[Cites 3, Cited by 0]
Gujarat High Court
Executive Engineer vs Kataria Construction Co on 25 March, 2026
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Reserved On : 11/03/2026
Pronounced On : 25/03/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2274 of 2000
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J. C. DOSHI
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Approved for Reporting Yes No
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EXECUTIVE ENGINEER
Versus
KATARIA CONSTRUCTION CO.
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Appearance:
MR VISHRUT JANI for MR RC JANI(357) for the Appellant(s) No. 1
NOTICE SERVED for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
CAV JUDGMENT
1. Present first appeal is directed against the judgment and
decree dated 8th March 2000 passed by the learned Second
Joint Civil Judge (SD), Kachchh at Bhuj, whereby the learned
trial court has dismissed the suit of the plaintiff and allowed
the counter claim of the defendant and directed the plaintiff to
pay Rs. 6,52,050/- with 12% interest per annum from the date
of the suit till realization.
2. The factual aspects born out of the record are that the
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Gujarat Water Supply and Savage Board in capacity of the
plaintiff filed the Special Civil Suit No.210 of 1991 against
respondent Katira Construction Company Limited, to recover
the damage of Rs.17,28,855.65 Paise at the yearly interest of
18% on the ground and reason that the plaintiff board had
given a contract for construction of ESR and underground
sump at the cost of Rs.23,08,712.50 paisa to the defendant
with the condition to complete the construction work within
12 months from the date of receipt of the work order.
2.1 The defendant since did not complete the work of
construction within 12 months, but raised various disputes, he
has been issued legal notices on 3 rd March 1999, 18th July
1990 and 28th September 1990 respectively and the contract
in question was severed with the blockage of risk and cost of
the defendant. The remaining work thereafter was carried out
through other agency, and since the plaintiff board incurred
expenditure, it has asked the relief of damage from the
defendant.
2.2 On being served, the defendant appeared and filed
written statement-cum-counterclaim at Exh.28 raising the
dispute that the design for the work which was to be carried
out was sanctioned late by four months by the plaintiff, hard
rock cutting was not anticipated, thus hard rock cutting
consumed time. It is also disputed that when excavation work
was started by the defendant, the landowners and nearby
persons compelled the defendant to stop the work at the midst
of the contract work. The quantity of the reinforcement (steel)
was unilaterally increased by the plaintiff board. All these has
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been pleaded to claim that because of such approach of the
plaintiff, the defendant could not complete the work and
instead of paying the risk and cost, rather, is entitled to
damage occurred to him on various count and therefore, the
defendant filed counterclaim under Order 8 Rule 6A of the
Code of Civil Procedure, 1908 (in short "the Code") for
recovery of Rs. 24,79,000/-.
2.3 The learned trial court went into trial after framing the
issue and permitted both the parties to lead oral as well as
documentary evidence. At the end, the learned trial court
dismissed the suit of the plaintiff and partly allowed the
counterclaim of the defendant in tune of the aforesaid decree.
2.4 Being aggrieved by the judgment and decree to the
extent of partially allowing the counterclaim, the plaintiff
board filed the first appeal.
3. Before proceed to record the arguments of learned
advocate, Mr. Vishrut, Jani for learned, advocate Mr. RC Jani
for the plaintiff, let me observe that the plaintiff board has not
filed appeal challenging the impugned judgment and decree
insofar as it relates to dismissal of the suit of the plaintiff.
Simulteneously, it is to be noticed that though notice was
served to the defendant, he chose not to remain present and
to contest the appeal.
4. Learned advocate Mr. Jani, in his crisp submissions,
mainly refers to the counter claim filed by the defendant,
precisely, various claims ranging from claim Nos.1 to 9 vis-a-
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vis the impugned judgment and decree and submitted that to
establish various claims made in the counter claim, the
defendant has not filed any documentary evidence, which can
strengthen, base, and establish the case of the defendant to
recover the amount stated therein in different claims. He
would further submit that the claim No.1 was not accepted by
the learned trial Court and no appeal against rejection of
claim No.1 has been preferred by the defendant, therefore, to
that extent, the judgment and decree attained finality.
4.1 Insofar as other claims on record and allowed by the
learned trial Court is concerned, learned, advocate Mr. Jani
would submit that the claim No.2, whereby the learned trial
court has granted Rs. 3,23,000/- on the ground that the work
has been done, but not paid, is not proved by any evidence on
record. Claim No.3, in regards to cutting of hard rocks,
whereby the learned trial court granted Rs. 64,000/-, is totally
in teeth of conditions of tender at Exh.120, whereby it was
deemed that the contractor has inspected the site and
satisfied himself about the nature of whole work of existing
road waterway, and other means and cost talong side, which
is sufficient to believe that there cannot be any separate claim
for cutting the hard rock. Claim No.4 is in regards to passing
of water through pipelines, which is granted in tune of Rs.
9000/-, but it relates to the work contract, which was required
to be carried out and cannot be separately claimed, and so far
as claim No.5 granting the amount to the tune of Rs. 81,250/-
for the escalation in the price of material and remuneration of
the labour is concerned, there is no evidence worth piece of
paper produced by the defendant and yet, the learned trial
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court passed the award.
4.2 Insofar as claim No.6 for loss of profit of Rs.1 lakh and
granted by the learned trial court, is concerned, learned,
advocate, Mr. Jani, relied upon the judgment, in case of M/s
Unibros Vs. All India Radio, 2023 INSC 931 to submit that
for the claim related to loss of profit, the defendant was
required to lead the evidence and establish that he has
suffered profitability or opportunity to succeed and delay in
completion of the work was attributable only to the plaintiff.
4.3 Learned advocate Mr. Jani would further submit that
therefore, grant of claim or compensation in claim Nos.2 to 6
by the learned trial court is totally without evidence and
deserves to be quashed and set aside by interfering with the
findings of the learned trial Court in judgment of the
counterclaim.
4.4 As far as last claim is concerned, whereby learned trial
court granted amount of Rs.74,800/-, learned advocate Mr.
Jani would submit that it is a refund of security deposit.
4.5 In the aforesaid premises, learned advocate, Mr. Jani
would submit that the judgment of the learned trial court, as
far as partly allowing the counterclaim is concerned, it is
based upon the principle of no evidence, and thereby it
requires to be interfered with.
4.6. Mainly upon above submission, learned advocate Mr.
Jani would submit to allow the first appeal by quashing and
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setting aside the impugned judgment and award as far as it
relates to partly allowing the counter claim.
5. As observed here in above, the defendant though served,
did not remain present. The counter claim is defined under
Order 8 Rule 6A of the Code. It has an effect of the suit. It is
in nature of the suit and requires to be proved as like suit. The
provisions of the Evidence Act in regards to burden of proof,
etc. equally applies in counterclaim upon the defendant as far
as establishing the facts of the case. Having noted so, the
issue arose for the determination that (i) whether the learned
trial Court committed error much less error of understanding
the fact and law in partly allowing the counter claim? (ii)
whether the learner trial court partly allowed the
counterclaim on no evidence? (iii) What order?
6. It is apposite to refer counter claim of the defendant at
Exh.28/B. As far as counter claim No.1 granting Rs.3,52,000/-
on account of loss due to idle labour staff and machinery is
concerned, out of said claim, they are viz. Rs.96,000/- loss due
to idle labour and staff; Rs.2,24,000/- towards loss of labour
and cost of establishment from February 1990 till August
1990 and Rs.32,000/- on account of cost of establishment from
September, 1990 to December, 1990. The pleading in this
regard has been made vide claim No.2, which was made for
Rs.3,23,000/- on account of work done but not paid. It is
claimed by the defendant that 11% of total work amounting to
Rs.2,53,000/- was done by the defendant and his due and
payable amount with interest of Rs.70,000/- was claimed on
account of work done between March 1990 and July 1990.
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7. Claim No.3 is made for Rs.64,000/- on account of
excavation of hard rock, whereas, claim No.4 is made for
Rs.9000/- on account of pumping and bailing out water. Claim
No.5 of Rs.81,250/- is made for the loss due to increase in the
prices of labour and material suffered until July 1990
explaining that how the defendant suffered increase in the
price of labour and material, which consist of base concrete
foundation and bottom slab. Claim No.6 is made for
Rs.12,35,000/- claiming loss due to blockage of machine,
shuttering, scaffolding etc. including claim of Rs.6,37,500/- on
account of depreciation and Rs.2,30,800/- on account of loss
of profit.
8. No claim under the head of claim No.7 is preferred, but
claim No.8 is in regards to loss on the overhead, whereas,
claim No.9 is made for the purpose of reimbursement of
Rs.74,800/- of FDR., whereby, on FDR of Rs.55,000/-, interest
at the rate of 18% per annum being Rs.19,800/- was added to
claim, totalling amount of Rs.74,800/-. Claim No.10 is for Rs.3
lakh for loss of business elsewhere.
9. The learned trial Court went into trial after framing the
issues at Exh.30. Out of several issues framed by the learned
trial Court, issue Nos.5 & 6 are in regards to relief claimed in
counterclaim. They being relevant are extracted as under:-
"5. Whether defendant prove the counter claim?
6. Whether defendant is entitled for the interest, if
yes, than at what rate?"
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10. The issue No.5 is answered in affirmative and issue No.6
is answered with the finding that the defendant is entitled to
12% interest per annum. Apt to note that the learned trial
Court has framed these issues for counter claim submitted by
the defendant. Though, the defendant has raised as many as
10 claims in counter claim on various grounds, making various
averments in support of such counter claim, none of them
have been put to adversarial filter by the learned trial Court
by framing separate issues for each claim.
11. In background of the aforesaid aspect, it could be
relevant to refer findings of the learned trial Court qua issue
Nos.5 to 7, which have been decided simultaneously. Para 9
to 14 reads as under:-
"9. The defendant has presented his counter claim
vide Exh.28 for Rs.24,79,000/- under ten claims.
However, it will be interesting to take note of
defendants' letter dated 10.2.1990 at Exh. 128, letter
dated 5.2.1991 at Exh.138. By both these letters,
defendants have produced claims to the plaintiff.
There are also several letters on the record which
require to be taken to consideration. There are three
works which were to be undertaken by the Contractor
and there were two sites where these works to be
done viz at Chopadva and Gandhidham. If we go
throgh the papers, it transpires that Drawing and
Designs for chopadva work were finalised as per
letter dated 7.8.1989 vide Exh. 172. And as per
defendant letter dated 16.11.1989 at Exh. 155, it says
that excavation has been done for 15 to 20 days, but
work has been stopped by people and another letter
of the same day i.e 16.11.1989, Exh. 173 by the
defendant that due to hard rock work has become
slow, Now, therefore, nothing comes out from the
record that as to why the work was not started from
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7.8.1989 till the end of october.
10.. Similarly, for the work to be carried out at
Kandla, drawings were approved by the end of
November- 1989 vide Exh. 175. However, Exh. 174
says that there is some dispute about the land.
11.. Then, Ex. 177 is letter dated. 1.2.1990 by the
plaintiff says that as the work at Chopadva has not
been restrted, the measurement will be taken on
7.2.1990. thereafter the defendant has by his letter
dated 20.5.1990 at Exh. 159 has said that work is
stopped due to nonpayment of work done.
12.. The defendant in his deposition at Exh. 165 in
para 6 has admitted that after the drawings and
designs were approved, they had gone on site for
starting the work. As stated above the drawings and
designs for Chopadva work were approved in August-
1989 and for Gandhidham work in November-1989.
Therefore, it is difficult to come to the conclusion that
staff, establishment, machinery etc. were lying idle at
the site. At the same time, from the letters narrated
above it comes out that the defendant himself had
stopped the work, though for non-payment, but that
default cannot entitle him for compensation.
The plaintiff has submitted a letter at Exh. 137 and
alongwith that a statement showing the financial
position of the work done and to be done is also
submitted. Now, if we look to that statement, the
work done has been shown in all the three works, and
the defendant does not seem to have denied that
position directly. However, the defendant has been
done by him and in the claim, the figures thereof have
been shown.
14.. I have gone through the deposition of the
defondent wherein he has narrated the claims. After
careful consideration, I have come to conclusion that
the following claims are sustainable:-
Claim No.2 for Rs.3,23,000/-
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Claim No.3 for Rs. 64,000/-
Claim No.4 for Rs.9,000/-
Claim No.5 for Rs.81,250/-
Claim No.6 for Rs.1,00,000/-
Claim No.9 for Rs.74,800/-
Total 6,52,050/-
12. Plain reading of the reasons assigned by the learned trial
Court to answer issue Nos.5 and 6, this Court failed to find
the discussion on the evidence, if any, led by the defendant
before the learned trial Court to establish various claims
narrated herein above. Mere pleadings would be incapable to
result into decree. It is the proof of the pleadings, which is
required to secure the decree. The learned trial Court
referred to various letters exchanged between the parties
claiming and determining each of the claims. However, they
cannot be treated as reason or evidence to establish various
claims like claim for work done but not paid, claim for loss
due to idle labour and staff and machinaries, expenditure of
amount for excavation of hard rock or the amount for
pumping and bailing out water or loss due to increase in the
prices of the labour and material suffered or loss due to
blockage of machine, shuttering, scaffolding etc., loss of
depreciation, losses on overheads, loss of profit or loss of
business. All these claims based upon assertion of particular
facts needed to be proved by leading cogent and convincing
evidence. The defendant was required to prove that he has
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done some work, which is measured and yet, it has not been
paid.
13. Learned advocate Mr. Jani brought to the notice of this
Court Exh.147 and submit that the plaintiff board has
measured the work carried out by the defendant contractor
and prepared bill of Rs.8,45,550/-. The amount has been paid
and thereby, entire amount assessed for work done by the
contractor has been squared off. In total, Rs.9,38,680/- has
been paid to the plaintiff. Thus, it would be highly improper
for the defendant to claim that he has done the work and yet
he has not been paid, more particularly, when he has
accepted the amount of the bill prepared by the plaintiff board
without raising any right to raise the dispute.
14. For claim Nos.3 and 4, while granting the amount of
compensation, perhaps the learned trial Court failed to read
condition No.2 of the tender notice produced at Exh.120 (page
97 of first paper book). Condition No.2 reads as under:-
"2 Tenderer will be deemed to have inspected the site
and to have satisfied himself as to the nature of all
works, all existing roads, water-way and other means
of communication and access to and from the site and
work and the building that may be required for
temporary purpose in connecction with the
construction, completion and maintenance of the
works and must make his own enquiries as to work,
yard sites and depot, and dums and as to the
acquisition of such additional sites and areas as may
be necessary for temporary purpose for constructing,
completing and maintaining the works."
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15. Plain reading of aforesaid condition interpret claim
Nos.3 and 4. But, the learned trial Court in hurry of granting
claims raised by the defendant, without referring to the
tender executed between the parties, wrongly passed the
judgment.
16. Claim No.5 is in regards to loss due to increase in the
price of labour and material, but such claim is made without
producing any documentary evidence that how and in which
way, the defendant suffered loss due to increase in the price
of labour and material. The defendant, who failed to carry out
anything beyond 11% of the total work, cannot claim that he
has suffered loss due to increase in the price of labour and
material. It also includes escalation in the price of material
and remuneration of the labour which again covers under
clause (2) of the tender. Thus, such claim was not
maintainable.
17. The defendant in claim No.6 even failed to clarify that
which machines were blocked, shuttered or scaffolded. The
submission of the defendant is insufficient to grant damage.
This claim also includes claim of Rs.6,37,500/- on account of
depreciation. The defendant, who claims damage for
depreciation, could have placed on record books of account to
establish claim of depreciation, but, no such documentary
evidence are submitted by the defendant to claim the
compensation.
18. Loss of profit at 10% was claimed to Rs.2,32,000/-.
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19. In Unibros (supra), the Hon'ble Apex Court in para 19
observed as under:-
"19. The law, as it should stand thus, is that for
claims related to loss of profit, profitability or
opportunities to succeed, one would be required to
establish the following conditions: first, there was a
delay in the completion of the contract; second, such
delay is not attributable to the claimant; third, the
claimants status as an established contractor,
handling substantial projects; and fourth, credible
evidence to substantiate the claim of loss of
profitability. On perusal of the records, we are
satisfied that the fourth condition, namely, the
evidence to substantiate the claim of loss of
profitability remains unfulfilled in the present case."
20. None of the conditions stated by the Hon'ble Apex Court
in Unibros (supra) has been followed by the defendant to
claim loss of profit. Thus, the damages under the head of this
claim is found stale. Rest of the claims except claim No.9 i.e.
for reimbursement of the FDR are also general and vague and
even not supported by the evidence much less single evidence
on record.
21. As fa as claim No.9 is concerned, it is undisputed that
FDR of Rs.55,000/- has been submitted by the contractor
towards security of the work. The learned trial Court while
granting refund of the FDR was pleased to accept the
contention that the defendant has accepted 18% interest p.a.
on the FDR and granted Rs.74,800/- as damage or rather
refund of the FDR with further interest at the rate of 12% p.a..
So, the learned trial Court on a claim of refund of the FDR
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partly allowed interest at the rate of 18% p.a. and then,
granted 12% interest even on the interest amount and
thereby, has granted compounding interest. This is
something unusual, unprecedented and unheard of. But
since, the learned trial Court was in mood of granting
compensation towards suchclaims of the defendant, such
mistake is bound to be happened. The amount of refund on
FDR is required to be granted and to that extent, the
defendant's counterclaim was maintainable. Grant of FDR is
required to be granted with interest at 12% considering the
FDR as security deposit in commercial transaction.
22. In the premises of the aforesaid reasons, this Court finds
that the learned trial Court has committed serious and
menifest error in partly allowing the counterclaim and
allowing the decree to recover Rs.6,50,050/- with interest at
12% p.a. from the date of the suit (interest has to be started
from the date of the counterclaim). The learned trial Court
proceeded to partly allow the counterclaim on no evidence.
Just pleadings and some of exchange of letters between the
parties triggered the learned trial Court to grant the decree in
favour of the defendant while decreeing the counterclaim
partly. The complete erroneous approach taken by the
learned trial Court is viewed by this Court and accordingly,
present appeal deserves consideration.
23. In wake of aforesaid premises, present appeal is allowed.
The judgment and decree passed by the learned trial Court in
counterclaim is hereby modified to the extent that the
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defendant is entitled to amount of Rs.55,000/- being refund of
FDR along with interest at 12% p.a. from the date of the
counterclaim till realization. Rest of the decree passed by the
learned trial Court below counterclaim is hereby quashed and
set aside.
24. If any amount is deposited pursuant to the impugned
judgment and decree, except the aforesaid amount decreed by
this Court, shall be refunded to the plaintiff by the learned
trial Court upon proper verification and identification.
25. Decree sheet be prepared accordingly.
26. Registry is directed to return back the R & P, if any, to
the concerned Court forthwith.
(J. C. DOSHI,J)
SHEKHAR P. BARVE
