Partly allowed

M/S Tisco v. M/S S.K.Saha And Co. And Anr.

Jharkhand HC2 Nov 2017FA/41/2000

Case brief

AI extract

What is this about?

In an appeal against a money decree, the High Court set aside the trial court's allowance of three specific claims under a terminated construction contract—grant for post-termination work, retention money, and escalation charges—due to lack of evidence and non-application of mind.

What did the court decide?

Interference with the impugned judgment and decree to the extent it allowed specific claims under Job No. 76/TC/90-91 regarding post-termination work, retention money, and escalation charges.

M/S Tisco Vs M/S S.K.Saha And Co. And Anr. — Contract and Commercial Disputes | Jharkhand HC (2017)

¶1

Appeal from original Decree No. 41 of 2000 (R)

¶2

Against the judgment and decree dated 18^th January, 2000//22^nd February, 2000 passed by Sub-Ordinate Judge-I, Jamshedpur in Money Suit No. 1 of 1994

¶3

M/s. Tata Iron and Steel Company Limited,

¶4

District- East Singhbhum .....Appellant Versus 1. M/s. S. K. Saha & Co., Jamshedpur District-Singhbhum (East) 2. Sapan Kumar Saha, District-Singhbhum (East) ........Respondents. --- For the Appellant : Mr. G. M.Mishra & Mr. Ganesh Pathak, Advs. For the Respondents : None

¶5

PRESENT

¶6

HON'BLE MR. JUSTICE APARESH KUMAR SINGH

¶7

By Court:

¶8

Heard learned counsel for the appellant. Respondents though have appeared on notice, but no one has appeared on behalf of the respondents since last several days.

¶9

Plaintiffs sought realization of Rs. 55,21,615/- with cost and interest from the defendant. The defendant is the appellant aggrieved by the judgment and decree dated 18^th January, 2000/22^nd February, 2000 passed by learned Sub-Judge-I, at Jamshedpur in Money Suit No. 1 of 1994, whereby the suit has been decreed in part on contest with cost. The counter claim of the defendant-company has also been partly allowed. Plaintiffs were entitled to a decree amounting to Rs. 44,34,271=74 paise against the defendant. Defendant-Company was directed to pay the decreetal amount to the plaintiffs within sixty days from the date of order, failing which, the same would be realized through the process of the Court.

¶10

By virtue of the interim order dated 21^st August, 2000 and 13^th September, 2000, respondents have withdrawn the decreetal amount against furnishing security in the shape of bank guarantee which has been renewed from time to time till 21^st September, 2018 as per instruction to learned counsel for the appellant.

¶11

¶12

Though elaborate arguments have been made by learned counsel for the appellant to challenge the impugned judgment and decree but he has confined challenge to three particular items as noted hereunder in respect of claim allowed in favour of plaintiff by learned court in connection with Job no. 76/TC/90-91. However, briefly case of the parties are also noticed hereunder before dealing with the grounds of challenge canvassed by learned counsel for the appellant in respect of three items of claim allowed under Job no. 76/TC/90-91.

¶13

The case of the plaintiffs, in substance, is that they had undertaken different jobs under work orders issued by the defendant including Job no. 76/TC/90-91 vide work order dated 27^th May, 1991 for construction of Eightyfour Supervisory Flats for a total cost of Rs. 1.49 Crores. It comprised of construction of Block No. I with fourteen Units. In Block no. II he claims to have constructed seven roofs out of eight roofs. In Block nos. III, IV, V and VI, according to the plaintiffs, several works have been completed and after the aforesaid works have been entered in the measurement books, the bills have not been prepared finally as the measurement books have not been handed over to the plaintiffs by the defendant-company. As per the plaintiffs in respect of the instant work order dated 27th May, 1991, they were entitled to a sum of Rs. 41,03,000/after all deductions. Further claims of plaintiffs relate to Job at Uliyan dated 21st September, 1989 bearing no.23/TC/89-90. Job bearing no. 19/TC/90-91 vide work order dated 23rd July, 1990 for construction of Roads and Sewar Lines at Zoological Park, amounting to Rs. 21,12,957/and Job no. 75/TC/90-92 vide work order dated 8th February, 1992 worth Rs. 4,94,195/- for balance work of constructions of compound walls for worker's flat at Uliyan. However, since grounds of challenge are confined by the appellants to Job no. 76/TC/90-91 dated 27th May, 1991, further discussion on the other claims are not necessary to be made hereunder. Plaintiffs have also stated that despite several reminders for return of measurement books and preparation of bills against the aforementioned jobs no response was received from the defendants. The defendant without

¶14

¶15

any reason had also terminated the Job no. 76/TC/90-91by letter no. ATP/3827 dated 17th November, 1993 including the change order dated 2nd November, 1993. The plaintiffs alleged that termination of contract is not tenable. They also contended that by letter dated 21st September, 1992, defendants directed ad-hoc payment of 80% to be paid to the plaintiffs but that was also not paid. Therefore, the plaintiffs' claim the total amount of Rs. 55,21,615/- as detailed given in Schedule-A to the plaint.

¶16

The defendant/appellant filed written statement along with counter claim inter alia opposing the plea of the plaintiffs that cause of action for the suit arose against the answering defendant on and from 17th November, 1993 i.e. date of termination of contract in respect of Job no. 76/TC/90-91 is apparently incorrect. The order for aforesaid Job no. 76/TC/ 90-91 was terminated by Change Order no. II dated 2nd November, 1993 as admitted by the plaintiffs, for neglect and failure of the plaintiff to complete the said job within the specified time. Steps had already been taken on 20^th November, 1993 for verification and assessment of the stock of unused materials at site in pursuance of the meeting dated 11^th September, 1993 in presence of plaintiff no. 2. The plaintiffs through letter dated 30^th October, 1993 expressed their anxiety to hand over possession of the site to the defendant requesting the defendant to take over possession of the site without delay in consequence of which the plaintiffs' job was terminated by change order no. II dated 2^nd November, 1993. Therefore, the claim itself was liable to be rejected under Order 7 Rule 11(a) of C.P.C. They also contended that the claim of Rs. 55,21,615.00 was indefinite and unsupported by disclosure of any material in the plaint and was liable to be rejected. They also denied giving any job after 22^nd November, 1993. They refuted the other claim of the plaintiff as well under different job numbers. They also stated that plaintiff expressed its inability to collect the measurement book despite letter of defendant dated 1^st December, 1993 as he was out of station. There was no effort on the part of the plaintiffs to collect the measurement books subsequently also. The termination of job was right on the part of the defendant by Change Order No. II dated 2^nd

¶17

¶18

November, 1993. The defendant is also entitled to claim for damages against the plaintiff for loss sustained by the Company for getting the balance work of Job no. 76 done by the other contractors, who have been proceeding with the construction of balance work left unexecuted by the plaintiffs.

¶19

Plaintiffs also filed their written statement to the counter claim and alleged that no cause of action arose on the part of the defendants. According to them, change order is generally used for extension of period of finishing the job and any alternation and addition of job. Plaintiffs also contended that the plaintiffs never neglected and failed to complete the Job no. 76/TC/90-91 for construction of supervisory flats.

¶20

Rest of the contention relates to other job. Learned trial court framed the following issues for adjudication.

¶21

(i) Whether the suit as framed is maintainable?

¶22

(ii) Whether the plaintiff has got cause of action for the suit?

¶23

(iii) Whether the suit is barred by law of limitation?

¶24

(iv) Whether the plaintiffs are entitled to a decree for Rs. 55,21,615=00 with interest against the defendant company?

¶25

(v) Whether the defendant company is entitled to for recovery of Rs. 17 ,94,123=00 from the plaintiffs?

¶26

(vi) Whether the plaintiffs are entitled to a decree as claimed?

¶27

Issue nos. (iv), (v) and (vi) were taken together and answered in favour of plaintiff partly and in favour of defendant company partly.

¶28

Appellant has confined its challenge to three items of claim allowed under Job no. 67 inter alia as discussed at page nos. 11 and 12 of the impugned judgment:

¶29

The claim for Rs. 6,10,000=00 after issuance of the Change Order No. II dated 2^nd November, 1993 (Ext.-7). Learned counsel for the appellant submits that the entire claim is based upon execution of work after the change order dated 2^nd November, 1993 on the basis of plea that he had executed it between July, 1993 to 30^th October, 1993 just after issuance of the change order.

¶30

There was no measurement of the work claimed in the measurement books. (Ext.7) dated 2^nd November, 1993 reads as under:

¶31

¶32

“ The scope of work is reduced from Rs. 149.24 lakhs to Rs. 21.68 (reduced by Rs. 127.56 lakhs) i.e. the extent of work so far done. Cancelling the order for the remaining job left incomplete.

¶33

Reason: Your failure to execute the job in time.”

¶34

Ext. 2/Z/37 dated 17^th November 1993 termination order reads as

¶35

under:

¶36

“ 1. Your order stands terminated with immediate effect, as per change order No. II dated 2.11.93.

¶37

You are requested to meet the undersigned and hand over the possession of blocks/sites of 4,5 and 6, as may be the case, immediately, to our representatives.

¶38

Also you are requested to take joint final measurements immediately and submit final bills for your work by 15.12.93.”

¶39

Learned counsel for the appellant submits that the scope of work order was reduced from Rs. 149.24 lakhs to Rs. 21.68 lakhs i.e. the extent of work so far done, canceling the order for the remaining job left incomplete. Plaintiffs in their claim and as recorded in the impugned judgment also had stated that defendant had paid Rs. 14,44,428=75 for the aforesaid work under 6^th on A/C to 10^th on A/C bill of Rs. 21,07,647=40 towards outstanding dues as per measurement books vide Exts.-11/F, 11/E to Exts. 11/0. Plaintiffs have claimed only Rs. 6,63,218=74 after deduction of the aforesaid amount. The change order itself had confined scope of work to Rs. 21.68 lakhs to the extent of the work done as on 2^nd November, 1993 and as per admission of the plaintiff, the total works due on account bill as per measurement book is Rs. 21,07,647- only against which Rs. 14,44,000/- had already been paid. Therefore, learned trial court was in complete error in allowing the claim of Rs. 6,10,000=00 for the alleged work done between July, 1993 upto 30^th October,1993 said to have been executed before 2^nd November, 1993 i.e. date of Change Order i.e, Ext.7 as there was no record of measurement of any such work. Defendant/appellant therefore has seriously objected to grant of such

¶40

¶41

unsubstantiated claim.

¶42

On consideration of plea of learned counsel for the appellant and relevant material documents extracted above, it is clear that not only was the scope of work Rs. 21.68 lakhs reduced by Change Order dated 2^nd November, 1993 cancelling the order for the remaining job left incomplete but the work order itself stood terminated with immediate effect as per Change Order No. II dated 2^nd November, 1993 by the termination letter dated 17^th November, 1993. This termination letter has not been specifically challenged by the plaintiff. In those circumstances an unsubstantiated claim of Rs. 6,10,000=00 without any record of measurements in the measurement books and beyond admitted claim of the plaintiffs themselves from 6^th on A/C to 10^th on A/C bill to the tune of Rs. 21,07,647=40, would be wholly untenable on facts as well as in law.

¶43

Learned counsel for the appellant has then pressed the challenge to claim of Rs. 1 Lakh on account of retention money @ 5%. Learned counsel for the appellant has also pointed out that the retention money could have only been refunded after issuance of a completion certificate of the work by the Engineer-in-Chief.

¶44

Learned trial court in the impugned judgment at page-11 has while dealing with the said claim only made reference to the deposition of D.W.3 that retention of 5% of the said amount were kept back as security money and that it had not been paid to the plaintiffs. However, learned trial court has failed to apply its mind and record any finding on the specific case of the defendant based on Change Order dated 2^nd November, 1993 and termination letter dated 17^th November, 1993 that scope of work had been reduced to Rs. 21.68 lakhs i.e. the extent of work so far done and the work order had been cancelled due to remaining job left incomplete. In that case, when the work order itself was terminated due to noncompletion of total job under Work Order no. 76, the claim for refund of retention money was also untenable on facts and in law on the part of the plaintiffs. The said claim has therefore also been wrongly allowed by

¶45

¶46

learned trial court.

¶47

Learned counsel for the appellant has finally pressed its challenge to the claim of escalation charge @ 70% on the total bill amount of Rs. 18,90,000.00.

¶48

Learned trial court in its discussion at page-12 of the impugned judgment has referred to letter no. SKS/293/93 dated 14th June, 1993 being Ext.-2/Z-43.

¶49

The instant letter dated 14th June, 1993, is in fact issued by the plaintiffs themselves addressed to the Divisional Manager (A & T.P) M/s. Tata Iron & Steel Company Ltd. and in respect of Job no. 76 TC/90-91 which shows that under sub paragraph no. 3 plaintiffs have on their own raised a claim of 70% payment against all unpaid bills. This letter apart from being issued by the plaintiffs themselves does not refer to any terms and conditions under Job no. 76 TC/90-91 where such condition of escalation upto 70% payment against unpaid bills was stipulated.

¶50

Learned counsel for the appellant, on the other hand, has referred to Ext.-1/b being Job no. 76 TC/90-91 dated 27th May, 1991. He has pointed out the terms and conditions stipulated thereunder that the rates will remain firm and binding till satisfactory completion of job were duly certified by the department. If the job is not done as per specification and instructions, the same will be got done by some other agency at your own cost and risk. The job order also reserves the right to terminate the contract by giving 30 days prior notice in writing on expiry of which the contract will deem to have been terminated. The appellant has contended that plea of escalation in these circumstances when the job order was itself terminated due to incomplete execution of work and there being no such specific terms and conditions providing for escalation, the same is untenable on law as well on facts .

¶51

This Court finds substance in the contention of the appellant in the light of the relevant materials on record discussed hereinabove. The learned trial court has again shown complete non-application of mind while allowing such claim of escalation in respect of job no. 76 relying

¶52

¶53

upon letter of the plaintiff himself dated 14th June, 1993, dehors any such terms and conditions in the agreement/work order.

¶54

Since the appellant has not pressed the challenge in relation to the other claims adjudicated by the learned trial court, this Court is not required to render any finding in respect thereof in the present appeal. However, from the entire facts and evidences discussed above and for the reasons recorded, findings of learned trial court on these three counts appears to suffer from complete non-application of mind to the relevant materials on record. As a matter of fact, learned trial court has completely failed to make any discussion on the material evidence adduced during trial while simply allowing the claim of the plaintiff on these three counts. The relevant extracts of the impugned judgment is also quoted hereunder:

¶55

" After the constructions of the aforesaid works the plaintiffs have claimed Rs. 41,11,21=74 paise. The plaintiffs have claimed 6th on A/C to 10th on A/C bill of Rs. 21,07,647=00 on the basis of the measurement books vide Exts. 11/F, 11/E to Exts. 11/0. On the basis of Ext. 10/A and Ext.11/F it is found that the defendant has paid Rs. 14,44,428=75 to the plaintiffs for the above work. So, the plaintiffs have claimed only Rs. 6,63,218=74 paise after deducting a sum of Rs. 14,44,428=75 paise for the work 6th on A/C to 10th on A/C bill.

¶56

The plaintiffs further claimed that after change order no. II dated 2nd November, 1993 vide Ext.-7 he continued his work from July, 1993 upto 30th October, 1993 just before the issuance of the change order and the plaintiffs claim the price of that work without any measurement as the Measurement Books were not supplied by the defendant amounting to Rs. 6,10,000=00.

¶57

The plaintiffs have also claimed Rs. 1,00,000=00 an amount on account of Retention money at the rate of 5%. The claim of the plaintiffs is corroborated from the deposition of D.W. No. 3. In the last para of the deposition of D.W.3 has admitted that whatever payment is made 5% of the said amounts are kept back as security money and he has further admitted in that para that retention money has not yet been paid to the plaintiffs.

¶58

The plaintiffs are also claiming escalation charges at the rate of 70% on the total bill amount for Rs. 18,90,000=00. The plaintiffs have mentioned this fact in its letter no. SKS/293/93 dated 14th June, 1993 vide Ext. 2/Z-43. This letter has been proved by the plaintiffs and no cross examination was made on behalf of the defendant company on this aforesaid letter.”

¶59

It is apparent that the learned Trial Court has made a mere narration of the claim of the plaintiffs without any adjudication per se after dealing with the contention of the defendant and appreciation of the

¶60

¶61

material evidence on those counts. The plea of the appellant so far as these three sub items of claim allowed under Job no. 76/TC/90-91, therefore, deserves to be accepted. The impugned judgment and decree is interfered to the extent it has allowed the claim of the plaintiffs on these three counts under Job no. 76/TC/90-91.

¶62

The appeal stands partly allowed. Decree accordingly.

¶63

(Aparesh Kumar Singh,J)

¶64

Jharkhand High Court, Ranchi Dated 2^ndt November, 2017

M/S Tisco v. M/S S.K.Saha And Co. And Anr.

Case brief

What is this about?

What did the court decide?

M/S Tisco v. M/S S.K.Saha And Co. And Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

M/S.Surendra Prasad Singh Vs Steel Authority of India Ltd.

Shiv Kumar Singh Vs the State of Jharkhand and Ors.

Shri Shri Damodar Chandraji Deity Represented through Its Sebayat Maghendra Narayan Singh Vs State of Bihar And Ors.

Jai Prakash Rai Vs the State of Jharkhand and Ors.

Surendra Prasad Mahto and Ors. Vs Baleshwar Mistry

Indu Bhushan Singh Vs Mr Amrit Lal Meena Principal Secretary Road Construction Deptt