiff was asked to take delivery of 100 barrels of bitumen from the Badagara stores.

The contract stipulates that bitumen shall be supplied from the kuttiady stores, which is very near the work site. The Badagara store was some seventy kilometres away and taking delivery of bitumen from there certainly entails additional expenditure. When there is additional expenditure by way of transporting charges, that calls for additional work or extra work. For claiming payment for that, there has to be a supplemental agreement as contemplated in Clause 63 (b) of the Madras Detailed standard Specifications (MDSS). Provisions in M.D.S.S. form part of the conditions of the contract is mentioned in article 4 of the Contract, and preamble to it. Clause 63(b) of the Madras Detailed Standard Specifications, clearly provides that for claiming for any additional work, there shall be a supplemental contract and in the absence of such a supplemental contract, no such payment shall be made. The defendants have no case that when the plaintiff was asked to take delivery of bitumen from Badagara, he was offered any additional payments for the extra expenses in connection with transporting or mentioned about the execution of any supplemental agreement in that regard. In such circumstances, it was not obligatory on the part of the plaintiff to go to Badagara and collect bitumen for the progress of the work. In spite of that, it is seen from the evidence that he proceeded to Badagara for taking delivery of the bitumen, but that was refused by the authorities in the Store, insisting upon an indent for that purpose. The indent is to be given by the Executive Engineer and will be addressed to the Stores Assistant Engineer. In this particular case, such an indent was not issued by the Executive Engineer to the Stores Authorities and for that reason, bitumen was not given from the stores. That is spoken to by PW1 when he was in the box. The examination on that point is directed to the effect as to whether a written letter or communication was given from the stores insisting upon an indent. The reply of the plaintiff was in the negative. That does not mean that the plaintiff, even though as per the terms of the contract was not obliged to collect bitumen from Badagara, was not ready and willing to take the article from Badagara and proceed with the work. He was prevented from that because of the non - issue of the material from the Badagara Stores. It was in such circumstances that the further work was not carried out by the plaintiff. From the facts mentioned above, it is very clear that the work could not be carried out further because of the non - supply of bitumen, a contractual obligation on the part of the defendants.

Without adverting to these aspects of the matter, the trial court readily accepted the contention that bitumen was required only in July, 1982 and then necessary arrangements were made by the Department for the supply, and because of the failure on (he part of the plaintiff, bitumen was not taken delivery of and work proceeded with. That observation and finding of the trial court is not at all justified, in the light of the evidence in the case. It would appear that the trial court was of the impression that the bitumen will be required only after reinstalling work was completed for the entire length of 4.7 kilometres of the road. That is certainly an erroneous understanding of the matter, and as pointed out earlier, the work was being carried out from stage to stage i.e. for the first span, the entire work was completed and then proceeded to the next span.

It is proved by documentary evidence that bitumen was required as early as in December, 1981 and for that purpose, a requisition was made by the plaintiff, but the Department arranged for the supply, that too from Badagara only in July 1982, at the peak of the monsoon season. It is common ground that during monsoon season, that type of work cannot be and should not be carried out. From the above, it is clear that had bitumen been supplied when the plaintiff made the requisition in December 1981, he would have proceeded with the next stage of the work. But, that was prevented by the non-supply of bitumen by the Department. They have defaulted in the matter of the contractual obligations.

The other items of materials to be supplied by the Department were cement and steel rods. Those materials were required for the construction of the cross-drainage. That work involves cement concreting of the foundation and above that random rubble masonry and then construction of a reinforced cement concrete slab. For the first work of construction of the foundation, the ratio provided in the Schedule to Ext. B6 Agreement is 1:3: 6 (one cement, three sand and six metals). Only after completing that work, the rubble masonry work is to be started. For the first item of the work of constructing foundation, cement and steel are required. In the written statement of the defendants what is contended is that the necessary materials to be collected by the contractor were not collected and so, the question of supply of cement and steel rods did not arise and there was default on the part of the contractor. It is not specified in the written statement, what are the materials, the plaintiff has failed to collect for starting the work. The rubble for the masonry structure will be required only after completion of the foundation. So, the failure to collect rubble cannot be taken as a reason for non supply of cement and rods if actually the foundation work was to be started. Excepting the written statement, taking up contentions alleging default on the part of the plaintiff, the defendants have not chosen to adduce any oral evidence in the matter. Plaintiff as PWI has spoken to the fact that actually cement and steel rods were also required and the failure on the part of the Department to supply them has affected the progress of the work, or even the starting of the work for the Cross Drainage. When no contra evidence is forthcoming on the side of the defendants to prove the alleged default on the part of the plaintiff in that respect, and when the plaintiff has sworn to the necessity or cement and steel rods and his readiness and preparation to start the work, it has to be taken that there was default on the part of the Department in not supplying cement and steel rods, That also was one of the reasons for the plaintiff to stop the work and that was certainly due to the default on the side of the defendants.

Another reason alleged by the plaintiff for not completing the work, is the non-payment of part bills in time. According to the plaintiff, that also is a violation of the conditions of the contract.

Condition No. 6 of the contract provides that in the case of works estimated at a cost more than Rs. 5,000/-, the contractor shall receive a monthly payment to such extent as the works may be approved and passed under a certificate by the Executive Engineer. Condition 7 says that:

a bill shall be submitted by the contractor each month for all works executed in the previous month in accordance with the terms of the specifications and the Executive Engineer shall take the requisite measures for having the same tested and the claim as far as admissible, adjusted, if possible, before the expiry of ten days from the presentation of the bill, should the contractor be unable to prepare the bill himself, the Executive Engineer shall depute a subordinate to measure up the work performed in the presence of the contractor, whose countersignature to the measurement list will be a sufficient warrant to the Executive Engineer to prepare the bill for him from that list".

It was according to the latter part of condition 7 that measurements were taken as evidenced by Exts. B3 to B5. Ext. B4 is the first measurement taken on 30-12-1981 for the works carried out by the plaintiff. At page 82, the total quantity and the cost work is mentioned. After this, the formality to be observed was to prepare a bill in a particular format, and payment to the contractor. That was done in the case of Ext. B4 measurement only on 15-4-1982.

The second part bill is evidenced by Ext. B4 (Pages 83 to 93) and Ext. B5 (pages 46 to 64). The total cost of the work upto 7-5-1982 as per that measurement was Rs. 1,81,372/-. Deducting the payment under the first bill, the net balance due was Rs- 20,955/-. This was paid on 14-5-1982. The third part payment is evidenced by Ext. B5 (page 95) and Ext. B3 (pages 6 to 27). The measurements for that were taken on 11-6-1982, 14-6-1982, 24-6-1982, 8-7-1982 and 30-7-1982. The total value of work upto that point of time was Rs. 2,81,318/-. Deducting the payments under the previous bills, the net amount that was to be paid was Rs. 99,946/-. This was paid only on 3-5-1983, after nine months of taking the measurements. As noticed earlier, under condition No. 7 in Ext. B6 contract, the payment was to be made before the expiry of ten days from the date of presentation of the bill.

It is admitted in the written statement that there was delay in payment and that is attributed to paucity of funds with the Government for payment to the contractor. That is no explanation which would absolve the defendants of the contractual liability. As and when work was done, payments should have been made every month to enable the contractor to proceed with the next stage of the work. It is not contemplated that the contractor should complete the entire work and then claim the payment for that. Conditions 6 & 7 certainly cast a contractual obligation on the part of the Government for effecting payments every month, that too if possible within ten days from the date of taking the measurements. That was not done in this case and there was inordinate delay, particularly for the payment of the third part bill, Ext. B3 and that is certainly a justifiable cause for the plaintiff not to proceed with the work.

Conditions 6 & 7 of Ext. B6 contract envisage a reciprocal promise on the part of the Government to effect payment for the work done by the contractor. When that is not done, it is certainly within the legal powers of the contractor to insist for payment for proceeding further with the work. So, the non - payment of the part bills in time is also a default on the part of the Government in performing the reciprocal promises or their obligations under the contract.

It was in such circumstances that the plaintiff stopped the work and ultimately issued Ext. A10 on 19-2-1984 terminating the contract. Even before that, under Ext. A8 dated 4-10-1983, the plaintiff offered to continue the work and finish it, but on certain conditions. It may be noticed that Ext. A8 was issued long after the expiry of the extended period of contract. There was a time-lag of more than a year and it is common knowledge that there was escalation of price of materials and expenses in connection with the work. The conditions were not acceptable to the Department and that was let known to the plaintiff by different letters forming part of Ext. B2 file. Then, a show cause notice was served on 22-10-1983 as is contended in paragraphs 26, 27 & 28 of the written statement. For that, the plaintiff sent Ext. A9 reply dated 311-1983 explaining his position and attributing default on the part of the Government. It was after that, on 9-2-1984 the plaintiff terminated the contract. Subsequent to that, the Superintending Engineer by proceedings dated 16-6-1984, terminated the contract which is adverted to earlier.

According to learned counsel for the appellant/plaintiff, the Superintending Engineer is not entitled to terminate the contract and as per the conditions in the Madras Detailed Standard Specifications, the authority competent to terminate the contract was the Executive Engineer, and not the Superintending Engineer. To support the proposition that even if the Superintending Engineer is a superior officer, under the contract the authority competent to terminate the contract, is the Executive Engineer, reliance was placed on the decision reported in AIR 1971 J & K 91 (M/s. Roshan Lal Sethi v. The Chief Secretary & Ors.). That was a case relating to forest contract and as per the terms and conditions in the contract, the Authority competent to terminate the contract was the Conservator of Forests. But in that case, the termination was ordered by the Chief Conservator of Forests and in considering the validity of that termination, the Court held:

The relationship of the patties is governed by the terms of the agreement and only those officers who have been mentioned in any particular clause can exercise powers and none-else, may be superior or inferior. It is a contractual matter and not an administrative one, so neither party can fact outside the terms of the contract in an administrative matter, if the powers are vested in the inferior officer, his superior also can exercise them but not so in the case of a matter which is embodied in a contract............"

I do not see any reason to differ from that reasoning. Here, under clauses 2 & 3 of the conditions of contract, and condition 61 in the Madras Detailed Standard Specifications, the authority competent to determine the contract, is the Executive Engineer and not the Superintending Engineer. So, the termination effected on 16-6-1984 is not in terms of the contract between the parties and so, is illegal and ineffective. It may be noticed in this context that even prior to 16-6-1984, as per Ext. A10 dated 19-2-1984, the plaintiff himself had terminated the contract.

For the reasons mentioned in the discussion supra, it is clear that there was breach of contract on the part of the defendants and the plaintiff was fully justified in stopping the work and then terminating the contract, as evidenced by Ext. A10. The findings to the contrary by the trial court cannot be sustained. The trial court without adverting to the relevant provisions in the contract, the transactions between the parties, the work turned out by the plaintiff, the progress of work, reason for stopping the work etc., by extracting some sentences from the deposition of PW,1 taken out of context, has reached the conclusion that there was no default on the part of the defendants and there was deliberate failure or default on the part of the plaintiff. The trial court was of the view that the bitumen became necessary to be supplied only in July, 1982. It was not correct as could be seen from the discussion supra. A similar conclusion was also arrived at by the trial court in the matter of non - supply of cement and steel rods. The failure on the part of the Department in not making part payments promptly, was brushed aside as an insignificant matter by the trial court on the basis of the statement of PW1, that it was not unusual for the Government to delay payments for the contract work carried out by the contractors. But that does not absolve the defendants of the contractual obligations Thus, from the evidence, the only conclusion is that the defendants were at default and they have committed breach of the contract. Necessarily, the plaintiff was entitled to recover the cost of the work done by him.

The first item of claim is to the tune of Rs. 14,719/65. That is constituted by the value of 12 mm metal collected at the site and cost of construction of the drain on the sides of the road. The evidence on the side of the plaintiff proves only a sum of Rs. 6,955/95 as assessed by the Commissioner. It was argued that by efflux of time and due to the heavy traffic on the road and monsoon, the drains on the sides have been washed away and sides given sway, and the metal collected was lost. But, that aspect was not proved by any acceptable evidence. It was not impossible of proof and the plaintiff could have adduced evidence to show how much metal he had collected there, and to what length the drains were constructed. In the circumstances, I find that the plaintiff is entitled to Rs. 6,955/95 only on that score.

The other claims relate to retention amount and security deposits. Since there was breach of contract by the defendants, they were not entitled to forfeit the security or keep the retention amount. The plaintiff is entitled to get those amounts.

Another sum claimed is Rs. 100/-, fine unlawfully levied and collected when the extension of time was granted by the Department. It was pointed out that the Officers of the Government have no authority or jurisdiction to levy fine and the contract also does not envisage any fine. The payment of that was under protest and plaintiff is entitled to get that back. In the result, the plaintiff is granted a decree to recover from the defendants a sum of Rs. 48,605/95 (Rupees Forty eight Thousand, Six Hundred & Five and Paise Ninety five) with twelve per cent interest from the date of Suit till realisation. It is declared that the rearrangement of work shall not be at the risk and costs of the plaintiff. There is no reason why costs shall not follow the event. Plaintiff will be entitled to recover proportionate costs throughout.