Dismissed

M/S Randhir Construction Company v. State of C.G. and Ors.

Chhattisgarh HC1 Jul 2013CR/47/2003

Case brief

AI extract

What is this about?

The Chhattisgarh High Court dismissed a civil revision challenging a tribunal award. The court held that the State respondent was not guilty of breach of contract as the work stoppage was due to a Supreme Court stay order, not State inaction. Consequently, the applicant was not entitled to loss of profit or overhead.

What did the court decide?

The revision is dismissed; the impugned award of the Arbitration Tribunal allowing no amount for mesne profit and overhead stands affirmed.

M/S Randhir Construction Company Vs… — Contract and Commercial Disputes | Chhattisgarh HC (2013)

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2N THE HISH COURT OF CHHATTISGARH ATBILASPim.

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Civil Revision Ho. ^^~ /2003.

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^^LICABFT
^PETiriONER

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M/s^ Raadhir Construction Company, Throagh its partner Ram Asbray Singb s/o Late sfeiri Randhir Singh, age 58 years, A-ry Class Coatractor, Ambikap^ir» ©Istt^ Sia.rgiija, e^G^

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V E R S U S« .,^'

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NON-A^^LICANTS ?>- ^'Tlie state of Chhattlsgarh^
^ ^!; Pablicthrou^iworkstfoe secretary»Department,
RaipXjir^
2. Gbief Engineer» P.mQ. East
Zone ^ Ra Ipur ^ C^ ©•
^^ ^ 3< saperintending Etegineer,
^%-" ^ P.M.D. (B & R), Raigarh.
''.-" c^<v\P-
^:^^p''^i:- "" 4» Execiitive Engineer, P^W.Be
(B & R) ©ivision No. 1,
^' Ambikapiir •
.^>» The State of M.P throagh
Secretary P«W.D« Vallabh
Bhawan» Bhopale
RBVISION UNDER SBCTION 19 OF THE M«P. M^ffi^STHAM
ADHIKARAN APHINIYAM 1983 R/W. SECTION TIS OF THE
CODE OF CIVII* PROCEDURE

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HIGH COURT OF CHHATTISGARH, BILAPUR

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(Sinqle Bench: Hon'ble Mr. T.P. Sharma. J)

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Civil Revision No.47/2003

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ApDlicant M/s Randhir Construction Company

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Non-applicants 1. The State of Chhattisgarh

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Chief Engineer, PWb, Raigarh

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Superintending Engineer, PWD Raigarh 4. Executive Engineer, PWD (B <& R), Ambikapur.

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The State of M.P.

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Present:

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<Mr.^Rahul Jha,^Advocate for^{theapplicant.}

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Mr. Sanjeev Agarwal, Panel Lawyer for the respondent-State.

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JUbGMENT

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(01.07.2013)

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By this revision under Section 19 of the Madhyastham Adhikaran Adhiniyam, 1983 read with Section 115 of CPC, the applicant has challenged legality and propriety^{oftheawarddated11.10.2002} passed^{bytheArbitrationTribunal,} Bhopal (for short^lthe Tribunal') in Reference Case No.68/1994 whereby the Tribunal has allowed substantive claim of the applicQnt but disallowed the

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/ claim relQting to mesne profit and loss of overhead on the ground that the applicant has failed to prove expected mesne profit and overhead.

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Heard learned counsel for the parties and perused the impugned award passed^{bytheTribunal.}

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Learned counsel for the applicant submits that on account of agreement between the parties, the applicant has deployed machineries etc. at the site and also engaged staff for execution of the work, however, the same has been stayed by the Hon'ble Supreme Court ond therefore the applicant requested the respondent authorities for direction and the respondents directed him to wait. Finally, the work could not be carried out on account of stay. Therefore, the applicant has claimed loss incurred to the applicant along.with loss of mesne profit and overhead. While considering claim of the applicant, the Tribunal has held in Para-34 of the award that the applicant is ^^{entitledforiossof} profit^{andoverheadbuthasdeclinedtoawardanyomount}

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Civil Revision No.47/2003

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under the head of mesne profit and overhead on the ground that the applicant has failed to prove the same.

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Reliance is placed on Clause 2.36. of the Report of Rates and Costs Commi'ttee which relates to 'Contractor's Overheads and Profits' in which it is provided that overhead and profits are not required to be proved but it can be reasonably inferred to the extent of 10% for each head. Reliance is further placed in M/s A.T. Brij Paul Singh & Bros. vs. State of Gujarat ^ in which the Supreme Court has held that in case of loss of profit no specific proof is necessary and the tribunals / courts are required to assess the damages based on the circumstQnces of each and every case. Reliance is also placed in Dwarka Das v. State of M.P. <& another2 in which the Supreme Court has held that loss of profit would depend upon the facts and circumstances of each case but there shall be a reasonable expectation of profit^{isimplicifintheworkscontractanditslosshastobecompensatedby} way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid and the Court is required to estimate amount of damages on the basis of broad evaluation instead of going into minute details. 4. On the other hand, learned counsel for the State has opposed the revision r and submits that virtually in the present case the applicant or the respondent authorities both were not responsible. The work could not be completed on account of stay order passed by the Supreme Court in the matter filed by the villagers wherein the present applicant or the State was not direct party. Aforesaid situation was beyond the control of the State and the State was not in a position to rescind the contract or to direct the authorities to execute the work against the stay order. Therefore, the State authorities have been left with no option but to direct the applicant to wait and as such, the applicant is not entitled for any loss of profit or overhead.

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In Para-34 of the impugned award the Tribunal has held that the respondents were in the stage of indecisiveness but has not given specific direction to the applicant to stop or suspend the work, therefore, the

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'AIR1984SC 1703 \21999 Arb. W.L.J. 276

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Civil Revision No.47/2003

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applicant was in uncertainty for long time and hence the applicant is entitled to claim loss of profit and over head from the respondents. Para-34 of the impugned award reads thus:-

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u34.The respondents were not only obliged to provide unhindered site to the petitioner for the contractual work but they were also under obligation to give specific directions about the work to the petitioner looking to the dispute and litigation raised by Shri Vijay Kumar Agrawal. Though the respondents have pleaded that the petitioner stopped the wok voluntarily on the objections raised by Shri Vijay Kumar Agrawal but

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•~J petitioner's plcQding is that he was asked to wait, under such circumstances in the absence of pleading and not regarding any specific directions issued by the respondents, we are

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- bound to hold that the respondents are liable due to their indecisiveness resulting in not giving specific directions to the petitioner to stop, or suspend the work till 12.11.1991 as attributable to them for keeping the petitioner in uncertainty for a long time. So the petitioner is entitled to claim loss of profit and over head from the respondents".

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In Para-40 of the impugned award the Tribunal has further held that the

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opplicant is failed to prove the amount of loss of profit and overhead, therefore, the applicant is not entitled for the same. Para-40 of the impugned award reads thus;-

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^ "40. On the above discussions we are of the view that though the petitioner is entitled to claim the loss of profit and loss of over head in this case but the amount claimed under both these heads is apparently only based on percentage system but under the law laid down by Hon'ble M.P. High Court and well considered view of the Tribunat as reproduced above the petitioner is required prove the anticipated losses by leading evidence to prove the calculation and method thereof as to how the percentage or the amount claimed is anticipated to have been earned. The petitioner has not undertaken to produce original account books etc. Hence, the amount claimed under both the heads is not proved as such the claimed amount under both these heads cannot be allowed and we hold accordingly".

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Clause 2.36.1 <& 2.36.2 of the Report of the Rates <& Costs Committee of the

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Ministry of Irrigation & Power read thus;-

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"2.36.1. Overheads-M allowonce of 10 per cent would be adequate for the contractor's actual expense on < supervisory establishment, field office and share of head-office charges, travelling expenses, publicity,

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Civil Revision No.47/2003

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interest and insurance of damage to plant and injury to labour.

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2.36.2. Profits- We believe that in normal circumstances an allowance of 10 per cent of the prime cost as contractor's profit is reasonable".

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While dealing with the question of loss of profit in M/s A.T. Brij Paul Singh (supra) it has been held that measure of damages depends upon facts of each case but the claim under the head of loss of profit is admissible. It has been further held that as the State was guilty of breach of contract, the contractor is entitled for loss of profit.

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In the matter of Dwaraka Das (supra) by relying upon the judgment in M/s c A.T. Brij Paul Singh (supra), it has been held that claim of loss of profits is not on account of actual loss suffered by the contractor but this loss of profits which the contrQctor expected to earn by undertaking the works contract and in case of such guilty of breach of contract, opposite party is entitled for loss of profits.

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Consequently, the party who is not 9uilty of breach of contract is entitled for toss of profits and overhead because the party concerned has entered into agreement to gain something or to earn some profit and in CQSC of any / breach by one party, another party is entitled for such loss of profits and overhead. In the present case the applicant has deployed machineries and staff at the place of work for due execution of the work. The respondent State has not rescinded the contract, However, the work coutd not be carn'ed out by the applicant on account of stay order of the Supreme Court and due to which the respondent authorities were atso not in a position to give any specific direction to the applicant contrary to the order of the Supreme Court or even for finally stopping the work because order of stay was not the final order. Therefore, only option left to the respondents was to intimate the applicQnt to wait <& watch till further orders of the Supreme Court. Therefore, by giving such direction the respondent authorities have not committed any illegatity. The respondents are not guilty for breach of contract. Even the respondents have not rescinded the contract. In these < circumstances, the respondents are not liable for any loss of profits or overheod. This is not the case in which the respondents have intentionally

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Civil Revision No.47/2003

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entered into contract with Q view to disturb the applicant or to put the applicant in loss.

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Considering the facts and circumstances of the case, by disallowing the claim of loss of profits and overhead, the Tribunal has not committed any illegality

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