Karnataka High Court
Karnataka Housing Board vs National India Contractor And ... on 7 November, 2024
Author: S.G.Pandit
Bench: S.G.Pandit
-1-
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 07TH DAY OF NOVEMBER, 2024
PRESENT
THE HON'BLE MR. JUSTICE S.G.PANDIT
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
R.F.A. No.1325 OF 2008 (MON)
BETWEEN
KARNATAKA HOUSING BOARD
A STATUTORY BODY CONSTITUTED
UNDER THE KARNATAKA
HOUSING BOARD ACT HAVING
ITS OFFICE AT CAUVERY BHAVAN,
K.G.ROAD, BANGALORE-560 009
...APPELLANT
(BY SRI RAJESH MAHALE, SENIOR ADVOCATE A/W
SMT SUMANGALA GACHCHINAMATH, ADVOCATE FOR
SRI GURUDEV I GACHCHINAMATH, ADVOCATE)
AND
NATIONAL INDIA CONTRACTOR
AND ENGINEERS
A REGD. PARTNERSHIP FIRM HAVING
ITS HEAD OFFICE AT KATRI HOUSE,
628, 13TH ROAD, KHAR (WEST)
MUMBAI-400 052,
REPTD. BY ITS EXECUTIVE PARTNER
MOHAMED AHMED USMAN GANI KHATRI
...RESPONDENT
(BY SRI. ARIF BHATI, ADVOCATE)
-2-
THIS RFA IS FILED U/S 96 OF THE CPC AGAINST THE
JUDGEMENT AND DECREE DT.30.6.2008 PASSED IN
OS.NO.11343/1996 ON THE FILE OF THE XXVI ADDL. CITY CIVIL &
SESSIONS JUDGE, MAYOHALL UNIT, BANGALORE, DECREEING THE
SUIT FOR RECOVERY OF MONEY AND ETC.
THIS APPEAL HAVING BEEN RESERVED FOR JUDGMENT ON
14.08.2024, COMING ON FOR PRONOUNCEMENT THIS DAY,
POONACHA J, DELIVERED THE FOLLOWING:
CORAM: HON'BLE MR JUSTICE S.G.PANDIT
and
HON'BLE MR JUSTICE C.M. POONACHA
CAV JUDGMENT
(PER: HON'BLE MR JUSTICE C.M. POONACHA)
The present appeal is filed by the defendant under
Section 96 of the Code of Civil Procedure, 19081 challenging
the judgment and decree dated 30.6.2008 passed in OS
No.11343/1996 by the XXVI Additional City Civil and Sessions
Judge, Mayo Hall Unit, Bangalore2, whereunder the suit for
recovery of money filed by the respondent/plaintiff has been
decreed by the Trial Court directing the appellant/defendant to
pay a sum of `81,46,758.20 together with interest at 4% pa.,
from the date of the suit till realization with costs.
2. Parties will be referred to as per their rank before
the Trial Court for the sake of convenience.
Hereinafter referred to as 'CPC'
Hereinafter referred to as the 'Trial Court'
3. It is the case of the plaintiff that pursuant to a
paper publication made by the defendant inviting tenders for
construction of 909 tenements in Bengaluru city for slum
dwellers, the plaintiff participated in the said tender. That the
plaintiff was invited by the defendant for negotiations and the
agreement arrived at between the parties in the negotiations
was confirmed by letter of the plaintiff dated 28.10.1991,
whereunder the following terms were agreed:
a. To accept/execute and complete the works of
construction of 909 tenements at 15% above S.R
(Schedule of Rates) 1990-91. Cement and steel
was to be supplied at the agreed issue rate;
b. Sanction of 15% mobilisation advance of the total
work value against bank guarantee without
interest;
c. To release 50% of the mobilisation advance along
with the work order;
d. To recover mobilisation advance in 10 installments
commencing from 3rd running bill;
e. To issue individual work order as and when the
clear site is handed over to the plaintiff;
f. To award the works before the SR of 1991-92 is
released;
g. Offer for entire project of 909 houses.
3.01. It is the further case of the plaintiff that the
defendant informed the plaintiff that construction of the
tenements behind Gajanana Talkies could not be taken up since
the site was under dispute and indicated that construction of
tenements at Appa Reddy Palya numbering 356 and
construction of 462 tenements at Jeevanahalli (Doddagunte)
was to be taken up immediately. Accordingly, the plaintiff
commenced construction work of 462 out of promised 707
tenements at Jeevanahalli on 20.12.1991 even without the
work order. It is the further case of the plaintiff that between
18.12.1991 and 2.11.1992 the bills were prepared and moneys
were paid. That the construction of 770 units at Jeevanahalli
over a total sital area of 3.876 acres was segregated as
follows:
a. In Sy.No.150/1 - 308 units
b. In Sy.Nos.151 and 152 - 274 units
c. In Sy.No.158 - 188 units
3.02. That only construction of 462 tenements at
Jeevanahalli was entrusted and the sital area for construction of
378 units was released. It is the further case of the plaintiff
that the sital area was not made available at one time and that
they were made available as follows:
a. in Sy.No.158, site area for 180 units was handed over
on 14.1.1992 and markings were made on the same day;
b. in Sy.No.158, site area for 4 units was handed over on
14.1.1992 and markings were commenced on 12.3.1992;
c. in Sy.No.152, site area for 58 units was handed over on
14.1.1992 and markings were made on the same day;
d. in Sy.No.151, site area for 106 units was handed over
on 14.1.1992 and markings were made on the same day;
e. in Sy.No.151, site area for 24 units was handed over on
25.5.1995 and markings were made on the same day;
f. in Sy.No.151, site area for 6 units was handed over on
15.12.1995 and markings were made on the same day.
3.03. It is the further case of the plaintiff that 75% of the
site area was handed over to it only in the year 1995. That in
terms of clause (3), date of commencement is when 75% of
the site is given to the contractor. Hence, the period for
completion of 18 months is to be construed from 15.12.1995
and that the plaintiff had time till June 1997 to complete the
work. That the plaintiff entered upon the work for ultimate
construction and completion of 770 units at Jeevanahalli
without any formalities being completed and without work
order issued by the defendant. That the work was commenced
and being carried out only on adhoc instructions issued by the
officials of the defendant present on the site from time to time.
3.04. That the plaintiff had furnished on 26.12.1991 to
the defendant a bank guarantee in a sum of `17.50 lakhs
taking the contract value at `2,13,00,000/-. It is the further
case of the plaintiff that it had faced variety of problems
commencing from marking of sital area, digging of trenches,
procurement of water etc., which although was brought to the
notice of the defendant, and was reacted with lethargy and
delay. That the work progressed in a haphazard manner for
some time solely on account of the fact that the defendant was
not in a position to furnish detailed drawings and instructions
and provide materials in adequate quantities on time, from
time to time. That the officers of the defendant on the site
frequently changed instructions, thus hindering the progress of
the work and requiring the plaintiff to do additional work.
3.05. That the parties entered into an agreement on
12.3.1992 and the defendant issued work order on the same
day. The construction as agreed to be carried out are:
a. Work of construction of 770 units at Doddagunte -
Jeevanahalli in Sy.Nos.150/1, 151, 152 and 158 was entrusted
at 15% over the estimated rates on SR 1990-91;
b. The total value of the contract was `1,88,59,825/-;
c. The period of completion was fixed at 18 months from the
date of handing over to the plaintiff at not less than 75% of
the work site area comprising in a block after the issue of the
work order;
d. The plaintiff had paid a mobilization advance at 15% of the
value of the work order without interest;
e. Mobilization advance was to be recovered in 10 equal
instalments starting from 3rd RA bill with intent that the entire
mobilization advance is recovered in 10 instalments or before
75% of the work is completed, whichever is earlier;
f. The defendant would withhold a sum of `12,04,500/- as
further security deposit from the bills;
g. Steel was to be supplied free of cost and cement at the rate
of `86/- per bag with supply of the steel and cement at the
spot of construction.
h. In the work order the defendant undertook to sent to the
plaintiff Schedule -B being the details of the quantities of
works, the rates per unit etc.
3.06. It is the further case of the plaintiff that effective
from 1.1.1992 the government directed that SR under 1990-
91 be increased by 10% as per the government circular
dated 12.3.1992.
3.07. It is the further case of the plaintiff that pursuant to
issuing the work order on 12.03.1992 and fixing the
valuation of the contract at `1,88,59,825/-, the defendant
called upon the plaintiff to modify the existing bank
guarantee given by it from `17.5/- lakhs to `16.00 lakhs for
the purpose of release of mobilization advance. That the
project requirement of cement and steel was never
provided.
3.08. It is the specific case of the plaintiff that right from
the first day the defendant has defaulted in performing its
obligations, which included, not giving drawings, schedule
of progress not being furnished and specifications being
changed from time to time. That despite the tender for
construction of 909 units being accepted, the plaintiff was
permitted to work only in respect of 348 units and that too
in an area not covered by the original tender. That despite
the failure of the defendant, the plaintiff fulfilled a
substantial portion of its obligation under the contract by
February 1993.
3.09. With regard to the payment of bills, it is the case
of the plaintiff that there was a continued default by the
defendant with regard to same, inasmuch as, as per
PWG/65, clause 7(a), the plaintiff was to submit bills by 15th
of each month for all items of work executed in the previous
month. That the defendant was unable to furnish the bill of
quantities with the unit rates. That the parties had orally
agreed which was confirmed by the conduct of the parties
that the plaintiff would raise bills every month. Accordingly,
between 20.12.1991 and May 1996, 14 bills were prepared
by the Assistant Executive Engineer and passed by the
Executive Engineer, which shows the progress of work even
as assessed by the defendant. That the defendant was not
accurate in making measurements and even this has been
objected to. That in the bills, the defendant has been not
making payments for items of work completed leaving a lot
of payment to be made. That after 31.08.1995, bills were
prepared by the Assistant Engineer, but for some reason
they were never taken on record and consequently, the
plaintiff itself prepared bill Nos.15 and 16 in the prescribed
form and sent the same to the defendant by registered post.
However, the said bills have not been scrutinised by the
defendant and no notice has been issued as contemplated
under clause 7(b) of PWG/65 before taking measurements.
Hence, it is deemed that the said bill Nos.15 and 16 are
correct.
3.10. It is the further case of the plaintiff that the
value of the project being more than `1.00 lakh, the
progress of work ought to have been reviewed by the
Executive Engineer along with the plaintiff every fortnight
and such review should have indicated the delay in progress
was due to non supply of materials, drawings, etc. However,
no such reviews were ever done. That the delay in work was
not due to any lapse on the part of the plaintiff.
3.11. It is the case of the plaintiff that as on
31.8.1995, even according to the defendant, the plaintiff
had completed the tendered items as well as the extra items
and they were reflected in the bills. Thereafter, the work
was done by the plaintiff till April 1996. That the plaintiff
had submitted bills of an aggregate value of `1,15,67,934/-
and it received a payment of `91,25,635/- leaving a balance
of `24,42,300/-. That the bank guarantee of a value of
`9.00 lakhs was invoked by the defendant in May 1996.
That the plaintiff had worked up to April 1996. That the
plaintiff received a letter dated 5/11.6.1996, whereunder the
defendant rescinded the work contract. It is further stated
that the defendant called upon the plaintiff to come for joint
measurements on 26.7.1996. However, the plaintiff sought
for fixing of a date after 26.7.1996. Hence, no joint
measurement as required was taken.
3.12. Various notices were exchanged between the
parties, consequent to which the plaintiff filed the suit for
recovery of `81,46,758.20 together with interest at 18%
p.a. The claim of the plaintiff made in the suit was under
the following heads:
a. On account of loss of profits
and loss of overheads `12,25,888/-
b. On account of excess EMSD
collected and interest thereon ` 1,74,420/-
c. On account of transportation
costs for cement and steel. ` 56,035/-
d. Service charges on (c) at 12% ` 6,724.20
e. On account of mobilization and
Special reliefs. ` 2,21,215/-
f. Damages on account of loss
during the period between
21.12.91 to 11.7.96 of `94,67,578/-
restricted to `14,00,000/-
g. On account of 10% adhoc
increase in SR 90-91
effective 1.1.92 `26,20,177/-
h. Value of R.A. Bill No.15 `21,16,285/-
i. Value of RA bill No.16 __` 3,26,014/-__
Total ` 81,46,758.20/-
4. The defendant entered appearance and filed written
statement denying the case of the plaintiff. However, it is
admitted by the defendant that the plaintiff was the successful
tenderer for construction of 909 tenements for rehabilitation of
slum dwellers in 7 places of Bangalore. However, since there
were difficulties in handing over the scattered sites in vacant
possession, it is the case of the defendant that it negotiated
with the plaintiff for construction of houses under the scheme
at alternate places and Doddagunta (Jeevanahalli) land bearing
Sy.No.150/1P, 151, 152 and 158 was identified wherein 770
houses/units were to be constructed, which was accepted by
the plaintiff. Accordingly, agreement dated 12.3.1992 was
entered into. However, during the course of execution of the
contract, the work on land bearing Sy.No.150/1P where 308
houses were proposed could not be taken up because of Court
stay and the work was restricted to 462 houses at Jeevanhalli,
to which the plaintiff agreed and commenced the work.
4.01. It is the further case of the defendant that the
plaintiff did not show required progress of the work within the
stipulated time and due to serious lapses on the part of the
plaintiff in execution of the work as well as the quality of the
progress of work, no further work was entrusted to the plaintiff
and the defendant was compelled to restrict the tenements
awarded. It is further contended that the plaintiff failed to
complete construction in all respects even with regard to 462
houses which was entrusted to the plaintiff and the plaintiff
resorted to unhealthy correspondences. It is further contended
that due to the inaction and delay caused by the plaintiff, the
defendant Board suffered heavy losses on account of the
project not being completed within the specified time and the
slum dwellers who were the beneficiaries were put to hardship
and inconvenience on account of the lapses of the plaintiff.
4.02. It is the further case of the defendant that the
contract was awarded to the plaintiff on the basis of the
contract rates prevailing during the year 1990-91 plus 15% of
tender premium. That the work order was issued on 12.3.1992
on execution of the tender agreement by the plaintiff. The
period of completion of the contract was 18 months from the
date of handing over of the sites and approximate amount of
contract of the sanctioned estimate rate based on SR of year
1990-91 plus 15% of the tender premium was specified. That
on the request of the plaintiff, mobilization advance amount of
`16.00 lakhs at 15% on pro-rata basis of the total value of the
work was paid when the work order was issued to enable the
plaintiff to go ahead with the construction. That the
mobilization advance amount was an interest free advance
which was recoverable in 10 equal instalments out of the
running bills starting from the 3 rd bill onwards. It was also
agreed that the entire mobilization advance amount was to be
cleared and adjusted in 10 equal instalments in the running
bills or before 75% of the work completion, whichever is
earlier.
4.03. The defendant has denied the case of the plaintiff
that the construction of 462 units at Jeevanahalli was a new
item for which no new rates, terms and conditions were
quoted, accepted or agreed upon. That the contract agreement
dated 12.3.1992 clearly indicated that the plaintiff agreed to
execute the work at Jeevanahalli in lieu of the construction of
909 houses at different places in the same terms and
conditions already agreed.
4.04. It is denied by the defendant that it got the plaintiff
to commence the work of 462 units out of 707 promised at
Jeevanahalli on 20.12.1991 even without the work order. That
the required land area for construction of houses in
Sy.Nos.151, 152 and 158 were handed over on 14.1.1992 itself
in vacant possession even before the agreement was executed
and work order was issued so as to enable the plaintiff to make
preliminary arrangement for starting with the construction
work. However, the plaintiff failed to give the required
progress as per the terms of the contract. The defendant
denied that 75% of site area was handed over to the plaintiff
only in the year 1995. It is the contention of the defendant
that the required sites have been handed over long back during
January 1992 and as per the condition of the contract, the
plaintiff was bound to complete the work of construction by
September 1993. It is contended that the plaintiff voluntarily
agreed to execute the work of construction of houses at
Jeevanahalli and on the request made by the plaintiff an
amount of `16.00 lakhs interest free mobilization amount was
released.
4.05. It is the contention of the defendant that the
primary responsibility to arrange for marking and infrastructure
facilities was that of the contractor. That there were three
open wells and in addition two borewells were handed over to
the plaintiff with sufficient yield of water. Hence, it is denied
that the plaintiff has suffered any hardship in execution of the
work. It is further contended that the drawings and details
along with materials were made available and the work could
have been carried out to 376 units without any hindrance. That
the defendant had also paid running bills in respect of the work
executed by the plaintiff without any delay. That the plaintiff
had accepted the measurements and received payments.
4.06. It is the further case of the defendant that houses
were to be constructed to the extent of land available. That
despite the efforts and endeavours made by the defendant and
the vacant land being made available to the plaintiff, the
targeted progress was not given by the plaintiff. That at the
time of rescinding the contract on 11.6.1996, the plaintiff had a
balance of 6177 bags of cement which were misused for
construction of hollow blocks and 5 metric tonnes of steel
unused which were the excess material which were released by
the plaintiff towards execution of the work. It is further
contended that the plaintiff had secured advance and the
materials to the tune of `13.00 lakhs and the defendant
released the said amount to enable the plaintiff to execute the
work within the stipulated time. It is further contended that the
plaintiff has misused the department material for his own gain
and that if the material and advances were properly utilized for
the work, 378 tenements could have been completed. That the
lapses on the part of the plaintiff resulted not only in abnormal
delay in completion of the project, but also resulted in heavy
losses to the defendant.
4.07. It is further contended that the balance work was
taken up by the defendant at the risk and cost of the plaintiff.
That the plaintiff is due to the defendant in a total sum of
`26,74,054/- in the following manner:
i. Towards secured advance
Outstanding amount `13,01,165/-
ii. Cost of still unused and not
returned ` 3,77,780/-
iii. Cost of cement ` 9,95,109/-
__________
Total `26,74,054/-
4.08. It is further contended that the plaintiff never used
to submit running bills as required under clause 7(a) of the
contract. However, the officials of the defendant prepared
running bills to the extent of work done and the payments were
accepted by the plaintiff. That the plaintiff deliberately stopped
work which has caused hardship to the defendant. It is further
contended that the bills submitted by the plaintiff were fictitious
and not in accordance with the actual work done at the spot.
4.09. It is further contended that the plaintiff was asked
to be present on 20.6.1996 for taking final measurements.
However, since the plaintiff was not present, the
measurements were taken in his absence and mahazar has
been drawn to that effect. That on the basis of the final
measurements taken, the final bill was prepared, according to
which the amounts payable was `44,000/- which was adjusted
towards the dues payable by the plaintiff. It is further
contended that the plaintiff had no intention to complete the
work in view of the fact that further execution of work would
get him meagre bills and recovery would be effected against
heavy outstanding dues and payable by the plaintiff. That
since the plaintiff stopped the work and there was no response
to the notices issued, the defendant was constrained to invoke
the bank guarantee. It is denied that the plaintiff continued to
work up to April 1996. It is contended that the plaintiff has
stopped the work long back and has failed to perform its
obligations under the contract. That the plaintiff had
abandoned the work and left the work site for more than six
months as on taking of the measurements.
4.10. The defendant also denied the claim made by the
plaintiff towards loss of profits and other claims made in the
plaint. Hence, the defendant sought for dismissal of the suit.
5. Based on the pleading of the parties, the Trial Court
framed the following issues:
"1. Whether defendant proves that the required
land area for construction of houses in Sy.
Nos.151, 152 and 158 were handed over to the
plaintiff on 14.01.1992 itself?
2. Whether defendant proves that the plaintiff
voluntarily agreed to execute the construction of
houses at Jeevanahalli and at his request an
amount of Rs.16.00 lakhs interest free mobilisation
advance was released?
3.Whether plaintiff proves that the defendant took
decision to bifurcate the construction of '770'
houses at Jeevanahalli?
4.Whether plaintiff proves that the defendant has
failed to fulfil its obligations as per the terms of
agreement dated 12.03.1992?
5.Whether plaintiff proves that the delay in
progress of construction of houses was due to non-
supply of materials and drawings by the
defendant?
6. Whether plaintiff proves that as on 31.08.1995 it
had completed tendered and extra items work?
7. Whether defendant proves that the suit of the
plaintiff is bad for want of notice under Section 72
of Karnataka Housing Board Act, 1962?
8. Whether defendant proves that by virtue of
Court Stay Order the work on Sy No.150/IP could
not be taken up?
9. Whether defendant proves that the work
entrusted to the plaintiff was not completed within
stipulated '18' months and time was the essence of
contract it was forced to rescind the contract on
11.06.1996?
10. Whether defendant proves that as on
11.06.1996 the plaintiff had balance of 6177 bags
of cement and 14.5 metric ton of steel?
11. Whether plaintiff proves that it is entitled to
claim 10% increase in the rates over and above
S.R. 90-91?
12. Whether plaintiff is entitled to recover from the
defendant Rs.81,46,758-20 as detailed in para 34
of its plaint?
13. Whether plaintiff is entitled to claim interest; if
so, at what rate?
14. What decree or order? "
6. The Executive Engineer of the plaintiff was
examined as PW.1. Exs.P1 to P90 have been marked in
evidence. The Manager of the defendant - Board was
examined as DW.1 and the Assistant Executive Engineer as
DW.2. Exs.D1 to D58 have been marked in evidence. The Trial
Court by its judgment and decree dated 30.6.2008 decreed the
suit and directed the defendant to pay a sum of `81,46,758.20
to the plaintiff with interest at 4% pa., from the date of suit till
date of realization with cost. Being aggrieved, the present
appeal is filed.
7. Heard the submissions of learned Senior Counsel
Sri Rajesh Mahale along with learned counsel Sri Gurudev I
Gachchinamath for the appellant/defendant and learned
counsel Sri Arif Bhati for the respondent/plaintiff.
8. Learned Senior Counsel for the appellant contends
that admittedly as per the averments made at para Nos.10 and
11 of the plaint the property was handed over to the plaintiff to
commence construction work on 14.01.1992. That the terms
and conditions under which the defendant was required to carry
out the work was stipulated in the agreement dated
12.03.1992 (Ex.P.49) and that the plaintiff did not carry out the
work within the stipulated time in terms of the agreement. It is
further contended that 14 bills of the plaintiff have been cleared
in respect of the work carried out by it and there is no question
of the defendant paying any further amounts to the plaintiff. It
is further contended that in terms of the said agreement
(Ex.P49), the defendant was required to supply cement and
steel to the plaintiff for carrying out construction work. That the
said cement and steel have been supplied which has not been
utilized by the plaintiff for the work that it was required to carry
out under the agreement. It is further contended that the
defendant is not entitled to pay any further amounts and that
the running bill Nos.15 and 16 have been unilaterally prepared
by the plaintiff. It is further contended that when the plaintiff
was notified regarding joint measurements that was required to
be taken, no representative of the plaintiff was present. That
since the plaintiff did not carry out the work in terms of the
agreement, the said agreement was rescinded vide notice /
order dated 05/11.06.1996 (Ex.D.6). It is further contended
that due to the plaintiff not carrying out the work in terms of
the agreement, the defendant was justified in rescinding the
contract and the plaintiff is not entitled for any damages. That
the plaintiff did not furnish any material to demonstrate and
justify the quantum of damages sought for in the plaint and in
the absence of the same, the Trial Court was not justified in
awarding damages and decreeing the suit. It is further
contended that the judgment of the Trial Court being erroneous
and contrary to the material on record, is liable to be set aside
and the suit is liable to be dismissed. Hence, he seeks for
allowing of the above appeal and granting of the reliefs sought
for.
9. Per contra, learned counsel for the respondent -
plaintiff submits that although the tender was called for
construction of 909 tenements in 4 slums, only 1 slum was
handed over to the plaintiff for carrying out construction. It is
further contended that the plaintiff was called upon to
commence the construction, even prior to execution of the
agreement by the plaintiff and in terms of the instructions of
the defendant, the plaintiff commenced the construction work
as required. It is further contended that the plaintiff has
repeatedly corresponded with the defendant in bringing to its
notice the various shortcomings on the part of the defendant
and the plaintiff repeatedly sought for resolution of various
issues due to which the plaintiff was facing impediments in
carrying out the construction. However, it is contended that the
defendant did not respond to the said issues raised by the
plaintiff. It is further contended that the defendant did not hand
over the site as required, due to various reasons and the
plaintiff was required to commence construction only after
these sites were handed over without any encumbrances which
the defendant failed to do within stipulated time. It is further
contended that the defendant did not supply the requisite
quantities of cement and steel. That PW.1 has not been cross-
examined by the defendant regarding the said aspect of the
matter. It is further contended that the panchanama drawn
does not speak of any cement and steal that is available with
the plaintiff. Hence, it is contended that the plaintiff is entitled
to the damages sought for in the suit. That the Trial Court has
adequately appreciated the oral and documentary evidence and
decreed the suit which ought not to be interfered with by this
Court. Hence, he seeks for dismissal of the above appeal.
10. Both the learned counsel have referred to various
correspondences between the parties and the relevant
correspondences which will be considered during the course of
this judgment.
11. The submissions of both the learned counsel have
been considered and the material on record including the
records of the Trial Court have been perused.
12. The questions that arises for consideration are:
i. Whether the finding of the Trial Court on issue
Nos.1 to 6 is erroneous and liable to be set aside?
ii. Whether the Trial Court was justified in recording a
finding that the defendant is due and payable the
sum of `81,46,758/- claimed by the plaintiff in the
plaint?
iii. Whether the judgment and decree passed by the
Trial Court is erroneous and liable to be interfered
with?
Re.question Nos.(i) to (iii):
13. It is forthcoming from the factual matrix that it is
undisputed that the defendant invited tenders for construction
of tenements in Bengaluru city for slum development in which
the plaintiff participated. It is further undisputed that the
plaintiff was invited for negotiation by the defendant. It is
forthcoming from the letter dated 28.10.1991 (Ex.P.2) that the
plaintiff wrote to the defendant placing on record the agreed
terms pursuant to the negotiation held between the parties and
the said terms are as under:
a. "To accept/execute and complete the works of
909 tenements at 15% above the SR of 1990-
91. Cement and steel to be supplied at site at
agreed issue rate. We also confirm your
having agreed to
b. Sanction us 15% mobilisation advance on the
total contract value against Bank guarantee
BUT WITHOUT INTEREST.
c. Release atleast 50% of the agreed
mobilisation advance along with the work
order.
d. Recover the released mobilisation advance in
ten equal instalments from ten running bills.
First instalment to start from 3rd bill onwards.
e. Issue individual work order as and when the
clear site is handed over to us.
f. Award us the works before the SR of 1991-92
is released.
g. Our offer as above is for the entire project of
909 houses."
14. Vide letter dated 06.12.1991 (Ex.P.3), the
defendant responding to the letter (Ex.P.1) confirmed that the
tenders negotiated at 15% above the estimated rates based on
S.R.No.90-91. Further, it is stated that the sites at Appareddy
Palya and the slum behind Gajanana Talkies are clear and the
plaintiff was requested to contact the defendant for entering
into a contract for issuance of a work order. It was further
informed that action regarding request for payment of
mobilization advance will be taken.
15. It is necessary to consider the correspondences
between the parties to adjudicate upon the questions that arise
for consideration. Accordingly, the correspondences are
considered as under:
i. The defendant, vide letter dated
11.12.1991 (Ex.P.4), directed the plaintiff to start the
work at Appareddy Palya immediately and directed the
plaintiff to contact the Assistant Executive Engineer of
the defendant for further information.
ii. The plaintiff, vide letter dated 11.12.1991
(Ex.P.5), informed that in the site of Appareddy Palya
only about 20 houses can be constructed and
requested the defendant to look into the matter and
arrange to handover clear site where at least 25 to
30% of the tenements (out of total 909 can be
constructed).
iii. The defendant, vide letter dated
18.12.1991 (Ex.P.6), informed the plaintiff that
construction of tenements behind Gajanana Talkies
cannot be taken up since the site is under dispute.
Hence, construction of tenements at Appareddy playa
numbering 36 may be taken up. It is further informed
that construction of 462 units at Doodagunte
(Jeevanahalli) be taken up immediately. That the work
may be started either on 19.12.1991 or 20.12.1991
since the Hon'ble Minister for Housing and Urban
Development is pressing for starting of the work. It is
further informed that construction of 36 units at
Jayaraj slum may also be taken up. Hence, it is
informed that the total number of units entrusted was
530 and the balance of about 379 units will be
entrusted immediately.
iv. Vide letter dated 28.12.1991 (Ex.P.7) the
plaintiff informed the defendant that they have started
cleaning the site, marking and excavation of marked
houses at Jeevanahalli. The plaintiff sought for release
of the proportionate mobilisation advance.
v. Vide letter dated 06.01.1992 (Ex.P.8), the
plaintiff informed the defendant that although work
commenced for construction of 462 tenements at
Jeevanahalli, more that two weeks ago, progress could
not be achieved due to various reasons. The reasons
are set out in the said letter including foundation
details not being made available, water struck while
putting the foundation, that markings made during the
second half of the day get wiped out by next morning
since the site is being used as a play ground by the
children.
vi. The defendant vide letter dated
24/25.01.1992 (Ex.P.9) placed on record that the
Housing Commissioner along with the Executive
Engineer inspected the site and the plaintiff was
requested to excavate the work and start bed concrete
work under intimation to the defendant.
vii. Vide letter dated 11.02.1992
(Ex.P.10/D.2), the plaintiff informed the defendant
that the excavation foundation concrete and stone
masonry work is in full progress at Jeevanahalli. The
plaintiff sought for issuance of the work order and
payment of the mobilisation advance.
viii. It is forthcoming that vide copy of letter
dated 07.02.1992, which is annexed along with
Ex.P10, the Indian Bank informed the plaintiff
regarding the amendments made in the bank
guarantee. It is relevant to note here that the
amendment was also to substitute the words 462
units at Doddagunte (Jeevanahalli) in place of '909
slums'. Further, a sum of `1,09,00,000/- was to be
substituted in place of `2,13,00,000/- and
`16,00,000/- was to be substituted in place of
`17,50,000/-.
ix. Vide letter dated 18.02.1992 (Ex.P.11),
the plaintiff wrote to the defendant that even though
the site made available at Doddagunte for
construction of 462 tenements was not the one
mentioned in the tender, as a special consideration
since the same falls under the constituency of the
HUD Minister, the work has been started. Further, the
plaintiff mentioned that despite commencement of
work, no work order has been issued and mobilisation
advance for 909 slums has not been paid. Further, the
plaintiff set out various hardships that were being
faced by them in the matter of carrying out of the
work including purchase of quarry materials, fetching
of water, non-availability of labour etc. It is further
mentioned that the work which was shaping up well
has been stopped by the concerned Assistant
Executive Engineer. Hence, the plaintiff sought for
issuance of work order, release of the agreed
mobilisation advance at the earliest and to provide a
Borewell at the site.
x. Vide letter dated 27.02.1992 (Ex.P.12) the
plaintiff highlighted the hardship caused due to non-
availability of water and sought for providing a
Borewell at the site.
xi. The proceedings of the meeting held on
10/11.03.1992 between the parties (Ex.D.4) discloses
that the technical approval is accorded to the estimate
amounting to `2,23,27,000/- for the construction of
770 houses at Doddagunte (Jeevanahalli) in
Sy.No.150/1, 151, 152 and 158. It is further noted
that the tenements of the plaintiff for construction of
909 units at 15% above the existing rates at SR.90-91
has been approved in the meeting of the board held
on 04.02.1992 that the over all project cost should not
exceed `2,23,27,000/-.
xii. Vide letter dated 06.04.1992 (Ex.P.13),
the plaintiff authorized their General Manager Mr.
Shrikant R. Karnataki, to sign the bills, letters etc.,
and also accept cheques on their behalf.
xiii. Vide letter dated 08.04.1992 (Ex.P.14) the
defendant referring to the work order bearing
No.1/92-93 dated 12.03.1992 and its other
correspondences informed the plaintiff that in terms of
the tender notification and work order, the period of
completion of work is 18 months including the rainy
season from 15th June to 15th September. Further
reference has been made to construction of 770 units
at Doddagunte (jeevanahalli), the work order and the
meeting held on 26.3.1992, wherein it was agreed to
complete the work within 12 months. It was further
placed on record that the condition for completing the
work within 12 months was releasing the mobilisation
advance and for the said purpose the plaintiff was
requested to present a bar chart for financial and
physical completion of work within 10 months before
the release of mobilisation advance.
xiv. Vide letter dated 20.04.1992 (Ex.P.15) the
defendant informed the plaintiff that the Chairman of
the defendant had inspected the work at Dr.
Ambedkar slum on Murphy Town, Lingarajapuram
tank bed and Doddagunte (Jeevanahalli) site on
22.03.1992 and issued various instructions. It is
relevant to note that with regard to the work at the
Doddagunte (Jeevanahalli) site unhappiness was
expressed for the slow progress of work and the
plaintiff was instructed to improve the tempo of the
progress of work.
xv. Vide letter dated 15.05.1992 (Ex.D.29)
the defendant informed the plaintiff that various
points regarding the construction being carried out at
Doddagunte (Jeevanahalli) including that the masons
were not doing the size stones masonry with proper
size stones; that the stones are not being dressed
before laying; that the line, length and level are taken
carelessly; that some new masons were engaged for
the work who do not know the masonry work and that
they don't differentiate between size stones and
rubble; that the laying of stones are done haphazardly
effecting the quality of the work; that the supervision
staff of the plaintiff do not take notice of the same to
correct the mason, though the department staff
repeatedly instructed them regarding the same.
Further various short comings were pointed and it is
stated by the defendant that the desired progress is
not possible from the plaintiff with the type of
organisation and set up, even though they brought
sufficient construction material at the site. The
defendant further called upon the plaintiff to submit
the bar chart early and reinforce men and material at
the site to gear up the tempo of progress and that any
lapse may invite serious action.
xvi. Vide letter dated 18.05.1992 (Ex.P.16),
referring to the construction of 462 units at
Doddagunte (Jeevanahalli) and the letter dated
13.05.1992, the plaintiff informed the defendant of
various requirements including supply of working
drawings, plinth beam details, required steel and
sufficient place for casting yard.
xvii. Vide letter dated 27.05.1992 (Ex.P.17)
referring to its earlier letter dated 10.04.1992, the
defendant requested the plaintiff for submission of bar
chart to closely monitor the progress of work within
the time schedule.
xviii. Vide letter dated 05.06.1992 (Ex.P.18),
the plaintiff wrote to the defendant with regard to the
observations regarding progress of work. The plaintiff
informed the defendant regarding progress of work
and further requested for providing schedule - B as
also working drawings. It was further informed that
cement and steel were required to be supplied at work
site, that the plaintiff was made to collect cement
from Jayanagar and steel from A.D. Halli. It was
further requested that the construction of 464 houses
being allotted (out of which only 80% has been
allotted), is only part of the successful tender for
construction of 909 houses. It is further informed that
men and machineries earmarked and geared up for
909 houses is idle. The plaintiff requested the
defendant to award balance portion of work.
xix. Vide letter dated 08.06.1992 (Ex.P.19),
the plaintiff requested the defendant for consideration
of awarding of further work of construction of 909
tenements.
xx. Vide letter dated 10.07.1992 (Ex.P.20)
the plaintiff informed the defendant that they have
geared up and planned to hand over the houses by
the end of October, 1992, much before the stipulated
dated of 12th of March 1993 and that the plaintiff
themselves are not happy with the progress due to
strike of the transporters and non receipt of cement
which is beyond their control. Hence, the plaintiff
requested the defendant to look into the matter
regarding supply of cement early.
xxi. Vide letter dated 18.07.1992 (Ex.P.21) the
plaintiff informed the Chairman of the defendant that
despite passage of six months, the plaintiff being the
successful tenderer for the construction of 909
tenements, they have been awarded only 40% of the
work i.e., 464 units out of which site for 94 units is
yet to be made available. That men, material and
machineries kept ready for 909 units has remained
idle and are thus incurring losses. Hence, the plaintiff
requested the defendant to award the proposed
project at Doddagunte (Jeevanahalli) on 5½ acres of
acquired land.
xxii. Vide letter dated 20.07.1992 (Ex.P.22)
addressed by the plaintiff to the defendant, the
plaintiff admitted that they could not give the desired
progress due to non supply of cement and steel by the
defendant and that they purchased cement in the
open market and enclosed the bills for the same.
Hence, the plaintiff sought for release of material
advance and also sought for reimbursement of the
extra cost of cement incurred by the plaintiff. The bills
of purchase of the cement was also enclosed along
with the said letter.
xxiii. The defendant vide letter dated
22.07.1992 (Ex.P.23) highlighted the fact that no
cement has been supplied and made a request for
immediate supply of cement.
xxiv. Vide letter dated 03.08.1992 (Ex.P.24) the
plaintiff informed the defendant, while referring to the
work order dated 12.03.1992 for 770 units at
Doddagunte, placed on record that only 366 units
have been entrusted and for want of availability of site
for the remaining units have not been entrusted.
Hence, the plaintiff requested for immediate
arrangements to handover the site along with the
markings.
xxv. The plaintiff vide letter dated 28.08.1992
(Ex.P.25), while referring to the letter of the
defendant dated 17.08.1992 has informed the
defendant, inter alia, that the work awarded by the
defendant was outside the purview of the tender for
909 tenements, that the supplies of cement and steel
have been irrational and that although two borewells
have been dug, no pump sets and no electricity
connection have been provided at the site. That there
was complete demobilisation of men and machinery
for over 1½ month and due to non supply of cement
the hollow concrete blocks could not be manufactured
during the said period.
xxvi. Vide letter dated 02.09.1992 (Ex.P.26),
the defendant while responding to the letter of the
plaintiff - Ex.P.25 has stated regarding the land have
been available for construction of 464 units. Further
the defendant admitted that due to various factors
there was delay in the supply of the cement. Further
the defendant admitted that there was a delay in the
changes recommended by the architect. However,
water and electricity supply are responsibility of the
tenderer. Further, the defendant informed the plaintiff
that the reasons mentioned by the plaintiff in its letter
Ex.P.25 cannot be the reason for the delay and
informed that the defendant expects early completion
of tenements. That depending on the progress of the
work, defendant will take appropriate action in
awarding the work concerning the tender for 9090
tenements.
xxvii. Defendant vide letter dated 14.09.1992
(Ex.D.30) informed the plaintiff that during the
inspection of the site, it has been noticed that hollow
blocks cast at the site are being used on the works
without required curing which was objectionable.
Further, it informed that the arrangements for curing
was very poor and that the hollow blocks had not
acquired required strength. Hence, it is informed that
the blocks manufactured should be tested by the
quality control sub-division before being used. Hence,
the defendant informed the plaintiff that necessary
instructions be issued to the site Engineer and that
there should be no deviation on the said instructions.
xxviii. Vide letter dated 23/25.09.1992 (Ex.P.27)
the defendant, in furtherance of its letter - Ex.P.26
informed the plaintiff to take up fabrication of steel for
lintels and proceed with the work of casting of the
same without further delay and also ensure that the
roof slab is laid by the end of dated October 1992.
xxix. Vide letter dated 05.10.1992 (Ex.D.31),
the defendant referring to the undertaking dated
08.04.1992 executed by a representative of the
plaintiff, as also its letters dated 08.07.1992,
13.05.1992, 09.04.1992 and 27.07.1992, informed
the plaintiff that the bar chart of the work in terms of
the undertaking dated 08.04.1992 of the
representative of the plaintiff has not been furnished.
It is further informed that, as seen from the last paid
bill, there is short progress. Hence, the defendant
informed the plaintiff to raise the work progress to the
agreed monthly progress by the next bill, failing which
the penal clauses of the contract would be enforced.
xxx. Vide letter dated 23.10.1992 (Ex.P.28) the
defendant referring to the meeting dated 21.10.1992
reminded the plaintiff to submit the necessary bar
chart, failing which action will be taken to cancel the
contract.
xxxi. The plaintiff vide its letter dated
29.10.1992 (Ex.P.29) referring to the letter - Ex.P.28
intimated the defendant that copy of the sanctioned
estimate of schedule - B to enable preparation of the
required bar chart was not provided despite repeated
requests. It also informed that construction at
Doddagunte is outside the purview of the tender.
Further it is informed that some of the houses have
already reached roof level and the roof related
drawings has not been furnished by the defendant. It
is further placed on record that the oral changes are
proposed in the stair case and hence, sought for
revised drawings. The plaintiff also sought for
clarification regarding work of the internal walls which
has been stooped by concerned architect. Hence, the
plaintiff informed the defendant that maintaining
progress in the absence of related drawings and
clarifications was left to the imagination of the
defendant.
xxxii. Vide letter dated 31.10.1992 / 02.11.1992
(Ex.P.30) the defendant referring to the letter -
Ex.P.29 enclosed a copy of the schedule - B to enable
submission of the bar chart.
xxxiii. Vide letter dated 24.12.1992 (Ex.D.32),
the defendant referring to the letter dated 08.12.1992
of the plaintiff informed that the bar chart submitted
by the plaintiff shows the period of completion at
September 1993 which extends to 19 months instead
of 18 months as per the agreement. Further 464 units
were to be completed within 18 months from March
1992, but the plaintiff has given a program for
completion of 348 units which should be completed by
April 1993, where as the plaintiff has given
programme up to September 1993 which is not
correct. It is further informed that the progress of the
site is behind schedule which is to be expedited. The
defendant has further informed that inspite of
repeated reminders and instruction that there is no
improvement in the style of working at the site. That
the curing is poor and centering and laying of concrete
is for from satisfactory. That the field staff of the
plaintiff did not understand the instructions given by
the department staff and that if the same is not
corrected, action will be taken in terms of the
agreement. The defendant also sought for bar chart
showing physical and financial progress.
xxxiv. Vide letter dated 01.01.1993 (Ex.D.34),
the defendant referring to the plaintiff's letter dated
28.12.1992 informed the plaintiff that with regard to
the issue of cement bags for the Jeevanahalli project,
that sofar 11,600 bags of cement have been issued to
the plaintiff and the plaintiff was permitted to bring
1,605 bags and use the same during the month of
August 1992. That the overall quantity issued on the
work is 13,250 bags, but when the actual physical
progress of the work is assessed, the up to date
consumption is only 7,000 bags and that the plaintiff
was left with 6250 bags for which no work is done.
Hence, the stoppage of work on account of non issue
of cement is not justified. It is further informed that
curing is not satisfactory and that laying of concrete to
roof slab, lintel, chejja and staircase is very carelessly
done and lot of honeycombs are seen after centering.
That in spite of mobilisation advance and regular bills
in respect of the work done, the progress work is
poor. Hence, the defendant informed the plaintiff that
unless the defects are rectified in toto and the bank
guarantee submitted for the mobilisation advance is
received no recommendation for issue of any material
will be made.
xxxv. The plaintiff vide letter dated 12.01.1993
(Ex.P.31) informed that 25% of the project units
would be handed over by March 1993 at Jeevanahalli
and subject to supply of cement and steel, clearance
of drawings and bills periodically and instructions and
directions in the right tempo.
xxxvi. Vide letters dated 01.02.1993 and
10.02.1993 (Ex.P.32 and 33) the plaintiff informed the
defendant that they are facing tremendous shortage
of supply of cement and sought for action at the
earliest.
xxxvii. Vide letter dated 06.02.1993 (Ex.D.36)
the defendant informed the plaintiff that they have
laid the roof concrete on 3rd block of Sy.No.158 on
12th and 13th January 1993 leaving three stair case
and two units in the middle without concreting. That
no arrangements have been made to lay the concrete
for the remaining portion. It is further placed on
record that the staff of the plaintiff has informed that
they have not procured the jelly for the work. It is
further placed on record that plaintiff has lifted 150
bags on 03.02.1993 informing that they will be lent
for purchasing blocks and that though the defendant
was not obliged to supply of cement for manufacture
of blocks, sufficient quantity was issued to ensure
good progress of work. The defendant has placed on
record that the plaintiff is misusing the cement and
steel and has not making arrangements for proper
progress of work. It is further placed on record that
the staff of the plaintiff have informed the defendant
that two pumps which are used for curing are under
repair. It is informed that bar chart as promised to be
supplied by the plaintiff was not done. Hence, the
defendant informed the plaintiff that it was
recommending to the higher authorities for applying
the penal clauses of contract and for imposing fines on
the inordinate delay.
xxxviii. Vide letter dated 10.02.1993 (Ex.D.35)
the defendant has informed the plaintiff that it has
issued 14,348 bags of cement and 70 Metric Tons
(M.T) of steel and the consumption is only 8000 bags
of cement and 46 M.T of steel. Hence, denied the
statement of the plaintiff that cement and steel is not
issued. The defendant further requested the plaintiff
for bar chart to keep track of the progress of work and
substantiation of utilisation of material on the work.
The defendant further informed that the penalty of
`100/- per day will be starting from 20.02.1993, if
work is not resumed and continuous work is done not
till the end of the tender which expires on 30.09.1993.
xxxix. The plaintiff vide letter dated 18.02.1993
(Ex.P.34) informed that the works of casting roof
slabs, hollow block masonry, fixing of doors, windows,
plasting etc., are in progress and sought for
preparation of four RA bills.
xl. The plaintiff vide letter dated 18.02.1993
(Ex.P.35) listed progress of the work and also listed
out various issues faced by the plaintiff. It is further
placed on record that it received 15,800 bags of
cement and consumed 15,710 bags. The basis of
consumption has also been furnished. Hence, the
plaintiff has placed on record that as only 90 bags
(wrongly calculated as 80 bags in Ex.P35) of cement
are in stock. It is further stated that the imposition of
penalty is not justified. It is further informed that by
February 1993 the plaintiff has planned to handover
25 units to slum dwellers and requested for handover
of balance 561 units and the balance work in terms of
work order.
xli. The plaintiff vide letter dated 23.02.1993
(Ex.P.36) has sought for sanitation, water supply and
electrical drawings of the earliest as also the sanction
schedule - B at the earliest. The plaintiff sought for
the handover of balance 561 houses.
xlii. Vide letter dated 05.03.1993 (Ex.P.38) the
plaintiff referring to the letter of the defendant dated
03.03.1993 informed that the sanction schedule - B is
not handed over. Further it has informed that water
supply, electricity and sanitation has been handed
over on 01.03.1993. Further the plaintiff requested
the defendant to consider with holding supply of
cement against recovery of cement as they are in
need of financial assistance. Further the plaintiff
stated that the scope of the work allotted as per
estimates, schedules, EMD which may be handed over
to avoid entitling the plaintiff to claim losses towards
machinery, labourers, staff establishment overheads,
etc. It is further informed that the bank guarantee is
valid up to August 1993 and the same will be
extended. It further informed that the plaintiff has
been paid only 75% of the windows and 25% is with
held and release of same was sought. It is further
informed that the question of non preparation of bill
No.4 did not arise and imposition of penalty was
unjustified.
xliii. The defendant vide letter dated
06.03.1993 (Ex.D.38) referring to letter - Ex.P.34 of
the plaintiff enclosed para wise replies to the same
and also regretted slow progress of work. It is further
informed that action will be taken in terms of penal
clauses of the agreement.
xliv. Vide letter dated 31.03.1993 (Ex.P.37) the
plaintiff informed the defendant that they have no
stock of cement and that they have not received
cement from the defendant due to which the progress
of work is suffering. Further the plaintiff is suffering
from financial crisis due to non-release of bills by the
defendant. Hence, supply of sufficient quantity of
cement and release of bills were requested at the
earliest.
xlv. Vide letter dated 07.05.1993 (Ex.P.39) the
plaintiff stated regarding non supply of cement at
regular intervals and non payment of bills and sought
for making necessary arrangements to avoid losses.
xlvi. Vide letter dated 22.06.1993 (Ex.P.40),
the plaintiff referring to the meeting dated 07.06.1993
with the Housing Commissioner denied that the
plaintiff is due to the defendant in a sum of
`9,40,000/-. Further the plaintiff informed the
defendant to recover the cement, if any against a sum
of `7,17,500/-. It further informed that the bank
guarantee is valid up to August 1993 and the same
would be renewed. It is further informed that
payment of 4th RA bill of `9,40,000/- is pending. That
revised bar chart for extension period in terms of the
discussions with the Housing Commissioner will be
submitted on payment of the 4th RA bill. It further
sought for supply of cement as there was no cement
with the plaintiff. It further informed that around 38%
of the work has been handed over and 75% of the
tendered work ought to have been handed over. That
the work was entrusted on 12.03.1992 with the period
of 18 months for completion. However, only 348 units
against the allotted 909 units as per tender were
handed over. That due to non supply of cement by the
defendant that the work could not be completed as
per the time schedule. Further it was informed that a
fresh bar chart with extension period to be submitted
on the defendant with release of `5,00,000/- against
the 4th RA bill. That the defendant was liable to pay a
sum of `9,40,000/- towards the 4 th RA bill and that
the plaintiff will start working immediately on release
of `5,00,000/- on issue of bulk quantity of cement by
the defendant.
xlvii. Vide letter dated 29.6.1993 (Ex.P41), the
plaintiff submitted a revised bar chart to the
defendant with extension period of 348 units at
Sy.Nos.151, 152 and 158 at Jeevanahalli -
Doddagunte. However, it is stated that the said
revised bar chart was subject to various conditions (11
nos.).
xlviii. Vide letter dated 7.5.1993 (Ex.P42) the
plaintiff referring to the various letters written by the
defendant sought to visit the office of the Chief
Engineer of the defendant to personally cover the
issues raised in the said correspondences.
xlix. Vide letter dated 1.7.1993 (Ex.P43), the
plaintiff referring to the meeting with the Housing
Commissioner on 7.6.1993 and other correspondences
confirmed that upon receipt of the cement shifting
letter on 30.6.1993 the work has started.
l. Vide letter dated 6.7.1993 (Ex.P44) the
plaintiff sought for extension of time for completing
348 units at Sy.Nos.151, 152 and 158 at Jeevanahalli
- Doddagunte up to March, 1994. It is stated that
extension was due to unavoidable circumstances from
the defendant.
li. Vide letter dated 16.7.1993 (Ex.D40), the
defendant responding to the letter - Ex.P41 informed
that the period under the contract expires on
12.9.1993 and the work was required to be completed
before the said date. It is further informed that there
was regular supply of cement from time to time and
14666 bags have been issued against the utilised
cement of 8596 bags towards the work and 6843 bags
towards manufacture of hollow blocks. Further, it is
placed on record that the plaintiff stopped the work
since December 1992, which is not correct. It is
further informed that handing over of balance
site/houses as demanded by the plaintiff will arise
only after completion of the work on hand. The
plaintiff was called upon to step-up with the work
progress.
lii. Vide letter dated 27/29.7.1993 (Ex.P45),
the plaintiff informed the defendant that the shifted
quantity of cement from Valmikinagar site is almost
over and further arrange for bulk quantity of cement
to avoid stoppage of work.
liii. Vide letter dated 28.07.1993 (Ex.P.46),
the plaintiff referring to the letter of the defendant -
Ex.D.40 intimated the plaintiff that the cement supply
is almost exhausted and if further bulk quantity is not
released the work in progress will be effected. It
further intimated that the cement supply by the
plaintiff of 1650 bags will be removed if payment at
`117 is not released for the same. It is further
informed that the 4th part bill has not been paid. It is
further demanded that the balance contract work
should be handed over at the earliest to avoid further
claims and losses.
liv. Vide letter dated 03.08.1993 (Ex.P.47),
the plaintiff, referring to the meeting in the chamber
of the Housing Commissioner on 07.06.1993 and
earlier correspondence, intimated that the work is in
progress inspite of non-cooperation by the defendant.
It further placed on record that bulk quantity of
cement should be released without further delay as to
avoid stoppage of work. It is further stated that the
instructions of the Housing Commissioner has been
maintained and the progress of the work has been
kept up in spite of non cooperation. It is further stated
that the quantity of cement consumed is accepted by
the defendant in the previous letter and there is no
further balance from the quantity supplied from the
department.
lv. Vide letter dated 06.08.1993 (Ex.P.48),
the plaintiff sent a reminder to the defendant
regarding various aspects including payment of 4th
part bill, release of balance payment for cleaning
works, etc.
lvi. Vide letter dated 06.09.1993 (Ex.D.41),
the defendant referring to the letter of the plaintiff
dated 03.09.1993 and earlier correspondence
intimated the plaintiff regarding cement consumption
and that the block / mixture machine after service /
repair is kept at the site.
lvii. Vide letter dated 09/10.09.1993
(Ex.D.42), the defendant issued a show cause notice,
to show cause within 10 days as to why action should
not be taken in terms of the contract. The said show
cause notice has placed on record, various alleged
lapses on behalf of the plaintiff.
lviii. Vide letter dated 14.09.1993 (Ex.D.43),
the defendant has intimated the Housing
Commissioner that the contractor has lost interest in
completing the work. It is further placed on record the
various lapses of the plaintiff and it is also been
informed that works entrusted are in three survey
Nos.151, 152 and 158 and that balance portion of
work in two survey numbers i.e., 151 and 152 would
be withdrawn.
lix. Vide letter dated 13.10.1993 (Ex.D.44),
the plaintiff with regard to the letter of the defendant
regarding encashment of bank guarantee and
undertook to continue with the work in full progress,
which can be seen from the next three months.
lx. Vide letter dated 18.11.1993 (Ex.D.45),
the defendant referring to its earlier letter dated
20.10.1993 and the letter of the plaintiff dated
24.10.1993 informed the plaintiff to expedite the work
including completion of internal services, so as to
handover to the completed units without delay. It
further sought for flooring works, plastering of walls
and curing to be done simultaneously. It sought for
submission of bar charts for granting extension of
time.
lxi. Vide letter dated 26/27.11.1993 (Ex.D. 25
& 46), the defendant referring to the letter of the
plaintiff dated 04.11.1993 has placed on record that
the defendant has supplied 15038 bags of cement and
70.52 metric tons of steel, but the plaintiff has lifted
850 bags of cement and 14.365 metric tons of steel
unauthorizedly. Hence, it has disputed the assertion of
the plaintiff that despite non supply of materials by
the defendant the work progress will be continued.
Further it is stated that the centring work at
Sy.No.152 has not started except Sy.No.151. It is
further stated that the manufacturing of cement
concrete hollow blocks are not being done
continuously. It is further stated that the revised bar
chart has promised has not been furnished. It is
further stated that the men and labour engaged in
work are meagre, compared to left over portion for
complexion and the work progress is slow. The
defendant has further stated that as per its
assessment, the plaintiff will not be able to complete
the work in time as promised. The defendant further
informed the plaintiff that they fail to give satisfactory
progress engaging sufficient men, labour and
materials, the defendant will be constrained to
rescined the balance work and complete the same
through another agency. It is relevant to note that
said notice (Ex.D.25) which was sent by registered
post has been returned as not claimed.
lxii. Vide letter dated 06.11/12.1993
(Ex.D.33), the defendant informed the plaintiff that
there is delay and unsatisfactory progress in the work
and that despite repeated reminders, no action has
been taken. The defendant has called upon the
plaintiff to look into the matter and to take necessary
action to make up back log and shortfall in the
progress and also maintain good quality of work and
that if the short fall is not made good within the
stipulated time, the plaintiff will be liable for penal
action.
lxiii. Vide letter dated 18/20.12.1993 (Ex.D.10)
the defendant referring to its earlier letters dated
25.09.1993 (Ex.D43) and 18.11.1993 (Ex.D.45) as
well as the undertaking dated 16.10.1993, informed
the plaintiff that the work has been stopped since two
weeks and the registered letters sent by the
defendant are returned as not claimed. That as per
the contract, the work should have been completed
and units handed over by 12.09.1993 that the
progress achieved is not encouraging. Hence, the
plaintiff was intimated that the centering and laying of
roof in Sy.No.151 and 152 was required to be done on
or before 31.12.1993 failing which the said letter itself
will be a final notice and action will be initiated as per
agreement.
lxiv. Vide letter dated 24.12.1993 (Ex.D.11),
the defendant referring to its earlier letters including
letter - Ex.D.10 has informed the plaintiff that no
action has been taken despite lapse of three months
of the period stipulated in the agreement and that the
plaintiff has failed to keep up to the undertaking dated
13.10.1993 that work has been stopped since fifteen
days without valid reasons even thought penalty of
`100/- per day have been imposed for short progress.
That 858 bags of cement and 14.385 metric tons of
steel and mobilization advance of `14.40 lakhs is
outstanding and that there is no satisfactory work
progress. Hence, it was informed that if the centering
and laying of roof in Sy.No.151 and 152 are not done
within 31.12.1993 and the construction work is not
commenced, the deposits of the plaintiff will be
forfeited and penal clauses in the agreement would be
enforced and the plaintiff will be recommended for
black listing.
lxv. Vide letter dated 21.02.1994 (Ex.D.12 /
Ex.D.47), the plaintiff informed the defendant that the
balance quantity of steel is with them and will be used
for the work as and when required.
lxvi. Vide letter dated 19/22.04.1994
(Ex.D.13), the defendant issued a "pre-final notice" to
the plaintiff, referred to its earlier correspondence and
intimated that the progress achieved is to an extent of
` 45,82,366/- as against estimated cost of
`2,23,27,000/- which is unsatisfactory. It is further
reported that as per the report of the Assistant
Executive Engineer of the defendant the plaintiff has
not resumed the work as on 05.04.1994. Hence, the
plaintiff was called upon to immediately commence
the work failing which the contract would be
rescinded.
lxvii. Vide letter dated 10/11.05.1994
(Ex.D.14), the defendant referring to the earlier
correspondence and referring to the joint meting held
on 22.02.1994 intimated the plaintiff that the revised
bar chart has not been produced. Further it has
intimated that in the event that the work has not
completed on a "war footing basis", the defendant will
withdraw a portion of the work and carry out the
same, at the risk of the plaintiff.
lxviii. Vide letter dated 31.08.1995 (Ex.D.48),
the defendant informed the plaintiff that tempo of
progress of the work is not satisfactory and that the
beneficiaries are expressing their apprehension for the
delay caused in the completion of houses. Hence, the
plaintiff was informed to step-up the progress failing
which penal clauses will be imposed.
lxix. Vide letter dated 11.09.1995 (Ex.P.52),
the plaintiff referring to the letter of the defendant
dated 31.08.1995, informed that the centering for
casting, lintels, chejjas, roofs, plastering, etc are in
progress. That the work is kept as per the supply of
departmental materials and to increase the required
tempo of progress, maximum quantity of
departmental materials are required. It is further
informed that as per mutual discussion in the chamber
of the defendant the sanitation works will be started
shortly.
lxx. Vide letter dated 13.10.1995 (Ex.D.49),
the defendant informed the plaintiff that they have
issued 1200 bags of cement during the months of July
to September 1995 and the work carried out during
July and August has been measured and paid. That
651 bags of cement were used on work and the same
was recovered in the 14th RA bill. Hence, there were
549 bags of cement at the site. It is further informed
that 175 bags of cement were also issued on
27.09.1995. Hence, there is total 724 bags at the site.
That as per the existing work it was estimated that
200 bags of cement was consumed and there should
be a balance of 500 bags of cement as on the date of
letter. Hence, it is informed that until all the 500 bags
of cement should be used for work, no fresh cement
will be given. It is further informed that curing work is
not being carried out properly for the plastering and
that centering work is also not done properly. The
plaintiff was informed to rectify the said issues. It is
further informed that 10.5 metric tons of steel was
issued on 28.07.1995 and only 29 units have been
casted. Hence, there is balance steel and cement
available to carry out the work. It is further informed
that the defendant has paid for steel windows and
doors fixing. Hence, the plaintiff was requested to
bring the quantity to the site and fix the same without
further delay. It is further placed on record that
despite repeated instructions, sanitary works are not
being done properly and the plastering to inside walls
is being done without fixing doors and windows.
lxxi. Vide letter dated 20.11.1995 (Ex.D.50),
the defendant has informed the plaintiff that curing
and centering work is not done properly. It is further
informed that the material advance given for nearly
`40,000/- hollow bricks was give and the same is not
available on the site. Further 21.00 metric tons of
steel issued was not available at the site. That the
plaintiff has promised to bring back the balance
quantity of steel to the work site. It is also noticed
that steel doors and windows are fixed at site is not
according to specification and measurements. Hence,
needful action by the plaintiff was requested.
lxxii. Vide letter dated 27.11.1995 (Ex.D.51),
the defendant referring to its earlier correspondence
has issued notice No.5 listing out the various
deficiencies and further informed the plaintiff that the
Minister of State Housing and the local MLA have
expressed unhappiness with the execution of the
work. It is further instructed that proper action be
taken to accelerate the work and complete the same
as per the schedule failing which fine will be imposed.
lxxiii. Vide letter 07/12.12.1995 (Ex.D.53), the
defendant once again informed the plaintiff regarding
various details and deficiencies in the work carried out
by the plaintiff.
lxxiv. Vide letter dated 28.12.1995 (Ex.D.54),
the defendant has once again pointed out various
deficiencies in the work of the plaintiff and required
the plaintiff to carry out the work and treat the said
letter as final notice.
lxxv. Vide letter dated 05/08.01.1996
(Ex.D.55), the defendant once again listed out the
various deficiencies and pointed out that the total
outstanding secured advance was `13,00,945/- and
called upon the plaintiff to take necessary action and
read the said letter as a final notice.
lxxvi. Vide letter dated 28/29.02.1996
(Ex.D.57/D26/P53), the defendant pointed out the
various deficiencies in the work of the plaintiff and
informed that necessary action would be taken as per
the agreement including resending of the contract if
the needful is not done within time;
lxxvii. Vide letter dated 5.3.1996 (Ex.P54) the
plaintiff referring to the various earlier
correspondences, listed out action for sorting out
various issues;
lxxviii. The plaintiff, vide legal notice dated
7/8.3.1996 (Ex.P55) has called upon the defendant to
sort out the differences to ensure completion by April,
1996;
lxxix. The plaintiff, vide letter dated 12.3.1996
(Ex.P56) has sought for issue of departmental
materials to facilitate completion of the work in terms
of the work order;
lxxx. Vide letter dated 13.3.1996 (Ex.P57), the
plaintiff requested the defendant to withdraw the
letter issued by it to the bank not permitting the
plaintiff to encash the bank guarantee;
lxxxi. The plaintiff vide letter dated 18.3.1996
(Ex.P58) referring to the meeting held between the
parties on 15.3.1996 conveyed to the defendant that
pending settlement of its claims, the plaintiff will be
increasing the strength of the work force and give
progress of 3.5 lakhs by April, 1996, on specific
assurance that payments would be released. It
further requested for 407 bags of cement to be issued
immediately for carrying out the work up to 5.4.1996;
lxxxii. The plaintiff vide letter dated 21.3.1996
(Ex.P59) requested for issue of material for
completing the works in all respects with respect to
378 units;
lxxxiii. Vide letter dated 21.3.1996 (Ex.P60), the
plaintiff sought for copies of the bill Nos.1 to 144;
lxxxiv. Vide letter dated 21.3.1996 (Ex.P61) the
plaintiff sought for payment of intermediate bill
amounting to `21,61,285.16. It also requested for
copies of bill Nos.1 to 14 contending that there was
some omission in the measurements recorded by the
defendant;
lxxxv. The defendant got issued a registered
letter dated 26.3.1996 (Ex.P63), whereunder it
referred to its earlier correspondences as well as letter
dated 21.3.1996 of the plaintiff (Exs.P59 and P60) and
in detail set out its responses, inter alia, placing on
record that there is recovery outstanding towards
consumed cement of 9980 bags up to 14 RA bill and
until the cost of the cement is recovered, there is no
funds available to purchase the quantity of the
cement. It has further placed on record that the
balance quantity of 17.8 MTs., steel with the plaintiff
and until the said quantity is consumed, the balance
quantity cannot be issued. It has further placed on
record that if the plaintiff does not give the required
progress by 6.4.1996 to complete the balance work,
action will be initiated;
lxxxvi. Vide registered letter dated 30.3.1996
(Ex.P64) in response to the legal notice dated
7.3.1996 (Ex.P55), the defendant has in detail
responded to the assertions made by the plaintiff vide
the said legal notice;
lxxxvii. The plaintiff vide its letter dated 3.4.1996
(Ex.P65) in response to the letter of the defendant
dated 30.3.1996 (Ex.P64) as disputed the assertions
made by the defendant regarding supply of cement
and steel. Further, the plaintiff sought for settlement
of existing claims as also the payment of pending bills
and handing over of the balance site;
lxxxviii. Vide letter dated 11.4.1996 (Ex.P66) the
plaintiff referring to its earlier correspondences sought
for supply of cement/steel and also settlement of its
existing claims;
lxxxix. Vide letter dated 25.4.1996 (Ex.P67) the
plaintiff once again sought for payment of existing bills
and supply of material;
xc. Vide communication dated 5.6.1996
(Ex.P69), the defendant issued to the plaintiff,
contract rescinding order whereunder the defendant
intimated the plaintiff that the tender agreement has
been rescinded and requested that the representative
of the plaintiff be present at the site on 20.6.1996 at
11.00 am., for taking final measurements;
xci. Vide letter dated 19.6.1996 (Ex.P70) the
plaintiff noticing the letter of the defendant dated
5.6.1996 has intimated that the plaintiff is unable to
be present for the joint measurements and sought for
deferment of the joint measurements;
xcii. Vide legal notice dated 17.10.1996
(Ex.P87) the plaintiff got issued a legal notice under
Section 72 of the Karnataka Housing Board Act, 1962
and made a claim for payment of a total sum of
`1,75,10,964/- from the defendant.
16. It is forthcoming from the aforementioned that
pursuant to the tender dated 14.10.1991 issued by the
defendant for construction of the said 909 tenements,
negotiations took place between the plaintiff and the defendant
regarding the same and in October, 1991 itself, the defendant
had intimated the plaintiff that various sites were unable to be
handed over to the plaintiff for construction of the said
tenements due to various issues/disputes. It is further
forthcoming from the communication dated 18.12.1991 (Ex.P6)
that the defendant had requested the plaintiff to take up
construction of 36 tenements in Appareddy Palya and further
construction of 462 tenements at Jeevanahalli/Doddagunte
immediately and sought for the work to be commenced on
either 19.12.1991 or 20.12.1991 since the Hon'ble Minister for
Housing and Urban Development was pressing for starting of
the work. Further, it is forthcoming from the letter dated
28.12.1991 (Ex.P7) that the plaintiff has acknowledged to the
defendant that it has started cleaning of the site and
excavation of marked houses.
17. Thereafter, various communications have been
exchanged between the parties including the plaintiff having
issued a bank guarantee as is forthcoming from the letter dated
11.2.1992 (Ex.P10). The plaintiff vide letter dated 18.02.1992
(Ex.P11) has sought for issuance of work order while placing on
record that the construction of 462 tenements was not part of
the original tender. It is forthcoming that the plaintiff
commenced construction much prior to issuance of the work
order and that the work order was issued on 12.3.1992
(Ex.P83), whereunder construction of 770 units in Sy.No.150/1,
151, 152 and 158 of Doddagunte/Jeevahanalli was entrusted
and the total contract including the tender premium of 15%
was a sum of `1,88,59,825/-. The period of completion was 18
months from the date of entrustment of not less than 75% of
the work site area. Various other conditions including security
deposit was stipulated in the work order (Ex.P83). The
defendant vide letter dated 08.04.1992 (Ex.P14) while referring
to the work order dated 12.03.1992 has placed on record that
although in the work order, the period for completion of the
work was 18 months including the rainy season from 15th June
to 15th September, as per the discussion held on 26.03.1992,
the period of completion of the work was restricted to 12
months.
18. It is forthcoming that the defendant has supplied
various quantities of cement and steel as agreed, apart from
giving mobilization advance. However, the plaintiff has
consistently sought for further supply of cement and steel from
the defendant.
19. As is forthcoming from the letters dated 1.1.1993
(Ex.D34), 4/10.2.1993 (Ex.D35) and 6.2.1993 (Ex.D36) the
defendant has specifically alleged that the plaintiff has
misutilized the cement and steel supplied by the defendant for
the project in question and has in fact, diverted the said
material supplied by not utilizing the same for project in
question. Although the plaintiff has denied the same, there is
sufficient material on record which indicate that the defendant
has clearly pointed out the misappropriation of the material
supplied by it.
20. The defendant vide letter dated 20.04.1992
(Ex.P15) has placed on record the observations/instructions
pursuant to the inspection made by the Chairman of the
defendant on 22.03.1992 whereunder, it, inter-alia, suggested
various measures with regard to the construction carried out at
Doddagunte-Jeevanahalli site. The plaintiff vide letter dated
05.06.1992 (Ex.P18) has placed on record various aspects
regarding construction of 464 units at Doddagunte. In the said
letter, the plaintiff has admitted that out of 464 houses, more
than 20% of the site is yet to be made available. The defendant
vide letter dated 02.09.1992 (Ex.P26), while responding to the
letter of the plaintiff dated 28.08.1992 (Ex.P25), has responded
to the various aspects raised by the plaintiff in the said letter.
Further, the defendant in Ex.P26 has raised various aspects
indicating the slow progress of work and has specifically
stipulated that depending on the progress of the work by the
plaintiff, the defendant will take appropriate action in awarding
the work concerning the tender for 909 tenements.
21. Hence, as is clearly forthcoming from the material
on record, particularly Ex.P26, that the defendant specifically
entrusted construction of 462 units (wrongly mentioned as 464
units) to the plaintiff and also specified that after completion of
the said 462 units in a satisfactory manner the question of
entrustment of further construction to the plaintiff would arise.
However, it is forthcoming that the plaintiff has in all its
correspondences specifically demanded from the defendant for
entrustment of the balance work of construction of 909
tenements. The demand of the plaintiff for entrustment of
balance work of 909 tenements is ex facie untenable having
regard to the fact that the area in which the construction was
required to be taken was not available with the defendant.
Although the plaintiff participated in the tender issued by the
defendant for construction of 909 tenements, there was no
binding obligation on the defendant to entrust the said work to
the plaintiff. It is relevant to note that the work order (Ex.P83)
was for construction of 707 tenements. However, the defendant
has entrusted construction of 462 units to the plaintiff and had
specifically stipulated vide Ex.P26 that appropriate action for
awarding the work with regard to the 909 tenements will
depend on the progress of the work by the plaintiff in respect of
the construction of 462 units already entrusted.
22. The defendant vide letter dated 23.10.1992
(Ex.P28) had called upon the plaintiff to do the needful
regarding the submission of the bar-chart, failing which action
will be initiated to cancel the contract. The plaintiff, vide letter
dated 29.10.1992 (Ex.P29) had sought for copy of the sanction
estimate or Schedule-B, on receipt of which the required bar-
chart would be prepared. The defendant vide letter dated
31.10.1992 / 02.11.1992 (Ex.P30) forwarded a copy of the
Schedule-B which contained the details/specifications of the
construction that was required to be carried out by the plaintiff.
23. Further, despite the defendant repeatedly pointing
out various deficiencies in the construction activity that was
carried on by the plaintiff, the plaintiff has repeatedly claimed
for the balance construction work to be handed over and also
claimed that it had mobilized requisite men and material for
construction of the entire work as demanded. However, it is
relevant to note that there is no material placed on record by
the plaintiff to demonstrate that it has mobilized the entire men
and material. On the contrary, the claim of the plaintiff that it
had mobilized all the men and material is ex facie untenable
having regard to the fact that the defendant has from time to
time pointed out the slow progress of the work carried on by
the plaintiff and has repeatedly asked for the plaintiff to
expedite the work. If the plaintiff had, infact mobilized the
men and material to carry out construction of 909 tenements,
the question of slow progress of work by it would not have
arisen.
24. It is relevant to note that vide letter dated
06.02.1993 (Ex.D36) the plaintiff has specifically alleged
regarding the plaintiff misusing the steel and also that two
water pumps used for curing were under repair for more than a
month. Hence, the defendant called upon the plaintiff to comply
with the work progress failing which the penal clause under the
contract would be applied. Further, vide letter dated dated
02.05.1992 (Ex.D28), which has been issued by the defendant
in reply to the plaintiff's letter dated 18.02.1993 (Ex.P34), the
defendant enclosed parawise replies to the letter of the plaintiff
and further intimated that action will be taken by imposing
penal clauses and withdrawal of work.
25. It is forthcoming from a perusal of the
correspondences as noticed above that despite the demand
made by the defendant to expedite the progress of the
construction work, the plaintiff has made a counter demand for
supply of material and payment of bills. In fact, it is
forthcoming from letter dated 01.01.1993 (Exs.D34), letter
dated 7/12.12.1995 (D53) and letter dated 28/29.02.1996
(D57) that the plaintiff has also stopped the work on the
ground that the defendant has not supplied material to the
plaintiff.
26. It is clear that the plaintiff has admitted vide letter
dated 05.06.1992 (Ex.P18) that it had received more than 80%
of the area to put up construction of 462 units at Jeevanahalli-
Doddagunte. In terms of the tender (Ex.P83) and as recorded
in Ex.P14, the time for completion of the construction was 12
months. Hence, the plaintiff was required to complete the
construction within 12 months from 05.06.1992.
27. Since there was delay in the completion of
construction, various correspondences have been exchanged
between the parties and the parties have also held various joint
meetings to address the issues arising from the said delay. The
minutes of the meeting held on 21.02.1994 (Ex.P51) discloses
that the parties agreed to the manner of resolution of various
aspects including the demand of the plaintiff for further cement
as well as payment of pending dues. However, since according
to the defendant, the work had not progressed in terms of what
was agreed between the parties, various notices have been
issued i.e., Ex.P53/Ex.D57, Ex.P63, etc. Thereafter, the
defendant vide letter dated 05.06.1996 (Ex.P69) has issued the
"Contract Rescinding Order" whereunder it has rescinded the
contract entrusting the work to the plaintiff and directed the
representative of the plaintiff to be present at the site on
20.06.1996 for taking final measurements. However, the
plaintiff vide letter dated 19.06.1996 (Ex.P70) has sought for
rescheduling of the date fixed for taking joint measurements. It
is also relevant to note here that the plaintiff also issued legal
notice dated 07.03.1996 (Ex.P55) to the defendant.
28. The defendant has also issued various notices to
the plaintiff i.e., notice dated 19/22.04.1994 (Ex.D13), notice
dated 10/11.05.1994 (Ex.D14), final notice dated 15.6.1994
(Ex.D15), final notice dated 19.7.1994 (Ex.D16), notice dated
20.02.1996 (Ex.D18/Ex.D57), notice dated 20.03.1996
(Ex.D19), notice dated 26/27.11.1993 (Ex.D25/Ex.D46), notice
dated 28/29.02.1996 (Ex.D26), notice dated 05/08.01.1996
(Ex.D27), notice dated 15.05.1992 (Ex.D29), notice dated
01.01.1993 (Ex.D34), notice dated 10.02.1993 (Ex.D35),
notice dated 09/10.09.1993 (Ex.D42), notice dated 31.08.1995
(Ex.D48), notice dated 13.10.1995 (Ex.D49), notice dated
20.11.1995 (Ex.D50), notice dated 27.11.1995 (Ex.D51),
notice dated 01.12.1995 (Ex.D52) and notice dated 05.01.1996
(Ex.D55) with regard to the alleged delay in the progress of the
work by the plaintiff.
29. The Trial Court has, while considering issue No.1
recorded a finding that the version of the plaintiff is supported
by relevant documents and defendant has failed to prove the
issue. Further, while considering the claim of the plaintiff, the
Trial Court has held that the plaintiff has stated in the plaint
that the land in Sy. No.151 for 24 units were handed over on
25.05.1995 and the Survey number site area for 6 units was
handed over on 15.12.1995. The Trial Court has further held
that the version of the plaintiff is supported by relevant
documents without specifically recording a finding as to which
of the documents demonstrates the same. Hence, the finding
of the Trial Court on issue No.1 is ex-facie untenable and liable
to be set aside.
30. The Trial Court while considering issue No.2 has
noticed that although the plaintiff was the successful tenderer
for construction of 909 tenements in seven places in Bengaluru,
due to difficulties in handing over the possession of the area to
the plaintiff for construction, negotiations were made for
construction of 770 houses in Jeevanahalli-Doddagunte in Sy.
Nos.150, 151, 152 and 158 which was accepted by the
plaintiff. The Trial Court has further, noticing Exs.P6 and P7
held that the defendant has asked the plaintiff to take up the
construction work immediately even without executing proper
agreement. Hence, the Trial Court has held issue No.2 in the
Negative.
31. The Trial Court while considering issue Nos.4 to 6
merely noticed that the plaintiff has filed an affidavit
containing 125 pages and marked Exs. P1 to P9. Further,
noticing that the defendant examined its Manager as DW.1 and
Assistant Executive Engineer DW.2 and marked Exs.D1 to D58,
without noticing any specific correspondence between the
parties, merely recorded a finding that the correspondence
clearly goes to show that the defendant is at fault. The said
finding recorded by the Trial Court is ex-facie untenable and
liable to be set-aside.
32. The Trial Court has noticed that the defendant
entrusted the work of construction of 462 units at Jeevanahalli
and the defendant gave sital area for construction of 376 units,
the site area for 348 units was handed over on 14.01.1992
and remaining units was handedover on 15.12.1995. Further,
the Trial Court noticing the testimony of DWs.1 and 2 held that
DW.1 has admitted that 75% of the area was given to the
plaintiff only on 15.12.1995 and that DW.2 admitted that in the
year January 1992 area given to the plaintiff was only for 348
units in Jeevanahalli. The said finding of the Trial Court is
contrary to Ex.P18 as has been noticed at para 26 herein
above.
33. The Trial Court while considering the claims made
by the plaintiff and while discussing regarding issue Nos.12 and
13 has, after noticing the 9 claims made for a total sum of
`81,46,758.20 has recorded the following findings:
"31. The plaintiff estimated the loss during the
period between 1991 to 1996 to the extent of
`94,67,578/-; but restricted the claim only for
`14,00,000/-. While discussing above issues and
particularly while discussing issue Nos.3 to 6, the
Court has come to the conclusion; it is the
defendant who has failed to supply materials like
cement, steel and structural drawings to
defendant in time. Further, the Court has also
come to the conclusion that the defendant has
not handed over the complete 75% of the site
(area) to the plaintiff before December 1995 and
as per the terms and conditions the plaintiff was
liable to finish the work in June 1997; but in June
1996 itself the defendant without any valid
reasons rescinded the contract of the plaintiff.
Further, the defendant officials stopped the work
of construction temporarily. The defendant
officials have also asked the plaintiff to change
and alter the structures in the middle and all
these facts caused delay in finishing the work by
plaintiff. For that, the plaintiff is not responsible.
The defendant itself is responsible for the delay
caused in finishing the work. The claim of the
plaintiff is supported by various documents and
bills submitted by the plaintiff. There is no reason
to discard the claim of the plaintiff for a decree
for `81,46,758.20 paise. Hence, the suit of the
plaintiff is to be decreed."
34. With regard to the construction carried out by the
plaintiff it is relevant to note that the defendant from time to
time pointed out various deficiencies in the work carried out by
the plaintiff including the improper curing, unsatisfactory
progress of the work, not carrying out the work as per the
instructions given by the officials of the defendant, etc., as is
forthcoming from letters dated 28.08.1992 (Ex.P25),
10.03.1994 (Ex.D14), 28/29.02.1996 (Ex.D18), 14.09.1992
(Ex.D30),06.02.1993 (Ex.D36) and letter dated 13.10.95
(Ex.D49). Although the plaintiff has repeatedly sought for
various drawings and particulars to enable it to carry out the
construction, there is overwhelming evidence on record to
demonstrate that the plaintiff was not carrying out the work as
specified by the defendants. Having regard to the same, the
defendant had imposed a penalty of `100/- per day as is
forthcoming from the letter dated 10.02.1993 (Ex.D35), letter
dated 18.2.1993 (Ex.P35), letter dated 7/12.12.1995.
However, despite imposition of the penalty, the plaintiff has
continued to carry on the work, although in its correspondences
with the defendant, the plaintiff has protested the imposition of
the penalty.
35. It is relevant to note that the defendant has issued
various notices to the plaintiff by specifically stipulating that
there is delay in the progress of the work and notifying the
plaintiff to expedite the completion of the work, failing which
the penal clauses in the Agreement would be imposed and also
the contract terminated. This aspect has already been noticed
at para 24 hereinabove. Further, it is also pertinent to note that
some of the notices issued by the defendant to the plaintiff
were also returned as unserved.
36. It is also relevant to note that on the date when the
defendant called upon the plaintiff to be present for joint
measurement, the Plaintiff was not present. It is further
forthcoming that the defendant has specifically notified the
plaintiff that the work at the site has stopped and there were
no men of the plaintiff who was present at the site.
37. The Trial Court has not appreciated the material on
record with respect to the claims made by the plaintiff while
awarding the amounts sought for in the suit. Merely on a
cursory mention of some of the documents, the Trial Court has
decreed the suit of the plaintiff by granting the entire sum of
`81,46,758.20. The said judgment of the trial Court is ex-facie
erroneous and liable to be interfered with.
38. Learned counsel for the respondent/plaintiff
vehemently contended that PW.1 has not been cross examined
regarding the testimony adduced by the plaintiff claiming
damages. However, it is relevant to note that the plaintiff was
required to plead and prove the basis of its claim of damages.
The plaintiff is not entitled to succeed in the suit by merely
demonstrating that there was delay by the defendant in
handing over certain requirements for completion of the work
entrusted to the plaintiff by the defendant. The plaintiff is
specifically required to plead and prove its entitlement in
respect of each claim of damages made by it. In that regard, it
is relevant to note that apart from adducing the testimony of
PW.1 who was the partner of the plaintiff, no other witness, like
the Supervisor who was supervising the work at the site on
behalf of the plaintiff, etc., has been examined to testify
regarding the extent of manpower and material maintained at
the site. The plaintiff has also not produced any material on
record to demonstrate that it has made payments in respect of
the manpower it had allegedly maintained at the worksite of
the defendant. Although the plaintiff has filed a voluminous
affidavit by way of examination in chief giving details of various
calculations on the basis of which it has made its claim for
damages, the plaintiff has failed in producing the necessary
documentary material in support of the oral evidence adduced
by it to justify its claim for damages.
39. The plaintiff has made a claim towards bill Nos. 15
and 16. However the plaintiff has failed to demonstrate that it
has carried out the works, the cost of which was claimed vide
the said bill Nos.15 and 16.
40. The plaintiff has also made a claim for further
amount in respect of bill Nos.1 to 14. It is relevant to note
here that the Bill Nos.1 to 14 which were submitted to the
defendant in respect of the work carried on by the plaintiff have
been paid by the defendant. Although the plaintiff has sought
copies of the said bill Nos.1 to 14 as is forthcoming from letter
dated 1.03.1996 (Ex. P60) the plaintiff has failed to take any
steps in the suit requiring the defendant to produce the said
bills, so as to mark the same in evidence in order to prove its
entitlement for any further amounts that the defendant is liable
to pay under the said bills Nos.1 to 14. In the absence of the
plaintiff calling upon the defendant in the proceedings before
the trial Court to produce Bill Nos.1 to 14, the claim of the
plaintiff in respect of any further amounts claimed in the Bill
Nos.1 to 14 is not liable to be granted.
41. It is relevant to note here that the defendant has
examined its Manager as DW.1 and Assistant Executive
Engineer in its project office as DW.2. DW.1 has, in detail set
out as to how the plaintiff has, despite having been supplied
the requisite quantities of cement and steel, has not shown
requisite progress of work resulting in the defendant
terminating the contract vide contract agreement rescinding
order dated 5.6.1996 (Ex.P69) and 5/11.6.1996 (Ex.D6).
Further, it has been stated by DW.1 that, consequent to
rescinding the contract with the plaintiff, the defendant itself
has completed the 384 units departmentally. He has
specifically deposed that the defendant, in its Board Meeting
held on 13.8.1996 has, approved the revised cost of `75.60
laksh proposed for completion of the said 384 units
departmentally. It is further relevant to note that the
defendant produced the sketch of the project (Ex.D20) and
measurement books as Exs.D21, D22 and D23. Five books
containing vouchers, indents and invoices for supply of cement
and steel have been marked together as Ex.D24.
42. DW.2 who is the Assistant Executive Engineer has
also deposed regarding the stoppage of work on 15.2.1996 and
that the plaintiff not being present for joint measurements.
DW.2 has also stated in his affidavit by way of examination-in-
chief that the cost incurred by the defendant towards the
balance work was `75,50,000/-. The cost towards the material
supplied to the plaintiff has also been stated in the affidavit.
Although the plaintiff and the Trial Court have placed reliance
on the cross-examination of DW.1 to contend that 75% of the
sital area was not handed over, having regard to the plaintiff
itself admitting vide letter dated 5.6.1992 (Ex.P18) that it had
received more than 80% of the payment to put up construction
of 462 units, it is now not open to the plaintiff to contend that
requisite area has not been handed over.
43. It is relevant to note here that in the present case,
the plaintiff has not completed construction of the work
entrusted to it. In fact it has abandoned the project as is
forthcoming from letters dated 28/29.2.1996 (Ex.P53 and
Ex.D57) resulting in the defendant rescinding the contract vide
said letters. It is further clear and forthcoming that the
defendant has undertaken completion of the balance work by
itself having regard to the failure of the plaintiff to complete the
construction of the work entrusted to it. The Trial Court has
miserably failed in considering this aspect of the matter and
hence, the judgment of the Trial Court is contrary to the
material on record.
44. It is also relevant to note that the defendant has
produced the relevant measurement books as well as the
vouchers, indents and invoices vide Exs.P21 to P24 indicating
the extent of construction that has been carried out periodically
as well as the material supplied. The Trial Court has not
appreciated the said documents while considering the claim of
the plaintiff.
45. In view of the discussion above, the judgment of
the Trial Court decreeing the suit of the plaintiff for a sum of
`81,46,758.20 is unsustainable and not based on the material
available on record. The plaintiff has miserably failed in
proving that the defendant was liable to pay the amounts
claimed by the plaintiff. Hence, the question Nos.(i) to (iii)
framed for consideration are answered in the negative.
46. This Court by order dated 06.04.2009 granted
interim stay of the impugned judgment and decree subject to
the appellant depositing 50% of the decreetal amount before
this Court. Accordingly, the appellant has deposited a sum of
`40,73,379/- vide cheque bearing No.276786 dated
15.05.2009. Hence, the said amount is required to be
refunded to the appellant.
47. In view of the aforementioned, the following:
ORDER
i. The above appeal is allowed with costs;
ii. The judgment and decree dated 30.6.2008 passed
in OS No.11343/1996 by the XXVI Additional City
Civil and Sessions Judge, Mayo Hall Unit,
Bangalore, is set aside;
iii. OS No.11343/1996 on the file of XXVI Additional
City Civil and Sessions Judge, Mayo Hall Unit,
Bangalore, is dismissed with costs;
iv. The amount of `40,73,379 deposited by the
appellant before this Court pursuant to the order
dated 06.04.2009 shall be refunded to the
appellant.
v. Modified decree to be drawn accordingly.
Sd/
(S.G.PANDIT)
JUDGE
Sd/-
(C.M. POONACHA)
JUDGE
Bs/nd/pnv/sh/yan
