[Cites 4, Cited by 0]
Karnataka High Court
M/S Shankar Constructin Co vs University Of Agricultural Sciences on 27 March, 2026
Author: H.P.Sandesh
Bench: H.P.Sandesh
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RFA No.100097/2018
C/W RFA No.100038/2018
IN THE HIGH COURT OF KARNATAKA, AT DHARWAD
DATED THIS THE 27TH DAY OF MARCH, 2026
PRESENT
THE HON'BLE MR. JUSTICE H.P.SANDESH
AND
THE HON'BLE MR. JUSTICE B. MURALIDHARA PAI
REGULAR FIRST APPEAL NO.100097 OF 2018
C/W
REGULAR FIRST APPEAL NO.100038 OF 2018
IN RFA NO.100097/2018:
BETWEEN:
UNIVERSITY OF AGRICULTURAL SCIENCES
R/BY ITS REGISTRAR,
KRISHI NAGAR, DHARWAD-580005.
... APPELLANT
(BY SRI S.A. SANDOOR, ADVOCATE FOR SRI K.L. PATIL, ADVOCATE)
AND:
1 . M/S SHANKAR CONSTRUCTION CO.
Digitally signed
BY PARTNER SRI SUNIL M. SHETTY,
by YASHAVANT
NARAYANKAR
Location: HIGH
AGE: MAJOR (AGE NOT KNOWN),
COURT OF
KARNATAKA
DHARWAD
OCC: CONTRACTOR,
BENCH
Date: 2026.03.27 R/O: SHREE BUILDING,
14:25:09 +0530
POLICE HEAD CROSS,
QUARTERS ROAD, DHARWAD-580007.
2 . SHREE KEMPAYYA
AGE: MAJOR, (AGE NOT KNOWN)
OCC: ESTATE OFFICER,
NOW WORKING AS
EXECUTIVE ENGINEER,
ESTATE BRANCH CVKV HEBBAL,
BENGALURU-560024.
... RESPONDENTS
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RFA No.100097/2018
C/W RFA No.100038/2018
(BY SRI PRAKASH K. JAWALKAR, ADVOCATE FOR R1;
NOTICE SERVED TO R2 DISPENSED WITH)
THIS RFA IS FILED UNDER SECTION 96 OF CPC., PRAYING TO,
SET ASIDE THE JUDGMENT AND DECREE PASSED BY THE 2ND
ADDITIONAL SENIOR CIVIL JUDGE DHARWAD IN O.S.NO.211/1998
DATED 30.10.2017 IN THE INTEREST OF JUSTICE AND EQUITY AND
ETC.,.
IN RFA NO.100038/2018:
BETWEEN:
M/S SHANKAR CONSTRUCTIN CO.
BY PARTNER SRI SUNIL M. SHETTY,
AGE: 50 YEARS, OCC: CONTRACTOR,
R/O: "SHREE BUILDING",
POLICE HEAD QUARTERS ROAD,
DHARWAD-580008.
... APPELLANT
(BY SRI PRAKASH K. JAWALKAR, ADVOCATE)
AND:
1. UNIVERSITY OF AGRICULTURAL SCIENCES
R/BY ITS REGISTRAR,
KRISHI NAGAR, DHARWAD-580008.
2. SHREE KEMPAYYA
AGE: MAJOR, OCC: ESTATE OFFICER,
NOW WORKING AS EXECUTIVE ENGINEER,
ESTATE BRANCH, C V K V HEBBAL,
BENGALURU-01.
... RESPONDENTS
(BY SRI S.A. SANDOOR, ADVOCATE FOR SRI K.L. PATIL, ADVOCATE)
THIS RFA IS FILED UNDER SECTION 96 OF CPC., PRAYING TO,
SET ASIDE THE JUDGMENT AND DECREE PASSED BY THE 2ND
ADDITIONAL SENIOR CIVIL JUDGE DHARWAD IN O.S.NO.211/1998 BY
PARTLY DECREEING THE SUIT OF THE PLAINTIFF BY ITS JUDGMENT
AND DECREE DATED 30.10.2017 AND DECREE THE ENTIRE CLAIM OF
THE PLAINTIFF/APPELLANT AS PRAYED FOR IN THE SUIT AND ETC.,.
THESE APPEALS ARE COMING ON PRONOUNCEMENT AND THE
SAME HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON
10.03.2026, THIS DAY, B. MURALIDHARA PAI J., DELIVERED THE
FOLLOWING:
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RFA No.100097/2018
C/W RFA No.100038/2018
CORAM: THE HON'BLE MR. JUSTICE H.P.SANDESH
AND
THE HON'BLE MR. JUSTICE B. MURALIDHARA PAI
CAV JUDGMENT
(PER: THE HON'BLE MR. JUSTICE B. MURALIDHARA PAI)
Defendant No.1 namely University of Agricultural Sciences,
and the Plaintiff namely M/s Shankar Construction Company in
O.S. No.211/1998 have maintained these appeals, being
aggrieved by the judgment and decree dated 30.10.2017 passed
therein by learned II Additional Senior Civil Judge, Dharwad
(hereinafter referred to as "Trial Court").
2. The parties to these appeals are hereinafter referred
to by their respective rankings as arrayed before the Trial Court.
3. Brief facts leading to these appeals are as under:
i) In the year 1992, Defendant No.1 invited tenders for
construction works at their four campuses including construction
of Main Administrative Building in Dharwad Campus at the
estimated cost of Rs.1,57,00,000/-. Defendant No.1 received
two tenders, one from the plaintiff and another of Mr. Bhosle, in
respect of the work in Dharwad Campus. The plaintiff was the
lowest tenderer. After some deliberations, the plaintiff's tender
was accepted and work order was placed with them on
6.8.1992, to carry out the work at total value of
Rs.1,94,89,161/-, to be completed within 24 months excluding
rainy season. Pursuant to the same, the plaintiff executed an
agreement with Defendant No.1 and commenced the work.
Subsequently, Defendant No.1 rescinded the contract on
22.09.1994 by citing various reasons including stoppage of
construction work and that the plaintiff has no intention of
honouring the agreed terms of the contract. The plaintiff
challenged the said action of Defendant No.1 before this Court in
W.P. No.30585/1994. The said writ petition came to be
dismissed on 25.01.1995 with an observation that "... Whether
there has been any breach of the contract on the part of the
petitioner or the respondents or at what stage the breach
occurred and in what terms; whether the appendix formed part
of the contract or not particularly in the light of the
correspondence between the parties, are all matters which
cannot be decided in this Court. ..." and that the appropriate
course for the plaintiff is to work out his remedies in the civil
court in that regard.
ii) Afterwards, the plaintiff maintained the suit in O.S.
No.211/1998 on 19.09.1997, seeking relief of - (i) declaration
that the determination of contract on 22.9.1994 is illegal, null
and void; (ii) direction to the defendants to pay a sum of
Rs.42,22,105 to the plaintiff; (iii) interest at the rate of 18.5%
from the date of suit till the date of realisation; and for court
cost and other reliefs as the court deems fit, in the
circumstances of the case.
iii) The case of the plaintiff is that they agreed to
undertake construction work with a specific understanding and
agreement that the cost of the materials if increased are to be
reimbursed by the defendants and that they commenced the
work only on the defendants agreeing to their such terms and
conditions. The plaintiff alleges that the defendants did not keep
up their words and did not act as promised by them in spite of
several oral and written requests of the plaintiffs. It is further
alleged that because of inaction of the defendants, the plaintiff
suffered financially and progress of the work hampered. It is
contended that immediately after acceptance of tender, there
was abnormal increase in the price of the steel and cement and
in spite of repeated request, and the defendants did not place
the request of the plaintiff before the Board of Regents for
suitable decision and till date no decision has been taken by the
defendants in that behalf. It is contended that after vehement
protest, finally a meeting was held in the office of Defendant
No.1 on 25.07.1994, wherein the commitment of the University
to the conditions of the contract, clauses of agreement, appendix
to the agreement etc. were considered and thereafter it was
decided that the demand of the plaintiff was to be placed before
the ensuing Board Meeting in view of urgency and time factor
involved. Even then, the matter was not placed before the
Board of Regents and no decision was taken by the said Board
till rescinding of the contract. In this background, the plaintiff
maintained the suit claiming his right to recover escalation
amount, difference in cost of cement, encashed bank guarantee
amount, profit out of balance work and cost of materials in the
site at the time of stoppage of work together with interest
thereon apart from the relief of declaration.
iv) Initially the plaintiff had maintained the suit against
University of Agricultural Sciences and one Sri Kempayya, the
Estate Officer. The suit against Sri Kempayya, i.e, Defendant
No.2, came to be dismissed on 27.01.2001 as the plaintiff failed
to take necessary steps for service of summons on him. In the
said circumstances, the suit was continued only against
Defendant No.1 i.e., University of Agricultural Sciences.
v) On service of summons, Defendant No.1 appeared
before the Trial Court through their counsel and contested the
suit by filing their written statement. According to them the
plaintiff did not perform the contract in full as per the agreed
terms and conditions. They contended that the plaintiff tried to
impose the conditions not agreed to between the parties and
that the plaintiff tried to incorporate conditions beyond the scope
of the contract to his own advantage and to the detriment of the
University. They alleged that when the plaintiff was not
successful, adopted unwarranted delaying tactics and ultimately
illegally stopped the work and even started moving materials
from the site. They submitted that the University was compelled
to terminate the contract as the plaintiff committed breach of
the contract. They also contended that they have paid all the
running bills of the plaintiff to a tune of Rs.86,00,000/- and
justified the termination of contract with the plaintiff.
vi) Based on the pleadings of the parties and the
documents available on record, the Trial Court framed the
following issues:
1. Whether the plaintiff proves that it is a
registered partnership firm?
2. Whether the plaintiff proves that the validity
of the tender dated 10.4.1992 was extended
and 2?
3. Whether the plaintiff proves that the
defendants have agreed to escalation of
prices of cement, steel and pay the other
building materials during the construction
period as per terms?
4. Whether the Plaintiff proves that the
progress of the construction work was
hampered because of the in action of
Defendants and thereby progress of the
work was hampered and he was put to loss?
5. Whether the Plaintiff proves that, because of
the in action of the defendants and at their
request the work was slowed down?
6. Whether the Plaintiff proves that, the
defendants have illegally rescinded the
contract on 22.9.1994?
7. Whether the Plaintiff proves that, the
imposition of penalty by the Defendants
affected the progress of the work of the was
illegal and that had adversely affected the
progress of the work of the Plaintiff?
8. Whether the Plaintiff proves that,
Defendants did not allow him to take his
belongings and building materials from the
construction spot and has not taken
measurements of the works undertaken by
Plaintiff and thereby did not settle the
accounts as alleged?
9. Whether Plaintiff proves that he has
completed 80% of the construction work and
he is entitled to recover thereon the
accounts to be recovered by him?
10. Whether the Plaintiff is entitled to price
escalation and interest of Rs.9,67,546-22
Ps. from Defendants?
11. Whether Defendant proves that they are not
liable to pay escalation charges for the
completion of work beyond 2 years as per
clause 44 of contract?
12. Whether Plaintiff is entitled to claim
Rs.1,39,456/- as pleaded in Schedule 'B' of
the plaint?
13. Whether Defendants prove that Plaintiff
created deadlock in the matter and hence
they could not take early decision?
14. Whether Defendant proves that they have
supplied building materials to them after
4.8.1992 and hence they are not liable to
pay difference in materials?
15. Whether Plaintiff proves that defendants
encashed bank guarantee illegally and high
handedly?
16. Whether Defendants prove that they are
liable to recover a sum of Rs.24.18 lakhs
from Plaintiff?
17. Whether Defendants prove that Plaintiff
committed illegal breach of contract and
thereby caused loss to Defendants?
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18. Whether the Defendants prove that the
Plaintiff caused loss to defendants to the
tune of Rs.94,10,437/-?
19. Whether the Plaintiff proves that he is
entitled to recover a sum of Rs.42,22,105.00
Ps. from Defendants?
20. Whether the suit is barred by limitation?
21. Whether the Plaintiff is entitled for the relief
of declaration as prayed for?
22. What order or decree?
vii) In support of their case, the plaintiff examined three
witnesses including its partner as PW-1 and got marked
documents at Ex.P1 to P42. On behalf of Defendant No.1, its
Estate Officer was examined as DW-1 and got marked at Exs.D1
to D45.
viii) Subsequently, the trial Court heard the arguments of
both sides, considered the materials on record and proceeded to
decree the suit in part with cost of Rs.10,000/- and directed
Defendant No.1 to pay a sum of Rs.85,000/- to the plaintiff
together with interest at the rate of 6% p.a. from 15.03.1994 to
31.03.1997 and interest at the rate of 8% p.a. on the said
amount of Rupees 85,000/- from the date of filing of this suit till
its realization, within one month from the date of the order.
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Being dissatisfied with the impugned judgment and decree, both
the plaintiff and Defendant No.1 have preferred these appeals.
4. Sri Prakash K. Jawalkar, learned Counsel for Plaintiff
submitted that the crux of the dispute is whether the plaintiff
entitled to claim escalation of prices of cement, steel and other
building materials during the construction period as per terms
agreed between the parties and whether Defendant No.1
justified in rescinding the contract. He vehemently submitted
that the plaintiff had agreed to undertake construction work and
commenced the work only on the defendants agreeing to pay
cost of the materials if increased and as such Defendant No.1 is
liable to reimburse the plaintiff in terms of such understanding.
He contended that the delay in the work was on account of
inaction on the part of Defendant No.1 and that the plaintiffs
have not committed breach of contract as alleged by the
defendants. He further contended that the trial Court has failed
to properly appreciate the contentions of the parties and the
evidence placed on record and thereby arrived at wrong
conclusion.
5. Per contra, Sri K.L. Patil, learned Counsel for
Defendant No.1, vigorously submitted that the plaintiff had
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quoted low rates in the tender so as to appear that he was
lowest tenderer and it was a deceitful attempt. He submitted
that as per Clause 44, the plaintiff was not entitled to claim
escalation of prices and as such, the claim of the plaintiff is not
permissible. He contended that the plaintiff was not at all ready
and willing to perform their part of contract and complete the
construction work within stipulated time, on account of which
the contract was terminated. He contended that in the facts and
circumstances of the case, the plaintiff was not entitled for any
relief and that the trial Court committed error in decreeing the
suit in part.
6. Having heard the arguments addressed by both
counsels and on considering the materials available on record,
the following points arise for the consideration of this Court:
1) Whether Defendant No.1 had agreed for
escalation of prices as contended by the
plaintiff?
2) Whether the trial court committed error in
properly appreciating the contentions of the
parties and the evidence placed on record in
support of their case?
7. Before proceeding further, it would be appropriate to
refer to the Order dated 25.01.1995 passed in
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W.P.No.30585/1994 produced at Ex.P3. It was a proceeding
initiated by the plaintiff being aggrieved by rescission of the
contract. In the said proceeding, the plaintiff had sought to
declare the action of Defendant No.1 in rescinding the contract
as illegal, without jurisdiction, void and non-est and
unenforceable in law. The writ petition came to be dismissed
with following observations:
"6. Although lengthy arguments have been
addressed before this Court, the matter confines
itself to a narrow compass. The question for
consideration is whether, as contended for the
petitioner, the doctrine of promissory estoppel is
attracted to the present case or not. In GODFREY
PHILIPS INDIA's case, the Supreme Court examined
the whole gamut of the doctrine. It was explained
that this principle is evolved in the administrative law
and is styled as promissory estoppel but it is neither
in the realm of contract nor in the realm of estoppel.
The basis of the doctrine is one based on equity true
to its form stepped into mitigate the rigours of strict
law. The requirements for application of the said
principle is that (1) where one party has by his word
or conduct made to the other a clear and unequivocal
promise or representation which is intended to create
legal relations or affect the relationship arising in
future; (2) knowing or intending that it would be
acted upon by the other party to whom the promise
or representation is made; (3) it is in fact acted upon
by another party; (4) the promise or the
representation will be binding on the party making it
and he will not be entitled to go back or turn upon it.
Now, I have to examine whether the claim made by
the petitioner in this case is one that falls within the
scope of this principle. Learned counsel for the
petitioner principally based his arguments on the
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construction of the letters dated 8.8.1992 and
2.2.1994 in the context of his letter sent on
18.7.1992. When the respondents sent a letter on
17.7.1992 stating that the request or the conditions
mentioned in the letters of the petitioner dated
9.4.1992, 19.5.1992 and 15.7.1992 cannot be
considered as there is no provision in the conditions
of the tender, the petitioner wrote a letter the very
next day to indicate that, in the event the same is
not acceptable, the respondents should refund the
earnest money deposit made by him at the earliest.
While the petitioner is categorical in stating that he is
not interested in continuing the contract in the event
of the respondents not accepting or considering the
request made by him or the conditions offered by
him, the respondents are not so categorical. On the
other hand, they are equivocal in their statements.
What they state is that, so far as the hike in cement
is concerned, they accept the same in principle and
would pay the same. But so far as the escalation in
regard to other items mentioned in the appendix, it
will be confirmed to him after obtaining the approval
of the Board of Regents. The same position is
reiterated two years later also in their letter dated
2.2.1994. If this is the state of affairs, can it be laid
that there is an unequivocal, clear and unambiguous
act on the part of the respondents to accept the offer
made by the petitioner as to the conditions
mentioned the appendix? The answer is obvious. It
cannot be said that there has been an unequivocal
promise on the part of the respondents to accept the
same. All that is stated is that the matter would be
placed before the Board of Regents and thereafter
decision will be taken. The decision being taken
either then or later was all that promise was made.
Therefore, the question of the petitioner having been
given any promise in that regard may not be well
founded. (emphasis supplied)".
8. The aforesaid extract unequivocally records a
definitive finding by the learned Single Judge of this Court that
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Defendant No.1 had not accepted the plaintiff's requests for
price escalation or adjustment, as advanced through multiple
letters, correspondences, or the appendix to the agreement.
Consequently, the writ petition challenging Defendant No.1's
rescission of the contract was dismissed vide Order dated
25.01.1995. The plaintiff neither preferred an appeal nor
otherwise assailed this order, which thus attained finality and
remains binding upon them. In light thereof, the plaintiff is
precluded from seeking a declaration that the contract's
determination on 22.09.1994 was either illegal or null and void.
9. The other relief sought by the plaintiff against
Defendant No.1 is for recovery of Rs.42,22,105/- together with
interest at 18.5% from the date of suit till its realization. The
plaintiff quantified the amount under the heads of (i) escalation
amount with interest, (ii) difference in cost of cement with
interest, (iii) enchased bank guarantee amount with interest,
(iv) profit out of balance work with interest, and (v) difference
amount payable towards cost of materials at the site after
deducting balance amount payable towards secured advance
amount.
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10. In W.P.No.30585/1994 it is unambiguously held that
there was no promise on the side of Defendant No.1 to pay
escalation price of steel and other materials except the price of
cement. Added to the above, it is the definite case of the plaintiff
that from the date of their first request letter dated 09.04.1992
till date, Defendant No.1 did not take any action to place it
before Board of Regents for a decision on such request. Thereby,
it becomes clear that the University or the tender accepting
authority had not agreed for modification of the clauses relating
to price adjustment/escalation as requested by the plaintiff. In
view of the same, it is to be held that the plaintiff was not
entitled to claim price escalation in respect of steel and other
materials from Defendant No.1.
11. Even otherwise, the claim of price escalation and
interest thereon needs to be considered in the light of the terms
of the contract. Admittedly, the plaintiff submitted the tender
subject to conditions of the contract produced at Ex.D2. Clause
44 of the contract relates to change in costs and price
adjustment. The said clause makes it clear that it is applicable
only to contracts where the stipulated period of completion of
the work is more than two years. Clause 44 further makes it
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clear that the price adjustment shall not be applicable on the
value of work carried out during the initial 12 months of the
contract period. In this case, the tender of the plaintiff was
accepted on 06.08.1992 and the work order was issued to them
on the same date subject to their executing an agreement.
Pursuant to it, the plaintiff executed an agreement on
06.08.1992 itself. Thereby, it becomes clear that as per Clause
44, the plaintiff was not entitled to seek for price adjustment
during initial 12 months from 06.08.1992.
12. The case put forth by the plaintiff and the
documents available on record including the request letter/
representation dated 09.04.1992 of the plaintiff clearly indicate
that the plaintiff was fully aware of the condition in Clause 44, at
the time of submitting their tender and in the said
circumstances, they had submitted their tender along with the
letter dated 09.04.1992, requesting the defendants to modify
such condition and allow the price adjustment from the date of
commencement of the contract work. In view thereof, the
burden squarely lies upon the plaintiff to establish that the
defendants had agreed for price adjustment or escalation from
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the date of commencement of the contract works, a burden
which they have wholly failed to discharge.
13. It is contended that in 1992, when the plaintiff
sought to withdraw his tender, the defendants induced him to
proceed by assuring payment of escalation charges for steel,
cement, and other materials, enabling completion of the
construction works within the stipulated two-year period and
thereafter the defendants did not act as per their words. The
materials on record do not support the above contention of the
plaintiff. It is because the document at Ex.D4, the letter dated
17.07.1992 addressed by the Estate Officer to the plaintiff,
contains information about rejection of the request in an
unambiguous terms that "... the requests/conditions mentioned
in your letter dated 09.04.1992, 19.05.1992 and 15.07.1992
cannot be considered as there is no provision in the conditions of
tender, ...". Thereafter, the plaintiff executed the work
agreement marked at Ex.D5 on 06.08.1992, undertaking to
execute the work in accordance with the conditions and
stipulation of the tender.
14. Undisputedly, the plaintiff had enclosed an appendix
to the agreement incorporating certain conditions like provision
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for escalation of prices of the materials based on the prices
prevailing at the time of opening the tender. It is not the case
of the plaintiff that the defendants had agreed for such
escalation as on the date of agreement. For aforesaid reasons, it
is held that the trial court justified in holding that the plaintiff
was disentitled to claim escalation, price adjustment, or
consequent payment thereunder.
15. Undisputedly, the plaintiff was required to complete
the tender work within a period of 24 months from the date of
work order excluding the rainy season. The work order was
issued on 06.08.1992 and the said contract was terminated on
22.09.1994. It is the definite case of Defendant No.1 that the
plaintiff had no intention to complete the work by the stipulated
time i.e., 31.03.1995 and they had practically stopped the work
by 11.06.1994. It is further contended by Defendant No.1 that
the progress assessment as on 21.09.1994 revealed the
financial performance of the plaintiff was 46% during the period
of about 18 months and balance 54% was required to be
completed within a span of about six months. On the other
hand, the case of the plaintiff is that during the meeting held on
25.07.1994 they had expressed their inability to carry on the
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work if the escalation price is not paid to them as per their
appendix and at that time, the committee had requested them
to slow down the work. It is further case of the plaintiff that
from September 1994 they were constrained to stop their work
on account of rescind of the contract. In the averments of the
plaint, it is contended that the plaintiff had completed 80% of
the work and 20% of the work was remaining. But, according to
PW-2 Sri Rajkumar Bilgi, the Engineer working with the plaintiff
stated that when the work was stopped, they had completed
only 70% of the work assigned to them. It is to be noted that
the plaintiff has not adduced any reliable evidence to show the
extent of the work turned out by them as on the date of
termination of contract or that there was any instruction from
the side of the defendants to slow down the work. In fact, the
documents available on record indicate otherwise.
16. It is the definite case of Defendant No.1 that
University was hard pressed for accommodation and anxious to
get the main administrative building completed as early as
possible. The plaintiff adopted tricky and misleading approach
by quoting low rates in tender forms and then started claiming
higher rates to suit his own convenience though he was not
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entitled to make such claim. They stated that under the
circumstances, they could not straight away rejected the tender
of the plaintiff, invited the plaintiff for discussion to resolve the
issue and agreed to give difference in cost of cement only. The
materials on record probabilise the above contention of
Defendant No.1. The tender notice contains a specific clause that
"Conditional tenders will not be accepted". In spite of the same,
the plaintiff chose to submit their tender on 10.4.1992 along
with a letter dated 09.04.1992 containing conditions styled as
request. Even thereafter, the plaintiff kept on putting forth such
conditions regularly in spite of clear indication on the side of
Defendant No.1 that such requests are not permissible. Thus,
there are sufficient materials on record to establish that the
failure on the part of the plaintiff to adhere to the terms of
contract and breach committed by them, forced Defendant No.1
to rescind the contract, which is perfectly justified in the facts
and circumstances of the case.
17. The action on the part of Defendant No.1 of
encashing the bank guarantee offered by the plaintiff is in terms
of the contract. Defendant No.1 has proved their contention
about breach of contract committed by the plaintiff as well as
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encashment of the bank guarantee offered by the plaintiff
towards their dues. Similarly, the question of the plaintiff
claiming compensation or damages towards anticipated profit
would arise when they succeed in proving breach of contract on
the side of Defendant No.1. The plaintiff has also claimed certain
amount from Defendant No.1 under the head of cost of the
materials in the site. Admittedly, while rescinding the contract,
Defendant No.1 had requested the Plaintiff to attend the closing
measurements vide letter dated 22.09.1994 marked at Ex.P1.
The Plaintiff has not produced any letter or reply sent to
Defendant No.1 in response to Ex.P1, particularly giving details
of their materials left at the site or calling upon Defendant No.1
to allow for its removal. Therefore, it is held that the trial court
has rightly rejected the claim of the plaintiff under these heads.
18. The plaintiff has claimed a sum of Rs.85,000/- from
Defendant No.1 under the head of difference in cost of cement.
Admittedly, Defendant No.1 agreed to pay escalation of cement
price and claimed that as per resolution dated 21.8.1993 they
have paid a sum of Rs.1,41,476/- to the plaintiff towards
difference in cost of cement through RA Bill No.12 and
subsequently they have supplied required cement to the
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plaintiff. In support of this contention, Defendant No.1 has
produced concerned bill at Ex.D39. The said bill pertains to
cement consumed from 07.09.1992 to 13.06.1993. Even the
plaintiff admits Defendant No.1 having paid a sum of
Rs.1,40,000/- towards cost of cement. However, the plaintiff
has not come up with the details or basis on which they are
claiming a sum of Rs.2,25,000/- towards difference in cost of
cement. The reasons assigned by the trial court indicate that it
accepted the claim of the plaintiff mainly on the ground that
before or after rescinding the contract vide letter dated
22.09.1994, no final settlement of account has taken place. The
said reasoning of the trial court cannot be accepted. It is
because, the initial burden is on the plaintiff to prove the dues
on the part of Defendant No.1 towards difference in cost of the
cement. The plaintiff has not placed any reliable evidence on
record to support their contention. Further, it is the specific
case of Defendant No.1 that they have paid difference in cost of
the cement much before termination of contract through RA Bill
No.12. The materials on record go to show that thereafter they
have made payments to the plaintiff through few more bills i.e,
RA Bill Nos.13 to 18. In the above circumstances, this Court
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holds that the trial court has committed an error in holding that
Defendant No.1 was still due a sum of Rs.85,000/- to the
plaintiff towards difference in cost of the cement.
19. Learned Counsel for the Plaintiff has placed reliance
on M/s J.G.Engineers Pvt. Ltd. Vs Union of India and another
[Civil Appeal No.3349 of 2005, DD 28.4.2011] rendered by
Hon'ble Apex Court to contend that Defendant No. 1 lacked
authority to unilaterally adjudicate the alleged breach and
rescind the contract. As pointed earlier, this Court has already
upheld the legality of the rescission vide Order dated 25.01.1995
passed in W.P. No.30585/1994. Further, competent civil court
has adjudicated the dispute relating to the claim arising out of
such rescission. As such, it is held the cited decision is,
therefore, inapposite and affords no assistance to the plaintiff's
case.
20. Learned Counsel for the Plaintiff has relied on one
more decision in M/s A.T. Brij Paul Singh and others Vs State of
Gujarat reported in (1984) 4 SCC 59 and contended that where
in a works contract, the party entrusting the work commits
breach of the contract, the contractor would be entitled to claim
damages for loss of profit which he expected to earn by
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undertaking the works contract. In the present case, the
materials on record clearly establish breach of the contract by
the contractor i.e, the plaintiff and as such there is no question
of the plaintiff claiming damages for loss of profit from
Defendant No.1. It may be relevant to note that in Puran Lal
Sah Vs The State of UP, reported in AIR 1971 SC 712, Hon'ble
Apex Court has held that where work is done under a contract
pursuant to the terms thereof, remedy by way of quantum
meruit is not available to the party who breaks the contract even
though he may have partially performed part of his obligation.
For the foregoing reasons, Point No.(i) is answered in the
negative and Point No.(ii) is answered partly in the affirmative.
21. In the result, this Court proceeds to pass the
following :
ORDER
i) The appeal in RFA No.100097/2018 is allowed
and the appeal in RFA No.100038/2018 is
dismissed.
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ii) In the facts and circumstances of the case, the
parties are directed to bear their respective
cost.
iii) Consequently, the judgment and decree dated
30.10.2017 passed in O.S. No.211/1998 by
learned II Additional Senior Civil Judge,
Dharwad is set aside and suit is dismissed in
entirety.
iv) Draw a decree accordingly.
Sd/-
(H.P.SANDESH)
JUDGE
Sd/-
(B. MURALIDHARA PAI)
JUDGE
YAN/RKM
Ct-CMU
