Dismissed

M Keshavaraju v. Government of Karnataka

Karnataka HC3 Sept 2021COMAP/8/2020

Case brief

AI extract

What is this about?

The Commercial Court in Karnataka dismissed an appeal by a contractor challenging a trial court judgment that dismissed his suit for recovery. The court held the contractor failed to prove defendants breached the contract and ruled the contract rescission was justified due to delay in work progress.

What did the court decide?

The commercial appeal stands dismissed, upholding the dismissal of the suit for recovery of money at the trial court level.

M Keshavaraju Vs Government of Karnataka — Specific Performance | 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.8 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, CHIKKABALLAPUR, 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.O.S No.24/2019.

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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 contractor and in pursuance of the tender notification inviting bids from eligible contractors for the work of

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"Construction of First Grade College at Siddlaghatta, Kolar District", the plaintiff submitted his bid and was the successful bidder. A work order was issued in his favour and an agreement was executed on 26.3.1993. The cost of the work under the said agreement was Rs.38,91,629/-. The plaintiff was required to commence work on 26.3.1993 and complete the construction work on or before 26.3.1995. 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 done by him under the contract, he was not in a position to complete the work within the specified period of time in the contract. It was further pleaded that unilateral rescission of the contract by the defendant without extending the period for completion of the contract is illegal and as such the 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 and 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 was already deposited with the concerned departments and the said departments had shifted the same and there was no obstruction for the plaintiff to commence the work. It was also contended that the defendants were not under an obligation in terms of the contract assuring the plaintiff with regard to the availability of the building materials within a reasonable distance from the work 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 and the defendants in terms of Clause-3 of the Contract have rescinded the contract due to the breach of the terms of the contract by the

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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 also 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 P18. The defendants examined two official witnesses as DW1 and DW2 and exhibited documents at Ex.D1 to D17.

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The Trial Court after examining the evidence

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on record held that the plaintiff has failed to prove that the defendants have failed to perform their part of 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

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that the plaintiff repeatedly requested the defendants to furnish the required approved drawings to the plaintiff for

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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 obligation 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, there was a delay in completion of the work, which was beyond control of the plaintiff. It is further submitted that the defendants ought to have 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 the making of payments

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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 decision of the Apex Court in the case of M/s.SCG Contracts India Pvt. Ltd. -vs- K S Chamankar Infrastructure Pvt. Ltd. & ors. reported in (2019) 12 SCC 210. In support of his submission, he placed reliance 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 the learned counsel

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for the 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 copy of letter of cancellation of the contract dated 29.6.2001 as additional evidence.

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10. Learned Additional Government Advocate for

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the defendants submitted that the approved drawings were prepared before the execution of agreement dated 26.3.1993 and the entire drawings up to roof level was furnished to the plaintiff on 9.12.1993 vide letter dated 9.12.1993 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 Directions for the Guidance of Contractors which form a part of the agreement dated 26.3.1993 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 construction of work only after the approved drawings were furnished to him which is evident from the letter dated 2.7.1993 at Ex.P5. He further submitted that the telephone, electric and water supply lines were removed and there was no obstruction for the plaintiff to commence

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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 obligation under the terms of the contract assuring the plaintiff of 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 in work 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

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of State of Maharashtra & Anr. -vs- Digambar

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Balwant Kulkarni reported in 1979 AIR 1339 .

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We have considered the submissions made by

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the learned counsel for the parties and perused the material on record.

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The issues involved in this appeal are, whether 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 26.3.1993 executed between the plaintiff and defendant No.3 and under the said agreement, the approved amount put to tender was Rs.38,91,629/- and the plaintiff was required to commence the work on 26.3.1993 and complete the same on or before 26.3.1995. The monthly progress was specified work worth as Rs.2,16,200/-. The agreement

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entered into between the parties was subject to the conditions contained in the contract at Ex.P1(a).

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The plaintiff to substantiate his claim that

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there was delay in furnishing the approved drawings has exhibited letters/communications at Ex.P5 series. In the letter dated 2.7.1993 at Ex.P5 which was the letter issued at the earliest point of time, the plaintiff has stated that there is no shortfall in the progress of the work and that the approved foundation drawings were received on 3.5.1993 i.e. after the lapse of one month seven days. In the letters dated 11.5.1994 and 10.6.1994, the plaintiff has alleged that there was delay on the part of the defendants in furnishing the drawings up to plinth level and in the letter dated 24.10.1994, he has stated that due to the delay, the construction work above the plinth level was delayed. The plaintiff has also produced the letters dated 16.2.1995 , 27.7.1995, 16.10.1995, 16.4.1997 and 14.10.1998 to substantiate his claim that in spite of several requests, the defendants failed to supply drawings

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and other technical particulars pertaining to different components of the work.

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The defendants to substantiate their claim

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have denied the allegation of the plaintiff that there was inordinate delay in supplying the drawings and also in their evidence stated that the drawings up to root level was furnished to the plaintiff on 9.12.1993. Ex.D6 is the letter dated 14.7.1993 addressed by the 2nd defendant enclosing approved structural drawings showing the details of excavation, combined footing, isolated footing, RC footing and columns.

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Ex.D9 is the letter dated 26.9.1994 addressed by the 3rd defendant to the plaintiff stating that the plaintiff has shown physical progress to the extent of Rs.15,60,000/- as against the required progress of Rs.30,26,828/-. The plaintiff was further instructed to make good the deficit progress and complete the work within the specified time. The similar letters dated 2.2.1995 and 5.7.1995 were issued to the plaintiff stating

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that there is shortfall in progress of the construction work and to make good the deficit progress in the work since the time specified for completion of the work had already expired.

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It is evident from the communications exchanged between the parties, most of the drawings were furnished to the plaintiff on or before September 1994 and the receipt of the said drawings is categorically admitted by the plaintiff.

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Clause-2(b) of the Contract at Ex.P1(a) specifies that the contractors 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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Clauses-3 and 12 of the General Rules and

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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 produced 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 charges. It was only after issuing the letter dated 2.7.1993 at Ex.P5 wherein he had not complained of nonfurnishing of drawings, the plaintiff started to correspond with the defendants to furnish the drawings so as to achieve progress in the work. In spite of repeated instructions issued by the defendants to make good the deficit progress in the work, the plaintiff has not achieved the progress in work as specified in the agreement. 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

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inordinate delay in achieving the progress required in terms of the contract at Ex.P1.

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In view of the preceding analysis of the evidence on record and having regard to the fact that the plaintiff commenced his work without any complaint with regard to the non- furnishing of the drawings, it can safely be concluded that the plaintiff has failed to prove that the defendants have not furnished the approved drawings resulting in delay in achieving the progress in the work.

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The plaintiff had also contended that due to the inaction on the part of the defendants in clearing the obstructions in the work site and also the failure to complete the water supply, sanitary and electrical works by the defendants, there was shortfall in the progress of the work. However, the plaintiff in the letters issued to the defendants at the earliest point of time has not complained about the inaction of the defendants in completing the said work. It was only on 27.9.1995 and thereafter the plaintiff started corresponding with the defendants alleging that

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there was delay on the part of the defendants in shifting the telephone lines.

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The defendants have pleaded and led evidence stating that a sum of Rs.9,893/- was deposited with the department concerned on 14.6.1993 to shift the electric line and a sum of R.8,192/- was deposited with the department concerned to shift the telephone lines and poles and after receipt of the same, the departments concerned have removed the electric lines and telephone lines from the work site. The defendants have also pleaded and led evidence stating that the plaintiff commenced the work only after removal of the obstructions on the work site.

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It is evident from the evidence on record that

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there was no breach of contractual obligations by the defendants and the plaintiff has not placed any cogent evidence to prove that there was inordinate delay in shifting the electric and telephone lines. The plaintiff has also not furnished the work programme to prove that the

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shortfall in the progress of the work was due to the inaction on the part of the defendants in removing the obstructions at the work site.

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The plaintiff has not placed any evidence to substantiate his claim that the defendants had assured availability of building materials within a reasonable distance from the work site. Moreover, there is no such clause in the agreement. In view of the aforesaid, the claim of the 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, a sum of Rs.47,60,006/- was disbursed to the plaintiff by the defendants and the said

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amount is in excess of the amount put to tender. 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 26.3.1993 and complete the same on or before 26.3.1995. A reading of the provisions of Contract at Ex.P1 and schedule of Contract Form at Ex.P1(a) indicates that the contract shall continue to be in force till completion of the contract or its rescission. The Apex Court in the case of State of Maharashtra (supra) while dealing

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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

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delay in completing the work and that the right to rescission 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 26.3.1995, it can be construed that the time was the essence of the contract for the limited purpose that if the work was completed within the specified time, the plaintiff will not be liable to pay any compensation. In the event, on failure to complete the work within the specified time, the plaintiff has to compensate the defendants and a right accrues in

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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. Hence, the plaintiff was 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

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exercising their discretion since time was the essence of contract as per Ex.P1(a) - Schedule of Contract Form. The final notice of intimation dated 3.9.1998 at Ex.D1 was issued to the plaintiff stating that for having failed to complete the contract work in spite of giving several notices, the plaintiff was called upon to be present on the site on 11.9.1998 for taking final measurement in the presence of witnesses and if the plaintiff fails to be present, action will be taken to close the work order in accordance with law.

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Ex.D3 is the mahazar dated 11.9.1998 under which final measurement was taken on 11.9.1998. However, the plaintiff remained absent at the time of taking final measurement. Since there was substantial deficit in the progress of work by the plaintiff even though the time was extended on several occasions, the defendants were left with no alternative but to rescind the contract. The rescinding of the contract which is in consonance with the Clause -3 of the Contract cannot be

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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 Principal Senior Civil Judge, Chikkaballapur and the summons was served on the defendant No.3 on 30.3.2017 and the time to file a written statement was extended finally on 12.9.2017. Since the defendants did not file a written statement, the suit was posted for plaintiff's evidence. 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.9/2018. In OS No.9/2018 at the stage of crossexamination 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 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

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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), 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 allow the written statement to be taken on record."

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A reading of the amendment to the First

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Schedule of Civil Procedure Code indicates that if the defendant fails to file the written statement within the said

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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 if it exceeds hundred twenty days, then 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 after establishment of commercial courts, the suit was transferred to the I Additional District and Sessions Judge, Chikkaballapur. The District Court by applying 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 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

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order passed by the Trial Court permitting the defendants to file written statement is contrary to Order V rule 1 subrule (1) of the I Schedule to the Code of Civil Procedure is not acceptable and the decision relied upon is not applicable to the instant case.

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From perusal of the averments made in the IA,

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it is evident that the same do not satisfy the pre-conditions laid down in of 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 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

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the defendants in performing their obligations under the terms of the contract and rescinding of the contract by the defendants is in accordance with Clause-3 of the Contract. The Trial Court after meticulous appreciation for the evidence on record has rightly dismissed the suit and the same does not warrant any interference. 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 Keshavaraju v. Government of Karnataka

Case brief

What is this about?

What did the court decide?

M Keshavaraju v. Government of Karnataka

Case brief

What is this about?

What did the court decide?

What the court decided

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