Karnataka High Court

The Chief Engineer vs M/S. Rathod And Naik Co on 14 May, 2025

Author: B.M.Shyam Prasad

Bench: B.M.Shyam Prasad

 IN THE HIGH COURT OF KARNATAKA AT DHARWAD
                   BENCH

      DATED THIS THE 14TH DAY OF MAY 2025

                   PRESENT

  THE HON'BLE MR. JUSTICE B. M. SHYAM PRASAD

                     AND

      THE HON'BLE MR. JUSTICE C.M. JOSHI

    REGULAR FIRST APPEAL NO. 100189 OF 2018


BETWEEN

  1. THE CHIEF ENGINEER
     KNNL, IRRIGATION (NORTH)
     CLUB ROAD, BELAGAVI-590001.

  2. THE EXECUTIVE ENGINEER
     OFFICE OF THE EXECUTIVE ENGINEER
     KNNL IRRIGATION DEPARTMENT
     GLBC DIV NO.3, BILGI
     DIST. BAGALKOT

  3. THE MANANGING DIRECTOR
     KNNL, 4TH FLOOR, COFFEE BOARD
     BUIDLING, DR. AMBEDKAR VEEDHI
     BENGALURU-560001.

    ALL APPELLANTS ARE REP BY
    APPELLANT NO.2 WHO IS AUTHRORISED
    TO REPRESENT
                                 ...APPELLANTS

(BY SRI. M.B.NARAGUND, SENIOR COUNSEL FOR
SRI. A.S.PATIL, ADVOCATE)
                          2




AND

M/S. RATHOD AND NAIK CO.,
REGD. PARTNERSHIP FIRM
CIVIL CONTRACTORS
VEERABHADRA NAGAR,
PLOT NO.62, 1ST CROSS,
BELGAVI-590016,
REP. BY ITS PARTNER
SRI. KESU POMU RATHOD
AGE 56 YEARS
OCC: CONTRACTOR
R/O BELAGAVI.
                                  ...RESPONDENT

(BY SRI. M.S.BAGALI, ADVOCATE FOR
SRI. MRUTYUNJAY TATA BANGI, ADVOCATE)

      THIS REGULAR FIRST APPEAL IS FILED UNDER
SECTION 96 OF CPC AGAINST THE JUDGMENT AND
DECREE DATED 12.12.2017 PASSED IN O.S.No.49/2012
ON THE FILE OF THE I ADDITIONAL SENIOR CIVIL
JUDGE AND CHIEF JUDICIAL MAGISTRATE, BELAGAVI,
PARTLY DECREEING THE SUIT FILED FOR RECOVERY
OF MONEY.

      THIS   APPEAL   HAVING   BEEN   HEARD   AND
RESERVED ON 10.01.2025 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, B.M.
SHYAM PRASAD.,J DELIVERED THE FOLLOWING:



CORAM:   THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD
          AND
          THE HON'BLE MR. JUSTICE C.M. JOSHI
                             3




                   CAV JUDGMENT

(PER: THE HON'BLE MR. JUSTICE B.M.SHYAM PRASAD)

This appeal is by M/s Karnataka Neeravari

Nigam Limited and its officers [the defendants and

are referred to as 'M/s KNNL'] in OS No.49 of 2012 on

the file of the I Additional Senior Civil Judge, Belagavi

[for short, 'the civil Court'], and M/s KNNL is

aggrieved by the civil Court's judgment and decree

dated 12.12.2017. The civil Court has decreed the

respondent's suit in OS No.49 of 2012 for recovery of

money holding M/s KNNL and its officers are jointly

and severally liable to pay to the respondent [a

partnership firm] Rs.6,05,02,830/- along with interest

at 6% per annum from date of the suit till the date of

realization. The civil Court has directed M/s KNNL to

pay this amount of Rs.6,05,02,830/- under the

following heads:

Sl. No.     Amount awarded                Amount
                under





  1     Excavation of all kinds          Rs.5,64,516.75
        of soil
  2     Excavation of soft rock
        (SR] and some rock              Rs.18,09,296.18
        blasting [SRB]
  3     Towards    un-coursed            Rs.1,52,918.29
        rubble masonry.
  4     Towards fabrication of
        steel enforcement and
        for work of CCM-15,              Rs.9,49,735.00
        40mm D/S with 15%
        plum.
  5     Removal and hauling of
        debris and de-silting/           Rs.4,12,445.25
        dewatering
  6     Towards        storage     of Rs.2,41,50,000.00
        materials
  7     Towards       forfeiture   of    Rs.1,09,248.00
        EMD
  8     Removal of hard rock            Rs.2,82,02,850.00

  9     IV R A Bill                      Rs.9,55,480.47




         2.     This Court,        on   15.11.2018,   has

considered M/s KNNL's request for stay of the

operation of the civil court's impugned judgment and

decree with the respondent beginning execution

proceedings in EP No.97/of 2018. This Court has

stayed further execution proceedings subject to M/s

KNNL paying the respondent a sum of

Rs.75,00,000/-. In this appeal, M/s KNNL has

admitted the liability to this extent. It is brought on

record that M/s KNNL, in compliance with this

condition, has indeed paid the respondents

Rs.75,00,000/-.

The undisputed facts and circumstances:

3. M/s KNNL, under a time bound

Central Government Program called the Central

Assistance of Accelerating Irrigation Benefit Program

[CAAIBP], has envisaged project for modernizing

Ghataprabha Left Bank [GLB] Main Canal over a

stretch of 30 Km between the 71st and 105th Kms of

this Main Canal dividing this into six packages of 5

Kms each. M/s KNNL has issued separate tenders

for these six packages, and the respondent has

successfully participated in the tender issued for the

fifth package [V Package] comprising 5 Kms stretch

between the 93rd and 98th Kms of this Main Canal. A

set of certain other contractors are successful in

offering their respective bids for the other five

packages.

3.1 M/s KNNL and the respondent have

signed the contract dated 17.11.2006 [referred to as,

'the Agreement'] with the respondent entrusting the

work of Concrete Lining for the stretch of 5 Kms

between 93rd and 98th Kms and issued Work Orders

dated 28.11.2006. M/s KNNL has handover the site

to the respondent on 01.03.2007. The respondent, in

performance of the terms of the Agreement, had to

complete the Concrete Lining work after the requisite

extraction, and removal of debris within four [4]

months between 01.03.2007 and 30.06.2007 as the

work could only be executed during this period before

the commencement of rains1.

3.2 The respondent, when he could not

complete the Contracted Work before 30.06.2007,

1 This stipulation admittedly is part of Clause 38 of the Agreement.

has requested for extension of time, and M/s KNNL

has granted such extension of time during the years

2008 and 2009 requiring the respondent to complete

the Contracted Work by 30.06.2009. However, with

the Contracted Work not being completed even

during the extended period, M/s KNNL has cancelled

the Agreement and entrusted the balance work to

third-party contractors after issuing fresh tender.

The other five packages are completed without

dispute.

3.3 The Contracted Work requires the

respondent to cut earth on either side of the existing

canal excavating all kinds of soil [AKS], Soft Rock

[SR] and Soft Rock Blasting [SRB] to provide for the

requisite Full Supply level [FSL] with Free Board [FB]

and Berm2 maintaining the requisite Canal Bed

Level/ Width and Slope. The extent of cutting

[excavation] varies along the stretch because of the

terrain, and therefore, the measurements will also

2 BERM means a flat strip of land [a raised bank] bordering a canal [or even a River].

vary. The nature of work with the Full Supply Level

with Free Board and specifications [subject to

variation as aforesaid] are explained by this

schematic representation [diagram].

The respondent - plaintiff's case:

4. M/s KNNL estimated the cost of the

Contracted Work at Rs.4,98,69,860/-, and the

respondent offered 33% more than the aforesaid

amount [in a sum of Rs.6,63,26,914/-]. This amount

was revised to Rs.6,08,24,847/- based on the

Technical Standing Committee's recommendation,

and the respondent accepted to execute the work for

this amount. M/s KNNL estimated the cost of work

in the year 2006 when the canal was in use, and as

such, the work entrusted under the Agreement did

not correspond with the site condition. M/s KNNL, to

prepare the estimates had to inspect the Canal when

it was not in use, and M/s KNNL, in notifying the

work based on improper estimation contrary to the

site condition, has committed a fundamental breach.

The respondent therefore had to mobilize men and

machinery beyond the estimated work to handle the

site's condition.

4.1 The respondent, describing the

aforesaid as the fundamental breach, has alleged that

M/s KNNL has committed breach such as [a]

preparation of the estimate based on cross sections of

the Canal at the interval of 50 meters instead of

interval of 20 meters resulting in the difference in

measurements and increase in excavation, [b] the

existing Ground Level, Canal Bed Level, Side Slope

and such others mentioned in the agreement did not

tally with the site's condition [c] the insistence on the

execution of the Canal Lining Work [Concrete Lining]

despite these errors would result in mismatch of

Canal Bed Levels at the Distribution Outlets, and

therefore improvisations had to be done [d] the

stretch at the 94th KM required Deep Cut but the

estimate did not correspond with the site conditions

like Slope, Top and bottom Widths, [e] the Concrete

Lining using Mechanical Paver Machine required a

minimum of 1.5 meter wide Berm but this was not

shown, [f] executing the excavation work to achieve

the required Full Supply Board and Free Board

required extensive removal of earth contrary to the

estimate, [g] the estimate only provided for excavation

of Soft Rock/Soft Rock Blasting but the site's

condition required extraction of Hard Rock.

4.2 The respondent brought these

defects to the notice of the concerned from M/s KNNL

seeking Technical Clearance for Additional Work as

contemplated under Clause 12 of the Agreement, but

M/s KNNL remained silent to gloss over the defect

and directed the respondent [orally] to execute the

work with no decision on the increase in the

excavation work and the cost. The Engineers with

M/s KNNL coerced the respondent to execute the

work without the technical approval for the increased

quantities.

4.3 The respondent has executed the

work during the years 2007, 2008 and 2009 despite

all the difficulties and in anticipation of the requisite

technical approval for the additional work. The

engineers with M/s KNNL have prevailed with the

Technical Sub-committee to decide on cancelling the

Agreement despite the Sub-committee's observations

about payments, which are detailed in para 13 of the

plaint.

4.4 The respondent also asserts that

because of the above, M/s KNNL is liable to pay

different amounts under the following heads along

interest at 24% p.a.

[i] The delayed interim payments for the work done and delay in release of amounts according to the Running Account submitted with effect from 01.07.2007,

[ii] For excavation of Soft Rock/ Soft Rock Blasting in a sum of Rs.28,26,546/- [at the rate of Rs.125.26 for the quantity measuring 22,565.43 m³],

[iii] For excavation of All Kinds of Soil [AKS] in a sum of Rs.10,05,479/- [at the rate of Rs.62.34 for the quantity of 16,128.95 m³ ],

[iv] For Uncoursed Rubble Masonry in a sum of Rs.2,88,581/- [at the rate of Rs.2279.29 for a quantity of 126.61 m³],

[v] For fabrication of steel reinforcement a sum of Rs.9,49,735/- [at the rate of Rs. 61.34 for a quantity of 15,483.12 KG of Steel],

[vi] For Cement Concrete with M-15 grade, 40mm d/s 15% plum at Rs.1,00,58,718/- [at the rate of Rs.4,382.96 for a quantity of 2,294.96],

[vii] For removing and hauling debris in a sum of Rs. 7,36,968/- [at the rate of Rs.112.57 for the quantity of 6546.75 m³],

[viii] For excavation of Hard Rock in a sum of Rs. 3,13,22,578/- [at the rate of Rs.364.80 for the quantity of 85,862.33 m³],

[ix] For Storing Materials [such as sand] in a sum of Rs.76,50,000/- [at the rate of Rs.1700/- for a quantity of 4500 m³],

[x] For storing jelly at site in a sum of Rs.1,65,00,000/- [at the rate of Rs.2200/- for the quantity of 7500 metric tons],

[xi] For the charges incurred in procuring rubble [at the rate of Rs.200 per cubic metre], and

[xii] For the cost of two Concrete Transit Mixers in a sum of Rs.75,94,627/-.

4.5 The respondent apart from these

amounts has also sought for special damages under

different heads such as reimbursement of the extra

expenditure incurred in employing men and

machinery for commencing the work after the delay

with an appropriate escalation in price of Rs.

2,00,000/- per month for the extended period

starting from 01.07.2007 towards overhead charges,

and other special damages under different heads.

M/s KNNL's defense:

5. M/s KNNL, without denying that the

estimate is prepared based on the cross-sections of

the Canal at intervals of 50 meters and not 20

meters3, has contended that the respondent, which

had to begin work simultaneously on all the

3 According to M/s KNNL, the Estimation is prepared based on the cross sections at 50 meter intervals for existing canals and for construction of new canals the Estimation is prepared based on the cross sections at 20 meter intervals.

stretches, commenced work only on the 94th KM

stretch employing just an excavator. Therefore, the

Assistant Executive Engineer wrote to the respondent

on 27.02.2007 to expedite commencement of work on

all the stretches to ensure that the Contracted Work

is completed by 30.06.2007. M/s KNNL has

specifically denied the allegation that the preliminary

estimation was prepared when the Canal was in use

stating that this exercise was undertaken during the

canal closure period.

5.1 M/s KNNL has averred that the

site's conditions for assessment of the Deep Cuts,

Partial Cutting, Bank-work reaches and Cross-section

at 50 meter intervals were collected during the canal

closure period and submitted to the Chief Engineer

[Irrigation] Belagavi, and that this Chief Engineer has

approved the Estimate [and other details of the

Contracted Work] after a detailed scrutiny. M/s KNNL

also contends that, as typically there will be variation

between the estimation and the site's condition,

Clause 20 is incorporated in the Agreement providing

for adjustments in terms of Clause 13 of the General

Conditions of Contract.

5.2 M/s KNNL asserts that the

respondent during the contract period could only

achieve financial closure of Rs.35,14,000/- as against

Rs. 6,08,24,000/- and that too only along the 94th

KM stretch denying the respondent's case that during

this period its representative had filed details of the

defects in Estimation. However, M/s KNNL accepts

that the Chief Engineer, in August 2007 [after

completion of the contractual period], suggested

modifications4 as the Deep Cut Reaches had to be

altered because the Canal width had to be increased

from 4.11 meters to 8.01 meters, but contending that

this did not render the tender defective as the tender

provided for additional work.

4 The details in these regards are stated in paragraph 16.3 of the Written Statement.

5.3 M/s KNNL, while detailing the work

executed by the respondent along the 94th KM stretch

to justify its case that the respondent had achieved a

financial closure of Rs.35,14,000/-as against the

tender work of Rs.6,08,24,000/-, has contended that

on 09.01.2008 the respondent submitted Schedule

of Program undertaking to complete the work by

30.06.2008, but did not even turn up at the site to

begin the work during the canal closure period in the

year 2008. M/s KNNL asserts that the respondent

had abandoned the work in the year 2008 and

therefore the concerned mooted proposal to begin

criminal proceedings, but no action was taken as the

respondent pleaded bona fides and undertook to

execute the work during the canal closure period in

2009.

5.4 M/s KNNL further contends that the

respondent had not submitted any bill as was

required under the Agreement and therefore its

officers arranged for measurement and prepared the

Bill taking the respondent's counter signature for

payment, and that subsequently in the year 2009,

the respondent showed progress of Rs.69,77,000/-

and submitted Second Running Account and Third

Running Account Bills for a sum of Rs.16,05,000/-.

Thereafter, a decision was taken to cancel the

Agreement without penalty and risk. M/s KNNL

contests the respondent's reliance upon the Sub-

committee's observations asserting that such

observations are internal, and the respondent cannot

draw any support from the same.

5.5 M/s KNNL has denied the liability to

pay the different amounts claimed by the respondent

under the specific heads on different grounds while

also denying the claim for special damages such as

the alleged improper forfeiture of EMD. M/s KNNL

has further denied the liability essentially contending

that the respondent will not be entitled to the

different amounts claimed because it has not

completed the work within the contractual period or

the extended period, and because the quantity of

work is part of the tender either as estimated or as an

additional work.

Issues framed by the civil Court

6. The civil Court has at the first

instance framed Issues such as whether the

respondent proves that it could not execute the

Contracted Work within the stipulated period

because M/s KNNL was in breach and whether M/s

KNNL proves that the suit is not maintainable and

that it had no jurisdiction to entertain the suit5.

However, the civil Court has framed Additional

Issues6 such as whether the respondent proves [i]

that there was defective estimation, [ii] that the

5 The civil Court at the first instance had framed Issue No.1 requiring the respondent to prove that he has executed the tender work for M/s KNNL as per the terms of the agreement, but on 28.06.2017 has reframed this Issue to be whether the respondent proves that he could not carry out the tender work within the stipulated period because of latches by M/s KNNL.

6 These Issues are framed on 02.06.2017, when the suit was listed for judgement, but the civil Court has heard the learned counsels for the parties after framing these additional Issues.

actual site condition differed from the details based

on which M/s KNNL has prepared the estimates, [iii]

that it had to excavate hard rock which is not part of

the quantities identified in the Estimate, [iv] it has

[a] excavated 85,862.33 Cubic Meter of hard rock,

[b] excavated Soil of All Kinds [SAK] in 16,128.95 Cubic Meter,

[c] excavated Soft Rock/Soft Rock Blast in 22,565.43 Cubic Meter,

[d] used rubble masonry in 126.61 Cubic Meter in the ratio of 1:5,

[e] used additional steel reinforcement of 15,483.12 KG,

[f] executed CCM-15, 40 MM d/s with 15% plum for 2294.96 Cubic Meter, and

[g] removed and hauled debris in 6546.75 Cubic Meter.

The details of the Witnesses examined and the Documents marked:

7. The respondent has examined Sri.

Ravi S/o Kashinath Chavan, a Power of Attorney, as

PW.1 and marked Exhibits P1 to P93, and M/s KNNL

has examined Sri Ulhas S/o Vasanth Kulkarni, a

retired Executive Engineer, who was in service at the

relevant time, as DW.1. M/s KNNL has marked

Exhibits D1 to D90. The respondent and M/s KNNL

have marked some documents twice, and these

documents include certain correspondences inter se

the officers of M/s KNNL and between the respondent

and M/s KNNL apart from the Tender Documents,

Work Order and proceedings of the Technical

Subcommittee Meeting.

The essentials of the civil Court's Reasoning:

8. The civil Court has taken Issue -1

and Additional Issues -1 and 5 together for

consideration, and these Issues require the

respondent to establish latches by M/s KNNL in

preparation of estimate as alleged and M/s KNNL to

show that unless the respondent constructed the

Template Wall, the estimation of Extra Financial

Implication [EFI] was not possible. The civil Court,

while opining that the evidence on record clearly

shows that the tender was faulty in technical

specifications and the officers of M/s KNNL have

made false allegations against the respondent of

executing the work whimsically, has concluded that

the strata classification at the time of estimation for

tender was not proper. The civil Court, in arriving at

this conclusion, has relied upon these following

conclusions.

8.1 The clause 1.5[a] of the tender

stipulates that M/s KNNL shall prepare L Sections

and drawings at intervals of 5 meter along the stretch

with the participation of the respondent's

representative and obtain his counter signature, and

though this clause is admitted, KNNL's witness

[DW.1] has stated that these details are part of the

Measurement Books. The Assistant Executive

Engineer with M/s KNNL [as per Exhibit P.36 dated

28.04.2009] has alleged that the respondent is

executing the work according to his whims and fancy,

but when the requisite sections and drawings are not

furnished, this allegation could not have been made.

8.2 The Chief Engineer along with the

Superintending Engineer, Executive Engineer and

Assistant Executive Engineer [DW.1] have inspected

the site [as per Exhibit P.20 dated 07.08.2007] and

prepared notes of Inspection which show that [a] the

respondent has tackled work in the 93rd, 94th, 95th,

and 96th KMs, [b] the excavation has to be carried out

after constructing Template Wall, [c] there must be

Paver Lining for Berm of 1.5 meter at Free Board with

balance cutting with side Slope at 1:1, and [d] that

Bank Work reaches for the Berm will have to be

provided.

8.3 The civil Court has opined that this

Inspection Note shows that there were instructions to

execute additional work observed at the time of

inspection with extra financial implication to the

respondent, but there is nothing on record to show

that any action was taken in furtherance thereof

before the cancellation of the Agreement except that

the proposal for approval of the financial implication

for the additional work is sent on 04.12.2009 as per

Exhibit P.44.

8.4 The civil Court has next considered

the Issues No. 4, 6 and 7, and these Issues relate to

the maintainability of the suit, the sufficiency of the

court fee paid and the respondent's right to relief. The

civil Court, on verification of the documents such as

correspondences and the minutes of the Technical

Sub-committee Meetings, has opined that the

respondent has established that M/s KNNL is

responsible for the delay. The civil Court has

concluded that M/s KNNL has acknowledged that

executing the Contracted Work will require extra

excavation/extraction and approval of Extra

Financial Implication [EFI] but has not granted such

approval and the respondent has proved that M/s

KNNL did not even release payment for the financial

closure achieved.

8.5 The civil Court has found in favour

of the respondent on these counts holding that in the

year 2007, the respondent is called upon [as per

Exhibit P.21/D.42] to complete the Contracted Work

by 14.07.2008 without approval of EFI, that in the

year 2008, the respondent is also called upon [as per

Ex. D.45-D.51] to complete the work by 14.07.2008

and it is informed that the contract will be closed at

its risk and cost without approval of EFI or payment,

that in the year 2009-2010, the respondent is

informed that:

[a] the contract will be extended on a

penalty of 7.5% but only to be later

informed that the penalty will be at the

rate of Rs.100/- per day for the period

between 30.06.2007 to 30.04.2010,

[b] the Technical Sub-committee is not

given all the information,

[c] the legal opinion [Exhibit P.59]

rendered to the Technical Sub-

             committee      is        that    the   closure       of

             contract     would        not     be   appropriate

             because      no     clear        breach      by    the

respondent is established and there is

nothing to show that the respondent

has been assigned the additional work,

and

[d] in a hurriedly convened manner the

Technical Sub-committee thereafter

has decided to close the Agreement and

forfeit the EMD.

8.6 The civil Court referring to a series

of decisions on the tendency amongst the

Government officials to encourage litigation to protect

themselves without taking decisions and the

requirement in the Government Officials to act fairly,

has opined that M/s KNNL is unfair in its conduct

and the respondent has established its entitlement to

receive compensation holding that the suit is

maintainable.

M/s KNNL's case in brief as urged in this appeal

9. Sri Nargund, the learned Senior

Counsel for M/s KNNL, in his endeavour to persuade

this Court to interfere with the Civil Court's

impugned judgment and decree canvasses the

following.

9.1 The Civil Court has awarded a total

sum of Rs.6,05,02,830/- under different heads but

without even considering M/s KNNL's specific case

and the evidence that is placed on record to vindicate

the same. This can be seen, amongst others, in the

Civil Court awarding a sum of Rs.2,82,02,850/-

towards Removal of Hard Rock and a sum of

Rs.2,41,50,000/-towards Storage of Materials.

9.2 The respondent has admittedly not

completed the work, and M/s KNNL is compelled to

publish fresh tenders and award fresh Work Orders

for completion of the modernization of the canal

between 93 and 98 KMs. M/s KNNL has this time

issued Work Orders to 5 [five] different agencies for

this stretch of 5 [five] KMs. These agencies have

completed the work and none of these 5 [five]

agencies have submitted a bill for payment for the

extraction of Hard Rock. M/s KNNL, to establish this

facet of their defense, has produced Balance Work

Sheet and Completion Report Balance Sheet [Exhibit

D.88 and D.89] and M/s KNNL's witness [DW.1] has

also spoken about this in his evidence, but he has

not been cross-examined.

9.3 The civil Court has not considered

these circumstances, and crucially, the civil Court

has failed to consider that the respondent has placed

no detail on [i] the stretch where the Hard Rock is

extracted, [ii] the men and machinery employed to

remove Hard Rock and [iii] the disposal thereof to

establish its case that it has extracted Hard Rock or

to refute the evidence as per Exhibits D.88 and D.89

to controvert M/s KNNLs' case.

9.4 The civil Court has accepted the

cross sections furnished by the respondent

overlooking the fact that the respondent has prepared

these cross sections unilaterally just before the

commencement of the suit and although the

respondent has signed Measurement Books. These

Books not only show the respondent has not

completed the Contracted Work despite repeated

extensions but also that the respondent is paid

according to the work executed in terms of the

Agreement. This would also be with the Running

Bills/Final Bills which are signed on behalf of the

respondent accepting that the measurements as

mentioned therein are true and correct.

9.5 The respondent's witness [PW.1] has

also admitted to signing the Measurements Book and

the Running/Final Bills in stating that "it is shown

that whatever the work the plaintiff has executed

during the tender period is recorded by the defendant

in the Measurement Book at points of time". The civil

Court, despite this overwhelming evidence, has

drawn conclusions against M/s KNNL.

9.6 The respondent's witness [PW.1] was

cross-examined on commission, and the civil Court,

because the Commissioner's Report containing the

cross examination was kept separately, has not

considered the cross-examination. The civil Court has

thus excluded vital material. The civil Court should

have examined the entire evidence in determining the

liability to pay compensation under the specific heads

upon consideration of the specifics of the respective

cases.

9.7 Sri Nargund, relying upon the

synopsis of the submissions on behalf of M/s KNNL,

proposes to take this Court through the details of the

findings by the Technical Sub-committee to justify

that the civil Court could not have accepted the

respondent's case on the extent of the work executed

or the expenses incurred in the execution, including

the cost of material such as jelly and sand in

computing the amount payable. The learned Senior

counsel emphasizes that M/s KNNL has shown the

liability to pay only a sum of Rs.75,00,000/- to the

respondent, which is in fact paid in compliance with

the interim orders of this Court in the present

proceedings.

A brief statement on the response on behalf of the respondent

10. Sri. M S Bagali, the learned counsel

for the respondent, stoutly refutes the canvass on

behalf of M/s KNNL, but he is not convincing in his

efforts to persuade this Court to accept that the civil

Court has actually considered the cross-examination

of the respondent's witness. The learned counsel

argues that this Court must not interfere with the

impugned judgement and decree, notwithstanding

certain circumstances in favour of M/s KNNL,

because the essentials of the respondent's case are

established.

10.1 Sri. M S Bagali argues that the

evidence on record establishes that [a] M/s KNNL

prepared the Estimate when the Canal was in use, [b]

the respondent has constructed the Template Walls

as directed by the Assistant Executive Engineer, [c]

the respondent objected to increase the canal width

in the Deep Cut Portions along the entire stretch

between the 93rd and 98th KMs, [d] the respondent

was restricted in commencing the work because it's

representatives were asked to await prior approval

from the competent authority for the additional

work/construction of Template Walls [e] the Chief

Engineer's Inspection Report, which refers to certain

additional works and deficiencies, bears testimony to

the Estimate being faulty.

10.2 Sri M.S. Bagali, relying upon the

details as underscored in the List of Dates and

Events filed on 22.11.2024, proposes to rely upon

correspondences [such as Exhibit P. 21, Exhibits P. 23

- P.30, Exhibits P.35 - P.41] to contend that these

Exhibits must be construed in a particular manner

that vindicates the respondent's case. However, the

learned counsel, with Sri Nargund seriously

contesting such reading of these exhibits, does not

dispute that this particular reading of these Exhibits

have not been put to M/s KNNL's witness.

The point/s for consideration:

11. This Court has called for a glossary

of the technical terms used and a PPT on the details

of the Contracted Work to understand the nuances.

With both Sri Nargund and Sri M.S. Bagali accepting

that M/s KNNL and the respondent must have

another opportunity to bolster their evidence to

substantiate their respective cases, this Court has

heard them on deciding the appeal on merits calling

for a report from the civil Court as contemplated

under Order XLI Rule 27 of the Code of Civil

Procedure [for short, 'the CPC'].

11.1 Further, as part of consideration of

the afore question, this Court has also heard Sri M.B.

Nargund and Sri M.S. Bagali on the question of

remanding the suit for reconsideration setting aside

the impugned judgement and decree with liberty to

file Interrogatories as contemplated under Order XI of

CPC and to lead further evidence.

This Court's reasoning on remand as against calling for a report

12. This Court must refer to one of the

recent decisions of the Apex Court on remand as

against the appellate Court itself deciding on the

merits. The Apex Court in Shivakumar v.

Sharanabasappa7 has held that a remand routinely

will not be justified when available evidence suffices

to dispose of the appeal on merits, but a remand may

be necessary in certain eventualities depending on

the facts and circumstances of each case. The Apex

Court has thus declared rejecting a canvass for

remand for reconsideration of the due execution and

authentication of a purported last Will and

Testament. The Apex Court has held thus:

A conjoint reading of Rules 23, 23-A and 24 of Order 41 brings forth the scope as also contours of the powers of remand that when the available evidence is sufficient to dispose of the matter, the proper course for an appellate court is to follow the mandate of Rule 24 of Order 41 CPC and to determine the suit finally. It is only in such cases where the decree in challenge is reversed in appeal and a retrial is considered necessary that the appellate court shall adopt the course of remanding the case. It remains trite that order of remand is not to be passed in a routine manner because an unwarranted order of remand merely elongates the life of the

7 (2021) 11 SCC 277

litigation without serving the cause of justice.

An order of remand only on the ground that the points touching the appreciation of evidence were not dealt with by the trial court may not be considered proper in a given case because the first appellate court itself is possessed of jurisdiction to enter into facts and appreciate the evidence. There could, of course, be several eventualities which may justify an order of remand or where remand would be rather necessary depending on the facts and the given set of circumstances of a case.

12.1 The essential controversy for the

decision in the suit is whether the respondent has

established that M/s KNNL is liable to pay the

different amounts claimed with the onus being on

M/s KNNL to show that the respondent has not

completed the Contracted Work despite the extension

of time. This controversy is presented for decision

with the rival pleadings leading to multifarious Issues

that have been framed and re-framed by the civil

Court with these Issues being reframed even after the

hearing of arguments. It cannot be gainsaid that the

Issues are presented in the backdrop of a technical

matter i.e., an assessment of the structure of the

canal as it existed, the details of the work to be

executed to change the structure to provide

additional features [modernizing the canal], and the

details of the work executed by the respondent.

12.2 These technical aspects will have to

be examined based only on the circumstances as

could be gathered today because M/s KNNL,

admittedly, has completed the modernization of the

subject stretch of the canal engaging the services of

other contractors after issuing fresh tender cancelling

the Agreement with the respondent. This Court

opines that, in these circumstances, the saying in law

that it is not the bulk of [the quantity of] the evidence

but the effectiveness of the evidence that will be

material is emphasized.

12.3 The respondent has examined a

Power of Attorney, whose competence to give evidence

is under serious dispute with M/s KNNL asserting

that this person was not supervising the work and

that he is not acquainted with all the technical

details. The respondent has marked 93 Exhibits, and

these include [apart from the correspondences]

technical documents showing the different quantities.

M/s KNNL through its witness [Sri Ulhas S/o Vasant

Kulkarni - DW1 - a retired Executive Engineer who

was in service at the relevant time] has marked 90

documents, and most of these exhibits are internal

communications or communications with the

respondent and technical documents such as

Estimates and Estimate Face Sheet with certain

abstracts, measurements and such other technical

details.

12.4 Undeniably, the evidence that M/s

KNNL and the respondent have let in is mostly

documentary evidence. The ocular evidence on the

relevance and probative value of the documentary

evidence is rendered tenuous with neither M/s

KNNL's witness nor the respondent's witness

speaking about them in the context of the specific

Issues that are considered. If the witnesses have not

explained the relevance of the correspondences or the

technical details in the documents in their chief

examination, they have also not been cross-examined

in this regard.

12.5 Perhaps it could be argued that the

onus cannot be on the other side to cross-examine on

the relevance of the documents if the witness has not

spoken about the documents marked through him,

but indubitably in the present case the assessment of

both the probative and relevance of the documentary

evidence is vastly undermined by the lack of

exhaustive examination of the witnesses on the

documents marked in evidence. This Court must

refer to certain specific aspects, which are as follows.

12.5.1 Measurement Book/s Running

Bills. M/s KNNL relies upon the Measurement

Books, which are marked as Exhibits P.84 and P.85.

As canvassed by Sri Nargund, these Exhibits [as

also the Running /Final Bills - Exhibit D.10] show

that the joint measurement was taken along each

stretch of the canal as per the Contracted Work at

intervals of 20 meters. It is emphasized that the

details in these Measurement Books and

Running/Final Bills do not reflect the quantities, or

the measurements, for which the respondent has

filed a claim in the suit.

12.5.2 The respondent has marked

the Measurement Books and M/s KNNL has marked

the Running/Final Bills. On behalf of M/s KNNL,

the respondent's witness is cross-examined on the

relevance of the entries in these Books/ Bills, but

M/s KNNL's witness has not explained the same in

his evidence and as such there is cross-

examination. These documents have multiple data,

and unless the witnesses concerned speak about the

relevance with appropriate cross-examination, these

documents serve no purpose, and this can only

mean that the trial is not effectively concluded.

Further, the civil Court has not considered these

documents.

12.5.3 Temporary and Permanent

Benchmarks: The civil Court, referring to clause 1.3

of the agreement, has opined that M/s KNNL has

failed to provide Temporary Benchmarks and this

was necessary for effective measurement of the work

executed by the respondent because the respondent,

based on such Temporary Benchmarks, was required

to erect the Permanent Benchmarks to facilitate final

measurements. The respondent's witness, while

admitting that the respondent has not written to

appellants asking for Temporary Benchmark, has

denied the suggestion that the Temporary

Benchmark would not be relevant but without

furnishing details.

12.5.4 Sri M.B. Nargund and Sri. M S

Bagali propose to take this Court elaborately

through the documents on the significance of the

Temporary/Permanent Benchmark. However, this

Court must observe that neither M/s KNNL's nor the

respondent's evidence is conclusive in this regard,

and if either M/s KNNL or the respondent can take

advantage of any failure in establishing/ erecting

the Temporary and Permanent Benchmarks, they

should have placed on record cogent evidence. As

such, this Court cannot arrive at a particular

conclusion without evidence.

12.5.5 Construction of Template Walls:

The civil Court has referred to M/s KNNL's witness

admitting to certain blanks in the Tender

Documents to opine that there are some latches in

M/s KNNL on giving instructions to the respondent

to execute the Contracted Work. M/s KNNL, to

assert that the blanks in the Tender Document will

not be significant given the other terms of the

Tender Documents/ Agreement, contends that the

respondent was required to construct Template

Walls at regular intervals and if the respondent had

constructed such Template Walls, the difference, if

any, in the quantity could have been assessed.

12.5.6 The respondent's witness is

elaborately cross-examined with reference to M/s

KNNL's correspondence calling upon the respondent

to construct Template Walls. The respondent's

witness has disputed the correspondences asserting

that these have been written although the

respondent had constructed Template Walls. If the

respondent's version is to be believed and held

against M/s KNNL, this Court must opine that it

was imperative for the respondent to place on record

the details of the construction of the Template Walls.

12.5.7 The civil court overlooking this

material aspect has opined that the question of

construction of the Template Walls will not be

relevant because neither the Executive Engineer nor

the Superintending Engineer have examined the

financial repercussions to the respondent. This

conclusion is a consequence of the party's failure to

place on record cogent and relevant evidence to

justify conclusions on technical aspects.

12.5.8 The reliance on

Correspondences: M/s KNNL and respondents have

relied upon, as aforesaid, on a series of

correspondences. The evidentiary value of these

correspondences must be firstly explained in the

chronology that they are written and secondly based

on the specific areas that those correspondences

relate to. These details will provide the context in

which the probative value of these correspondences

must be assessed. If these details are not furnished

with the opportunity to the other to admit the

consequence or the inference that could be from

these correspondences, neither M/s KNNL nor the

respondent can implore this Court/s to draw

inferences on a technical subject that could cause

jumbled conclusions.

12.5.9 The civil Court, in the absence

of these details, has opined that some

correspondences [Exhibits P.18, 19 and 20] are self-

explanatory and that these correspondences

indicate that the respondent required Additional

Funding as it had to execute additional work. In this

appeal, M/s KNNL and the respondent want this

Court to test the merits of the civil Court's

conclusions, but if this Court undertakes this

exercise in the absence of the details, it tantamount

to substituting its own reading on technical matters

without clear and cogent evidence.

12.5.10 The Respondent's claim of

removal of Hard Rock and Storage of Materials: Sri

M.B. Nargund has taken this Court through the civil

Court's reasoning to allow the respondent's claim for

removal of Hard Rock in a sum of Rs.2,82,02,850/-

and towards Storage of Materials in a sum of

Rs.2,41,50,000/- to demonstrate the deficiencies in

the civil Court's consideration of the respective

cases. The learned Senior Counsel emphasizes,

amongst others, that if the respondent had

extracted Hard Rock it should have been reflected

either in the Measurement Books or the Running

Bills but they are not mentioned in these documents

and that the Contracted Work, which is abandoned

by the respondent, is completed by five different

agencies after a fresh tender and none of these

agencies have made any claim for extracting Hard

Rock.

12.5.11 These would indeed be

substantial circumstances, and these must be

considered for a complete evaluation in the

backdrop of any other material that the respondent

has produced. The civil Court's conclusion in these

regards is found in paragraph-188 and onwards of

the impugned judgment, and this Court must opine

that the civil Court's conclusions are essentially

inferential or presumptive.

12.5.12 The civil Court, based on its

own reading of certain Exhibits, such as Exhibit

P.20, which refers to an increase in the slope for the

canal, has inferred that the respondent has

extracted Hard Rock. The civil Court is also

presumptive in its conclusion that the respondent

should succeed in its claim for reimbursement of the

costs incurred in removal of hard rock in opining

that the Chief Engineer or the other concerned from

M/s KNNL should have visited the site to verify.

12.5.13 This Court must opine that the

decision on the respondent's claim for

reimbursement at the cost of removal of hard rock/

Storage of Materials must be assessed based on

whether there is material to show that the

respondent has indeed removed hard rock/ stored

material and the actual quantity of hard rock

removed and the material stored as also the price

that is payable. The Tender Document/Agreement

provide for rates at which M/s KNNL must pay the

respondent for additional work; if the additional

work is within 125% of the volume, at a particular

rate and if the additional work is more than that, at

a rate determined in a particular manner.

12.5.14 This Court must observe that

the evidence is inconclusive, and that both M/s

KNNL and the respondent, who rely upon certain

circumstances must first call upon the other to

admit the foundational facts from which it could be

held either that the respondent has removed a

certain quantity of hard rock and stored the

material and the price that is payable. The civil

Court overlooking these decisive factors has

accepted the respondent's claims on these.

13. This Court must also observe that

the respondent's witness strangely asserts that M/s

KNNL did not handover the site to the respondent

and Contracted Work is also executed. This Court,

upon going through this witness's testimony in its

entirety, must opine that there is a definite

irreconcilability in his evidence lending credence to

M/s KNNL's case that this witness is only examined

as a Power of Attorney and he does not personally

know all the material facts, and the respondent must

have another opportunity. In the light of the afore,

this Court concludes that the appeal must be allowed

in part restoring the suit for reconsideration with

liberty to lead evidence instead of deciding the appeal

on the merits calling for a report from the civil Court.

14. This Court must observe that

neither M/s KNNL nor the respondent has availed the

recourse available to them under Order XI of CPC,

and if indeed they had availed this recourse, given

the technical nature of the dispute and the nature of

evidence relied upon by them, the civil Court could

have separated the admitted facts from the disputed

facts with respect to the specific areas of dispute and

answered the Issues based on the sufficiency of the

evidence. M/s KNNL's/respondent's failure has

contributed to an undeniable impression that the

impugned judgment and decree is despite an

incomplete trial. In this context, this Court must also

observe that it cannot be conclusively opined that the

civil Court has had the advantage of the cross-

examination of the respondent's witness.

15. The importance of interrogatories

and discoveries in technical and complex matters

have been underscored even by attorneys in other

jurisdictions, and an immediate reference could be

made to the Article called "The Effective Use of Written

Interrogatories" published way back in the year

19768. The importance is underscored thus:

"In complex litigation interrogatories are often the only practical and efficient means of obtaining certain information. For example,

8 THE EFFECTIVE USE OF WRITTEN INTERROGATORIES" - Adrian P. Schoone and Edward L. Miner, Marquette Law Review, Vol. 60:29, 1976

although depositions are relatively effective for obtaining spontaneous answers, the information is restricted to the knowledge of the deposed individual. Answers to interrogatories, on the other hand, represent the collective knowledge of the opponent and his attorneys and agents. Moreover, the answering party is required to conduct a reasonable investigation if this is necessary in order to formulate an adequate response to the questions.

............................

Written interrogatories are also the ideal discovery device where the information sought can be obtained only by reference to several documents or where the information is of such a complex and technical nature that it cannot be communicated verbally in an organized and comprehensible manner."

16. This Court must now refer to the

Apex Court's decision in T A. Shanmugam v. Ariya

Kshatriya Rajakula Vamsathu Madalaya

Nandhavana Paripalanai Sangam9. The Apex

Court, while emphasizing that the parties must set

forth sufficient factual details to reduce the ability to

9 [2012] 6 SCC 430

put forward a false or exaggerated claim or defense

and that the Courts must carefully look into the

pleadings, has declared that it is imperative that the

Judges must have a complete grip of the facts before

they deal with the case and that a proper admission

and denial are imperative in disposal of the cases.

The relevant extract reads:

"29. Ensuring discovery and production of documents and a proper admission/denial is imperative for deciding civil cases in a proper perspective. In relevant cases, the courts should encourage interrogatories to be administered."

17. The other important facet of the

present dispute is its nature, which is technical and

complex. This suit, with the promulgation of the

Commercial Courts Act, 2015, should have been

transferred to be decided as a commercial dispute but

for the proviso to Section 15 of the Act. In fact, this

Court, by the order dated 04.09.2024, has examined

whether the appeal should have been entertained by

this Court's Commercial Division to opine that the

civil Court has justifiably decided the suit without

transferring the suit to the Commercial Court

because it had reserved the suit for judgement prior

to the constitution of the Commercial Court in

Belagavi, and therefore, the appeal, is rightly before

this Court.

18. This Court has opined that the civil

Court's impugned judgement and decree is without

an effective and complete trial and that it will be just

and reasonable to set aside this judgement and

decree remanding the suit for fresh consideration.

Further, this Court is also of the opinion that M/s

KNNL and the respondent must file for

Interrogatories before the relative merits of their

respective cases are assessed for a decision on

merits. The next question for consideration, therefore,

is whether this suit must be restored to the

Commercial Court at Belagavi or be restored to the

civil Court, and if the suit is to be tried by the

Commercial Court, Order XI of CPC as applicable to

the Commercial Courts will apply and filing for

interrogatories will be in order.

19. As observed by this Court in the

aforesaid order dated 04.09.2024, the present

dispute between M/s KNNL and the respondent

emanate from a tender issued by M/s KNNL for civil

construction [modernization of a stretch of a canal],

and Section 2[1][c][vi] of the Commercial Courts Act10,

a dispute arising out of a tender would be a

commercial dispute by definition. The respondent's

suit, if it was pending as of today, should have been

decided as such by the Commercial Court at

Belagavi, and with this Court interfering with the

judgement restoring the same suit for

reconsideration, it must necessarily be considered by

the Commercial Court and not by the civil Court.

20. As such, the suit must be restored

to the Commercial Court at Belagavi with the

10 Section 2[1] [c]: "Commercial Dispute" means a dispute arising out of-

[vi] Construction and Infrastructure Contracts, including tender;

respondent and M/s KNNL filing for Interrogatories

as contemplated under Order XI of CPC applicable to

the Commercial Courts. The respondent and

appellants must file for Interrogatories based on the

exhibits that are already marked with liberty to lead

fresh evidence. This Court must observe that the

ocular evidence on record must be part of the record

and considered in the light of the response to the

Disclosure/Discovery and Interrogatories and further

evidence that the parties may lead consequent to the

remand.

ORDER

The appeal is allowed in part, and the

impugned judgement and decree dated 12.12.2017

in OS No. 49/2012 on the file of the First

Additional Senior Civil Judge and CJM, Belagavi,

is set aside restoring the suit for reconsideration

by the Commercial Court at Belagavi with the

following directions:

[a] The suit as OS No. 49/2012 shall be

listed before the First Additional Senior Civil

Judge and CJM, Belagavi, at Belagavi on

16.06.2025 and the appellants [M/s KNNL

and its Officers] and the respondent shall

appear without further notice on 16.06.2025.

[b] The First Additional Senior Civil Judge

and CJM, Belagavi, at Belagavi shall transfer

the suit to the Commercial Court, at Belagavi

under Section 15 of the Commercial Courts

Act, 2015 fixing the date of first appearance

before such Court.

[c] The Commercial Court at Belagavi shall

permit the appellants [M/s KNNL and its

Officers] and the respondent to file

Interrogatories as contemplated under Order

XI Rule 2 of CPC as applicable to the

Commercial Courts and lead further evidence