Dismissed

M Keshava Raju v. Government of Karnataka

Karnataka HC3 Sept 2021COMAP/7/2020

Case brief

AI extract

What is this about?

In this commercial appeal, the appellant challenged the dismissal of his suit for recovery of money and indemnity against the State. The High Court upheld the Trial Court's judgment, finding that the appellant failed to prove delays caused by the State regarding drawings or site utilities. The Court also distinguished prior precedents on the forfeiture of the right to file a written statement unde

What did the court decide?

The appeal stands dismissed; no interference with the impugned judgment is warranted.

M Keshava Raju Vs Government of Karnataka — Contract and Commercial Disputes | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 3RD DAY OF SEPTEMBER 2021

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PRESENT

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THE HON’BLE MR. JUSTICE ALOK ARADHE

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AND

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THE HON’BLE MR. JUSTICE HEMANT CHANDANGOUDAR

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COMMERCIAL APPEAL NO.7 OF 2020

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BETWEEN:

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M KESHAVA RAJU, AGED 69 YEARS, ENGINEERING CONTRACTOR, NO.7, I.T.I. LAYOUT, R.M.V. II STAGE,

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BANGALORE-560094. ...APPELLANT

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(BY SRI ANAND, ADVOCATE FOR SRI K.S.MAHADEVAN, ADVOCATE)

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AND:

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GOVERNMENT OF KARNATAKA PUBLIC WORKS DEPARTMENT REPRESENTED BY

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THE SECRETARY

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PUBLIC WORKS DEPARTMENT, GOVERNMENT OF KARNATAKA, 3RD FLOOR, VIKASA SOUDHA, BANGALORE-560001.

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THE CHIEF ENGINEER (C AND B) SOUTH, K.R. CIRCLE, P.W.D. BANGALORE-560001.

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THE EXECUTIVE ENGINEER P.W.D. DIVISION

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CHIKKABALLAPUR,

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CHIKKABALLAPUR DISTRICT. ...RESPONDENTS

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(BY SRI SHIVAPRABHU S HIREMATH, AGA)

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---THIS COMMERCIAL APPEAL IS FILED UNDER SECTION 13(1-A), CHAPTER IV OF THE COMMERCIAL COURTS ACT, 2015, PRAYING TO a. ADMIT THE PRESENT COMMERCIAL APPEAL AND CALL FOR THE LOWER COURT RECORDS OF THE COURT OF THE LXXXIII ADDL. CITY CIVIL AND SESSIONS JUDGE (COMMERCIAL COURT) AT BENGALURU (CCH-84) MADE IN COM.OS.NO.23/2019 AND ETC.,

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THIS COMMERCIAL APPEAL HAVING BEEN HEARD AND RESERVED ON 24.08.2021 FOR JUDGMENT AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY HEMANT CHANDANGOUDAR J ., DELIVERED THE FOLLOWING:

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JUDGMENT

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This appeal under Section 13 of the Commercial Courts Act, 2015 is filed against the judgment and decree dated 25.10.2019 passed by the LXXXIII Additional City Civil and Sessions Judge, Bengaluru City in Com.OS No.23/2019.

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The ranking of the parties are referred as per their ranking before the Trial Court for convenience.

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The plaintiff is in appeal. The plaintiff filed a suit for recovery of money contending that he is a Class-I

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contractor and in the pursuance of the tender notification inviting bids from eligible contractors for the work of "Construction of Mini Vidhana Soudha at Siddlaghatta, Kolar District", the plaintiff submitted his bid and was the successful bidder. A work order was issued and an agreement was executed on 11.8.1993. The cost of the work under the said agreement was Rs.42,91,526/- and the date of commencement of work was on 19.8.1993 and the date of completion of work on or before 15.11.1995. It was further pleaded that in view of the delay, on the part of the defendants in supplying approved working drawings, shifting of high tension electric, telephone lines etc. and non-availability of essential building materials and irregular payments for the work undertaken by the plaintiff under the contract, he was not in a position to complete the work within the time specified in the contract. It was also pleaded that the unilateral rescission of the contract by the defendant without extending the period for completion of the contract is illegal and as such the

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defendants are liable to indemnify the plaintiff for the loss caused to him. Hence, the suit.

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The defendants filed a written statement

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denying the averments made in the plaint. It was contended that the required approved drawings were furnished to the plaintiff along with the work order and at the time of handing over the construction site to the plaintiff, the requisite fee and expenses required for shifting of telephone and electric lines were already deposited with the concerned departments and the said department had shifted the same and there was no obstruction for the plaintiff to commence the work. It was

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also contended that the defendants were not under an obligation in terms of the contract to assure the plaintiff with regard to the availability of the building materials within reasonable distance from the construction site. It was further contended that the allegations made by the plaintiff are an afterthought so as to overcome the inordinate delay in completion of construction work done

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by him and the defendants in terms of Clause-3 of the Contract had rescinded the contract due to breach of the terms of the contract by the plaintiff. Hence, the defendant sought for dismissal of the suit.

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The Trial Court on the basis of the pleadings of the parties framed issues and recorded the evidence of the parties. The plaintiff in order to prove his case examined himself as PW1 and exhibited documents namely at Exs.P1 to P19. The defendants examined two witnesses as DW1 and DW2 and exhibited documents at Ex.D1 to D17.

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The Trial Court after examining the evidence on record held that the plaintiff has failed to prove that the defendants have failed to perform their part of the contractual obligations and that the rescinding of the contract by the defendants cannot be said to be illegal and consequently dismissed the suit. Taking exception to the same, the plaintiff is in appeal.

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Learned counsel for the plaintiff submitted that

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the plaintiff repeatedly requested the defendants to furnish the required approved drawings to the plaintiff for completing the work entrusted to him, but the defendants did not respond to the request made by the plaintiff which resulted in delay in completing the work. However, the Trial Court ignoring the evidence placed by the plaintiff at Ex.P5 series has erroneously held that the defendants have performed their part of contractual obligations under the contract. He further submitted that the Trial Court contrary to the evidence on record has erroneously held that the plaintiff has not produced the programme of work as required under Clause-2(b) of the Contract to substantiate his claim that the electric, telephone and water supply lines were not shifted within the specified time. He further submitted that due to non-availability of the building materials within a reasonable distance from the construction site, there was a delay in completion of the work, which was beyond the control of plaintiff. It is further submitted that the defendants ought to have

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extended the time for completion of the work instead of rescinding the contract. It is urged that the evidence placed by the plaintiff clearly establishes that there was an inordinate delay in making the payment by the defendants to the plaintiff for the work already completed resulting in further delay in completion of the work. He further submitted that the impugned judgment and decree passed by the Trial Court is contrary to the evidence on record and also the provisions of law. He further submitted that the order passed by the Trial Court placing the written statement filed by the defendants on record is contrary to I Schedule of Code of Civil Procedure in the Order V rule 1 sub-rule (1) which specifies that the right to file written statement stands forfeited if the same is not filed within one hundred twenty days from the date of service of summons. In support of his submission, he placed reliance on the following decisions:

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1979 AIR 720 (SC) - Hindu Construction Contractors -vs- The State of Maharashtra;

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1987 SCR(2) 398 - State of Karnataka Etc -vs- Shri Rameshwara Rice Mills;

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AIR 2011 SC 2477 - J G Engineering Pvt Ltd -vsUnion of India and anr;

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OMP 482 Delhi High Court - M/s.National Highways Authority of India -vs- M/s.Tantra - TBL (JV);

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1997 (2) Arb. LR 369 Delhi High Court - Bharatiya Construction Co. -vs- Delhi Development Authority;

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2011 (Suppl) Arb. LR 436 Karnataka (DB) Karnataka High Court - Rail India Technical and Economic Services Limited (Rites), New Delhi -vs- Ravi Constructions, Bangalore and other;

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AIR 1985 SC 607 - Hyderabad Municipal Corporation -vs- M Krishnaswami Mudaliar and another;

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(1985) 2 SCC 9 - Hyderabad Municipal Corporation - vs- M Krishnaswami Mudaliar and another;

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OMP 789 of 2012 Delhi High Court - M/s.National Highways Authority of India -vs- M/s Elsamex-TWSSNC-JV;

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Allahabad High Court FAFO No.9 1993 decided on 20.5.1994 - U.P.State Electricity Board -vs- Om Metals and Minerals (Pvt) Ltd.;

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ILR 1992 KA 3276 in MVA 2485/1991 - Government of Karnataka -vs- K Sudhakar Reddy;

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Andhra Pradesh High Court CRP 2460/1993 - Government of Andhra Pradesh and another -vs- V Sathyam Rao;

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ILR 2992 KAR 3084 - State of Karnataka -vsHarischandra Reddy;

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2019 (2) Arb. LR 1 (SC) Supreme Court of India - Jaiprakash Associates Ltd (JAL) -vs- Tehri Hydro Development Corporation Ltd (THDC);

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2001 (2) Arb. LR 133 (Delhi) Delhi High Court - Satyaprakash -vs- M C D and another;

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AIR 1960 Supreme Court 953 - Sahebzada Mohammad Kamgarh Shah -vs- Jagdish Chandra Deo Dhabal and ors.;

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AIR 1973 SC 2609 - Delhi Development Authority - vs- Durga Chand Kaushish;

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1991 Supp (1) SCC 68 - State of Maharashtra -vsNav Bharat Builders;

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SLP (Civil) 1954 of 1987 - Municipal Corporation of Delhi -vs- Jagan Nath Ashok Kumar;

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Supreme Court 1979 AIR 1339 - State of Maharashtra & Anr. -vs- Digamba Balwant Kulkarni;

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After the submissions of learned counsel of the

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plaintiff were concluded, the plaintiff filed an application in I.A.No.1;2021 under Order 41 Rule 27 of CPC seeking permission to produce the original Annexure-D dated 11.3.1999 canceling the contract.

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Learned Additional Government Advocate for

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the defendants submitted that the required approved

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drawings were prepared before execution of the agreement dated 15.5.1993 in favour of the plaintiff and the said drawings were available for inspection in the office of the defendants at the construction site. The Clause-3 of the General Rules and Direction for the Guidance of Contractors which form part of the agreement dated 11.8.1993 at Ex.P1 specifically provides for inspection of the specification designs and drawings etc. at the concerned offices during office hours. Clause-12 further provides for furnishing of the drawings to the plaintiff on payment of prescribed fee. He further submitted that the plaintiff commenced the construction work only after the approved drawings were furnished to him which is evident from Ex.P5 dated 25.11.1993. He further submitted that the telephone, electric and water supply lines were removed and there was no obstruction for the plaintiff to commence the construction work which is evident from the fact that the plaintiff commenced the work entrusted to him without any complaint. He further submitted that the defendants were not under an

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obligation in terms of the contract to assure the plaintiff with the availability of the building materials within a reasonable distance from the construction site. He further submitted that since the plaintiff did not achieve the required progress despite several extensions provided for completion of the work, the defendants were compelled to rescind the contract in terms of Clause-3(a)(b) and (c) of the Conditions of Contract. He further submitted that the Trial Court has considered the evidence on record in a proper perspective and also the conditions of contract and therefore has rightly dismissed the suit and the same does not warrant any interference.

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In support of his submission, he placed reliance on the decision of the Supreme Court in the case of State of Maharashtra & Anr. -vs- Digambar Balwant Kulkarni reported in 1979 AIR 1339 .

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We have considered the submissions made by the learned counsel for the parties and perused the material on record.

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The issues involved in this appeal are, whether

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the shortfall in the progress of the work of the plaintiff is due to the inaction on the part of the defendants to perform their contractual obligation and also whether the defendants were justified in rescinding the contract instead of extending the time for completing the contractual work.

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Ex.P1 is the agreement dated 11.8.1993 executed between the plaintiff and defendant No.3 and under the said agreement, the approved amount put to tender was Rs.42,91,526/- and the date of commencement of work was 19.8.1993 which was to be completed on or before 15.11.1995. The monthly progress of work was specified as work worth Rs.2,14,576/-. The agreement/contract entered into between the parties was subject to the conditions contained in the contract at Ex.P1(a).

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14. The plaintiff to substantiate his claim that

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there was delay in furnishing the approved drawings has

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exhibited the letters/communications at Ex.P5 series and also at Ex.P18 and Ex.P19, which are the copies of drawings issued by the defendants to the plaintiff. In the letter dated 25.11.1993 at Ex.P5 which was the letter issued at the earliest point of time, the plaintiff has neither stated nor brought to the notice of the defendants of the fact with regard to the delay or non-furnishing of the copies of the approved drawings. The contents of the said letter read thus:

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"M Keshava Raju Contractor

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Phone 332424 19, Devasandra R.M.V.II Stage BANGALORE - 560 094

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To: The Executive Engineer P.W.D., Kolar Division, Kolar.

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Sir,

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Sub: Construction of mini Vidhana Soudha at Siddlaghatta - Kolar Dist.

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With reference to the above I state that the subject work was entrusted to me on tender basis with 23.59% above the notified rates vide work order dated dt.24.8.93.

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The work was started and foundation work is under progress. There are electric, telephone, and water supply lines in the site which are obstructing the work.

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It is difficult to continue with the work without removing all the above said lines.

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Hence, I request you to arrange to remove the electric, telephone and water supply lines to resume and to complete the work at an early date. The delay in removing the above said lines may kindly be treated for extension of time.

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Thanking you,

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Yours faithfully, sd/(M KESHAVA RAJU)

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Copy to:

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The Asst. Executive Engineer, No.3, Sub-division, PWD, Chickaballapur for kind information and needful.

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Ackd. is in the letter of F G College dt.25.11.93."

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In the letter dated 28.11.1994 issued by the plaintiff to the defendant No.3, the plaintiff has categorically stated that the drawings were received from Chikkaballapur Sub-Division on 26.11.1994 and the work will be commenced shortly. However, in the letter dated 11.5.1994, 10.6.1994 and 24.10.1994 and the subsequent letters dated 16.2.1995, 30.10.1995, 5.11.1996, 16.4.1997, 4.9.1998, 5.10.1998, 14.10.1998 and 25.11.1998, the plaintiff has stated that he has not received the drawings in spite of his repeated requests.

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Ex.D9 is the letter dated 26.10.1994 issued by the 3rd defendant to the plaintiff requesting him to visit the office of the Assistant Executive Engineer, Chikkaballapur so as to collect necessary drawings in connection with the construction work.

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Clause-2(b) of the Contract at Ex.P1(a) specifies that the contractor shall carry out the work of tender within the specified time and was required to prepare a programme for execution of the work. However, the plaintiff has neither pleaded nor adduced any evidence to prove that in spite of preparation and furnishing of a programme for execution of the work, the drawings were not furnished by the defendants.

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Exs.D18 and D19 are the copies of the drawings of RC, steel beams and the ground floor, root slab, beams and approved on 6.7.1994 and 23.12.1995. The defendants have taken up a contention that Ex.D18 and Ex.D19 are the final drawings and the drawings required for completing the construction work were

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supplied to the plaintiff. This contention of the defendants is also corroborated by the defendants in their evidence and nothing is elicited in the cross-examination so as to disbelieve the same. It is not in dispute that the plaintiff had commenced the construction work prior to approval of drawings namely Ex.D18 and Ex.D19. Hence, it can safely be held that the plaintiff was furnished with the relevant drawings before commencement of the work. Hence, the documents at Exs.D18 and D19, no way establish that there was inordinate delay in furnishing the drawings to the plaintiff.

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Clauses-3 and 12 of the General Rules and Directions for the Guidance of Contractors clearly provide for inspection of the drawings at the work site and also furnishing of the drawings to the contractor on payment of requisite charges. The plaintiff has neither pleaded nor adduced any evidence to claim that he was prevented from inspecting the drawings at the work site or he made any attempt to obtain drawings by paying the requisite

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charges. It is only after issuing the letter dated 25.11.1993 at Ex.P5 wherein he has not complained of non-furnishing of drawings, the plaintiff started to correspond with the defendants to furnish the drawings so as to achieve progress in the work. This conduct of the plaintiff clearly establishes that the repeated requests made by the plaintiff to furnish drawings is an afterthought so as to overcome the inordinate delay in achieving the progress required in terms of the contract at Ex.P1. It is evident from the letters dated 25.11.1993, 28.11.1994 at Ex.P5 and the letter dated 26.10.1994 at Ex.D9 and Clauses-2 and 12 of the General Rules and Directions for the Guidance of Contractors-Ex.P1 and also having regard to the fact that the plaintiff commenced his work without any complaint with regard to the nonfurnishing of the drawings clearly establish that the plaintiff has failed to prove that the defendants have not furnished the approved drawings resulting in delay in achieving the progress as required under the contract.

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The plaintiff had also contended that due to

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the inaction on the part of the defendants in removing the high tension electric, telephone and water supply lines, there was shortfall in progress of the work. Ex.D6 dated 24.11.1993 is the quotation issued by the BSNL requesting for payment of Rs.8,191/- for shifting of telephone line and poles from the construction site. The proforma annexed to Ex.D6 also discloses that a sum of Rs.8,191/was paid for shifting of electric lines and poles from the construction site. Ex.D7 is the communication addressed by the Assistant Executive Engineer, PWD Sub-Division, Chikkaballapur to the Karnataka Electricity Board stating that a sum of Rs.9,893/- is paid by the Assistant Executive Engineer, PWD towards shifting charges of the electricity lines near Junior College, Siddlaghatta. Admittedly the work site in question is in the proximity of Junior College, Siddlaghatta.

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In the letter dated 28.11.1994 addressed by

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the plaintiff to the Assistant Executive Engineer, he has

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clearly admitted that the high tension electric lines were shifted during September, 1994 and telephone lines were not shifted. In the letter dated 27.7.1995, the plaintiff has admitted that the telephone lines were shifted recently. A perusal of Exs.D6 and D7 and the letters dated 24.10.1994 and 27.7.1995 as well as the oral evidence of the defendants corroborate the contention taken by the defendants in the written statement that there was no delay in shifting the electric and telephone lines. Therefore, it can safely be concluded that there was no breach of contractual obligations by the defendants and the plaintiff has not adduced any cogent evidence to prove that there was inordinate delay in shifting the electric and telephone lines by the defendants.

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The plaintiff has not adduced any evidence to substantiate his claim that the defendants had assured availability of building materials within a reasonable distance from the work site. There is no such clause in the agreement. In view of the aforesaid, the claim of the

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plaintiff that there was shortfall in progress of the work due to non-availability of building materials within a reasonable distance is not acceptable.

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The plaintiff to substantiate his claim that due to irregular payments made by the defendants, there was a shortfall in the progress of the work, has neither produced nor stated the details with regard to preparation of running bills and the date of delayed payments made by the defendants. It is not in dispute as on the date of cancellation of work, the value of the work undertaken by the plaintiff was Rs.17,83,296/-. In the absence of any evidence, the claim of the plaintiff with regard to irregular payments made by the defendants cannot be accepted.

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As per the terms of the contract at Ex.P1, the plaintiff was required to commence the construction work on 19.8.1993 and complete the same on or before 15.11.1995. A reading of the provisions of Contract at Ex.P1 and the schedule of Contract Form at Ex.P1(a), the contract shall continue to be in force till completion of the

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contract or its recession. The Apex Court in the case of State of Maharashtra (supra) while dealing the clauses contained in the contract akin to the clauses contained in the contract at Ex.P1 has held that the time was the essence of contract only in the sense that if the plaintiff completed it within the original period of one year, the plaintiff would not be liable to pay any compensation but if the plaintiff overstepped the said time limit, he would have to compensate the defendants for every day's delay in completing the work and that the right to recession would accrue to the defendants only when the compensation due exceeded the amount of the security deposit or if the plaintiff abandoned the work.

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In the instant case, though the plaintiff was required to complete the work on or before 15.11.1995, it can be construed that the time was the essence of contract for the limited purpose that if the work is completed within the specified time, the plaintiff will not be liable to pay any compensation. In the event, on failure to complete

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the work within the specified time, the plaintiff has to compensate the defendants and the right accrues in favour of the defendants to rescind the contract. The plaintiff has failed to achieve the progress in the work as required under the contract though he was provided with sufficient opportunity by extending the time, the plaintiff is not entitled for extension of time in terms of Clause-3 of the Contract. The time provided for completing the work was extended by the defendants by exercising their discretion since the time was the essence of contract as per Ex.P1(a) - Schedule of Contract Form. The final notice of intimation dated 22.2.1996 at Ex.D17 was issued by the 3rd defendant to the plaintiff calling upon him to start the work which he had stopped within ten days from the date of receipt of this letter and to complete the work failing which appropriate action will be taken. Pursuant to the said notice, final measurements were taken through mahazar dated 18.7.1998 and the 2nd defendant accorded approval for cancellation of tender work stating that the plaintiff has failed to achieve the required progress within

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the stipulated period. Thereafter the 3rd defendant issued a communication dated 10.3.1999 to the plaintiff rescinding the contract. The recession of the contract which is in consonance with the Clause -3 of the Contract cannot be said to be in violation of the terms and conditions of the contract.

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Initially, the plaintiff filed the suit for recovery of money before the II Additional Senior Civil Judge and JMFC, Chikkaballapur in OS No.45/2017 and though the summons was served on the defendant No.3 on 30.3.2017, the defendants did not take steps to file written statement and the suit was posted for plaintiff's evidence. Thereafter, the suit was transferred to the I Additional District and Sessions Judge, Chikkaballapur on 3.7.2018 and the suit was numbered as OS No.10/2018. In OS No.10/2018 at the stage of cross-examination of the plaintiff, the defendants filed an application in I.A.No.2 under Section 151 of CPC praying to place the written statement on record.

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Section 15(1) of the Commercial Courts Act

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provides that all the commercial suits pending before the regular courts shall be transferred to the Commercial Court. The proviso to Section 15(4) of the Act gives the Court discretion to set a new time limit for filing of written statement in relation to such transferred suits. Section 16 of the Act provides for amendment to the Code of Civil Procedure, 1908 in its application to commercial disputes and the First Schedule to Order V in rule 1, in sub-rule (1),

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for the second proviso, the following proviso was substituted.

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"4. Amendment of First Schedule.- In the First Schedule to the Code.-

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(A) in the Order V, in rule 1, in sub-rule (1), for the second proviso, the following proviso shall be substituted, namely.-

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"Provided further that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other day, as may be specified by the Court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred twenty days from the date of service of summons and on expiry of one hundred twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the Court shall not

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allow the written statement to be taken on record."

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A reading of the amendment to the First Schedule of Civil Procedure Code indicates that if the defendant fails to file the written statement within the said period of thirty days, he shall be permitted to file on such other specified date on payment of cost but such date shall not be later than one hundred twenty days from the date of service of summons and on expiry of one hundred twenty days, the right to file the written statement stands forfeited.

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The suit was initially filed before the Principal Senior Civil Judge, Chikkaballapur and thereafter after establishment of commercial courts, the suit was transferred to the I Additional District and Sessions Judge, Chikkaballapur. The District Court by relying on the proviso to Section 15(4) of the Act and by exercising its discretionary power has permitted the defendants to file the written statement and placed the same on record by extending the time to file the written statement after the

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specified time. The order passed by the District Court dated 18.1.2019 is in consonance with the proviso to Section 15(4) of the Act and the same cannot be said to be illegal. Hence, the submission of the learned counsel for the plaintiff that the order passed by the Trial Court permitting the defendants to file written statement is contrary to Order V rule 1 sub-rule (1) of the I Schedule to the Code of Civil Procedure is not acceptable and the decisions relied upon by him are not applicable to the instant case.

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From perusal of the averments made in the IA, it is evident that the same do not satisfy the pre-conditions laid down in Order 41 Rule 27 of CPC to enable a party to lead additional evidence. The document annexed with the application could have been filed by the appellant before the Trial Court by exercising due diligence. The aforesaid document has been filed after the submissions on behalf of the appellant for which no possible explanation has been

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offered. We, therefore, do not find any ground to entertain the application. The same is therefore rejected.

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In view of the preceding analysis, it is held that

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the plaintiff has failed to prove that the shortfall in the progress of the work was due to the inaction on the part of the defendants in performing their obligations under the terms of the contract and that the rescinding of the contract by the defendants is in accordance with Clause-3 of the Contract. The Trial Court after meticulous appreciation of the evidence on record has rightly dismissed the suit and interference with the impugned judgment is not warranted. Accordingly, we pass the following:

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ORDER

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The appeal stands dismissed.

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Sd/JUDGE

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Sd/JUDGE

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bkm

M Keshava Raju v. Government of Karnataka

Case brief

What is this about?

What did the court decide?

M Keshava Raju v. Government of Karnataka

Case brief

What is this about?

What did the court decide?

What the court decided

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