Gujarat High Court
Gujarat Water Supply And Sewerage Borad vs State Of Gujarat on 26 August, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 22 of 2007
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
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Approved for Reporting Yes No
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GUJARAT WATER SUPPLY AND SEWERAGE BORAD
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR KH BAXI(150) for the Appellant(s) No. 1
MS ROSHNI PATEL AGP for the Defendant(s) No. 1
MR BHARAT T RAO(697) for the Defendant(s) No. 2
RULE SERVED for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
Date : 26/08/2025
ORAL JUDGMENT
1. Present appeal is filed by the appellant - original defendant No.2
under Section 96 of the Civil Procedure Code against the judgment and
decree dated 24.10.2005 passed by the learned Principal Senior Civil Judge,
Civil Court, Gandhinagar (hereinafter referred to as "the trial Court") in
Special Civil Suit No.51 of 1997 (Old Special Civil Suit No. 96 of 1986)
whereby the trial Court has allowed the suit and directed the original
defendants to pay Rs.10,19,277/- along with the interest.
2. The original plaintiff - respondent No.2 herein is the company
incorporated under the provisions of the Indian Companies Act, 1913 and
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carrying manufacturing of Pre-Stressed Concrete Pipes and also Civil
Engineering Works relating to installation of pipe lines. The defendant No.2
is a statutory body established under the Gujarat Water Supply and
Sewerage Board Act, 1978. By the said Act the work, assets, liabilities and
benefits have been transferred from defendant No.1 to defendant No.2.
2.1 The defendant No.1 issued notice in August / September 1978, being
Tender Notice for Bhavnagar Water Supply Scheme Shetrunji Pipeline
Project for the purpose of providing, fabricating, laying and jointing of pre-
stressed concrete pipes more particularly specified in the notice inviting
tenders and the plaintiff submitted the offer for the aforesaid tender.
Considerable correspondence, thereafter, ensued between the plaintiffs and
the defendant No.1, by which various terms and conditions, as set out in the
tender documents of defendant No.1 as also letter of officers of the plaintiff,
were modified and mutually accepted. By a letter dated 27.12.1978, the
defendant No.1 issued a work order to the plaintiff for carrying out the
aforesaid project. The tender documents, the plaintiff's letter of offer dated
13.09.1978 and the subsequent correspondence culminating in the Works
Order dated 27.12.1978 collectively constitute the contract arrived at
between the parties and are preferred to as "the Contract Documents".
2.2 That defendant No.1 had committed considerable default or delay in
issue of the 1000 tons of cement such delay ranging from 1.1/2 months to
12 months after the issue of the work order, for which there was delay on
the part of the defendant No.1 in issuing the said contract, the plaintiff had
to incur additional costs by way of idle labour, interest and cost of raw
materials. The damages incurred by the plaintiff amounted to Rs.2,94,000/-
and, therefore, the plaintiff claimed the said amount.
2.3 That other outstanding dispute was in relation to the rate at which
defendant No.1 were required to pay to the plaintiff for the excavation work
under item'2 of Schedule "B". The total estimated excavation was 44,931
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cm, the total quantity of excavation done was 39,156.95 cm i.e. the total
excavation done was, in fact, less than the estimated quantity of excavation
and there was no question of excess excavation. However, the excavation
actually carried out was admittedly in harder strata of the soil and the same
was required to be done at greater depths. Consequently, the plaintiff were
required to be reimbursed for the same at higher rates as accepted by the
defendants. There was no question of any alteration in/or addition to the
original specifications, drawings, designs and instructions and, accordingly,
clause 14 had no application whatsoever for the purpose of determining the
rate applicable in respect of the excavation. The defendants, however,
wrongly applied Cl.14 and purported to pay the plaintiff at the reduced
rates prescribed in Clause 14. Applying the accepted rates for the actual
excavation work done, the plaintiff was eligible for payment of
Rs.6,45,880.82 paise. The defendant, however, wrongly applied Clause 14
and paid the plaintiff at rate lesser than the agreed rate. Consequently, the
defendants have paid to the plaintiff an amount of Rs 3,61,660.37 paise,
leaving a balance outstanding of Rs.2,84,220.45 paise. A statement giving
the factual date of the estimated quantity of excavation in different strata
and at different depths, the actual quantity of work done the rate quoted by
the defendants and the correct lower rate sought to be applied by the
defendants. The defendants did not pay the aforesaid balance amount to
the plaintiffs, inspite of repeated reminders by the plaintiff, the plaintiff by
its advocate's letter dated 25.03.1986 called upon the defendants to pay
the aforesaid amount together with interest thereon amounting to
Rs.11,94,805.65. The defendants have not paid any amount in respect
thereof. From time to time, the plaintiffs raised various bills on the
defendants in accordance with the contract. The plaintiffs debited the
amount of the defendants maintained in the books of accounts of the
plaintiffs with the amounts of the bill. The defendants made various part
payments. The plaintiffs credited the account of the plaintiffs with the
amounts of the bill. The defendants made various part payments. The
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plaintiffs credited the account of the defendants with the amounts paid by
the defendants. The last of such payments was made by the defendants on
3.5.1983. There is now due and payable by the defendants to the plaintiffs,
as amount of Rs.11,94,805.65. The plaintiffs are also entitled to further
interest on the amount of Rs.11,94,805.65 at the rate of 24% p.a. from the
date of the suit till payment and realization. By the reply dated 16.04.1986
the defendant No.2 inter-alia denied their liability to pay the sum of
Rs.11,94,805.65 to the plaintiffs and raised false contentions therein.
2.4 Under the aforesaid cause of action present plaintiff filed this suit and
has prayed that the defendants be ordered and decreed to pay to the
plaintiff an amount of Rs.11,94,805.65 together with further interest at the
rate of 24% p.a. from the date of the suit till payment with cost and any
other relief that this court may deem fit and proper in the circumstances of
the case.
2.5 The trial Court has, after considering the submissions of both the
sides and evidence on record, allowed the suit and directed the defendants
to pay decreetal amount of Rs.10,19,277/- along with interest.
3. Being aggrieved, the appellant - original defendant No.2 has
preferred this appeal.
4. Heard Mr.K. H. Baxi, learned counsel for the appellant, Ms.Roshni
Patel, learned Assistant Government Pleader for respondent No.1 and
Mr.Bharat Rao, learned counsel for respondent No.2 at length. Perused the
material availabe on record.
5. Mr.K. H. Baxi, learned counsel for the appellant has submitted the
same facts which are narrated in the memo of appeal and has submitted
that the judgment and decree passed by the trial Court is contrary to the
facts and the circumstances of the case and is based on inference not
warranted for the facts of the case and presumption not permitted by law
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and also based on misreading the evidence. He has submitted that the suit
is barred by law of limitation and there is no cause of action to file the suit
and the agreement of 1978 and 1979 were executed between and
defendant No.1. He has submitted that the trial Court has committed an
error in rejecting the contention of respondent No.2 is not proper and legal
without giving any cogent reasons.
5.1 Mr.Baxi, learned counsel has submitted that the work order was
issued on 27.12.1978 for providing fabricating, laying and jointing of pre-
stressed concrete pipe for Bhavnagar Water Supply Scheme based on
Shetrunji pipe line project. He has submitted that the date for completion of
work was 11.05.1979 but the same was completed on 25.02.1981 and the
final bill was prepared on 03.05.1983 and many disputes and differences
were arisen between the parties which came to be referred to the
arbitration of the Superintending Engineer under clause 30 of the
agreement, however, two disputes were held to be not arbitral under clause
30 and therefore, the suit was filed for the same. He has submitted that the
claim of loss of Rs.2,94,000/- on account of idle establishment charges and
unpaid reimbursement of higher rate of excavation to the tune of
Rs.2,84,220.45 paise respectively is recoverable. He has also submitted
that the respondent's claim for loss of establishment charges, is on alleged
delay in supplying pipes, which is not just in view of statement Exhibit 79
showing the supply schedule with dates, which makes it clear that there is
no delay as alleged. He has further submitted that the plaintiff - respondent
herein has examined sole witness at Exhibit 48, who in his cross
examination, admitted that he has no personal knowledge and also
admitted that there is no other evidence except Exhibit 58.
5.2 Mr.Baxi, learned counsel has mainly emphasized upon clause 15 and
clause 15(A) of the tender document at Exhibit 70 and urged that clause 14
provides that altercations in specifications and designs not to invalidate
contract and rate for works not entered in estimate or schedule or rates of
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the division and, therefore, it cannot be termed as an additional work as
prayed by the respondent and hence the respondent is not entitled for any
excess amount or escalation in the price inactive and thus the trial Court
has without considering the said aspects, passed the impugned judgment
and decree in favour of the respondent, which is unjust, illegal and
arbitrary. He has further emphasized upon clause 15(A) of the tender
document and submitted that clause 15(A) provides that the contractor
shall not be entitled to claim any compensation from Government for the
loss suffered by him on account of delay by Government in the supply of
materials entered in Schedule A where such delay is caused by (I)
difficulties relating to the supply of railway wagons, (ii) Force manicure , (iii)
Act of God and (iv) Act of country enemies or any other reasonable cause
beyond the control of Government. He has submitted that since the cement
was control item and, therefore, due to some reason, it was not provided in
time, but the respondent was agreed and signed the contract, he cannot
claim the damages due to delay in supplying the cement and raw-material
and, therefore, the trial Court has not properly appreciated the said aspects
in its true and proper spirit and in interpreting the terms of the contract.
Mr.Baxi, learned counsel has submitted that the present appeal deserves to
be allowed and the impugned judgment and decree deserves to be quashed
and set aside.
6. Mr.Bharat Rao, learned counsel for the respondent No.2 has
submitted that the appellant issued tender in the year 1978 for providing,
fabricating, laying and jointing prestressed concrete pipes Shetrunji Pipeline
Project and respondent no.2 submitted offer on 13.9.1978. He has
submitted that respondent No.2 has entered into correspondence with the
Government after submission of the tender and the offer of the respondent
No.2 was modified and accepted on 27.12.1978 and issued work order to
respondent No.2 for carrying out the said project. He has submitted that the
Government failed to handover the site in time and the respondent No.2
made number of correspondences for handing over the site in question and
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supplying of the cement and other items. He has submitted that the work
was completed on 25.02.1981 and pipeline has been commissioned in
February, 1981 and the plaintiff has completed part of the contract in spite
of number of defaults on the part of defendant no.1 more particularly in
supplying cement which was required to be supplied by appellant herein.
He has further submitted that number of disputes and differences have
been arisen and various payments required to be made by defendant to the
plaintiff and hence the plaintiff referred the dispute to the Superintending
Engineer as per clause 32 and most of the issues arising between plaintiff
and defendant were settled and the Superintending Engineer wrote a letter
dated 08.08.1985 informing that two disputes were beyond the scope of
clause 30. He has submitted that respondent No.2 raised bill of
Rs.2,94,000/- towards additional cost incurred by way of idle labour, interest
and cost of raw materials and excavation work of Rs.6,45,880/- out of which
defendant did not pay Rs.2,84,220.45 paise and, therefore, legal notice
came to be issued by plaintiff on 25.03.1986 calling upon the defendants to
pay Rs. 11,94,805.65 paise with interest @ 24% p.a. and payment of final
bill was made by GWSSB on 03.05.1983. He has submitted that respondent
No.2 himself examined at Exhibit 48 and appellant has examined one officer
Shri Lavjibhai Shakabhai Kanari at Exhibit 89 and also cross-examined him,
who admitted that he has received a letter from the plaintiff but it was not
replied and he also admitted that plaintiff has accepted payment under
protest. He has submitted that the said witness has also admitted that there
was meeting in August, 1984 between plaintiff and Chief Engineer wherein
it was decided that plaintiff should be paid amount as per accounts and
defendant also admitted in the cross-examination that plaintiff has carried
out the work with the help of sub-contractor and Board has never objected
for the same and Board has received letter Exhibit 70 and as per the
schedule, the material is to be issued by the Board. Mr.Rao, learned counsel
has submitted that the trial Court has decided the issues in favour of the
plaintiff and appreciated the oral as well as documentary evidence and for
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the claim of Rs.2,94,000/- bill dated 15.05.1979, on account of idle of labour
due to failure on the part of defendant to supply cement as per Schedule A,
the factory remained closed due to non-supply of cement. Mr.Rao, learned
counsel has referred Schedule A and B and submitted that the Schedule-A
provides for supply of material wherein defendant Board has taken
responsibility to supply cement and at that time cement was controlled item
and plaintiff needed cement for carrying out work of pre-stressed concrete
pipes, but the same could not be supplied in time. Mr.Rao, learned counsel
has referred the letter at Exhibit 77 wherein certain conditions were
mentioned out of which condition no.1 reads as under:
"The Portland cement required for the manufacture of pipe say about 1000
tons will be supplied by the department, FOR Baroda. The cost of the same
shall have to be paid by the contractor etc. etc. The cement will be supplied
at the rate provided in the tender."
6.1 Mr.Rao, learned counsel has submitted that the delay occurred in
completing the work which is attributable to the Government and the letter
at Exhibit 119 i.e. internal correspondence of defendant regarding
extension of time limit, which refers the reason for delay and admits that
defendant could not supply cement in time, valves were supplied late,
quantity of excavation in soft and hard rock has been executed over the
estimated quantity, considerable time was lost in obtaining permission of
private field owners or in acquisition proceedings. He has submitted that
the said letter was written by Chief Engineer to Superintending Engineer
which shows that the plaintiff was not in fault and the delay occurred due to
defendant's act of omission. He has submitted at the letter at Exhibit 120
written by defendant to the Circle Engineer where the defendant has
referred clause 14 and wrongly refused claim No.2 and claim of the plaintiff
for Rs.2,94,000/- has been supported by the documentary evidence. He has
submitted that claim No.2, the plaintiff has referred to and relied upon the
correspondence at Exhibit 61, 62, 63, 64, 66, 80 and 120. He has submitted
that Item No.2 which is shown in Schedule-B reads as under:
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"Item No.2
Excavation for pipe trenches including all safety provisions using site rails
and stacking the staff as directed by to lead of 30 Mt. and clearing the site
etc. complete."
6.2 Mr.Rao, learned counsel has submitted that there is no dispute with
regard to the quantity of item No.2 Sub-Item No.2C(i), (ii) have increased
from estimated quantity to actual quantity for more than 30% and Sub-Item
No.2C D(i), (ii) and (iii) have also increased for more than 30% of estimated
quantity to actual quantity and Item No.7 also increased from estimated
quantity of 450 Cum to 863.946 Cum more than 50%. He has submitted
that the defendant has wrongly applied clause 14 which clears from the
letter dated 20.07.1984 at Exhibit 140 and the Department has admitted
that there is no alteration in the nature of work. He has submitted that
there being no alteration in the nature of work, the excess in the quantity of
Sub-Item No.2 has occurred and the same is because the department has
not estimated the quantities correctly. Clause-14 shall apply where
alterations occur where alterations, additions to the original specifications
and drawings are given by the engineer-in-charge.
6.3 Mr.Rao, leaned counsel has submitted that the department has paid
less amount / rate, as per column No.6 at Exhibit 57 in respect of said items
and for item No.7 pertaining to provide CM 100 for pipeline with metal tap
from work during consolidation etc. He has submitted that the excess is
more than 30% as worked out mentioned in Exhibit 57, however, the
department has paid Rs.159.90 as against tender rate of Rs.325/- and
hence, it is clear that the department has paid less amount than the tender.
He has submitted that the issue of limitation has been held in favour of
plaintiff and the final bill was released on 28.05.1984 and statutory notice
was issued on 25.03.1986 and the suit was filed on 10.5.1986 and,
therefore, the suit is filed within the period of limitation. Mr.Rao, learned
counsel has submitted that the appeal being meritless deserves to be
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dismissed.
6.4 In support of his submissions, Mr.Rao, learned counsel has relied
upon the following decisions
(1) State Of Gujarat Vs. Shirinbai Pirojshah Wadia, 1976 (17) GLR 638;
(2) National Fertilizers Limited Vs. Puran Chand Nangia, (2000) 8 SCC
343;
(3) Chief Secretary, State Of Gujarat Vs. Kothari And Associates, 2003
(3) GLR 2177.
7. On perusal of the documents produced along with the appeal,
record and proceedings and on scrutiny of the evidence, the issues involve
in the appeal are that (i) whether the trial Court has committed any error in
awarding damages in favour of the respondent - plaintiff, (ii) whether the
trial Court has committed any error in interpreting clause 14 and 15(A) of
the contract as contended by the appellant, (iii) whether the respondent -
plaintiff is entitled to claim any damages in view of clause 14 and 15, (iv)
whether the trial Court has awarded the amount very excessive towards
the damages as prayed for by the respondent - plaintiff and (v) whether
there is any illegality or infirmity in the judgment and decree passed by the
trial Court.
8. It is worthwhile to refer the evidence of Arvindbhai Haribhai Patel at
Exhibit 48, who has deposed that he is conversant with the suit affairs,
tender was accepted by the defendant and work order dated 27.12.1978
total work Rs.79,96,610/-, Rs.90,000/- security deposit kept with defendant,
defendant failed to give possession, therefore, he could not completed the
work as per work order and as per contract, therefore, necessary time limit
was extended but work was completed on 25.02.1981, whatever delay is
from defendant's side, running bill prepared and payment made. As per
contract they have to complete the Schedule "B" item. Exh.70 tender
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defendant No.2 may have to supply the material, cement should be
provided by the defendant No.2 171 Μ.Tons, price is Rs.425/-, required
cement was 1400 tonnes. Exh.72 to 78 letters, written by the defendant
1400 M.tones material was supplied in time, work should be completed
within 4.1/2 months. Exh.79 (mark 3/3) written by him, cement supplied by
defendant was not in time, but delay Exh.58 letter attached-with Schedule-
B, without material labourers are sitting idle, after knowing the same
defendant failed to comply the payment, Exh.79 & 80 (mark 3/3 & 4)
narrated the work, defendant failed to pay up the claim amount. As per
mark 47/14 due to fault of defendant necessary time was extended in
writing by the defendant which is at Exh.71 and mentioned in final bill, final
bill was accepted with protest dated 3/5/1987, mark 47/32 (Exh.81) mark
47/8 actual work 863.946 cm. and defendant show the price less than the
contract and tender, therefore, plaintiff is entitled Rs.46,363=20ps, and
claim No.2 Rs.84,220.45ps. Mark 83/1 (Exh.84) defendant failed to provide
the cement, Exh.84 (mark 83/2) telegram, after so many times defendant
completed the demand, mark 83/3 (Exh.86) and mark 83/4 (Exh.87)
statutory notice. This chief-examination para-1 to 12 is crossed by Shri
T.H.Pandya in paragraph 14 to 19, for the purpose of discussion and the
Court has accepted the evidence Arvind Haribhai Patel.
9. It is also refer to the evidence of Lavjibhai Chakubhai Kanari at
Exhibit 89, who in examination-in-chief para 1 to 3 stated that Exhibit 70
page No.213 to 217 final agreement, as per tender plaintiff obtained the
work delay is on the part of the plaintiff due to factory was closed,
Executive Engineer has to take the work and as per Exh.58 bill was
produced and no damage caused to the plaintiff, Clause 14 variation as per
Exhibit 80 variation report prepared, therefore, plaintiff is not entitled any
amount of claim and defendant refuse claim of the plaintiff and, therefore,
plaintiff is not entitled any relief. This examination para-1 to 3 is challenged
by the plaintiff's learned advocate Shri G.T.Dayani in para-4 to 8, for the
purpose of discussion I accept the evidence of the defendant.
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10. With regard to the aforesaid issues, let first dwell into the oral
evidence of the plaintiff at Exhibit 48. It was specifically averred that
defendant No.2 agreed to supply the cement of 171 metric ton and per
metric ton, the price was fixed at Rs.425/-. It is an admitted fact that the
defendants have not supplied the raw-material for preparing the cement
pipe in time. The defendants have not complied with the terms and
conditions of the contract and now under the shelter of clause 15 and 15(A),
he denied to pay any damages is completely out of the scope of the
contract. In fact, there was sufficient material produced before the trial
Court stating that due to nonavailability of the raw-material i.e. cement, on
different dates they have received quota of cement. The plaintiff has
informed the defendant - board vide letter dated 15.05.1979 and for that,
the plaintiff has raised bill at Exhibit 58 and because of non-supply of the
raw-material, the plaintiff has to pay idle wages to the labourers. Even the
price which is mentioned in the tender under the grab of clause 15
defendant - board has paid very less amount to the plaintiff which clearly
shows from the document and, therefore, after considering the said aspect
and after cross-examination, nothing illicit material culled out from the
cross-examination of the plaintiff. Thus, the trial Court, after appreciating
different document as mentioned, has rightly passed the impugned
judgment and decree in favour of the plaintiff. From the evidence of
Lavjibhai Chakubhai Kanari at Exhibit 89, it appears that in his examination-
in-chief, he has emphasized upon clause 14 of the tender document that
they have right to change any design and specification and since the
plaintiff agreed to the same, he agreed that though the cement was control
item, therefore, there was delay in providing the material. He has admitted
in his cross-examination that bill at Exhibit 58 issued by the plaintiff, but the
defendants have not given any reply or response thereof. It is an admitted
fact that the final bill was accepted with objection subject to his right. Even
in August 1984, the Chief Engineer has held meeting and in that meeting it
was decided that whatever amount which was due and payable to the
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plaintiff, the same was to be returned to the plaintiff. It is also an admitted
fact that modification in the specifications in design was not intimated and
informed to the plaintiff. This witness has stated that he was relying upon
the Government Resolution but it was not made a part of the agreement
and reiterated that since there was clearly mentioned in clause 14,
therefore, the plaintiff was not entitled for any additional amount as prayed
for in the plaint. So, in view of admission on the part of the defendants, the
trial Court has rightly passed the impugned judgment and decree in
interpreting the document and considering the issue involved in the case
and the trial Court has, after appreciating clause 14 and 15(A) of the
document at Exhibit 70, rightly passed the judgment and decree in favour
of the plaintiff. It is an admitted fact that the work order was issued on
27.12.1978 and till 22.02.1979 the plaintiff has not received cement and
thus there was delay on the part of the defendants. In view of the evidence
of defendant No.1, though there was understanding that they have to
supply the raw-material i.e. cement for manufacturing the pipe has agreed
as per the agreement and though it was informed to the defendants, but
the defendants have not taken any care. The plaintiff has communicated by
various letters and intimated to the defendants with regard to non-supply of
the cement, payment towards idle wages which are received and admitted
by the defendants. Even as per the agreement also, the defendants have
paid a very less amount though it was agreed under the guise of clause 14
of the agreement, they cannot be permitted to commit wrong and not
permitted to take any benefit under the shelter of clause 14 of the
agreement. Thus, after considering the list of the documents referred in
para-6 and after interpreting the clause of documents at Exhibit 70 ad 71,
the trial Court has rightly passed the judgment and decree in favour of the
plaintiff. The trial Court has not committed any infirmity or illegality in
passing the judgment and decree. It is well settled that the breach of
conditions stipulated in the contract by either party is entitled for claim for
damages. In the present case, the breach is committed on the part of the
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defendants in not supplying the raw-material in time due to which the
plaintiff has to incur expenditure to pay idle wages to the labourer at the
site. Considering the decision of the Hon'ble Supreme Court in the case of
Maula Bux Vs. Union of India, AIR 1970 SC 1955, as referred by the
Division Bench of this Court in First Appeal No. 2972 of 2001 with First
Appeal No. 1635 of 2001 more particularly para - 7, 9 and 11 has
considered the said aspects, I am of the opinion that the present appeal
being meritless deserves to be dismissed and no interference is required to
be called for in the appeal.
11. In the result, the appeal is dismissed. The appellant is directed to
deposit the decretal amount before the trial Court along with the interest
within eight weeks from the date of receipt of the copy of this order. On
depositing the amount, the same shall be disbursed in favour of the plaintiff
after following due procedure and verifying the bank details of the plaintiff
through RTGS / NEFT. There shall be no order as to costs. Registry is
directed to transmit back the record and proceedings to the concerned trial
Court forthwith.
Pending civil application/s, if any, shall stands disposed of
accordingly.
(HEMANT M. PRACHCHHAK,J)
V.R. PANCHAL
