Partly allowed

Secretary,Maharathra Water Supply and Severage Board v. Shripati Lakhu Mane

Bombay HC24 Apr 2009FA/528/1998

Case brief

AI extract

What is this about?

Appeal against a decree awarding relief for an abandoned government contract suit. The High Court set aside the refunds of security deposit, overheads, and profits, holding the plaintiff abandoned the work. Claims for labor, idle machinery damages, and payment for completed extra items were confirmed.

What did the court decide?

Set aside claims for refund of security deposit, overheads, and loss of profit. Confirmed claims for labor, idle machinery damages, and payment for completed extra work.

Secretary,Maharathra Water Supply and… — Contract and Commercial Disputes | Bombay HC (2009)

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srk

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE

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First Appeal No.528 of 1998

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With

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Civil Application No.3308 of 2004

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The Member Secretary, Maharashtra Water Supply & Sewerage Board & ors.

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Appellants

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Vs.

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Shri Shripati Lakhu Mane Respondent

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Mrs.Neeta Karnik for appellants. Mr.Joel D’Souza i/b. Mr.S.M.Kamble for respondent.

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CORAM: B.H.MARLAPALLE & RAVI K.DESHPANDE,JJ.

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Reserved on : April 4, 2009. Pronounced on : April 24, 2009.

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JUDGMENT (PER B.H.MARLAPALLE,J.) :

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This First Appeal filed under Section 96 of CPC arises from a decree for recovery of Rs.24,97,077/with interest thereon at the rate of 20 % per annum from the date of suit till realisation and passed by the learned Civil Judge, Senior Division, Ratnagiri in Special Civil Suit No.90 of 1991 and the appeal has been filed by the original defendants. The respondent - plaintiff filed the said Suit for recovery of money for the work done but not paid, work done but paid at lower rate and for idle period and he claimed a total recovery of Rs.51,35,289/and the suit was filed on

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or about 26/9/1991. Thus the suit has been partly

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decreed.

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2. Undisputed facts leading to the recovery suit

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could be stated briefly in the following words.

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The plaintiff is a Registered Government

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. Contractor	and tender notice at E	xhibit	121	was
published	by the defendant no.3 in som	e of	the	local
newspapers	in connection with the Reg	ional	Rural	Piped
Water S	upply Scheme for Dabhol-B	hopan	and	other
villages	in Ratnagiri District. The		plaintiff	had
submitted	his tender and it was acce	pted	at the	rates
mentioned	with 47 percent rise on	the	estimated	cost.
The	estimated cost was Rs.55,06,82	6/-	and,	therefore,
the tend	er cost came to Rs.80,45,0	34/-.	He	was
informed	by communication dated 31/5/1	986	(Exhibit	28)
that his	tender has been approved	by	the	Chief
Engineer	and that he should deposit	init	ial	security
amount	so that formal work order	can	be	issued.
Security	deposit was made on 12/6/1986	and	the	Work
Order at	Exhibit 29 was issued to him	on	3/7/1986.	It
is the	claim of the plaintiff that as	per	the	letter
at Exhibit	139 he had commenced the	tender	work	before
he recei	ved the work order i.e. on	19/	6/1986.	On
3/7/1986	he had also requested	for	sanction	of

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mobilization advance.	However,	by letter	dated
28/7/1986 (Exhibit 30)	the work	order was directe	d to
be kept in abeya	nce / su	spended. The	plaintiff
represented by his	letter dated	6/8/1986 (Exhibit	67)
to defendant no.3	that he had	collected the	labour
force and machinery	at the site,	had commenced	the
work from the end	of June 198	6 itself and he	was
suffering the financial	loss.	He submitted	such
representation on	24/9/1986 (Exh	.68) and 7	/11/1986
(Exh.69). By lett	er dated 17/	12/1986 (Exh.31) he	was
called upon to recomme	nce the con	tract work. He	asked
for line out vide	his letter	dated 19/12/1986	(Exh.70)
and he recommenced the	work from	29/12/1986. Vid	e his
letter dated 14/1/198	7 (Exh.71)	he brought to	the
notice of the defendan	t no.2 that	the pipes of	various
sizes i.e. 250 mm	, 200 mm	etc. were not	available
and he was informed	about change	in execution of	20690
mtrs. length of 2	50 mm dia	pipe line and to	be
replaced by 200 mm	and 150 mm	dia. As per the	letter
dated 2nd March	1987 (Exh.75)	the defendant	no.3
called upon the	plaintiff to sto	p the work and	to
undertake the construction	of head	works to be	started
at Panchanadi. On	4th March	1987 the defendant	no.2
informed the plaintiff	about the	modification of	the
scheme which involv	ed the con	struction of head	works,

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one at	Karajai	and the secon	d one	at Panchanad	i.	Work
order	for	these jobs was	issue	d on 1/7/19	87 (E	xh.77).
He	had s	ubmitted his secon	d bill	which was	cleared	in
May	1987	by adjusting the	advance	paid and i	t was	his
grievance	that	the bill was	not	cleared as	per	the
rates	agreed	for the extra	items	and as per	the	rates
proposed	on	20th February	1987	(Exh.74) and	m	utually
agreed	upon.	It was his	case	that his	represen	tations
for	shortage	of material, n	ot cl	earing at the		agreed
rates	and	the indifferent	attitude	of the	defe	ndants
did	not pe	rmit him to co	ntinue	with the cont	ract	and
under	such	circumstances h	e was	imposed a	fine	of
Rs.10/-	per	day from 1st	March	1988 as per	the	letter
dated	1/3/198	8 (Exh.90).	By	letter dated	22/	3/1988
(Exh.86)	he	was informed th	at the	scheme is	split	up
in	two p	arts in respect	of	Item No.4	on	the
Sub-Sched	ule F	i.e. laying	down	of 250 mm	dia	pipe
and	the rate	was fixed at	Rs.6.32	and 4.55 fo	r 200	mm
and 15	0 mm	pipes respectively.	H	e was given	notice	on
28/7/1989	by	the defendan	t no.3	(Exhibit	92)	for
action	under	Clause 3 of	the C	ontract. The	c	ontract
was	to be	completed within	30	months from th	e date	of
commence	ment	and he was	informe	d vide let	ter	dated
19/4/1989 contract	(E wou	xhibit 90) that ld be deemed	the to	commencement have starte	of d	the from

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17/12/1986	.	He	submitted rep	resentat	ion	against the
action	of le	vying	fine. He issu	ed a	leg	al notice on
10/12/1988	(Exh.1	19).	The fine of	Rs	.10/-	per day was
increased	to	Rs.25	/- per day	from	20th	April 1989
which	was	protested	by him vide	his	lette	r dated 2nd
May	1989.	The	Plaintiff No.3	dire	ctly	communicated to
the	plaintiff’s	B	ank for renewal	of	B	ank Guarantee
upto	31/12/19	89	and thereafter	upto	31/12/	1990. He
was	granted	extensi	on in work	upto	31st	December 1989
as	requested	by	him vide his	letter	dat	ed 6/10/1989.
By	order	dated	19/4/1989	(Exh.9	1)	the defendant
withdrew	the	work	of 250	mm	C-1	pipeline from
Baijewadi	to	Dabhol	, Item 4A Su	b-work	F,	Clause 15 of
accepted	Tender	of	Chiplun Division	.	By	further order
dated	28/7/1989	(Ex.9	2) the remain	ing	work	of Sub-Work
C	was taken	up	at the plaintiff’s	risk	and	cost. By
letter	dated	6/10/	1989 (Exh.93)	the	fine	rate was
increased	to	Rs.50/-	per day	with	re	trospective effect
i.e.	1/8/198	9 as	there was no	work	bein	g carried on
by	the	plaintiff	. Plaintiff i	ssued		another notice
under	Section	80 of	CPC on 24	/8/1991	to	defendant no.3

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and finally on 26/9/1991 he filed the suit for the

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recovery of following money dues:

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(a) Compensation for idle machinery and labour

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for a period of five months i.e. from August

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1986 to December 1986.

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(b) Value of work of tendered rates which

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remained to be measured, recorded and paid.

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to be measured, recorded and paid as extra

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item.

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(d) Release of Security Deposit.

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	(e)	Damages	due	to	over	head	and	loss	of
profits.
	(f)	Interest	at	18 per	cent	per	annum	on	all
the	del	ayed pay	ments	upto		the	date		of
realisation	.

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3.	In	the	suit he	prayed	for decree	for
Rs.51,34,389/-		and		also	for a	de	claration		that	the
defendant’s	l	etter		dated	19/4/19	89	(Exhibit		90)	is
illegal.	He		prayed	for	interest	to	be	paid	at	the
rate of	18	per	cent	per	annum	on	the	suit	amount	from
the date		of	the	suit	till	realisa	tion	of	the p	ayment.

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Along with the plaint he had annexed the details of

recovery as under:

Annexure I

Sub-Schedule F

Excavation in soft soil, excavation in hard soil providing and laying murum bedding

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Rs.10,72,485/-

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Sub-Schedule C

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Excavation in hard material, providing & laying P.C.C. constructing UCR masonry, bailing out water, providing approach road

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Rs.83,712/-

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Sub-Schedule D

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Excavation in soft strata, excavation in hard strata, murum bedding etc.

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Total claim under Annexure I

Rs.30,323/-

Rs.12,25,864

Annexure II

Sub-Schedule F

Item 4 Conveying from Deptt. store to site of work lowering, laying following pipes in grade and alignment 200 mm. dia C.I. Pipes 7000 mtrs.

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Rs.5,82,250/-

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Annexure III

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Refund of full security deposit in the form of Bank Guarantee No.13/86 dated 12/6/1986

Rs.2,21,000/-

Annexure IV

Payment of labour charges for the period from August to December 1986 (idle labour)

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Rs.1,57,000/-

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Annexure V

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Damages for idle machinery from August to December 1986

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Rs.91,000/-

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Annexure VI

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Overheads for the period from January 1989 to 30/9/1990 (21 months) at the rate of Rs.26,815/- per month

Rs.5,63,115/-

Annexure VII

Loss of profit

Rs.11,55,000/-

Annexure VIII

Interest at 18 per cent per annum

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Rs.11,38,860/-

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. Claim in Annexure I, Sub-Schedule F was given

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up and the cl	aim in Sub-Schedule C	came to	be	rejected
by the Trial	Court. The claim in	Sub-Schedule	D	has
been allowed at	Rs.28,418/-. The	claim in	Annexu	re II
has been	allowed to the extent	of Rs.4,4	2,994/-	as
against the	claim of Rs.5,82,250/-.	The	claim	in
Annexure III	for refund of	security dep	osit	of
Rs.2,21,000/- has	been allowed in	toto.	Claim	in
Annexure IV	for idle labour has	been allowed	in	toto
at Rs.1,57,000/-.	Claim in Ann	exure V	for	idle
machinery at	Rs.91,000/- has been	allowed	in	toto.

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Claim in Annexure VI has been allowed in toto at Rs.5,63,115/-. Claim in Annexure VII for loss of profit has been allowed at Rs.9,93,250/and finally

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claim in Annexure VIII has been rejected as the claim

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for loss of profit has been allowed.

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The defendants filed Written Statement at Exhibit 20 and opposed the suit. It was submitted that so far as the main contract at Exhibit 121 was concerned, the plaintiff had abandoned the work and had not done any work after his second bill was cleared in May 1987. Despite the extension in the contract period having been granted finally upto 31/12/1989, he refused to continue with the contract and by his own letter dated 27/8/1988 Exhibit 89 and the legal notice at Exhibit 119, he refused to carry out the work unless the bill for the extra item i.e. Item No.4(a) from Sub-Schedule F of the contract was paid to him at the rates purportedly agreed jointly in Exhibit 86. The alleged non clearance of the bill or non supply of material for the additional contract for construction of two different overheads at Karajai and Panchanadi. As the plaintiff abandoned the work of the main contract at Exhibit 121, Clause 3(b) of the contract was invoked so as to forfeit the security

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deposit	amount	and as the plaintiff had not		carried
out	any wo	rk from the end of May 1987, there	was	no
question	of	entertaining his claim of either	ov	erheads
or	profits.	The defendants denied that the		required
materials	were	not provided to the plaintiff	so a	s to
continue	with	the contract. They claimed	that	the
plaintiff	insisted	that unless the rates for	the	extra
items	were	agreed upon as per the join	tly	agreed
proposal	at Ex	hibit 86 he refused to carry	out	further
work	of the	contract and under the terms	of	the
contract	the	plaintiff was not permitted to	do	so.
Such	acts	of the plaintiff amounted to aba	ndonmen	t of
contract	and	due notices were served on him,	the	fine
amount	was	initially imposed at Rs.10/-, rev	ised	to
Rs.25/-	and	then further at Rs.50/- per	day	and
despite	these	penal actions the plaintiff refu	sed	to

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continue with the contract. As per the defendants the

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claim was required to be rejected.

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5.		In support	of his c	laim the p	laintiff stepped
in	the	witness	box	and	on behalf	of	the defendants
Prabha	kar She	lgaonkar	-	DW	1 and	Exe	cutive Engineer at
the	relevant	time,	Da	ttatraya	Ramchand	ra	Kulkarni - DW
2,	Deputy	Engin	eer	from	11/7	/1986	to 12/3/1987,
Raghu	nath	Patil -	DW	3,	Assistant	Engin	eer from 1985

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to 1989, Shivaji Karlekar - DW 4, Deputy Engineer from March 1987 to July 1988, Ashok Waghate - DW 5, Deputy

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Engineer from July 1988 to November 1991 were examined.

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6.	In support of	the claim in Annexure IV i.e.
for p	ayment of	idle labour charges fr	om August	to
December	1986,	the plaintiff brought on	record	six
receipts	at Exhib	it 97 collectively is	sued by	the
contractor	supplying	the labour (Shri	Laxman Sa	lunkhe)
and i	n support	of his contentions	that he	had
organised	the labou	r force at the site	along with	the
machinery	and the	labour as well as	the machinery	was
idle	till 17/12/1986.	These receipts are	in the	sum
of R	s.1,57,000/-.	The defendants did	not take	any
steps	to issue	witness summons	to the	labour
contractor	who issued	the receipts so as	to examine	to
test	the veracity	of these receipts.	These	receipts
indicated	that for	supplying labour for	the months	of
July	1986 an amo	unt of Rs.20,000/- was	paid, for	the
month	of August	1986 an amount of	Rs.30,000/-	was
paid,	for the mo	nth of September 1986	an amount	of
Rs.30,000/-	was paid,	for the month of	October 1986	an
amount	of Rs.30,00	0/- was paid, for	the month	of
November	1986 a	n amount of Rs.30,000/-	was paid	and

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for th	e mo	nth	of	Decem	ber 198	6 an	amount	of
Rs.17,000/-	was	pa	id.	W	e do no	t find	any	error
committed	by		the	trial	Court in	allowing	this	claim
amounting	to	Rs.1,57	,000/-	mor	e so	when it	is	admitted
that the	contr	act	was	ente	red into	between	the	parties
on 3/7/	1986	and	he	was	called upon	to c	ommence	the
work	in ad	vance	and	he	was imm	ediately a	fter	signing
of the	con	tract	called	upon	to stop	the	work.	The
contract	rema	ined	in	abeya	nce till	17/12/1986	.	If it
was the	claim	of	the	defen	dants that	he did	not	employ
any la	bour	force	and	did	not have	machinery	at	the
site, t	he onus	wa	s on	the	m to prov	e the s	ame an	d they
did not	take	any	steps	to	do so.	On the	other	hand,
the	plaintiff	sta	ted	that	on accep	tance of	the	tender
he w	as told	to	start,	he	had at	the site	25	unskilled
labour,	10	fitter	s an	d 5	masons.	This	evidence	has
gone	unchalle	nged.		It	is ad	mittedin	the	W.S.
(Exhibit	20)	that	after	the	work or	der was	signed	on
3/7/1986,	for	the		first	time by	the	letter	dated

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28/7/1986 he was informed that the contract was kept

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in abeyance due to administrative exigencies.

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Coming to the issue of compensation for idle machinery, the trial Court was right in stating that no effective cross-examination of the plaintiff was

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subjected	by the defen	dants and	th	ey	allowed the	claim
to be	entertained	in default.	H	ere	again if	the
defendants	claimed that	there		was	no m	achinery
collected	at the	site by	the	plainti	ff during	the
period	from July to	December	1986,	the	onus was	on
them t	o prove the	same by	addu	cing	evidence.	The
trial	Court was,	therefore,	right	and	justified	in
allowing the	claim of Rs.91,000/- by	way of damage	s

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for idle machinery from August to December 1986.

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8. The	refund	of security deposit at Rs.2	,21,0	00/-
(Annexure III)		has been allowed	b	y the	t	ri	al	Court
without any	j	ustifiable reasons	.	The	tr	ia	l	Court
simply relied	u	pon the decree	pa	ssed	in	Sp	ecial	Civil
Suit No.528	of	1990 which was	fil	ed by	the		State	Bank
of India.	By	the said decr	ee	passed		ag	ainst	the
plaintiff an	am	ount of Rs.2,21,	000/-	was	dire	ct	ed	to
be paid to	the	Bank. Cl	ause	3	of		the	tender
conditions sta	tes	that in any	case	in	which		under	any
clause of	the	contract the	c	ontractor		sh	all	have
rendered hi	mself	liable to	pay	comp	ensation		am	ounting
to the whole	of	his security dep	osit	or	in th	e	cas	e of
abandonment o	f	work owing	to	serious	i	lln	ess,	the
Engineer on	be	half of the	Gove	rnor	of		Mah	arashtra
shall have	the	power to adopt	any	of	the		fo	llowing

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courses viz. 3(a) to rescind the contract and in that case the security deposit of the contractor shall

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stand forfeited and be at the disposal of the

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Government.

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. In his letter dated 6/1/1988 at Exhibit 80 the

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plaintiff	inf	ormed	the Executive Engineer th	at	unless
the	pending	claims	were settled and a writte	n	promise
made	for	clearance	of the bill, the contra	ct	work
could	not b	e comm	enced. On 2/2/1988 (Exhibit	82)	the
Superinte	nding	Engineer	appealed the plaint	iff	to
restart	the co	ntract	work at the earliest pos	sible	and
that	his	difficulties,	if any, would be add	ressed	to.
Vide	letter	dated	22/2/1988 (Exhibit 85	)	the
Superinte	nding	Engineer	called upon the	E	xecutive
Engineer	to	impose	a fine of Rs.10/- per day	on	the
plaintiff	and	the	plaintiff was required to	start	the
work	latest by	1/3/198	8. It was also informed	tha	t in
case	he failed	to	restart the work latest by	1/	3/1988,
the	contract	shall	be immediately withdrawn	under	the
relevant	clause	and	got completed from an	y	other
agency.	A	copy	of this letter was forwarded	to	the
plaintiff	and ad	mittedly	it was received by him.		Vide
his	letter	dated	29/4/1988 (Exhibit 84) addresse	d	to
the	Executive		Engineer the plaintiff clearly		stated

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that	unless he	was	paid an amount of Rs.5,00,0	00/- he
would	not restart	any	work including the contrac	t work
and	he referr	ed to	the personal discussions held	on
7/4/1988	and	11/4/	1988 with the Executive	Engineer.
He	also acknow	ledged	the fact that he was impos	ed a
fine o	f Rs.10/-	per	day by the Superintending	Engineer
but	stated that	the	said action was not in	keeping
with	any Rules	and	was unjust. He requeste	d the
Executive	Engineer	to	withdraw the order imposin	g fine
lest he	would not	rest	art any work. He reiter	ated the
same	contentions	vide	the subsequent letter	dated
7/7/1988	(Exhibit	88).	In his letter dated	27/8/1988
(Exhibit	89)	address	ed to the Executive Engineer	he
assured	to restart	th	e work towards the e	nd of
September	1988.	A	s per the letter dated	19/4/1989
(Exhibit	90) th	e fin	e amount of Rs.10/- per day	was
increased	to	Rs.25/-	under Clause 2 of the	Contract
and	with effect	from	20/4/1989. On the same da	y by
another	letter	at Ex	hibit 91 he was given notic	e of
ten	days under	Clau	se 3(a) of the Contract	agreement.
By le	tter dated	6/10/198	9 (Exhibit 93) he was	informed
that	the time	limit	for execution of the contr	act had
expired	on 17/6/19	89	and he did not app	ly for
extension.	Ex	tension	was granted upto 31/12/19	89 and
he	was further	inform	ed that as he did not show	any

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progress	and kept the work in abandonment inspite	of
penal	charges, the rate of penal charges was	increased
to	Rs.50/- per day with effect from 1/8/1989.	There
is n	o dispute that till he filed the Suit,	the
plaintiff	did not submit any fresh bill after	his
second	bill was cleared in May 1987. He did	not
challenge	the orders imposing fine and no d	eclaration
was	sought against the withdrawal of the contract	on
the	ground of abandonment under Clause 3(a) of	the
Contract	Agreement. Shri Raghunath Patil - DW 3	was
the	Assistant Engineer at Dapoli between the	period
from	1985 to 1989. He stated in	his
examinatio	n-in-chief that the contract work was	in
progress	upto May 1987 and after May 1987	the
plaintiff	did not start work and he further	reiterated
that	till his transfer on 5/10/1989 there was no	work
at t	he contract site resumed by the plaintiff.	He
also	stated that there was separate tender in	respect
of	Panchanadi work and that the plaintiff never	made
complaints	regarding measurements. In	his
cross-exam	ination he admitted that as per the	letter
dated	19/4/1989 (Exhibit 91) the entire work	of
gravity	main was withdrawn from the	plaintiff.
Similarly	Shivaji Karlekar - DW 4 who was the	Deputy
Engineer	from March 1987 to July 1988 stated	that

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after May 1987 no work was started by the plaintiff till July 1988 when he left the charge of Dapoli. He also stated that subsequent to May 1987 the question of taking measurements did not arise since the plaintiff did not restart the work. In his cross-examination he admitted that when he joined at Dapoli in March 1987 the work of laying pipeline of 200 mm dia was in progress. He also stated that the plaintiff had informed the Department that he would not continue with the further work unless the rate for the extra item was fixed and the rate fixed for 250 dia CI pipe for 20690 mtr. was Rs.67.75 per sq.mtr. and it was decided to lay 200 mm dia instead of 250 dia CI pipe. Ashok Wagate - DW 5 was Deputy Engineer from July 1988 till November 1991. He stated in his oral depositions that during his tenure he had not seen the men of the plaintiff doing any work at the construction site. The evidence of these witnesses that after May 1987 the plaintiff did not start any work till the withdrawal notice was given, has gone unchallenged in their cross-examination and, therefore, it will have to be concluded that the plaintiff had abandoned the work of the main contract and subsequently the defendants were justified in invoking Clause 3(a) of the contract agreement under

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which	the security deposit can be f	orfeited.
Surprisingly	these aspects have not been considered	by
the	trial Court and it placed reliance mainly on	the
decree	passed in Special Civil Suit No.528 of	1990
filed	by the Bank to which the defendants were not	a
party.	The trial Court fell in serious error	in
awarding	the forfeited amount to the plaintiff.	The
defendants	had acted strictly as per the	contract
terms	and the trial Court did not address to	the
aspect	of abandonment of work by the plaintiff.	Even
if the	payment in respect of the extra items or	in
respect	of the contract at two stations	i.e.
Panchanadi	and Karajai was pending, there was	no
justification	in stopping the main contract	work.
Hence	the claim for refund of the forfeited amoun	t of
Rs.2,21,000/	- was required to be disallowed and	the
reasoning	set out by the trial Court in allowing	the

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said claim is grossly erroneous and hence

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unsustainable.

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9.	The tr	ial court a	lso considere	d the le	gality of
imposing	find	on	the	pla	intiff.	The	fine	was
initially	imposed	at	Rs.10/-	per	day,	was	increased	to
Rs.25/-	and finall	y to	Rs.50/-	per	day.	Issue	Nos.	6
to 8	were	framed	and	decid	ed in	favour	of	the

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plaintiff. As per the trial court the said action of

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the defendants was illegal and unjustifiable.

¶126

.		We have noted that the tender contract at
Exh.121		was the main tender cont	ract and subse	quently
the	plainti	ff was called upon to d	o extra item	i.e.
replacement		of 250 mm dia pipe line	with 200 mm	and
150 mm	di	a pipe. He was also calle	d upon to u	ndertake
the	main	rise work at Panchanadi as	well as	Karajai.
If his	b	ills for the extra ite	ms or from	the
additional		contract were not cleared,	there was	no
justification		for the plaintiff to sto	p the work	of
the	main	tender contract (Exh.121).	In the	earlier
paragraphs		we have referred to	the corresp	ondence
between		the parties right from 3/7/	1986 till the	suit
was	filed	and despite the show	cause notices	and
warnings		issued to the plaintiff,	he did	not
recommenc	e	the work of the mai	n tender c	ontract.
Though	th	e fine amount was imposed	and revised	from
time t	o	time, he remained adamant	and put it	in
writing	that	unless the pending bills	were cleared,	he
would	not	restart the main tender cont	ract work.	DW
3, DW	4	and DW 5 also stated after	the second bill	was
cleared	in	May 1987, the work of	the main	tender
contract		was brought to a standstill.	The def	endants

¶127

¶128

had	invoked their pow	er un	der Cl	ause	3 (a) of the
tender	contract and	forfeited	the		security deposit on
the	ground that the	plai	ntiff	ha	d abandoned the
contract.	On the fac	e of	such	ov	erwhelming evidence
against	the plaintiff,	the	defend	ants	were justified
in	imposing the fine	from	time	to	time and increasing
the	same. Such an	action	was	in	keeping with the
contractua	l terms. We,	there	fore,	do	not agree that

¶129

the trial court’s finding that imposition and revision

¶130

of such fine amount was illegal and unjustified.

¶131

. The trial court has also allowed the

¶132

plaintiff’s	clai	m as a	gainst sub	-schedule	"D"	in
Annexure-I	to	the plaint	(Issue No.	9).	He	had
claimed	Rs.	30,323/- for ex	cavation in	rising	main	in
soft/hard	Strata	murum bedding	etc.	He	gave the	claim
in	subsched	ule "C" and	subschedule	"F"	of A	nnexure-I.
This	claim	was in respect	of rising	main	in the	bill
dated	31/3/19	87 (Exh. 95)	and an	amount	of	Rs.800/-
against	item	no.1 and	Rs.13,700/-	against	item	no.2
was	paid	to the plain	tiff. How	ever,	these	advances
were	recove	red from his	running bi	ll da	ted	30/5/1987
(Exh.96).		The trial cou	rt has all	owed	the said	claim

¶133

at Rs.28,418/- and we find no infirmity in the

¶134

reasoning set out for the same.

¶135

¶136

Under Issue No.13, the trial court was pleased to allow the claim of overheads of 10% of the contract term and the claim against loss of profits was also allowed at 15% of the net loss of tender amount i.e. Rs.64,88,335/-. The claim for interest was denied. The plaintiff had claimed an amount of Rs.5,63,115/towards overheads for the period from January 1989 to 30th September, 1990 ( 21 months ). The trial court noted that the total contract amount was Rs.80,45,034/and it was to be completed within 30 months. The plaintiff claimed that his monthly earning would have been Rs.26,815/-. He stated that from January 1989 to 30th September, 1990 he was entitled for the recovery of overheads by way of

¶137

damages. The trial court gave its reasoning in the

¶138

following words:-

¶139

".......It is	an admi	tted	position	that	in
every business	transaction	a	party	est	imates
the actual cost	and ads	a	percentage	for	all
his overheads and	profits	to	arrive	at	his
total costs.	Usually	the	"overh	eads"	in
construction contracts	comp	rises	of (i)		site
overheads and (ii)	head of	fice	overheads.		It

¶140

¶141

is further observed that if the execution of work is delayed by the breach of employer, the contractor, as already stated would be entitled to claim for the loss of "overheads" which have been put at a minimum of 10%......"

¶142

.	Overheads		hav	e been	defined as al	l
administrat	ion or	execut	ive	costs incident	to	the
manageme	nt, supervisor	or	the	conduct of	the	capital
outlay	or busi	ness,	distin	guished from "	the	opening
charges"	or those	items	th	at are insep	arably co	nnected
with	the production	and	may	seen as the	work	progress
and	are the	subject	of	knowledge fro	m obs	ervation
(Gajjera’s	Book (	Supplem	ent	1988) Law	relating	to
building	and engine	ering	contr	acts in India).	It	is
evident	that the	trial	cou	rt has blindly	accepted	the
plaintiff’s	claim for		overhea	ds. It has	come	on
record	that as pe	r Exh	.	93, the contract	term	was
extended	upto 31/12/	1989	and	we have	recorded	a
finding	that after	his	bill	was cleared in	1987,	the
plaintiff	did not	re	start	the main	contract	work
despite	the fact	that	fine	was imposed,	show	cause
notices	were issued	and	the	work was wit	hdrawn on	the
ground	that he had	aband	oned	the contract.	He did	not
seek	a declaration	aga	inst	the order of	imposing	fine

¶143

¶144

being illegal and trial	court framed such			issues
(Issue Nos.6 to 8)	which were beyon	d		the
prayers/reliefs sought for in	the plaint. Even		i	n his
legal notice at Exh. 119,	the plaintiff did	no	t	raise
the claim of overheads.	In fact, the plainti	ff		could
not explain, even before us,	as to how he cla	im		ed the
recovery of overheads for the	period of 21 mon	th	s	from
January 1989 to September,	1990. Once the		d	efendants
had declared that the	plaintiff had abandone	d		the
contract, there was no	question of entertaining			his
claim for overheads. The	trial court, thus, fel	l		in
error in allowing the	claim of overhead	s		at
Rs.5,63,115/-. The plaintiff	could not be all	o	w	ed to
take benefit of his own wro	ngs. For the same			reasons,
the plaintiff’s claim for	profits could not ha	ve		been
entertained. On our fi	nding that the plaintiff			was
rightly declared to have	abandoned the main			contract,
he was not entitled for any	profits at the rate		o	f 15%
and the reasoning given by	the trial court in			allowing
the aid claim at	Rs.9,73,250/- is			totally
unsustainable and without ap	plication of mind to			the
facts on record. Hence,	the claim for overhea	ds		as

¶145

well as profits made by the plaintiff stands rejected.

¶146

The claim made in Annexure II Sub-Schedule F

¶147

¶148

i.e. Item 4 co	nveying	from depa	rtment	store to	site
of work lowering,	laying	following	pipes	in grade	and
alignment 200 m.m.	dia	C.I. pi	pes 700	0 mtrs.	was
claimed at Rs.5,82,2	50/-	and the	trial	Court	has
allowed the sam	e at	Rs.4,42,994/-.		Mrs.Karnik,	the
learned counsel for	the	Board su	bmitted	that when	the
plaintiff had abandon	ed t	he main	contract	work and	so
far as the work of	extra	item is	concern	ed, he did	not
undertake the same	on	the pretext	that	the rates	were
not finalised.	Conseq	uently the	plaintiff	was	not
entitled to claim	any	payment	under	Annexure	II
Sub-schedule F.	In	the alt	ernative,	she	further
submitted that the	rates	of extra	item	s were i	nformed
to the plaintiff	vide	the	comm	unication	dated
22/3/1988 (Exhibit 86	)	and for 200	dia	it was	at
Rs.6.30 per mtr.	and	for 150 di	a it	was at	Rs.4.55
per mtr. She sub	mitted	that the	relianc	e of the	trial
Court on the rates	prop	osed vide	the	joint sub	missions
at Exhibit 87 are	not	binding on	the	defendants	and,

¶149

therefore, the trial Court was in error in allowing

¶150

the same.

¶151

As far as completion of actual work is concerned, the witnesses of the defendants i.e. Raghunath Patil - DW 3 and Shivaji Karlekar - DW 4

¶152

¶153

have	ad	mitted that	the	plai	ntiff	had	co	mple	t	e	d	the
work	as	mentioned	in	th	e	letter	da	ted				19/4/1989
(Exh.91)		and the work	was	com	pleted	upto	5	to		6		Kms.
Similarly		DW 4	stated	in	his	cros	s-exam	inati	o	n		that
when	he	took charge	at	Dapo	li on	15th	Ma	rch				1987, the
work	of	laying of p	ipeline	of	200	m.m.	dia					was in
progress	fr	om 0 to		2069	0	chainage	.		H	e		further
admitted		that the rat	e f	ixed	for	250	dia	w	a	s		Rs.67.75
per	mtr.	but a cha	nge	was	made	and	it	was			d	ecided to
lay	pipes	of 200 m.m.		dia	instead	of	250	m.m	.			dia.
During	his	period work	of	200	m.m.		pipe	wa	s			completed
upto	731.5	mtrs. and	of	150	mm.	dia	it	wa	s			completed
upto	516	4.5 mtrs.	He	furthe	r stat	ed th	at a	s		p	e	r the
rate	anal	ysis made by	the	de	fendants	rate	for	2	0		0	mm
dia	pipe	was Rs.86.90	per	mtr.	an	d for	150				m	m dia
pipe	it	was Rs.77/-	per	sq.m	tr.	The	lear	ned				Judge of
the	trial	Court has	acce	pted	this	evide	nce	an		d		allowed
the	bill	in respect	of	731.	5	running		mtrs.				plus

¶154

5164.5 running meters. We do not find any error in the same.

¶155

However, it was submitted by Mrs.Karnik that the rates proposed in Exhibit 87 were not binding on the defendants as the said rates were not accepted and finally the Member Secretary had turned down the same.

¶156

¶157

She	insisted	that the rates men	tioned i	n th	e orde	r at
Exhibit	86	were required to	be foll	owed	and	the
plaintiff	could	not have been	granted	the	rate	of
Rs.77/-	per	running mtr. The	trial	Court	referre	d to
the	Government	Circular dated 31	st May	1963	and	the
witness	of	the defendants admit	ted t	hat	the	said
Circular	was	binding in respect	of extra	ite	ms	which
were	not c	overed by the main	contract.		They	also
admitted	that	in such a situati	on the	ra	tes	agreed
between	the	parties by negotia	tions are	bin	ding	and
they	were	required to be followed.	On	the	face	of
this	evidence,	the trial Cour	t was		justified	in
awarding	the	rate of Rs.77/- per	running	mtr.	as	has
been	stated	in Exhibit 87 an	d while	calcu	lating	the
total	payment	the trial Court	has ded	ucted	the	amount
of	Rs.17,239/-	already paid vide	bill at	Ex	hibit	96.
Hence	no	interference is called	for	in	the	claim

¶158

granted at the rate of Rs. 4,42,994/-. We confirm

¶159

the said payment to be made to the plaintiff.

¶160

14.		Issue	Nos.17,	18-A, 18-B,	18-C and 18-D ha	ve
been	ans	wered	a	gainst	the defendan	ts by		the	trial
Court.		Issue	no.	17 was	regarding	notice		under	Section
80	of	the	Civil	Procedure	Code and	it	was	an	admitted
fact	that		the	plaintiff	had issued	such	a	notice	to

¶161

¶162

the defendants.	However, the defendants claimed	that
there was a variati	on between the claim set up i	n the
notice and the on	e set up in the plaint.	This
argument has been	rightly rejected by the trial	Court.
It was contended by	the defendants that the suit	filed
by the plaintiff	was not maintainable in law and	it
was bad for	non-joinder of necessary	parties.
However, they did not	clarify as to how and under	what
provisions the suit	was not maintainable. Sectio	n 64
of the Maharashtra	Water Supply and Sewerage	Board
Act, 1966 states	that no suit, prosecution or	other
legal proceedings	shall lie against the	State
Government, Board or	Members or any officer or	servant
of the State Govern	ment or of the Board for	anything
which is in good	faith done or purported or	intended
to be done in pu	rsuance of the this Act or any	Rules,
Regulations or Bye-laws	. The trial Court rightly	held
that the said Section	was not applicable when the	suit
was filed for re	covery of money. On the issue	of
limitation, it is	clear that the contract tenure	was
extended upto 31st	December 1989 and the suit	was
filed on 26/9/1991.	The work was withdrawn or	show
cause notices were	issued on 28/7/1989, 6/10/1989	and
7/11/1989. The sui	t was thus filed within	the
limitation of three	years. The trial Court	was

¶163

¶164

justified in answering the said issue against the

¶165

defendants.

¶166

In the premises this appeal succeeds partly and

¶167

the following claims granted by the trial Court to the

¶168

plaintiff are hereby set aside:

¶169

(A) Refund of security deposit at Rs.2,21,000/-

¶170

(B) Overheads for the period from January 1989 to

¶171

30/9/1990 at Rs.5,63,915/-

¶172

¶173

However, the following claims granted by the trial

¶174

Court in favour of the plaintiff are confirmed, with

¶175

interest.

¶176

(A) Excavation in soft soil, excavation in hard

¶177

soil, providing and laying murum bedding etc. at Rs.28,418/-.

¶178

(B) Labour charges at Rs.1,57,000/-

¶179

¶180

¶181

(D) Charges for laying of 200 mm and 150 mm dia CI

¶182

pipes at Rs.4,42,994/-.

¶183

We are informed by Ms.Karnik that the

¶184

appellants had deposited an amount of Rs.42,98,168/(Rupees forty two lakhs ninety eight thousand one hundred sixty eight only) with the Trial Court and the said amount was withdrawn by the respondent on 13/1/1999 by giving a Bank Guarantee. On adjustment of the decretal amount, the plaintiff is directed to return the balance amount as per the terms and conditions of the Bank Guarantee and if he fails to do so within a period of eight weeks from today, the trial Court is directed to encash the Bank Guarantee

¶185

for the remainder amount and refund the said amount to

¶186

the appellants.

¶187

Fresh decree be drawn accordingly. Refund or

¶188

payment of Court fees, if any, as per the Rules.

¶189

Civil Application does not survive and the same

¶190

stands disposed.

¶191

¶192

(RAVI K.DESHPANDE,J.)

¶193

(B.H.MARLAPALLE,J.)

Secretary,Maharathra Water Supply and Severage Board v. Shripati Lakhu Mane

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Secretary,Maharathra Water Supply and Severage Board v. Shripati Lakhu Mane

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