Kichha Sugar Company Limited vs Roofrite Pvt. Limited

Rajesh Tandon, J.—Heard Sri V.K. Kohli, Sr. Advocate, assisted by Sri I.P. Kohli, counsel for the appellant and none is present for the respondent.

By the present Second Appeal filed u/s 100 of the Code of Civil Procedure, the appellant has prayed for setting aside the judgment and decree dated 1.9.2000 passed by I Additional District Judge, Nainital in Civil Appeal N. 29 of 1995 Roofrite Pvt. Limited v. Kichha Sugar Factory Limited arising out of judgment and decree dated 4.5.1995 passed by Additional Civil Judge, Nainital in O.S. No. 55 of 1984 Kichha Sugar Company Limited v. Roofrite Pvt. Limited Company.

Present Second Appeal has been admitted on the following substantial questions of law:

a) Whether, the lower appellate court is correct in allowing the appeal and dismissing the suit of the appellant on the admitted facts that the defendant agreed to make the repairs upto 8 years in the original contract which the defendant did not perform inspite of the notice?

b). Whether, on the findings of the learned appellate court that the defendant was asked to complete the repair work and in absence of any pleading and finding that the damages to the roof was caused due to any other defect, is correct in dismissing the suit?

d). Whether, the lower appellate court acted illegally and justly in shifting the burden of proof with regard to the violation of the terms of the guarantee deed by the plaintiff and on the point of the damage caused to the sugar godowns on account of natural calamity as pleaded by the defendants, which burden of proof could be legally shifted upon the plaintiff?

e). Whether the lower appellate Court considered the matter of limitation as per the settled law as laid down by Hon''ble Apex Court and as per the pleadings of the parties?

Briefly stated, a suit was filed by the plaintiff / appellant being Original Suit No. 55 of 1984 Kichha Sugar Company Limited, Kichha District Nainital v. Roofrite Pvt. Limited Company Delhi for recovery of Rs. 2,54,262/along interest @ 15 per cent per annum.

According to the plaint averments, the plaintiff M/s Kichha Sugar Factory Kichha subsidiary of U.P. State Sugar Corporation entered into an agreement with the defendant M/s Roofrite Pvt. Ltd. on 5.12.1973 for performing the work of damp proofing and water proofing of Kichha Sugar Company''s five godowns situate at Kichha District Nainital. The deed of agreement between the parties was executed. The contractor agreed to give a free maintenance guarantee for a period of eight years for which a separate agreement was executed on 30.9.1974 and the defendant agreed to undertake guarantee against the rainy water leakage of roofs and dampness in the floors of godown No. I, II, III within the Kichha factory premises from 3.3.1974 to 2.3.1982. The defendant agreed to repair, replace any such defects which became apparent during the guarantee period on getting a notice from the plaintiff by performing the same within a period of 10 days. It was agreed that in case the defendant failed to perform the conditions of the agreement the plaintiff shall have the right to get the repairs done through other agent at the cost of the defendant and the defendant contractor shall be bound to pay the expenses. It was found that the work of the damp proofing and water proofing of the roof and floors of the godowns was not carried out as per the terms and conditions of the contract and it was ultimately found to be defective resulting into the leakage through the covered area of the roof and damaging the stocked sugar bag causing heavy damages to the plaintiff. Notices were sent to the defendant to carry out the repair work but he deliberately abstained and in defiance of the conditions of the guarantee he failed to fulfill the commitment. The defendant acknowledged the receipt of the letter by his reply dated 5.5.1981 but deliberately refused to complete the work of lame excuses, therefore, the plaintiff company had to get the technical advises and inspection done through Shalimar Tar Products Ltd. Default in the works were pointed out to the defendant and required notice was given to perform the work but of no avail. According to the plaintiff, he has suffered heavy loss on this count. Ultimately, he carried out water proofing and damp proofing work done through M/s Loyal Installation during the guarantee period. The plaintiff is entitled to claim the same towards the costs of repair so made by M/s Loyal Insulation and paid to it. An amount of Rs. 56,300 for each godown No. 1 to 3 is recoverable from the defendant, which was paid to M/s Loyal Insulation, hence the suit for realization of Rs. 1,68,900/- as principal and Rs. 85,362.00 towards interest upto 22.3.84 in all for Rs. 2,54,262.00 with interest pendentelite and future at the rate of 19% was filed.

The defendant has filed a written statement, wherein it has been admitted that the contract was entered into between the plaintiff and the defendant for the work of water proofing of the godowns of the plaintiff. It was further admitted that the defendant entered into a maintenance guarantee but it was alleged that guarantee was under certain conditions which the plaintiff failed to comply. The guarantee was only in respect of the job of water proofing. The defendant was not liable for any structural defect because of natural calamities like stone wounds falling in the area etc. It was the responsibility of the plaintiff to keep the structural intact to avail of the guarantee. It is wrong to allege that the work of damp proofing and water proofing of the roofs and floors of the godown were not done according to the terms and conditions of the contract. The leakage, if any, was caused for other reasons then the defective work of the defendant. When notice was sent to the defendant a representative of the defendant visited the site and found that there was no defect as per the terms of the guarantee but on the other hand, the leakage was caused because of structural defects. M/s Salimar Tar Products is a rivalry concern of the defendant and the inspection if any by this company ought to have been carried in presence of the representative of the defendant. There was no default on behalf of the defendant and he was not liable for repair or set at right the alleged defects. The plaintiff failed to make full payment to the defendant for the work carried out by him. Therefore, a suit for recovery of Rs. 49,999.00 was filed. The plaintiff has filed the written statement challenging the jurisdiction of Delhi courts and alleged that the work done was not on the terms and conditions of the contract and the plaintiff was entitled to withdraw the payment. The suit was decreed against the plaintiff but the plaintiff filed an appeal which is pending in the Hon''ble High Court of Delhi. It has further been stated that the present suit is an after thought and is barred by principles of res judicata and the court has got no territorial jurisdiction to try the suit. It has further been stated that the plaintiff placed the order with M/s Loyal Insulation before waiting the reply of the defendant. The plaintiff is not entitled to recover the amount. It is not clear as to how the claim is arrived at. The plaintiff is also not entitled to any interest on this amount. The plaintiff has got no cause of action against the defendant and the suit is barred by time.

On the pleadings of the parties, the trial Court has framed the following issues:

Whether the court has got no jurisdiction to try the suit?

Whether the suit is barred by principle of res judicata ?

Whether the plaintiff is a company subsidiary to U.P. State Corporation and the suit has been filed by its authorised agent?

Whether the defendant carried out water proofing and work of the godowns according to the contract?

Whether the plaintiff is entitled to recover the amount from the defendant made in repairs?

Whether the plaintiff is entitled to interest, if any?

Whether the defendant carried out water proofing work according to contract and guarantee?

To what relief, if any, is the plaintiff entitled?

Whether the suit is barred by time?

Towards the documentary evidence, the plaintiff has filed per list 5Ga twenty three documents i.e. Paper No. 6Ga Exhibit -19 Agreement Paper No. 35 GA Exhibit-1, Paper No. 35Ga/3 Exhibit-2, Paper No. 36Ga Exhibit-23, Paper No. 38Ga Exhibit -17, Paper No. 40Ga Exhibit-25 and per list 95 Ga nineteen documents Paper No. 96 Ga to 114 Ga. Towards the oral evidence, Jagdish Lal Chhavra, Harishankar Verma, Lal Singh Bisht, and Om Prakash were examined as P.W.1, P.W.2, P.W.3 and P.W. 4 respectively.

Towards the documentary evidence, the defendant has filed per list 56 GA three documents, per lsit 65 Ga fifteen documents, per list 119 Ga one document and per list 131 Ga two documents. Towards the oral evidence, Nardeep Ghumman, I.S. Ghumman and Gyarsi Lal have been examined as D.W.1, D.W.2 and D.W.3 respectively.

While deciding the issues No. 1 and 2 with regard to the point of resjudicata, a finding has been recorded that the principle of resjudicata does not apply to the facts of the case. A finding has further been recorded that the suit at Delhi Court was not in respect of the present cause of action and as such the principle of res judicata will not apply in this case and that was in respect of Godowns No. 4 and 5.

While deciding the issue No. 3 as to whether the plaintiff is a company subsidiary to U.P. State Corporation and the suit has been filed by its authorised agent, the trial Court has recorded the finding to the following effect:

oknh dh vksj ls bl lEcU/k esa ;g rdZ izLrqr fd;k x;k gS fd izfroknh dEiuh ds lkFk tks lu~ 1974 esa lafonk gqbZ Fkh og Hkh dEiuh ds vf/k''kklh funs''kd }kjk dh x;h Fkh vkSj vf/k''kk"khu funs''kd okn izLrqr djus ds fy, l{ke FksA vkns''k 29 fu;e 1 ds izko/kkuksa ds vuqlkj rFkk ih0MCyw&1 lk{; ls Li"V gS fd j.k/khj flag tks oknh dEiuh ds vf/k''kk"kh funs''kd Fks] muds }kjk okn izLrqr fd;k x;k gS tks fd dkuwuh :i ls lgh gSA bl lEcU/k esa izfroknh dh vksj ls ,0vkbZ0vkj0 1991 fnYyh ist 25 eS0 fuczw fyfeVsM cuke us''kuy bU'';ksjsal dEiuh fyfeVsM esa ekuuh; mPpU;k;ky; }kjk izfrikfnr fl)kUrksa dks mn~/k`r fd;k] ftlds voyksdu ls Li"V gS fd bl fl)kUr ds rF; orZeku eqdnesa ds rF;ksa ij ykxw ugha gksrs gSaA vr% oknh dh lk{; ls lkfcr gS fd Jh j.k/khj flag okn izLrqr djus ds fy, l{ke Fks] D;ksafd og dEiuh ds vf/k''kklh funs''kd ml le; FksA vr% okn fcUnq la[;k &3 rn~uqlkj fu.khZr fd;k tkrk gSA

While deciding the issues. No. 4, 5 and 7 as to whether the defendant carried out water proofing and work of the godowns according to the contract, as to whether the plaintiff is entitled to recover the amount from the defendant made in repairs and further as to whether the defendant carried out water proofing work according to contract and guarantee, the trial Court has relied upon the document Agreement Paper No. 35 Ga Exhibit 1 and Gurantee Dee Paper No. 35GA/3 Exhibit 2. The statements of the witnesses appeared on behalf of the defendants as well as the plaintiff have also been admitted where the work of damp proofing has been accepted. Relying upon the aforesaid, the trial Court has recorded a finding that the work of damp proofing and water proofing has been done by the defendant according to Agreement Exhibit -2. The trial Court has further taken into consideration the statements of P.W.2 Harishankar Verma, P.W. 4 Om Prakash Shukla. In his statement,P.W.2 has stated that the work of damp proofing and water proofing of five godowns had been done by the defendant in the year, 1974, which was guaranteed for eight years. It has also been stated that in the year, 1978 a leakage occurred in the work done by the defendant, due to which sugar bags were destroyed, the information of which was given to one A.K. Bhatnagar. It has further been stated in the statement that he had seen the water oozing from the roof of the godown and due to break up of the tarcole layer in the roof, it was oozing. P.W.2 has also stated the same fact. Nardeep Singh Ghumman D.W.1 has admitted in his statement that his agent had gone to inspect the godowns in the year, 1981 and the agent told them that due to some defect, the leakage might occur, but he admitted that the defect had come in the year, 1981, which had come due to infrastructure and this defect was not removed by his Company. Nardeep Singh D.W. 1 has stated in his statement that the report was submitted by his agent to the company, but the same has not been filed. D.W.3 Gyarsi Lal has also stated in his statement that in the year, 1981 the inspection had been done. Trial Court has further recorded a finding from the documents and evidence filed by the defendants, it is not established as to which godown the inspection had been done, in this situation, from the documents and evidence submitted by the plaintiff, it appears that the defects have come due to lack of damp proofing and water proofing in the godowns. Further reliance upon the bills Paper No. 97 Ga , 105 Ga and 108 Ga amounting to Rs. 1,68,900, which was paid by the plaintiff to M/s Loyed Insulation Company for the repair work done by it. D.W. 2 has stated in his statement that M/s Loyed Insulation Company is claiming much amount, which is excessive. Further the trial Court has recorded a finding to the following effect:

17& mijksDr foospuk ls ;g lkfcr gksrk gS fd izfroknh dEiuh }kjk fookfnr xksnkeksa dk okVj izwfQax o MSEi izwfQax dk dk;Z lafonk ds vUrxZr rks fd;k x;k] ysfdu lafonk o xkjUVh ds vuq:i ugha fd;k x;k vkSj ;g Hkh lkfcr gS fd izfroknh }kjk uksfVl izkIr gksus ds ckn Hkh fookfnr xksnkeksa dh ejEer ugha dh x;h] rc oknh }kjk ;g ejEer ykW;M bUlqys''ku dEiuh }kjk djkbZ x;h] ftldh ejEer dk Hkqxrku fd;k x;kA ,slh fLFkfr esa oknh mfpr xksnkeksa esa iqu% dh x;h ejEer esa fd;s x;s [kpZ dks ikus dk fuf''pr :i ls vf/kdkjh gSA okn fcUnq ua0 4] 5 o 7 rn~uqlkj fu.khZr fd;s tkrs gSaA

As will appear from the aforesaid, issues No. 4, 5 and 7 have been decided accordingly.

While deciding the issue No. 9 as to whether the suit is barred by time, the trial Court has recorded the finding that the suit has been filed within time.

While deciding the issue No. 6 with regard to interest, the trial Court has recorded a finding that since the rate of interest was neither fixed between the plaintiff and defendant and nor the rate of interest was existing at that time, therefore, it is relevant to award interest @ 6% per annum. This issue has been decided accordingly.

While deciding the issue No. 8 with regard to relief, the trial Court has recorded the finding that the plaintiff is entitled to get a sum of Rs. 1,68,900 from the defendant along with interest @ 6% per annum.

The trial Court has decreed the suit of the plaintiff on 4.5.1995.

Aggrieved by the said judgment and decree, the defendant has preferred an appeal being Civil Appeal No. 29 of 1995 Roofrite Pvt. Ltd. v. Kichha Sugar Factory Ltd. The appellate Court has allowed the appeal and has set aside the decree passed by the trial Court.

Earlier the appeal had been dismissed on 21.5.2001 and against that order, the appellant had gone to the Supreme Court by filing Civil Appeal No. 2504 of 2002, wherein following order was passed:

Our attention is drawn by learned Counsel for the respondents to the provisions of Section 100(5) of the CPC where the respondents to a second appeal is permitted "to argue that the case does not involve such but then the order on the Second Appeal should indicate, howsoever, briefly, why the questions formulated at the earlier stage had at the stage of final hearing been found to be no questions of law. It is for this reason apposite that the order under challenge should be set aside and the second appeal restored to the file of the High Court of Uttaranchal to be heard and disposed of on merits, due regard being had to the provisions of Section 100 of the Civil Procedure Code. Order accordingly. No order as to costs.

As will appear from the aforesaid, Hon''ble Supreme Court has remanded the matter to this Court.

The appellate Court while deciding the appeal has referred Article 18 of the Limitation Act in holding where the time limit is not fixed, the limitation will be three years. Article 18 reads as under:

Description of suit Period of Limitation Time from which period begins to run For the price of work Three years done by the plaintiff for the defendant at his request, where no time has been fixed for payment.When the work is done.

As will appear from the aforesaid, it relates to the price done by the plaintiff when the work is done. In the present case, the case of the plaintiff is that the work was got done by another person and not by the defendant and the defendant in spite of the guarantee executed could not fulfil his part of the obligation and as such, he had to get the work done by another Contractor and as such, the recovery has been made from the defendant.

Counsel for the appellant has referred Article 113 of the Limitation Act in order to show that the limitation will be taken when the right to sue accrues. It reads as under:

Description of application Period of limitation Time from which period begins to run 113. Any suit for which no Three years. When the right to sue period of limitation is provided accrues" elsewhere in this Schedule.

According to the case of the plaintiff, the right to sue accrues to him after the payment has been made to the defendant in September, 1981 and in spite of the notice, the defendant has failed to pay the amount and hence the suit was filed on 25.5.1984. According to the plaintiff, the guarantee was given for a period of eight years as will appear from the agreement to the following effect:

Whereas the contractors have executed the work of Water Proofing and Damp Proofing of roof and floors of Sugar Godown Nos. 1, II & III, within factory premises within the last six months and whereas the contractors have agreed to undertake the guarantee against the rainwater leakage of roofs and dampness in the Floor for the period of Eight years from 3rd March 1974 to 2nd March 1982, Now, therefore, the following terms of agreement have been finalized:

(1). The contractors give a guarantee to keep the roof and floors damp-proof of sugar godown Nos. I, II & III for a period of eight years ending on March 2, 1982 but their responsibility is restricted only to repair or replacement of any defect which may become apparent during the guarantee period, free of charge, on getting notice form the company. Contractors will not be responsible for leakage caused by structural defects, due to alteration of the building, earth quake or misuse or roofs and floors.

(2) Contractors agree to set right the leakage, if any, within 10 days from the date of receipt of any complaint from Company, failing which Company shall have the right to get the repair done through other agencies, at the cost of the contractors and legally the contractors shall be bound to pay the expenses, so incurred by the Company such account during guarantee period.

(3) The company has accepted the following suggestions of the contractors:

(a). that on the treated floor no hand trolley should be allowed to ply as it was likely to damage the floors and affect efficiency.

(b) That Coarse sand should not be swept from the floor for a period of one year ending on 2.3.75.

(c). That at least one matting is spread on the floor for at least two years where sugar is stocked in the godown.

As will appear from the aforesaid agreement, it was executed for a period of eight years ending on 2nd March, 1982 and the plaintiff having taken the work from another contractor and has paid the amount. On 25th May, 1984 within a period of three years when the right to sue accrues to the plaintiff, he filed a suit and as such, the suit shall be treated to be within limitation.

The appellate Court has recorded the finding that it appears that since the damages were caused due to natural calamities and other factors prevailing in Tarai area for which the defendant cannot be held liable.

While deciding the issue with regard to damages part, the appellate Court has recorded a finding that the amount has been paid to M/s Loyed Insulation to the extent of Rs. 1,68,900/- but the issue has been decided against the plaintiff on the ground that the defendant cannot be held liable to pay the amount claimed by him in spite of the service of notice on behalf of the defendant. Since the question of limitation has been decided against the appellant, the entire matter requires fresh hearing by the appellate Court including the question of limitation after considering the clauses of the agreement. The payment made to the contractor and guarantee furnished by the Contractor.

In view of the aforesaid, matter is sent back to the appellate court for deciding the same afresh in the light of the observations made above on all the points within a period of four months as far as possible.

Consequently, Second Appeal is allowed. No order as to costs.