The State Of A.P. vs P.N.Srinivasulu Reddy
2021 Latest Caselaw 1209 AP

  HON'BLE SRI JUSTICE M.VENKATA RAMANAAPPEAL SUIT No.15
                          of 2009

JUDGMENT :

This is a regular appeal preferred under Section 96 CPC against

the decree and judgment in O.S.No.31 of 2005 of the Court of the learned

Senior Civil Judge, Kovur, Nellore District.

2. The defendants are the appellants. The plaintiff is the

respondent.

3. The respondent laid a claim against the appellants for

Rs.5,60,564.96 ps. with future interest at 24% p.a. from the date of the

suit till realisation and for costs.

4. This dispute is relating to a work contract which was in respect

of special repairs to the road viz., K.M.13/4 to 17/4 via Gandavaram,

Peddaputhedu and Peyyalapalem. An agreement was entered into

between the respondent and the appellants when the respondent became

lowest tenderer for value of Rs.10,73,702/- for the estimated contract

value of Rs.9,79,771/- at 9.59% excess, based on SSR 97-1999. It was

accepted by the 2nd respondent. The work was to be completed within six

months of handing over the site and as per the work agreement, the site

was handed over on 19.09.1998 on account of which the work was to be

completed within six months therefrom by 18.03.1999. Breach of this

contract is alleged by both the parties in performance of the terms and

conditions thereunder which has lead to this action by the respondent

against the appellants.

MVR,J A.S.No.15 of 2009

5. The specific case set up by the respondent in the plaint was as

under:

(a) The appellants failed to hand over a specific work site to

the respondent after delineating the parameters of the work drawing

the center point and failed to provide a sketch to enable him to plan

his work within the time frame settled in the agreement. Therefore,

it was a fundamental breach and the site and the sketch were settled

only a month later which lead to delay in execution of the work,

making the respondents to keep the labour continued, engineering

foreman, work materials and workmens' sheds idle. The respondent

did inform the same in his letter dated 04.04.2002 marking copies of

the same to the 2nd appellant. By 20.02.1999 the respondent

executed the work worth Rs.1,91,328-21 ps., which was not

immediately paid when due and it was paid in three different

instalments. Though the actual work turned out was worth

Rs.2,51,000/-, M-book entries were maintained only to a tune of the

above sum mischievously and thus defrauded the respondent of

Rs.59,672/-. However, the appellants determined the contract on

30.01.2002 under clause 60(A) of the P.S. to APDSS unlawfully and

without justification.

(b) Seven claims in all were raised by the respondent on

account of the interest payable for delayed payments even though

the appellants were required to make such payments fortnightly or

monthly of submission of each bill, at the rate of 24% p.a. Second

claim pertains to the amount withheld and pooled by the appellants

of Rs.14,350/- towards further security deposit which was due for MVR,J A.S.No.15 of 2009

payment on 01.12.1999 on which he is also entitled for interest at

24% p.a. from 01.12.1999 to 31.03.2005 of Rs.14,063/- and in all

Rs.28,413/-. Third claim is in respect of Rs.59,672/- that was not

paid to the respondent for the work done, which is payable with

interest at 24% p.a. and thus in all Rs.1,10,989-92 ps. Claim no.4 is

in respect of overheads for establishment, salaries etc., in

maintaining site office as well as regular office with interest thereon,

in all Rs.1,41,504/- till date of the suit. Fifth claim is in respect of

anticipated loss of profit at the rate of Rs.1,41,504/- computed at the

rate of 15% on the total value of the contract. Sixth claim relates to

retention of earnest money deposit liable to be repaid with interest

and in all Rs.43,000/-. Seventh claim is for Rs.50,000/- for unjust

determination of the contract.

(c)Thus, the respondent claimed the relief against the

appellants and to pass a decree in his favour.

6. The 3rd appellant filed a written statement opposing the claim of

the respondent adopted by the appellants 1 and 2.

(a) The specific contention of the appellants in the written

statement was that the site was handed over to the respondent on

the date of the agreement dated 19.09.1998 and that the work

turned out by the respondent was for Rs.1,91,328/- and not for

Rs.2,51,000/-. They further contended that after executing the work

to that extent the respondent abandoned it, without attending

further. They further contended that the respondent had carted

material for remaining work of Rs.59,672/- which was understood by MVR,J A.S.No.15 of 2009

the department bona fide that the respondent would complete the

work. Therefore, according to the appellants, proposals were sent

for extension of time mentioning the work done for Rs.2,51,000/-. It

was the plea of the appellants in the written statement that in stead

of carrying out such work, the respondent had taken back the

material, with a mala fide intention, and that taking advantage of the

proposals so forwarded, the respondent intended to make a gain.

They further contended that the respondent was paid Rs.1,51,826/-

after deductions as per the agreement.

(b) The appellants further stated in their written statement that

the respondent delayed the commencement of work for no reason,

failed to maintain rate of progress as per the agreement and

thereafter who continued his work at a very slow phase. They further

stated in the written statement that by the end of October, 1999 i.e.

six months beyond contract period, he could execute the work worth

of Rs.1,91,328/- as against the contract value of Rs.10,73,702/- and

that on the applications of the respondent time was extended upto

31.10.2000 in the first instance and later upto 28.03.2002. They

further stated in the written statement that after receiving the amount

as aforestated, with a mala fide intention the respondents stopped

the work on which the 3rd appellant issued notices on 10.10.2000,

16.11.2000, 09.01.2001 and 10.07.2001 instructing to complete the

work, in vain and therefore, the 3rd appellant had to terminate the

work on 30.01.2002 as per the agreement. Thus, the appellants

denied the case of the respondent.

MVR,J A.S.No.15 of 2009

7. On the pleadings, the learned trial Judge, settled the following

issues:

"1. Whether the plaintiff is entitled for recovery of suit amount as prayed for?

2. To what relief?"

8. At the trial, the respondent examined himself as P.W.1 and

relied on Ex.A1 to Ex.A16 in support of his claim. The then Executive

Engineer, Roads & Buildings Department, Kavali, examined himself as

D.W.1 on behalf of the appellants and they relied on Ex.B1 to Ex.B19.

9. Considering the material and evidence, the learned trial Judge

held that the claim of the respondent is true and correct and that the

appellants committed breach of contract. Accordingly the suit was decreed

holding both the issues in favour of the respondent and against the

appellants.

10. Sri P. Raj Kumar, the learned Government Pleader for Appeals,

and Sri V.Tilak, learned counsel for Smt. C. Vani Reddy, learned counsel

for the respondent, addressed arguments.

11. Now, the following points arise for determination:

1. Whether the respondent is entitled for damages as claimed

and if the appellants committed breach of contract in

question?

2. To what relief?

MVR,J A.S.No.15 of 2009

POINT No.1:

12. The burden is on the respondent to establish his claim to the

effect that he could not complete the work contract of repairing Madras-

Calcutta road in between K.M.13/4 to 17/4 on account of failure of the

appellants to abide by its terms and permitting to execute this work within

the specified time frame.

13. Admittedly, six months time in between 19.09.1998 to

18.03.1999 was not adhered to, in completing this work. The contract was

also terminated on 30.01.2002 by which date the respondent had turned

out only 0.19% of estimated work under this contract. Out of value of this

contract of Rs.10,73,702/-, he carried out the work worth Rs.1,91,328/-

according to the appellants.

14. The contention of the respondent is that the work site in

question was not handed over to him as stipulated on the date of the

agreement viz., 19.09.1998. Ex.A1 (a copy of which is Ex.B10) is this

agreement. There is a certificate as a part of articles in agreement in

Ex.A1 to the effect that on 19.09.1998 the site was handed over to the

respondent. This certificate bears the signature of the respondent

admittedly. There is also a plan as a part of Ex.A1 agreement locating the

site of this work.

15. It is the contention of the appellants that in view of handing

over the site on 19.09.1998 itself, the version of the respondent that there

was delay in handing over the same is not correct. Their contention

further is that having regard to the nature of this work, a sketch with

specifications need not be supplied drawing a center point. Their MVR,J A.S.No.15 of 2009

contention is that the plan, which is part of Ex.A1, is sufficient and it was

very much available for the respondent to commence the work w.e.f.

19.09.1998 itself.

16. Rate of progress is also specified in Ex.A1 agreement, whereby

30% of the work should be completed within two months, 70% by next

four months and 100% or entire work to be completed within six months.

This part of Ex.A1 agreement was also signed by the respondent.

17. Time was agreed to be the essence of contract under this

agreement, which fact the respondent admitted as P.W.1. The very fact

that the contract came to be terminated on 30.01.2002 with payments

made in three instalments in between, according to the version of the

respondent from 01.12.1999 to 28.02.2000, indicated that the time

schedules so fixed under Ex.A1 were not adhered to. Extension of time

was being granted either at the request of the respondent or unilaterally

by the appellants.

18. Ex.B1 dated 01.11.1999 and Ex.B2 dated 20.12.1999 were the

letters of the respondent whereby he sought extension of time and with

due recommendations of the Assistant Executive Engineer and Deputy

Executive Engineer, the 3rd appellant apparently permitted these

extensions. Admittedly the respondent did not complain in Ex.B1 and

Ex.B2 of the delay in handing over the site or failure to hand over

appropriate sketch for commencing the work. It is further to be noted that

both these extensions were sought long after the due date in terms of

Ex.A1 for completing the work. The respondent as admitted by him in MVR,J A.S.No.15 of 2009

cross-examination for the appellants could fill up the pits on the road

forming one layer with metal.

19. Ex.A4 is the letter dated 30.01.2001 whereby the respondent

sought extension of time till 30.04.2001 to complete this work. The

reasons assigned therein were that material was not available, delayed

payments and his ill-health. Though this letter was addressed to the 3rd

appellant by him, it was returned by the 3rd appellant on 31.01.2001

directing to forward through proper channel and by means of a proforma.

Ex.A-5 is another letter of the respondent citing similar reasons as in

Ex.A4 requesting for extension of time till 28.03.2002. It was forwarded

by the Executing Engineer, Kavali i.e. the 3rd appellant to the 2nd appellant

along with a letter dated 20.09.2001 with necessary proposals.

20. However, by Ex.A7 letter dated 30.01.2002 the respondent was

informed by the 3rd appellant that the contract stood terminated, as, in

spite of granting time till 28.03.2002, he did not resume the work. It was

stated in this letter that the respondent did not come up with any action

to proceed with the work and finding that there was no hope of

continuing the work, it was stated in this letter that in terms of clause

60(a) P.S. to APSS, the contract was determined forfeiting EMD etc. A

specific reference is made in Ex.A7 that the respondent completed only

work worth Rs.1,91,328/- against the contract value of Rs.10,73,702/-.

21. The respondent addressed Ex.A2 letter dated 30.01.2002

referring to his request for extension of time, necessary assistance from

the department to complete this work and for payment for the work done.

As seen from Ex.A3 postal acknowledgment it was served on the 3rd MVR,J A.S.No.15 of 2009

appellant. Though it is disputed on behalf of the appellants, producing

Ex.A3 is sufficient to offer proof of service on the appellants.

22. Ex.B3 is the copy of the letter of the respondent dated

06.02.2002, whereby he requested to extent time for performance, which

was not responded to, while further requesting for payment of the

amount due. He also complained that the 3rd appellant was not extending

cooperation in this process and that another contractor under NABARD

scheme was handed over the site from K.M.13/4 to 17/4 for execution of

the work. He also requested in this letter to pay the bills for the work

done by him including the deposits. In response to Ex.B3, Ex.B4 letter

dated 25.02.2002 was addressed by the 2nd appellant to the respondent

referring to the circumstances under which the contract was terminated

and also leading to forfeiture of EMD and other deposits. A reference is

also made as to slow progress of work, extension of time granted for

completing this work and imposing a fine of Rs.1,000/- for this slow

progress on account of Ex.B16 letter of Assistant Engineer,Alluru, dated

29.01.2002.

23. Ex.A10 suit notice was issued by the respondent setting out

similar claims made in the plaint to which a detailed reply was issued by

the 3rd appellant in Ex.A18 dated 06.05.2005 (After institution of the suit).

24. Ex.A14 is the letter of the respondent dated 04.04.2002 mainly

questioning the action in determination of the contract, requesting to set

aside the same by the 2nd respondent.

25. It is thus the contention of the respondent that the process of

determination of the contract is illegal and when time was sought to be MVR,J A.S.No.15 of 2009

extended till 28.03.2002, its determination before hand by 31.02.2002,

upon handing over a part of the work site to another contractor Sri

Ch.Rammohan Reddy under NABARD scheme illegally, justified his claim.

26. The main claim of the respondent is in relation to extent of

work carried out by him for Rs.2,51,000/-, which the appellants

considered at Rs.1,91,328.21 ps. The basis to support this claim is the

proposals forwarded for extension of time as seen from Ex.A6. The

proforma to accompany the proposal for extension of time in Ex.A6

mentioned value of work done during the extended period at

Rs.2,51,000/- and that value of the work to be done at Rs.8,22,702/-.

This proforma was signed by all the concerned to this contract viz.,

Executive Engineer, R&B, Kavali, Deputy Executive Engineer, R&B, Kovur

and Assistant Executive Engineer, R&B, Kavali. It was apparently

forwarded to the 2nd appellant. Undisputedly, the Ex.B5-M-Book

maintained for this work with reference to its entries-Ex.B6 to Ex.B9

recorded the worth of the work done at Rs.1,91,328.21 ps. The contention

of the respondent in this context is that entries in M-book were

mischievously made suppressing the work done worth Rs.59,672/-.

27. The contention of the appellants in this respect is that the

figure so mentioned of Rs.2,51,000/- in Ex.A6 was only a proposal and it

did not reflect the actual work carried out by the respondent. They also

relied on the statement of the respondent in cross-examination as P.W.1

in this context that M-Book records the actual work turned out and that he

also signed in M-book to that effect. He denied a suggestion of the

appellants that he did not complete the work for Rs.2,51,000/- and except

to the extent stated above as recorded in Ex.B5 M-book. He also denied MVR,J A.S.No.15 of 2009

the suggestion that the contents of Ex.A6 were in anticipation that he

would complete the work to a tune of Rs.59,672/- further.

28. Ex.A6 is a part of intra-office communication. The manner of

securing it by the respondent was seriously canvassed at the trial

questioning its authenticity, as seen from the suggestions to P.W.1.

Nonetheless, either in the written statement or at the trial, its contents

are not as such disputed. It is a communication of the appellants. The 3rd

appellant then in office examined as D.W.1 also admitted the contents of

Ex.A6 in this context, though sought to explain in the manner stated in

the written statement, being only a proposal. At the same time, he stated

referring to Rs.2,51,000/- in column-12 of Ex.A6 that it was on account of

the mobilisation of the work. But, it is not substantiated by the contents of

Ex.A6 itself. D.W.1 further went to the extent of feigning ignorance of the

defence set up by the written statement in this context.

29. In the circumstances, having regard to the contents of Ex.A6

which is not or cannot be disowned by the appellants, value of the work

till then completed by the respondent at Rs.2,51,000/- has to be

accepted. Want of M-book entries for Rs.59,672/-in this context, cannot

be a reason to deny the claim of the respondent. Though the respondent

has attributed that this amount was mischievous omission in M-book, it is

for the appellants to explain. Explanation so offered by them at the trial

including in their pleadings neither is acceptable nor can be believed.

Therefore, this version of the respondent stands and the appellants are

bound to make good this amount of Rs.59,672/-.

MVR,J A.S.No.15 of 2009

30. The respondent has claimed interest at 24% p.a. whenever he

received any payments or which according to him are payable in this case.

Not only that rate of interest at 24% p.a. is on high side but also for the

reason that Ex.A1 itself clearly stipulated in clause 15.1.7 that the

contractor is not entitled for interest. This part of all the claims cannot be

permitted. On account of it, the first claim for payment of interest at 24%

p.a. on delayed payments, when he received Rs.1,51,280/- in three

different instalments, could not have been granted, by the trial Court.

31. In respect of the further security deposit withheld, when

payments were made by the appellants of Rs.14,350/- on account of the

termination of the contract, the respondent is entitled to receive the

same.

32. Claim No.3 for Rs.59,672/- for the reasons stated is found

proper and hence rightly the trial Court permitted the same.

33. Claim No.4 could not have been permitted for want of

evidence. There is absolutely no evidence from the appellants in this

context with justifying material. The claim of this nature cannot be

granted for mere asking without offering acceptable proof. Therefore, it

should be rejected.

34. Claim No.5 relates to anticipated profits and on account of the

anticipated loss. There is absolutely no justification for the respondent to

make this claim. He had created a situation by defaulting to perform his

part of the contract to a major extent. He could turn out only 0.19% of

the work that too when it related to a road work, for effecting repairs in a

rural setting, this inaction on the part of the respondent assumed greater MVR,J A.S.No.15 of 2009

significance. He cannot imagine getting such profit of 15%, even without

executing the work properly. He cannot take advantage of the lapse

committed by him for this purpose. Therefore, this claim should

necessarily be rejected.

35. Claim No.6 is in respect of refund of earnest deposit of

Rs.25,000/-. Though the appellants stated that in view of determination of

the contract as is stated in Ex.A7 letter followed by another

communication of Superintendent Engineer in Ex.B4 and Ex.B7 dated

25.02.2002, it cannot be a justifiable stand. EMD was the amount of the

respondent and there cannot be a unilateral appropriation of this amount

by the appellants forfeiting to the Government. Therefore, the respondent

is entitled for this amount.

36. In respect of Claim no.7, there is absolutely no material to hold

that the respondent is entitled for damages for the alleged unjust

determination of the contract.

37. Therefore, basing on the material, the respondent is entitled

for Rs.99,022/- only in this case.

38. The learned trial Judge, as seen from the tenor of the

judgment placed burden on the appellants to prove their stand. When it is

the respondent, who had approached the Court setting out a specific case

and claim, the burden in terms of Section 101 of the Evidence Act is on

him. The appellants cannot be called to prove something in negative.

Consideration of this matter by the learned trial Judge, is rather improper

and reasons offered in judgment under appeal are difficult to sustain or MVR,J A.S.No.15 of 2009

support. Therefore, interference is required to the extent stated above

while rejecting the part of the claim of the respondent.

39. Sri V. Tilak, learned counsel for the respondent tried to justify

the reasons assigned in the judgment of the trial Court and in this context

relied on Kailash Nath Associates Vs. Delhi Development

Authority1. It is a case of application of Section 74 of the Contract Act.

Nonetheless since EMD is directed to be refunded, contentions advanced

in this context need not have significance.

40. The learned counsel for the respondent also contended that

grounds have to be raised in the memorandum of appeal and that the

learned Government Pleader addressed arguments without raising such

grounds. Conservator of Forests Nizamabad Circle, Nizamabad and

Ors. vs. K. Sridhara Reddy2 is relied on by the learned counsel for the

respondent in this respect. When the appeal is presented in terms of

Section 96 CPC and when this Court is considering this appeal not only as

a last Court of fact but also in terms of law, it is open for the appellants to

canvass on all such issues relating to disputed facts and law. Therefore,

when a re-appraisal of the material is sought on behalf of the appellants,

the same cannot in any manner be injuncted to.

41. The respondent is entitled for interest on the amount arrived at

as stated above from the date of the decree till realisation at 9% p.a.

Thus, this point is held.

. (2015)4 SCC 136

. AIR 1968 AP 198 MVR,J A.S.No.15 of 2009

POINT No.2:-

42. In view of the findings on point no.1, this appeal is allowed in

part as indicated above.

43. In the result, the appeal is allowed in part, decreeing the suit

for Rs.99,022/- only with proportionate costs thereon throughout and with

future interest at 9% p.a. on Rs.99,022/- from the date of the decree of

the trial Court viz., 21.02.2008 till realisation against the appellants. Rest

of the suit claim is dismissed and without costs. If the amount withdrawn

by the respondent as per orders in A.S.M.P.No.2129 of 2009 dated

04.12.2009 is more than the decretal amount now granted, the appellants

are entitled for recovery of the same from him in the same proceedings by

executing this decree and for this purpose no separate suit is required to

be filed by the appellants against the respondents.

As a sequel, pending miscellaneous petitions, if any, stand closed.

Interim Orders, if any, stand vacated.

________________________ JUSTICE M.VENKATA RAMANA Dt:01.03.2021 RR MVR,J A.S.No.15 of 2009

HON'BLE SRI JUSTICE M.VENKATA RAMANA

A.S.No.15 of 2009

Dt:01.03.2021

RR