M/S. North East Group Of Engineers ... vs General Manager, Bsnl
2021 Latest Caselaw 39 Sikkim

             THE HIGH COURT OF SIKKIM : GANGTOK
                   (Civil Appellate Jurisdiction)
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SINGLE BENCH: THE HON'BLE MR. JUSTICE BHASKAR RAJ PRADHAN, JUDGE
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                              R.F.A. No.05 of 2019

1.       M/s North East Group of Engineers (P) Ltd.,
         Gangtok Lodge,
         M.G. Marg, Gangtok,
         East Sikkim.

2.       Shri Taktuk Bhutia,
         Managing Director,
         M/s North East Group of Engineers (P) Ltd.,
         M.G. Marg, Gangtok,
         East Sikkim.
                                   ..... Appellants/Plaintiffs

                                                 Versus

         General Manager,
         Bharat Sanchar Nigam Limited (BSNL),
         Telephone Exchange,
         Gangtok, East Sikkim.
                                .....Respondent/Defendant

Appeal under Order XLI Rules 1 and 2 of the Code of
             Civil Procedure, 1908.
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Appearance:
                   Mr. Zangpo Sherpa, Advocate along with Mr.
                   Sayshay Hang Subba, Advocate for the
                   Appellants/Plaintiffs.
             Mr. K. T. Tamang, Advocate for the
             Respondent/Defendant.
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    Date of hearing : 20.07.2021 & 29.07.2021
    Date of judgment : 06.08.2021

                                     JUDGMENT

Bhaskar Raj Pradhan, J.

1. This is a first appeal from the judgment and

decree of the Learned District Judge, Special Division-1

R.F.A. No. 05 of 2019 M/s North East Group of Engineers (p) Ltd. & Anr. Vs. General Manager (BSNL)

(learned Trial Court) dated 28.02.2019. First appeal is a

valuable right for the aggrieved. It is beyond doubt that all

question of facts and law decided by the learned Trial

Court are open for reconsideration. It is, however,

necessary for this Court to carefully examine and deeply

consider both the fact as well as the law arising herein and

give cogent reasons while disposing the appeal. It is our

duty to properly deal with all the issues and the evidence

led by the parties. Learned Counsel Mr. Zangpo Sherpa for

the appellant and Mr. K. T. Tamang for the respondent

have been heard in detail on facts as well as in law. This

judgement reflects their erudite submissions.

2. A money suit was filed by the plaintiffs (the

appellants herein) against the defendant (the respondent

herein) for recovery of money towards payment for work

done under a contract. The suit went for trial after the

defendant filed the written statement and eight issues

were framed.

3. The learned Trial Court while dismissing the suit

held that time was the essence of the agreement dated

22.02.2008 (exhibit-2) (the agreement); that although the

defendant had extended the time for completion, time did

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not cease to be of the essence merely because a party

agreed to short extensions; that the contract awarded to

the plaintiff no.1 by the defendant was not completed

within the stipulated/extended time limit; that the

plaintiffs were in breach of the terms of the agreement and

therefore, the defendant was not liable to pay any amount

to the plaintiffs. The learned Trial Court held that the suit

was not barred by limitation, but it was not maintainable

as plaintiffs had not been able to substantiate their case

and had not approached the court with clean hands. The

learned Trial Court further held that the defendant cannot

be held liable to pay the interest amount paid by the

plaintiffs to Punjab National Bank towards the loan taken

by them, as it was the plaintiff who had committed the

breach of the terms of the agreement. Accordingly, the

learned Trial Court dismissed the suit filed by the

plaintiffs. The plaintiffs have therefore, filed the present

appeal against the judgment and decree both dated

28.02.2019 passed by the learned Trial Court.

4. Out of the eight issues framed by the learned Trial

Court issue no.2 on the point of limitation and issue no.4

as to whether valid extensions were given to plaintiff no.1

from time to time to complete the concerned work was

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held against the defendant and in favour of the plaintiffs.

There is no appeal by the defendant on both these issues.

The rest of the issue which are agitated are taken up.

5. The first issue was whether the suit was

maintainable. If the plaintiffs had failed to substantiate

their case, the suit would fail. The question of

maintainability of a suit is a question of law. Section 9 of

the Code of Civil Procedure, 1908 (CPC) provides that the

court shall have jurisdiction to try all suits of civil nature,

accepting suits of which their cognizance is either

expressly or impliedly barred. The point of limitation was

separately decided in favour of the plaintiffs. The record

reveals that the defendant's contention that no notice

under Section 80 CPC was given by the plaintiffs was also

decided in favour of the plaintiffs while deciding an

application under Order 7 Rule 11 CPC filed by the

defendant.

6. It is also urged by the defendant that the plaintiff

no.2 has filed a letter dated 14.05.2010 bearing No.W-

290/2007-08/23 to project that time had been extended

till 21.02.2010. This document was exhibited by the

plaintiff no.2 as exhibit-7. Exhibit 7 clearly mentions that

it related to another work order. During the cross-

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examination he explained- "Exhibit-7 though filed by me

does not seem to be with regard to Namchi work. It seems it

was inadvertently filed. Since I had performed many works

for the defendant I am often confused regarding the said

documents." Besides, exhibit-7 the plaintiff had also filed

other documents claiming that they related to the work.

However, a bare perusal of exhibit-5 and exhibit-N makes

it evident that they related to some other work as

specifically mentioned therein. During cross-examination

the plaintiff No.2 again admitted that exhibit-N and

exhibit-5 did not relate to the Namchi work. Therefore,

there was no way the defendant could be misled by those

correspondences since they themselves were the issuer of

the work orders and correspondences. With the aforesaid

explanation, which is a plausible one, the weight of the

defendant's argument that the plaintiff no.2 had sought to

mislead the court would lose much of its weight.

Resultantly, it may not be possible to hold that the

plaintiffs had approached the court with unclean hands on

these facts to such an extent that it would disentitle them

for any relief. It is also the defendant's case that the

plaintiffs had sought to mislead the court by stating that

they had completed the work although it was not true. The

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defendant's own witness, Jay Prakash Thapa (D.W.2) the

engineer who supervised the work having admitted during

cross-examination that he had issued the work certificate

(exhibit-K) which reflects that the work was completed on

28.02.2010 nullifies this argument.

7. There was no other plea taken by the defendant

in the written statement which would touch upon the

maintainability of the suit. It must, therefore, be held that

that the suit was maintainable.

8. In answer to question no.3 it must be held that

the plaintiff no.1 had been able to complete the works as

recorded in the measurement book.

9. Issue no.5 was whether the plaintiff no.1

committed breach of the terms of the agreement, in

respect of the work, and whether the defendant could

avoid its liability. The learned Trial Court found that the

plaintiffs had committed breach of the agreement, thereby

causing loss to the defendant. This finding that the

defendant had suffered loss is held to be dehors the

evidence on record. The defendant had not even pleaded

so. Whether time was of the essence or not is always a

question of the intention of the parties. If it was not the

intention of the parties that time should be of the essence

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of the contract, the contract does not become voidable by

the failure to do such thing at or before the specified time;

but the promisee is entitled to compensation from the

promisor for any loss occasioned to him by such failure.

The defendant had allowed the plaintiffs to complete the

work by extending the time and the last of such extension

was open ended. Further, there is neither a plea for

compensation due to any loss suffered nor any evidence of

any loss suffered by the defendant. Thus, it is held that

there was no breach and breach of timelines, if at all, were

all condoned by the defendant by extending it again and

again.

10. On issue no.6 it is held that although time was

originally agreed to be of the essence under clause 8 of the

agreement, the defendant by its own action extended the

original deadline from time to time and finally allowed the

plaintiff to complete the work as soon as possible making

time no longer the essence of the contract.

11. The findings of the learned Trial Court on issue no

8 that the defendant cannot be held liable to pay the

interest amount paid by the plaintiff to Punjab National

Bank on account of delay, is upheld. It is held that the

defendant is not liable to do so. There was no such

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provision in the agreement. However, the rest of the

learned Trial Court's finding that it was the plaintiff who

had committed the breach of the terms of the contract and

work order are set aside.

12. Thus, in answer to issue no.7 which is decided in

the affirmative, it is held that the plaintiffs are entitled to

the reliefs as granted below. The reasons are also

discussed in detail hereinbelow.

13. The plaintiffs filed Money Suit No.25 of 2016 on

28.12.2016. It was the case of the plaintiffs that a work

order No.22 D(a)/05-06 dated 25.09.2008 (work order) was

issued in favour of the plaintiff no.2 by the defendant for

execution of work of laying of primary cables, distribution

of U/G cables, erection of DP's, carrying of stores and

distribution to different sites (carrying of stores from

Gangtok to Namchi and distribution) under the work name

of „beautification of Namchi Town Area‟. The work order

was awarded to the plaintiff no.2 to execute and complete

within 45 days of the date of its issuance. No estimate cost

of the work was fixed by the defendant in the work order,

but it was decided between the parties that the plaintiffs

shall be paid according to the work done and charges

incurred. Although, the plaintiff no. 2 commenced the

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work soon after the issuance of work order there were

many hindrances and work could not be completed on

time due to the defaults of the defendant. The plaintiffs,

therefore, sought extension of time on various occasions

which was considered and granted by the defendant. The

plaintiffs completed the work within the extended period

pursuant to which the defendant was informed, and bill

presented for payment. The plaintiff No.2 had also taken a

loan from the Punjab National Bank for the said work and

the plaintiff no.2 received a notice on 19.10.2012 to pay

back the loan with interest. The plaintiffs asserted that the

work was monitored by the concerned engineer of the

defendant who entered the progress of the work in the

measurement book. The plaintiffs pleaded that the

concerned engineer also issued work completion certificate

but despite that the defendant failed to make payments

although various request and reminders were made. Due

to this the plaintiffs were compelled to approach the Lok

Adalat for settlement of disputes. It is the case of the

plaintiffs that during the Lok Adalat proceedings the

General Manager, DGM and AGM of the defendant assured

that they shall investigate the matter and disburse the

payment as soon as possible. Due to the assurance given

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by them the plaintiffs withdrew the case before the Lok

Adalat. However, despite various visits by the plaintiff no.2

to the office of the defendant they failed to make the

payments compelling the plaintiffs to issue a legal notice

dated 04.03.2016. Despite the receipt of the notice no

payment was made and thus, the Money Suit was filed.

14. The defendant filed its written statement. It was

contended that the suit was barred by limitation. The

defendant also alleged that the plaintiffs had not

approached the court with clean hands and suppressed

material facts misleading the court with documents which

did not relate to the work order. The defendant admitted

the issuance of the work order and stated that prior to the

issuance of work order the agreement had been entered

between the plaintiffs and the defendant for execution of

such works in the State of Sikkim. The defendant stated

that time was the essence of the contract. However, the

plaintiffs did not complete the work on time and instead

sought for extensions. The defendant agreed to such

extension and the last of the extensions was agreed upon

by the defendant vide letter dated 27.01.2009. The

defendant stated that plaintiff had to complete the work by

the end of February 2009 and no further time would be

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granted by the defendant. The defendant stated that the

plaintiffs failed to complete the work even till January

2011 which gets established by their letter bearing

No.SDE(P)/NMC-2010-11/CW-2 dated 28.01.2011

(exhibit-P). It is the case of the defendant that as the

plaintiffs did not complete the work within the stipulated

time, they were not liable to make any payment at all. The

defendant denied having assured the plaintiffs for

payment.

15. The plaintiffs examined Taktuk Bhutia (plaintiff

no.2) as P.W.1 and two other witnesses i.e., Gambu

Tamang (P.W.2) and Pema Tamang (P.W.3). The defendant

examined Deepak Agrawal (D.W.1) the General Manager

and Jay Prakash Thapa (D.W.2).

16. The plaintiff no.2 reiterated the pleadings in the

plaint in his evidence on affidavit. In his cross-

examination the plaintiff no.2 admitted that exhibit-N did

not relate to the work order and related to work carried

out for the defendant from Mangan to Makha via Dikchu

covered by Work Order No. W-290/07-08/12. He also

admitted that exhibits 5 & 7 also did not pertain to the

work order. He admitted that although he had filed

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exhibit-7 he did so inadvertently as he was confused since

he was working for the defendant on several similar

projects.

17. Gambu Tamang stated that he knew the plaintiffs

and reiterated what plaintiff no.2 deposed in his evidence

on affidavit. He exhibited the AT report for u/g cable laying

as work completion certificate dated 18.12.2012 (exhibit-

15) issued by A.K. Dey, Sub-Divisional Engineer of the

defendant after inspection of the work. During cross-

examination Gambu Tamang stated that he was employed

by plaintiff No.2 who was his supervisor. He admitted that

the initial time for completion of the work order was 45

days which was extended from time to time. According to

him the concerned work was completed in the year 2010.

It is important to note that this fact has been stated by

Gambu Tamang during his cross-examination by the

defendant.

18. Pema Tamang also reiterated the facts as stated

by the plaintiff no.2 in his evidence on affidavit. He also

stated during cross-examination that as far as he could

recollect the contract work was completed by the plaintiffs

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within the extended time frame and that the measurement

books would depict the true completion work.

19. Deepak Agrawal reiterated the averments in the

written statement in his evidence on affidavit. He stated

that the agreement was entered between the plaintiffs as

the contractor and the defendant. As per Clause 8 thereof

time was of the essence and work order required it to be

completed within 45 days. The plaintiffs failed to complete

the work on time and instead sought extensions. The

defendant vide letter dated 18.11.2008 (exhibit-4) allowed

extension for a further period of 60 days in response to the

plaintiffs' letter dated 05.11.2008 (exhibit-C). He stated

that vide letter dated 15.01.2009 (exhibit-D) the plaintiff

no.2 was informed that they had been receiving

complaints and pressure from public and government

departments regarding the slow process in works and

request the plaintiffs to gear up the process of work to be

completed within the extended time frame. The plaintiffs

failed to complete the work even during extended period of

60 days therefore, by letter dated 20.01.2009 (exhibit-F)

the plaintiff request for further extension of one month.

The defendant vide letter dated 27.01.2009 allowed

extension of 30 days (exhibit-J). According to Deepak

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Agrawal the further period of one month granted vide letter

dated 27.01.2009 (exhibit-J) was the maximum period

that the defendant could have allowed and no further

extension was given. Thus, the plaintiff was bound to

complete the work by end of February 2009.

20. On 06.02.2009 the defendant issued another

communication (exhibit-I) to the plaintiffs to complete the

work on time and in the event of their failure departmental

action could also be initiated.

21. Deepak Agrawal stated that although it was

incumbent upon the plaintiff to complete the work by the

end of February 2009 the plaintiff with malafide intention

filed letter dated 14.05.2010 bearing No. W-290/2007-

08/23 (exhibit-7) with the plaint to project that time frame

to complete the work was extended till 21.02.2010 when in

fact this letter related to another work as laying

underground cables from Mangan to Makha via Dikchu. It

was therefore, submitted that the plaintiff has not

approached the trial court with clean hands.

22. Deepak Agrawal stated that the work completion

certificate forming part of the measurement book (exhibit-

13 collectively and exhibit-O) proved that the plaintiff

carried out only 60% of the assigned work and did not

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complete 40% of the work and even out of the said 60%

only 10% underground cables were made up to date with

respect to point-to-point jointing/joining work. Deepak

Agrawal stated that the defendant was not liable for the

loan taken by the plaintiffs. He stated that the work was

not completed till the month of January 2011 which is

established by the letter dated 28.01.2011 (exhibit-P)

which was filed by the plaintiff before the Lok Adalat.

23. Deepak Agrawal authenticated his evidence on

affidavit and exhibited various communications including

the extensions. During his cross-examination he admitted

that the defendant had not terminated the contract

awarded to the plaintiffs; that the original measurement

book (exhibit-O) were misplaced in their office; that once a

contract work is given their engineers also supervise the

work and in the present contract work their engineers

were involved in supervising it; that the progress of work

in the measurement book is recorded by their engineers;

that exhibit-K (comprised of exhibit-O) was also recorded

by the engineer from their department; exhibit-K only

mentions that 60% of the concerned contract work

awarded to the plaintiffs work had been completed and it

does not specifically say that the remaining 40% work is

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incomplete; the plaintiffs had repeatedly submitted letters

for release of bills in respect of the concerned work; there

was nothing in writing given by them to show that the

defendant had refused the prayer of the plaintiffs to

release the payments; and that they had extended the time

frame for completion of their contract work from time to

time on the request of the plaintiffs.

24. Jay Prakash Thapa was the Sub Divisional

Engineer of the defendant. He reiterated what was stated

in the written statement by the defendant in his evidence

on affidavit. He also admitted to the issuance of the work

order; the failure of the plaintiff to execute the work on

time; the extension granted by the defendant from time to

time and the failure of the plaintiff to complete the work

even during the extended period. During his cross-

examination Jay Prakash Thapa admitted that he was the

supervisor of the concerned work as per exhibit-2; the

defendant had not terminated the contract work; exhibit-

13 (collectively) and exhibit-4 are the measurement

book/copy in respect of the entire work carried out by the

plaintiffs pertaining to this case; exhibit-K (its original)

was written by him in which he had mentioned that the

work had been completed on 28.02.2010; exhibit-15 was

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written by A.K. Dey, the Sub-Divisional Engineer of the

defendant and as per exhibit-15 he had checked the

concerned work undertaken by the plaintiffs and was

satisfied with the work; that since he worked in the field

he could say that it is not possible for contract work to be

completed within the stipulated time mentioned in the

work order and that the General Manager of the defendant

who had come and deposed before the court was not

present during the execution of the said contract work.

25. The admitted fact seems to be that the plaintiffs

had been awarded the work order by the defendant. Prior

to that the agreement had been entered between them for

execution of similar works by the plaintiffs for the

defendant throughout Sikkim. Although the plaintiffs

initially were hesitant to admit that the agreement related

to the work order as well, he did so during his cross-

examination. Apparently, the work order was issued

pursuant thereto.

26. The agreement between the plaintiff no.1 and the

defendant was executed on 22.02.2008. The following

clauses are relevant and quoted herein below:

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

"3. The CONTRACTOR will, during the period of this CONTRACT from 22.02.2008 to 21.02.2009 or

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until this contract shall be terminated by such notices as is hereafter mentioned, whichever is earlier, safely carry out at his own expense and by means of tools, implements equipments etc., to be arranged by him at his own expense all repair works as described in the said Tender document hereunder which the BSNL or the General Manager Telecom, Gangtok, Sikkim or Divisional Engineer concerned under the jurisdiction of Gangtok Telecom District authorized by the General Manager Telecom, Gangtok, Sikkim in that behalf shall require. The contract is extendable for further period of one year considering performance of the Contractor as per discretion of the General Manager Telecom, Gangtok."

................................................................ "6. The CONTRACTOR shall promptly carry out the work wherever called upon by the Competent Authority of BSNL or any of the officers mentioned in the term & conditions above within the jurisdiction of the General Manager Telecom, Gangtok, Sikkim and within the time frame specified in the terms and conditions hereof at the time of issuing WORK ORDER.

7. The CONTRACTOR shall execute the work as specified in the Work Order using his own good tools and required instruments so that to maintain the standard of work as specified by the BSNL.

8. The above work shall, throughout the stipulated time period, be executed with all due diligence and the time allowed for completing the work as specified in Tender paper strictly be observed by the CONTRACTOR. The time in this respect shall be deemed to be essence of the Contract on the part of the CONTRACTOR.

9. If the CONTRACTOR fails to carry out any of his obligations under this Agreement. Penalty or recovery at the rate as prescribed at terms and conditions shall be imposed by the concerned officers mentioned in Tender Paper."

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

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"14. The aforesaid Security Deposit of Rs.3.00.000/-

(Rupees Three Lakh only) furnished by the CONTRACTOR shall be retained by the BSNL as security for the due and faithful performance by the CONTRACTOR of all the covenants herein contained and on his/her part to be satisfactory fulfill, keep and observes all or any of the covenants, conditions or agreements on his/her part contained herein, then, unless the same is already forfeited, the General Manager Telecom, Gangtok, Sikkim will have the power to retain the whole or any part of the same and to appropriate the same or any part thereof to the use of BSNL, absolutely as and when by way of liquidated damages and or other dues and without reference to the relative importance of the particular breach or breaches of Contract which might have given occasion for such appropriate and whether the BSNL may aforesaid or not. In the case of such appropriation or retention of whole or part of the amount or an amount sufficient to make up the deficit as the case may be."

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

"16. That the BSNL will pay the CONTRACTOR for the work, which the CONTRACTOR was called upon by the BSNL or by the concerned officers and which was satisfactorily done by the CONTRACTOR at the rates approved. For this purpose the CONTRACTOR should submit to the General Manager Telecom, Gangtok, Sikkim his/their bill for the terms of the work done by him/them against a particular work order at the rates approved within 30 (thirty) days of the items of work covered by that work order having been satisfactorily completed by him/them.

17. The bill will ordinarily be payable within two (2) months of the date of its submission."

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

"25. The CONTRACTOR will submit for examination in the office of the General Manager Telecom, Gangtok, Sikkim its books of account and all concerned papers immediately by it in this connection within fifteen (15) days from the date

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of its being called upon to do so if the CONTRACTOR fails to do so, and /or

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

(i) If the CONTRACTOR‟s work is found unsatisfactory in the opinion of the General Manager Telecom, Gangtok, Sikkim the General Manager Telecom, Gangtok shall be at liberty by notice in writing to the CONTRACTOR, terminate the Contract in any of the cases stated above. The CONTRACTOR shall thereupon pay to the General Manager Telecom, Gangtok, Sikkim in addition to any sum or sums of money which the CONTRACTOR may be able to pay under the provisions herein before stated, such sum or sums as the General Manager Telecom, Gangtok, Sikkim may decide to be reasonable compensation for loss or inconvenience caused. The amount of the sum or sums for such breach on the part of the CONTRACTOR will be fixed by the General Manager Telecom, Gangtok, Sikkim and shall be final and conclusive against the CONTRACTOR."

27. Clause 3 of the agreement provides a definite time

frame for execution of the contract extendable by one more

year as per discretion of the General Manager. Clause 6

mandates that the plaintiff No.1 complete the work within

the time to be provided in the work order. The work order

provided that the work should be completed within 45

days. Clause 8 provided time was of the essence. However,

clause 9 provided for payment of penalty or recovery at the

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rate prescribed if the plaintiff no.1 failed to carry out any

of its obligations under the agreement. Clause 8 providing

that time was of the essence was also one of the

obligations under the agreement. Clause 14 further

provided that the security deposit was liable to be

appropriated as liquidated damages by the defendant on

the failure of the plaintiff No.1 to duly and faithfully

perform all the covenants and to satisfactory fulfill, keep

and observe all or any of the covenants, conditions of

agreement. The agreement must be read in its entirety and

not individual clause alone. True intent of the parties

needs to be ascertained.

28. In Citadel Fine Pharmaceuticals v. Ramaniyam

Real Estates (P) Ltd.1 the Supreme Court held:

"50. By referring to various judgments, the Constitution Bench in Chand Rani (1993) 1 SCC 519] formulated the proposition that even where parties have expressly provided time to be of the essence of the contract, such a stipulation will have to be read along with other terms of the contract. Such other terms, on a proper construction, may exclude the inference that the completion of work by a particular date was meant to be fundamental.

The learned Judges indicated the following circumstances which may indicate a contrary inference; (a) if a contract includes clauses

1(2011) 9 SCC 147

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providing for extension of time in certain contingencies, or (b) if there are clauses for payment of fine or penalty for every day or week, the work undertaken remains unfinished after the expiry of time. The Constitution Bench held that such clauses would be construed as rendering ineffective the express provision relating to time being of the essence of contract (see para 22 at p. 528 of the Report)."

29. Reading the agreement in its entirety it is held

that clauses for imposition penalty and forfeiture of the

security deposit for nonadherence to the covenants also

diluted clause 8 of the agreement.

30. The work was to be completed under the

supervision of Jay Prakash Thapa. The defendant admits

that the plaintiffs had done some work although not as

contemplated within the initial time frame in the work

order. The defendant admits to the extensions of time

granted by them to the plaintiff and in fact exhibited

various correspondences to that effect. The defendant also

admits that they have not yet taken any action against the

plaintiffs for the plaintiffs' nonadherence to the time

schedule. Admission in pleadings, if true and clear are the

best proof of the facts admitted. Admission in pleadings

are judicial admissions and admissible under Section 58

of the Indian Evidence Act, 1872. It stands on a higher

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footing than evidentiary admissions, fully binding and

constitutes waiver of proof. Facts admitted need not be

proved unless the court requires otherwise.

31. The defendant contention that time was the

essence of the agreement despite the extensions granted

seems to have appealed to the learned Trial Court. The

learned Trial Court relied upon the judgment in Orissa

Textile Mills Ltd. vs. Ganesh Das Ramkishun2 and Dr. Bal

Saroop Daulat Ram vs. Lt. Col. Lakhbir Singh Kirpal

Singh3 to hold that:

"it is trite that if the time is originally of the essence of the contract it does not seize to be of the essence merely because a party agrees to short extensions. Instead, such brief extension may at the most amount only to a waiver to the extent of substituting such extended time for the original time and does not destroy the essential character of time."

32. In Orissa Textile Mills (supra) the Patna High

Court was examining a revision application against the

judgment of the learned Small Cause Court, Judge,

decreeing the plaintiff's suit for damages for breach of

contract. The plaintiff had placed the order with the

defendant no.1 through its selling agent for supply of five

bales. The goods were to be delivered within January

AIR 1961 Patna 107

AIR 1964 Punjab 375

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1956. The order had been accepted by the defendant no.1.

Out of these five bales, only one bale was supplied to the

plaintiff till February 1956, but the remaining four bales

were not at all supplied by the defendant to the plaintiff.

The plaintiffs were informed that they would deliver the

remaining bales if they agreed to pay the new excise duty.

The defendant No.1 was informed that the plaintiff was

prepared to take delivery of the remaining bales but only

at the old contract rate. The remaining goods were

therefore, not supplied. The suit was, thereafter, filed for

recovery of damages for breach of contract. On facts it was

held that the plaintiff in his order had fixed the month of

January 1956 for the fulfillment of contract. The

defendants while accepting the plaintiff order had

extended the time of delivery to the end of February 1956.

Both the parties conceded before the court that the

plaintiff agreed to the extension of time and therefore end

of February 1956 was the date fixed for the fulfillment of

contract. It was in such fact situation that the Patna High

Court held: -

"16. This extension of time by the defendants and its acceptance by the plaintiff clearly shows that time was of the essence of the contract. Where time is of the essence of the contract and is extended the extended date is also of the

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essence of the contract the time of delivery was certainly a necessary term, and that is the reason why the parties intended it to be a term of the contract. The letter sent by defendant 2 in March, 1956, Exhibit A (1), offering to supply the remaining goods in March, 1956, on the plaintiff agreeing to pay the new Excise Duty and the plaintiffs reply to it, Exhibit A, agreeing to accept the goods in March, 1956, at the old rate, but reluctant to pay the new Excise Duty, also point to time being of the essence of the contract. In my opinion, therefore, the learned Judge has rightly held that time was of the essence of the contract."

33. In Dr. Bal Saroop Daulat Ram (supra) the Punjab

and Haryana High Court was examining the plaintiff's first

appeal against the judgment and decree dismissing his

suit for specific performance of the agreement to sell

relating to a bungalow in Amritsar. The Punjab & Haryana

High Court held:

"46. On the facts and circumstances of the case in hand, time was presumably of the essence and this view seems to find additional support from the subsequent conduct of the parties. The fact that the vendor granted some extension for specified period would not seem to detract from the intention of making time of the essence; it may on the contrary support the existence of such an intention. But as I have observed earlier, in view of the finding that there was no term of delivery of vacant possession, and that the plaintiff-appellant had repudiated performance of his part of the contract without getting vacant possession it is

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unnecessary to express any considered view on this point".

34. In both the judgments cited above, the High Court

of Patna as well as the Punjab and Haryana High Court

have held that time was of the essence as it was

specifically agreed between the parties that it would be

done within the specified time.

35. The work order provided for a definite time frame

of 45 days to complete the work. This was, however,

extended by the defendant for a further period of 60 days.

Thereafter, it was also extended for a period of 30 days

taking the time for completion of the work till end of

February 2009. This is an admitted position. However,

admittedly the plaintiffs did not complete the work by the

end of February 2009.

36. Section 55 of the Indian Contract Act, 1872 which

is important at this juncture, provides:

"55. Effect of failure to perform at fixed time, in contract in which time is essential.-- When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

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Effect of such failure when time is not essential.--If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

Effect of acceptance of performance at time other than that agreed upon.--If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so."

37. In M/s. Hind Construction Contractors vs. State of

Maharashtra4 relating to building contracts, the Supreme

Court relying upon the 4th edition of Halsbury's Laws of

England held that even where the parties had expressly

provided that time is of the essence of the contract such a

stipulation will have to be read along with other provisions

of the contract and such other provisions may, on

construction of the contract, exclude the inference that the

completion of the work by a particular date was intended

to be fundamental; for instances, if the contract were to

include clauses providing for extension of time in certain

(1979) 2 SCC 70

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contingencies or for payment of fine or penalty for every

day or week the work undertaken remains unfinished on

the expiry of the time provided in the contract such

clauses would be construed as rendering ineffective the

express provision relating to the time being of the essence

of contract.

38. In Arosan Enterprises Ltd. v. Union of India5 the

Supreme Court held:

"13. These presumptions of the High Court in our view are wholly unwarranted in the contextual facts for the reasons detailed below but before so doing it is to be noted that in the event the time is the essence of the contract, question of there being any presumption or presumed extension or presumed acceptance of a renewed date would not arise. The extension if there be any, should and ought to be categorical in nature rather than being vague or on the anvil of presumptions. In the event the parties knowingly give a go-by to the stipulation as regards the time -- the same may have two several effects: (a) parties name a future specific date for delivery, any (b) parties may also agree to the abandonment of the contract -- as regards (a) above, there must be a specific date within which delivery has to be effected and in the event there is no such specific date available in the course of conduct of the parties, then and in that event, the courts are not left with any other conclusion but a finding that the parties themselves by their conduct have given a go-by to the original term of the contract as

(1999) 9 SCC 449

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regards the time being the essence of the contract. Be it recorded that in the event the contract comes within the ambit of Section 55, Contract Act, the remedy is also provided therein. For convenience sake Section 55 reads as below:

"55. When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so."

14. Incidentally the law is well settled on this score on which no further dilation is required in this judgment to the effect that when the contract itself provides for extension of time, the same cannot be termed to be the essence of the contract and default however, in such a case does not make the contract voidable either. It becomes voidable provided the matter in issue can be brought within the ambit of the first para

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of Section 55 and it is only in that event that the Government would be entitled to claim damages and not otherwise."

39. If time had been of the essence, on the failure of

the plaintiffs to complete the work on time, the agreement

would become voidable at the option of the defendant.

However, the defendant admittedly has not terminated the

agreement or taken any action contemplated under the

agreement. Jay Prakash Thapa as well as Deepak Agrawal

both admits that the defendant had not terminated the

contract/work order. There is not a single correspondence

after the extended completion period or material placed

which reflect that any action was taken or even

contemplated by the defendant. In fact, it is the

defendant's case that the plaintiffs had not completed the

work even till January 2011 which gets established from

the correspondence written by the defendant dated

28.01.2011 (exhibit-P) filed by the plaintiffs before the Lok

Adalat. The defendant has extracted the contents of

exhibit-P in the written statement and exhibited it through

Deepak Agrawal. This admitted correspondence is of

relevance. The contents are extracted below:

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"Sir, This is for your kind information and necessary action to the fact that only approximately 10% u/g cable laying by your concern has become up to date with respect to point to point verification under Namchi jurisdiction vide work order no- 22D(a)/05-06 dt 25/9/08 as intimated from our T.M. Station Namchi.

Henceforth you are requested to arrange for completion of rest as early as possible especially at the eve of visiting of Hon‟ble Prime Minister on 12/2/2011."

40. This correspondence establishes that the

defendant had requested the plaintiffs vide letter dated

28.01.2011 to complete making up to date the cable laying

with respect to point-to-point verification "as early as

possible" especially on the eve of the Hon'ble Prime

Minister's visit and kept it open ended. This

correspondence establishes that the point-to-point

verification of the underground cable laying by the

plaintiffs had been completed only up to 10%. This was

not a complaint of complete non completion of work which

as per defendant's witness Jay Prakash Thapa was done in

the year 2010. The work order did not specify point-to-

point verification and the defendant have not pleaded what

work remained to be completed. Thus, it would not be

possible for this court to agree to the view taken by the

learned Trial Court that although time was of the essence

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of the contract, it did not cease to be of the essence merely

because the defendant agrees to grant short extensions.

The learned Trial Court seems to have failed to examine

the correspondence in his correct prospective. The learned

Trial Court seems to have ignored the pleadings in the

written statement as well as affidavit on evidence of

Deepak Agrawal which clearly takes a position that the

plaintiff had not completed the work till January 2011

which was established by exhibit-P. With such clear stand

taken by the defendant there was no reason for the

learned Trial Court, with great respect, to wonder about

the reason for the issuance of the letter dated 28.01.2011

as being abruptly and hastily issued to the plaintiffs.

Thus, if, in case of a contract voidable on account of the

promisor's failure to perform his promise at the time

agreed, the promisee accepts performance of such promise

at any time other than that agreed, the promisee cannot

claim compensation for any loss occasioned by the non-

performance of the promise at the time agreed, unless, at

the time of such acceptance, he gives notice to the

promisor of his intention to do so. A voidable contract is a

contract that can be affirmed or rejected at the option of

one of the parties or in other words the contract which, in

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its inception, is valid, but which may be avoided i.e.

rendered void at the option of one of the parties. The

defendant however, as seen from its conduct, has not

avoided the contract but continued to request the plaintiffs

to complete the work even in the year 2011.

41. Deepak Agrawal exhibited the measurement

book of the contract (exhibit-O), the copy whereof was

exhibited by the plaintiff No.2. He has also exhibited the

work certificate (exhibit-K) forming part of the

measurement book. Jay Prakash Thapa admitted he

supervised the work and wrote the work certificate. He

admitted in cross-examination that he had mentioned that

the work had been completed on 28.02.2010 by the

plaintiffs in the work certificate. In his evidence on

affidavit, he has however, stated that the plaintiff no.2

executed the work by successfully completing only 60% of

the underground cable and did not complete 40% of the

work and out of the 60% assigned work only 10% of

underground laying cables was made up to date with

respect to point-to-point jointing/joining work. It is settled

that the documents speak for itself. Section 94 of the

Indian Evidence Act, 1872 provides when language used in

a document is plain, and when it applies accurately to

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existing facts, evidence may not be given to show that it

was not meant to apply to such facts. The work certificate

reads thus:

"work certificate It is certified that the excavating, trenching, construction of cabinet, pillar and laying of U/G cable has been tested and 60% U/G cable pair found ok. The work has been completed on 28.2.2010."

42. Further, Jay Prakash Thapa stated that he had

himself mentioned in the work certificate that the work

has been completed on 28.02.2010 by the plaintiffs. He

had also admitted that since he worked in the field, he

could say that it was not possible for contract work to be

completed within the stipulated time mentioned in the

work order. There is also clear admission of Deepak

Agrawal that the plaintiffs had in fact done work to the

extent of 60%. Thus, in any case this was not a case in

which no work at all was done. Be that as it may there is

no dispute about the contents of the measurement book

filed by the defendant. Deepak Agrawal admits that the

progress of the work in the measurement book was

recorded by the defendant's engineers. The total work done

quantified in terms of money is reflected as

Rs.12,13,321/- therein. The measurement book records

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the date of commencement as 21.11.2008 and date of

completion as 28.02.2010. The measurement book also

reflects that the work continued even after the end of

February 2009 which according to the defendant was the

last extension. The plaintiff No.2 has stated that on

04.07.2012 the Sub Divisional Engineer submitted the

total contractor's bill along with the measurement book to

the defendant for further action. The letter dated

04.07.2012 written by the Sub Divisional Engineer to the

General Manager submitting the contractors bill as

enclosed has been exhibited as exhibit-11 by the plaintiffs

and the bills as exhibit-12. The defendant has denied that

the Sub Divisional Engineer has submitted the

contractor's bill to the defendant's office by contending it

was the contractor's job to do so. The defendant has

admitted that the concerned officer had forwarded the

measurement book. The Sub Divisional Engineer's letter

dated 04.07.2012 (exhibit-11) however, forwards both the

bill and the measurement book together. Although, the

plaintiffs had furnished a copy of the bill (exhibit-12) the

defendant has not denied the contents thereof. The

plaintiff no.2 also stated that the original bill is in the

possession of the defendant. The plaintiff no.2 was not

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cross-examined on this aspect by the defendant and

therefore, there is no denial of the contents of the bill. The

bill is dated 15.06.2012 and contain the particulars,

quantity, rate and the amount and totals to

Rs.12,97,412/- only round about the same figure of

Rs.12,13,321/- as reflected in the measurement book.

Deepak Agrawal admits that the plaintiffs had written

several letters reminding the defendants to make the

payment. These correspondences have also been exhibited

by the plaintiffs.

43. In view of all the above facts, circumstances and

applying the ratio of the judgment as discussed above, it

must be held that although the clause 8 of the agreement

provided time was of the essence, the conduct of the

defendant allowing extensions and finally the open ended

one, time no longer remained of the essence. As held

above, the defendant by their own act had waived their

right to make the contract voidable, even if the penalty and

forfeiture clauses are ignored, and permitted the plaintiffs

to continue the work. No action of termination, forfeiture

or imposition of penalty has been taken by the defendant

against the plaintiffs. Having thus, extended the time for

completion of work even till 2011 and requiring the

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plaintiffs to do the work as indicated in the measurement

book at their own costs, it would not be correct on the

part of the defendant not to pay the plaintiffs what was

legitimately due to them for works already completed.

There is no dispute about the measurement book which

reflects the amount of Rs.12,13,321/- as work done till

then. Therefore, this court is of the view, that the plaintiffs

are entitled to a decree of the aforesaid amount of

Rs.12,13,321/-.

44. In the entirety of the records of the case there is

not a single correspondence from the defendant disputing

the reasons mentioned by the plaintiffs in their

correspondences seeking extension save complaining that

the progress was slow. Although the defendant did

threaten departmental action because of slow progress no

action was taken. There is no correspondence from the

defendant complaining of non-completion of work after the

last communication on 06.02.2009 (exhibit-I) till

28.01.2011 (exhibit-P). There was a duty for the defendant

to speak and its failure to do so constitutes a waiver of the

delay in execution of the work. Under clause 17 of the

agreement the plaintiffs' bill became payable within two

months of its submission.

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45. It is held that the payment became payable on

03.09.2012 i.e. before the expiry of the two months of

submission of bill on 04.07.2012. Therefore, the defendant

is also liable to pay interest thereon at the rate of 6% per

annum from 03.09.2012 till date of actual payment on the

amount of Rs.12,13,321/-.

46. The appeal is allowed. The impugned judgement

and decree of the learned Trial Court are set aside. In the

facts of the present case, no order as to costs.

47. The decree may be drawn accordingly.

                                                    ( Bhaskar Raj Pradhan )
                                                           Judge




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