The Managing Director Vs Sri.Vasant Satyanarayana Hegde

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IN THE HIGH COURT OF KARNATAKA,AT DHARWAD DATED THIS THE 20^TH DAY OF NOVEMBER, 2025

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PRESENT

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THE HON'BLE MR. JUSTICE R.NATARAJ

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AND

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THE HON'BLE MR. JUSTICE RAJESH RAI K

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REGULAR FIRST APPEAL NO. 100494 OF 2018 (MON) C/W RFA CROSS OBJ NO. 100003 OF 2023

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IN RFA 100494/2018:

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BETWEEN:

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THE MANAGING DIRECTOR KARNATAKA NEERAVARI NIGAM LTD., COFFEE BOARD BUILDING, DR. AMBEDKAR VEEDHI, BANGLORE-560001.

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THE EXECUTIVE ENGINEER M.R.B.C.C. DN.NO.5, RON, DIST: DHARWAD-582209.

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Digitally signed by VISHAL NINGAPPA PATTIHAL Location: High Court of Karnataka, Dharwad Bench, Dharwad

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THE EXECUTIVE ENGINEER M.R.B.C.C. DN.NO.4, NAVALGUND, DIST: DHARWAD-582208.

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THE APPELLANT NO.3 IS REPRESENTING FOR SELF

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THE CHIEF ENGINEER IRRIGATION (NORTH), KNNL, BELGAUM-590001.

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APPELLANT NOS.1, 2 AND 4 AS THEIR AUTHORISED REPRESENTATIVE BEING THE DIVISIONAL HEAD

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…APPELLANTS

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(BY SRI. S.M.TONNE, ADVOCATE)

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AND:

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SRI. VASANT SATYANARAYANA HEGDE S/O. SATYANARAYANA HEGDE, AGE: 60, OCC: CONTRACTOR, R/O. NO.5388/10, VIJAYANAGAR, HUBLI-580021.

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THE CHIEF SECRETARY GOVERNMENT OF KARNATAKA, VIDHANA SOUDHA, BANGLORE-560001.

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…RESPONDENTS

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(BY SRI. K.L.PATIL, ADVOCATE FOR RESPONDENT NO.1; SMT. GIRIJA HIREMATH, HIGH COURT GOVERNMENT PLEADER FOR RESPONDENT NO.2)

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THIS RFA IS FILED UNDER SECTION 96 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED 27.04.2018 PASSED IN O.S.NO.260/2003 ON THE FILE OF THE I ADDITIONAL SENIOR CIVIL JUDGE AND CHIEF JUDICIAL MAGISTRATE, DHARWAD, PARTLY DECREEING THE SUIT FILED FOR RECOVERY OF MONEY, DECLARATION AND MANDATORY INJUNCTION.

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IN RFA CROB. NO.100003/2023:

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BETWEEN:

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VASANTH SATYANARAYANA HEGDE S/O SATYANARAYANA HEGDE AGED ABOUT 62 YEARS, OCC: CONTRACTOR, R/O. NO.5388/10, VIJAYNAGAR, HUBBALLI-580032.

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…APPELLANT

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(BY SRI. K.L. PATIL, ADVOCATE) AND:

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THE MANAGING DIRECTOR KARNATAKA NEERAVARI NIGAMA LTD., COFFEE BOARD BUILDING, DR.AMBEDKAR VEEDHI

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BANGALORE-560001

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THE EXECUTIVE ENGINEER MRBCC DIV. NO.5, KARNATAKA NEERAVARI NIGAMA LTD., RON, DIST. GADAG-582209

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THE EXECUTIVE ENGINEER MRBCC DIVISION, NO.4, NAVALGUND-582208 DHARWAD DISTRICT.

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THE CHIEF SECRETARY GOVERNMENT OF KARNATAKA VIDHANA SOUDHA, BANGALORE-560001

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THE CHIEF ENGINEER IRRIGATION (NORTH), KNNL, BELAGAVI-590001

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…RESPONDENTS

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(BY SRI. S.M.TONNE, ADVOCATE FOR RESPONDENT NOS.1, 2 AND 5; SMT. GIRIJA HIREMATH, HIGH COURT GOVERNMENT PLEADER FOR RESPONDENT NOS.3 AND 4)

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THIS RFA CROB. IS FILED UNDER ORDER XLI RULE 22 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 27.04.2018 PASSED IN O.S.NO.260/2003 ON THE FILE OF THE I ADDITIONAL SENIOR CIVIL JUDGE AND CHIEF JUDICIAL MAGISTRATE, DHARWAD, PARTLY DECREEING THE SUIT FILED FOR RECOVERY OF MONEY, DECLARATION AND MANDATORY INJUNCTION.

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THIS APPEAL AND RFA CROB. HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 22.08.2025 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THROUGH VIDEO CONFERENCE THIS DAY, R. NATARAJ J., DELIVERED THE FOLLOWING:-

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CORAM: THE HON'BLE MR. JUSTICE R.NATARAJ AND THE HON'BLE MR. JUSTICE RAJESH RAI K

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CAV JUDGMENT

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(PER: THE HON'BLE MR. JUSTICE R.NATARAJ)

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This appeal is filed by the defendant Nos.1 to 4 in O.S.No.260/2003 on the file of I Additional Senior Civil Judge and CJM, Dharwad, challenging the judgment and decree dated 27.04.2018 passed in O.S.No.260/2003 by which the suit for recovery of money was decreed in part.

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The parties shall henceforth be referred to as they were arrayed before Trial Court.

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(i) In a nutshell the case of the plaintiff was that

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he was a Class-I contractor and that he was entrusted with the balance work of the Malaprabha Right Bank Canal at 113 km under a work order dated 07.05.1993. The estimated cost put to tender was Rs.34,18,648.70/-, while the contract amount was Rs.37,64,668.10/- with a tender premium of 10.12% above the scheduled rates. The site was handed over to the plaintiff on 12.07.1993 and the period stipulated for completion was 20 months including monsoon, with the scheduled date of completion being 11.03.1995. The plaintiff claims that after the cross-section drawings were furnished to him on 26.05.1994, he

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found that there was deposit of silt in the canal portion already executed by the previous contractor. He contends that such silt deposited was not the subject matter of the tender. He therefore, informed the defendants that he did not accept the final level of the work executed by the previous contractor as the initial level for the balance work and sought payment for excavation and removal of the silt in the canal bed.

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(ii) From the date of handing over the site till 11.03.1995, the plaintiff executed work valued at Rs.1,12,833/-. The plaintiff contends that removal of silt in the canal bed was a preliminary work required to be undertaken before the remaining canal work was commenced, and therefore he stopped further work. He further contends that while the tender provided for extraction of 35000 cubic meters of soil, the actual quantity was around 83000 cubic meters and thus exceeded 125% of the quantity put to tender. The plaintiff therefore started insisting that the defendants agree to a mutually revised rate and accordingly submitted data rates for removal of silt at Rs.130.57/- per cubic meter. Since the work was stopped, the Chief Engineer of the defendants directed the Superintending

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Engineer to treat removal of silt as an extra work and to make payment as per the scheduled rates provided under Clause 38 of the agreement. The plaintiff contends that the rate must have been determined by treating the removal of silt as an extra item in terms of Clause 13(ii) of the agreement. The issue went back and forth until March, 1997 when the Chief Engineer finally approved removal of silt as an extra item. Consequent thereto, the plaintiff commenced the work.

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(iii) In view of the escalation in cost, which was acceded to by the defendants, the plaintiff filed O.S. No. 212/2000 seeking a declaration that he is entitled to claim amounts as per Clauses 13(ii) and 15(iv) of the agreement, and not under Clause 38 of the Standard Tender Agreement, in respect of the following items of work: (a) removal of silt (b) excavation as per approved drawings, (c) providing and forming embankment, d) providing and forming murrum casing SR (90% P2). The plaintiff claimed Rs.23/- per cubic metre for 11437.84 cubic metres of silt removed, based on the SR rates applicable during 1997-1998. Likewise, for excavation of soil, he claimed rates as provided under Clause 15(iv) of the tender agreement. As regards the

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murrum required for the work, he claimed 116.46/- towards lead charges.

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After the defendants in O.S.No.212/2000 filed the written statement, the plaintiff filed an application (I.A.No.1) under Order XXIII Rule 1(3)(a)(b) of Civil Procedure Code (henceforth referred to as 'CPC' for short) seeking permission to withdraw suit with liberty to file a fresh suit on the same cause of action. In the affidavit, accompanying application he stated that " In the agreement there is a clause to the effect that in the event of any dispute in between the contractor and department, Arbitrator can be appointed. The present suit is for the determination of the Contractual disputed amount through the aid of arbitrator. It is bonafide mistake to present this claim before this Hon'ble Court instead under Act, 1996." The Court in terms of the order dated 29.03.2003 held " the plaintiff is contending that he is desirous of approaching the alternative forum as he is hopeful of getting relief there, expeditiously. In the circumstances, I see sufficient ground to give permission to withdraw from the suit with liberty to institute fresh suit in respect of the subject matter of the suit."

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The plaintiff later completed execution of the work, which is evidenced by the completion certificate dated 10.06.2001 and the final bill was paid in the year 2003. The plaintiff received the said amount under protest. He thereafter filed the present suit contending primarily that the work was delayed for nearly 07 years for reasons attributable to the defendants, resulting in escalation of cost, idling charges, unproductive additional overheads, loss of expected profit and other consequential losses. The plaintiff claimed a total sum of Rs.1,30,46,551/- which included a sum of Rs.12,30,360/towards the rate for removal of silt and slush from the canal. He further contended that the murrum required for the work was sourced from Yavagal quarry, situated 19 km away from the work site, resulting in additional lead charges, and therefore sought a declaration that he is entitled to additional lead charges of Rs.110.26/- per cubic metre.

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(i) The suit was contested by defendant No.3 who inter alia contended that the plaintiff was handed over the site and provided with detailed executable drawings during the course of construction activities, and that adequate quantities of

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the stipulated materials were supplied to him in advance. It was further contended that there were no extra items during the execution of the work and that all payments due to the plaintiff were made timely. The defendants also claimed that there was no interference with the work from their side in any manner.

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(ii) As regards the silt accumulated in the canal, it was contended that in the tender agreement, it was not mentioned that amount for removal of silt would be given separately. He claimed that it was the responsibility of the plaintiff to visit the site and verify the conditions before quoting the rates. Therefore, it was claimed that when the plaintiff gave his estimate that must have included the removal of silt. It was also contended that on 11.03.1997 the Superintending Engineer directed to pay for silt removal at the tender rates only, and the excess quantity was paid accordingly on 27.03.1997. Therefore, it was contended that the plaintiff cannot claim benefit under clause 15(iv) under tender agreement, as no letters were given to the plaintiff to stop the work.

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(iii) Further it was claimed that the Chief Engineer, Irrigation (North), Belgaum visited the work site on 24.10.1997

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and observed that the plaintiff had stopped work, and on enquiry, it was found that the excavation required exceeded the tender quantity. Consequently, the Chief Engineer vide his letter dated 20.04.1999 directed that action be taken as per Clause 38 of tender agreement. It was contended that as per the Rules under Schedule B of the tender agreement, the levels and dimensions shown in the drawings were approximate and could vary during the course of excavation, and therefore the plaintiff was not entitled for any extra amount.

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(iv) As regards the murrum used for the work, it was contended that defendant No.2 by an office letter dated 19.07.1994 had instructed the plaintiff that bringing murrum from sources other than the approved quarry for claiming extra charges would not be entertained. It was further contended that, due to the delay on the part of the plaintiff in carrying out work, murrum in the nearest Belavanki quarry "might have been exhausted" and therefore, the defendants cannot be held responsible for its non-availability at Belavanki quarry. It was claimed that the plaintiff did not bring it to the notice of the

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defendants during the execution stages that he was procuring murrum from Yavagal quarry.

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(v) With regard to the delay in execution of the work resulting in escalation of the cost, idling charges, overheads, it was contended that the plaintiff himself was responsible for the delay due to " wrong planning and programming ". It was further submitted that the plaintiff had earlier filed O.S.No.212/2000 and had withdrawn the suit with liberty to file a fresh suit on the same cause of action. Though the suit was withdrawn on 29.03.2003, the present suit was filed on 24.11.2003. It was contended that the cause of action for the suit in O.S. No.212/2000 arose on 31.08.1999 when the plaintiff's claim was rejected. In view of the above, it was contended that the suit filed in O.S.No.260/2003 was barred by limitation.

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(vi) It is contended that though the plaintiff was granted liberty to file a fresh suit on the same cause of action, he did not present the suit for the same reliefs, but deleted several reliefs and sought further reliefs which were not claimed in O.S.No.212/2000. It is stated that the reliefs sought for in O.S.No.260/2003 were based on the cause of action which arose

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when the plaintiff completed the work on 10.06.2001 and when the defendants made a part of payment of the final bill on 28.07.2003. It is therefore contended that the suit is not maintainable as it is barred under Order II Rule 3 of the Civil Procedure Code. It is further contended that the plaintiff withdrew O.S. No. 212/2000 with a view to avail the remedy of arbitration. However, instead of invoking arbitration, the plaintiff filed a fresh suit which is impermissible. Therefore, it is submitted that the suit is not maintainable either in law or on facts.

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(vii) Defendant No.5 also contested the suit by reiterating the averments made by defendant No.3 in the written statement. In addition, it is contended that the plaintiff did not issue a notice under Section 80 of the Civil Procedure Code before filing O.S.No.260/2003, and therefore the suit is not maintainable. It is further contended that as per Clause 7 of the tender agreement, the plaintiff was required to submit a list of disputed items within 30 days from the date of disallowance, however, the plaintiff did not submit such a list and, hence, it is deemed that he has waived his claims. It is also argued that all claims that

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arose prior to September 1999 were pressed in O.S.No.212/2000 and having withdrawn the said suit, the plaintiff cannot now seek

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revised rates in the present suit for all items of work executed.

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Based on these contentions the Trial Court framed

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the following issues:

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"1. Whether the Plaintiff proves that the Plaintiff is entitled for the claim amount of Rs.1,84,92,768/-?

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2. Whether the Plaintiff is entitled for his claims as averred in Para 45 of the Plaint including the interest as prayed?

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3. What order or decree?"

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ADDITIONAL ISSUES FRAMED ON 15.03.2007

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1. Whether the suit is hit by the provisions of Order XXIII Rule 1(3)(4) as well as Order XI Rule 2 and Section 12 of CPC?

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2. Whether the Defendants prove that Plaintiff did not comply the mandatory provisions of Arbitration Act, for resolving disputes and hence, there is no cause of action for filing the same?

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ADDITIONAL ISSUE FRAMED ON 17.06.2008

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3. Whether Defendant No.3 proves that this suit is not maintainable without making Chief Engineer, Irrigations (North) KNNL party to this suit?

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ADDITIONAL ISSUES FRAMED ON 07.01.2017

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4. Whether suit is maintainable without issuing notice under Section 80 of CPC?

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5. Whether the suit is within limitation?

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6. Whether Defendant No.5 proves that suit of the Plaintiff is barred under Order II Rule 2 of CPC?

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The plaintiff was examined as PW.1 and he marked

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Exs.P1 to P35 while, the incumbent Executive Engineer, MRBCC was examined as DW.1, who marked Exs.D1 to D45. An official of the defendant No.1 was examined as DW.2 who marked Exs.D47 to D60. The Deputy Chief Engineer, an authorized representative of the defendant No.5 was examined as DW.3 and he marked Exs.D61 to D63.

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Based on the oral and documentary evidence, the Trial Court decreed the suit of the plaintiff in part and directed the defendants to pay a sum of Rs.1,30,46,551/- along with 6% p.a. It also directed the defendants to pay a sum of Rs.11,026/-

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per cubic meter towards additional lead charges for conveying murrum from Yavagal quarry.

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Being aggrieved by the said judgment and decree the defendants have filed this appeal.

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The plaintiff has filed RFA Crob. No.100003/2023 challenging the rejection of the claim for interest at the rate of 18% per annum.

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The learned counsel for the defendants raised the following contentions:

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(i) The plaintiff had earlier filed O.S.No.212/2000 (Ex.D43) seeking a declaration that he is entitled to claim rates as per Clauses 13(ii) and 15(iv) of the tender agreement and not under Clause 38 of the Standard Tender Agreement in respect of (i) removal of silt (ii) excavation as per pre-approved drawings, (iii) providing and forming embankment, and (iv) providing and forming murrum casing SR 90% (P2), and to ascertain the actual amount due after taking into account the total quantum of work executed and the payments made. He contends that the said suit was filed on 27.10.2000. Subsequently, the plaintiff filed an

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application under Order XXIII Rule 1(3)(a)(b) of CPC seeking permission to withdraw the suit with liberty to institute a fresh suit. In the affidavit accompanying the application, he claimed that " in the agreement there is a Clause to the effect that in the event of any dispute between the contractor and department, Arbitrator can be appointed." Therefore, in order to do substantial justice it is expedient to present this claim before the other forum under the provisions of Arbitration and Conciliation Act, 1996. He contends that based on the above application, the Court vide order dated 29.03.2003 passed the following direction:

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"The plaintiff has contended that he is desirous of approaching the alternative forum, as he is hopeful of getting relief there expeditiously. In the circumstances, I see sufficient ground to give permission to withdraw this suit with liberty to file fresh suit in respect of the subject matter of the suit. Hence, I.A.No.1 is allowed and the plaintiff is permitted to withdraw from the suit."

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(ii) The learned counsel contends that the plaintiff did not initiate any proceedings under the Arbitration and Conciliation Act, 1996, but, on the contrary, presented the instant suit not only in respect of the claims made in

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O.S.No.212/2000 but also in respect of several additional claims. He submits that the plaintiff having withdrawn the earlier suit and having elected to invoke the provisions of the Arbitration and Conciliation Act, 1996, cannot now be permitted to file a fresh suit. He contends that the Court permitted withdrawal of the earlier suit in view of the submission that the plaintiff would invoke the process of arbitration and therefore the instant suit is liable to be rejected. He further contends that when a suit is permitted to be withdrawn with liberty to file a fresh suit, the fresh suit must be filed within the prescribed period of limitation. He submits that the plaintiff cannot exclude the period already consumed and cannot reckon the limitation afresh from the date of filing the present suit. Hence, he contends that the plaintiff cannot be permitted to revive or pursue those claims which formed the subject matter of O.S.No.212/2000 and which, according to him, have now become stale.

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(iii) He further contends that if the claims made in the present suit arose prior to the filing of O.S. No. 212/2000 and were not claimed therein, the same cannot be pursued in the present suit in view of Order II Rule 2 of Civil Procedure Code.

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He submits that the Trial Court, however, held that there was no Clause in the tender agreement providing for the appointment of an arbitrator and therefore, the plaintiff was entitled to file the present suit on the same cause of action, since liberty had already granted to file a fresh suit on the same cause of action. It is contended that the Trial Court committed an error in holding that the claims made in the suit arose subsequent to the filing of O.S.No.212/2000.

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(iv) He contends that assuming but not admitting that

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the reliefs sought in both suits are distinct and different and are based on different causes of action, the plaintiff ought to have sought for a ' joinder of causes of action'. Therefore, he submits that the suit is liable to be dismissed on this ground also. Per contra , the plaintiff contends that he signed the final bill under protest, indicating that he was not satisfied with the amount shown therein. He states that, the limitation period for settlement of accounts under Articles 56 and 115 of the Limitation Act, 1963 is three years. He submits that the present suit, was filed in the year 2003 is within the limitation period, as the cause of action for O.S.No.212/2000 admittedly arose in the

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year 1999, when the defendants, by their reply dated 06.10.1999 (Ex.P27) declined to comply with the demand made by the plaintiff in his notice (Ex.P18).

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(v) The defendants further contended that defendant No.4 was the Chief Secretary to the Government of Karnataka. Albeit, the Trial Court relying upon Ex.P18 held that the plaintiff had given two months' time to the defendants to comply with his demand and therefore was not required to issue another notice before filing the suit. It was contended that the plaintiff was mandated to issue a notice under Section 80 of Code of Civil Procedure, and seek exemption from issuing such notice and in the absence of compliance, the suit was liable to be rejected in its entirety. In support of his contention he relied upon the judgment of this Court reported in State through Deputy Commissioner Gulbarga and others Vs. Prabhakar - 2001(1) KLJ 136, Gangappa Gurupadappa Gugwad vs. Rachawwa and others - AIR 1971 SC 442, Bishandayal and Sons vs. State of Orissa & Ors - AIR 2001 SC 544, Bihari Chowdhary & Anr. V. State of Bihar & Ors., AIR 1984 SC 1043, Ebrahimbhai Vs. State of Maharashtra and Others - AIR 1975 BOM 13.

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(vi) He contends that the work order was issued to the plaintiff on 07.05.1993 and the possession of the site was handed over on 12.07.1993. He submits that, prior to commencement of the excavation work, the plaintiff had signed and accepted the 'L-section drawings' and 'cross section drawings' but he did not carry out the work in accordance with the tender agreement despite defendant No.2 issuing notices and reminders. He further contends that the plaintiff did not submit the daily reports (i) of the progress achieved, (ii) the laborers, machineries, (iii) tools, (iv) plants deployed and (v) the bar chart indicating the schedule for completion of the work within the prescribed timeline. Therefore, in the absence of any evidence to show that the plaintiff had kept his workmen and material idle at the site, no claim could be made towards Idling charges.

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(vii) It is also contended that no claim could be made by the plaintiff towards idling charges in respect of the extra items. It is submitted that the accumulation of silt in the canal was already shown to the plaintiff and therefore, he was bound to furnish his estimate for the work of silt removal while submitting

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his tender. He contends that the engineers of the defendants had undertaken inspections and had directed that the following actions to be carried out:

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(a) The ground levels & the work commenced with respect to removal of silt was recorded in the measurement book. Thereafter, Superintendent Engineer vide his letter dated 11.03.1997, directed to pay for silt removal as per Clause 13(4) of the tender conditions of contract at the rate of Rs.23/per cubic meter and the excess items was paid accordingly, therefore disentitling the plaintiff to claim extra payment which was calculated on the basis of schedule rates prevalent in the year 1997.

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(b) The Chief Engineer Irrigation North, Belgaum visited the site on 24.10.1997 and instructed defendant No.2 to submit a proposal for quantity exceeding the tender quantity in order to take necessary action.

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(c) Thereafter the Chief Engineer Irrigation North, Belgaum vide letter dated 20.04.1999 directed action to be taken as per Clause 38 of tender agreement.

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Therefore, it is contended the plaintiff is not entitled for extra payment of Rs.12,30,360/- towards excavating of silt and slush.

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(viii) As regards the claim for lead charges for bringing murrum, from Yavagal quarry, it is contended that the plaintiff is not entitled to the extra rate at Rs.110.26/- per cubic metre as the delay in execution of the work was not attributable to the defendants. It is further contended that the rate quoted by the plaintiff would hold good until the completion of the contract without reference to fluctuations in market conditions or variations in labour rates, and therefore no escalation could be claimed.

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(ix) It is contended that the plaintiff cannot claim the rates that were prevalent during the period of extended execution, as this would permit him to derive benefit from his own default. It is submitted that the plaintiff was required to complete the work within 20 months from the date of handing over the site, but he did not resume the work for the first 15 months, during which time several notices were issued calling upon him to commence the work. Therefore, the plaintiff is not entitled to claim any revised enhanced rates for the work executed beyond the original contract period.

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(x) He contends that as per Ex.D33, other contractors were sourcing murrum from Belavanki quarry, and therefore, the claim of the plaintiff that the Belavanki quarry was exhausted or that someone had obstructed him from procuring murrum is false. He further contends that the plaintiff had neither sought permission nor produced any letter authorizing him to extract murrum from Yavagal quarry. Hence, he submits that the plaintiff is not entitled to claim lead charges.

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(xi) He contends that the plaintiff is also not entitled to 'revised rates' for any item of work executed beyond the stipulated period of the contract.

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(xii) He contends that the plaintiff's claim towards 'additional overhead charges' at 15% of the total value of the work executed, multiplied by the number of years taken for completion, is not sustainable as no material is produced to substantiate such a claim.

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(xiii) He contends that the plaintiff's claim towards 'loss of expected profit' would amount to 'double payment' since the profit component is inherently included in the rates quoted. As

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there was no prior agreement to pay 18% towards such profit, this claim is also untenable.

¶170

Per contra, the learned counsel for the plaintiff contended that though the plaintiff had withdrawn O.S. No.212/2000 on the premise that he would pursue his remedy under the Arbitration and Conciliation Act, 1996, he was subsequently advised that no provision existed enable him to pursue such remedy. Therefore, he was constrained to file a fresh suit on the same cause of action. He submits that, albeit the Trial Court had recorded this as the reason for withdrawal, it had also granted liberty to file a fresh suit, which conferred upon the plaintiff the right to institute a fresh suit on the same cause of action.

¶171

With regard to the period of limitation, it is contended that the work was admittedly completed in the year 2001 and, by application of Section 22 of the Limitation Act, 1963 the cause of action continued until the year 2003, when the final bill was settled. Therefore, it is submitted that the suit filed is well within the period of limitation and is maintainable in all respects.

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As regards the contention that the suit is liable to be rejected for non-compliance of Section 80 of the CPC it is submitted that under Section 3(23) of the General Clauses Act, (hereinafter referred to as 'GCA Act' for short), the defendant No.4 does not constitute the 'State' for the purposes of Section 80 of CPC. It is further contended that no relief was sought against the State Government, which was arrayed only as a formal party. Therefore, it is submitted that the suit cannot be rejected on the ground of non-compliance of Section 80 of CPC.

¶175

It is contended that the construction site was handed over to the plaintiff on 12.07.1993 and shortly thereafter, he informed respondent No.3 about the accumulation of silt and requested arrangements for extra payment for its excavation. It is further contended that the plaintiff had not accepted the final level of the contract as the initial level for the balance work. Accordingly, it is submitted that the defendants ought to have taken an immediate decision treating the accumulated silt as 'extra work' and ensured payment forthwith. It is stated that the plaintiff repeatedly escalated the issue by letters dated 27.03.1994 (Ex.P6) and Ex.P7.

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It is further contended that the defendants had promised payment for the extra items, as the Chief Engineer, Irrigation North, Belgaum, while reviewing the progress of the work, had assured that payment for work exceeding 25% would be made and instructed the plaintiff to proceed with the work. Further, he invited the attention of the Court to Ex.P32, wherein it is contended that defendant No.3 had informed the Superintendent Engineer as follows:

¶179

" There is accumulation of heavy deposited soil in the bed since 1989 due to rains and other reasons. This has been first accounted while preparing D.T.Ps for balance quantities. But the instructions were issued under central office letter No.CEN.1/PLT/WMF/90-91 dated 01.04.1992 to follow the D.T.Ps already approved and instructed to get approval for the additional items if any, from the competent authority. The silt accumulated is heavy, it has to be removed before handing over the site to the incoming contractor. Hence, the estimates for the removal of silt is prepared and submitted herewith for according sanction.

¶180

It is contended that defendant No.3 was aware that

¶181

excavation of the accumulated silt had to be treated as an 'extra item of work' and that, without excavating the accumulated silt,

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the plaintiff could not have proceeded with the work. It is further contended that payment for the excavated silt was made only in the year 1997, that too at rates agreed upon earlier under the contract. Accordingly, it is submitted that the plaintiff is entitled to the standard rates prevailing during the year 1997. In view of the above, it is contended that the claim of the plaintiff for Schedule of Rates (SR) for the extra items is justified.

¶186

As regards the idling charges, it is contended that contracts involving heavy construction work require men and material to be sourced and kept ready. It is submitted that, due to the delay in accepting the extra works, the plaintiff had to keep the men and machinery idling at the site. Accordingly, it is contended that the defendants are liable to pay the idling charges, which have been duly quantified.

¶187

As regards the claim for additional lead charges for murrum sourced from Yavagal quarry, which is over and above the agreement rates, it is contended that no murrum was available at Belavanki quarry and, therefore, the plaintiff had to procure the same from Yavagal quarry, which is situate nearly 05 K.M. away. It is submitted that, in view of the above, the claim

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for additional lead charges at Rs.110.26/- per cubic metre is just and proper. It is further contended that as per Clause 13(i) of the tender agreement the rate quoted by plaintiff would hold good until the completion of the contract without reference to fluctuations in market conditions or variations in labour rates, and therefore no escalations could be claimed.

¶191

In so far as the claim towards balance payment at revised and workable rates is concerned, it is contended that the contract awarded to the plaintiff in year 1994 was completed in the year 2001. It is submitted that the delay is solely attributable to the defendants and, therefore, they are bound to pay the revised and workable rates for all items of work executed beyond the stipulated period of the contract.

¶192

In so far as the claim towards unproductive additional overhead charges is concerned, it is contended that the plaintiff was required to maintain clerical staff at the work site, make frequent visits and contribute towards Employees' Provident Fund, insurance etc., which constitute unproductive overhead charges. It is submitted that these charges, quantified

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at 15% of the total contract value for a period of 07 years are justified.

¶196

As regards the claim for loss of expected profit on the value of work that remained incomplete as on the stipulated date of completion, it is contended that: (i) had the defendants acted in time, (ii) had they furnished the initial levels of silt in the diagrams, (iii) handed over the site after removing the accumulated silt, (iv) treated the accumulated silt as an 'extra item', and (v) permitted the plaintiff to complete the work within the stipulated period, the plaintiff would have earned a profit of Rs.7,38,005/-. It is therefore, submitted that the plaintiff is entitled to the said amount.

¶197

As regards the rate of interest, it is contended that the amounts in question were payable in the year 2001 when the completion certificate was issued. It is submitted that the plaintiff was required to pay interest to banks and other financial establishments which, at the relevant time, was not less than 18% per annum. Therefore, it is contended that the Trial Court committed an error in awarding interest at 6% per annum from the date of the suit till the date of payment.

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I have considered the submissions of the learned counsel for the defendants as well as the learned counsel for the plaintiff and I have also perused the judgment and decree and records before the Trial Court.

¶201

The points that arise for our consideration in this appeal are:

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(i) Whether the plaintiff after withdrawing O.S.No.212/2000 with an intent to invoke Arbitration, was justified in filing a fresh suit?

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(ii) Whether the plaintiff could file a fresh suit including other causes of action without joining the other causes by filing an application under Order VII Rule 8 of CPC ?

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(iii) Whether the suit filed by the plaintiff is barred by limitation?

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(iv) Whether the suit filed by the plaintiff without issuing notice under section 80 of CPC is maintainable?

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(v) Whether the plaintiff had adduced sufficient evidence to claim the relief of revised rates for the extra items of work, revised rates for all items of work done beyond the stipulated period

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of contract, idling charges, unproductive or overhead charges, loss of expected profit and additional lead charges for transporting murrum from Yavagal quarry?

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(vi) Whether the plaintiff is entitled for interest @18% per annum.

¶212

Before we attempt to answer the above points for consideration, it is first necessary to record a few facts that are not in dispute namely, that;

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(i) The plaintiff was awarded with the work of construction of the MRBCC Division K.M. 113 (balance work) on 07.05.1993. The work site was handed over to the plaintiff on 12.07.1993.

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(ii) Soon thereafter the plaintiff noticed that there was accumulated silt in the bed of the canal and, therefore addressed a letter dated 24.01.1991 informing the Executive Engineer that the final level executed by the previous contractor could not be treated as the initial level for the balance work. The cross-section diagrams were handed over to the plaintiff on 26.05.1994 which indicated that the cross-section at 113 K.M. was as per the final measurement taken on 06.08.1991.

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(iii) It is not in dispute that the work was earlier executed by another contractor which was rescinded in the year 1989.

¶218

(iv) The plaintiff was not furnished the block levels of the bed of K.M. No.113 when the site was handed over to him on 12.07.1993. The excavation quantity put to tender was 35,000 cubic metres, however, the excess quantity excavated was 83,000 cubic metres, which exceeded 125% of the work put to tender. Therefore, the plaintiff claimed that the rates for the excess excavation were liable to be paid as per Clause 13(ii) of the tender agreement.

¶219

(v) The issue of treating the deposited silt in the canal as an extra item of work, was protracted from the year 1994 until March, 1997 when the defendants agreed to make payment at the SR rates prevailing as on the date of the tender. The amount towards this extra work was paid on 27.03.1997 @ Rs.23 per cubic metre.

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(vi) It is not in dispute that the plaintiff was required to source murrum from the Belavanki quarry which was 05 K.M. away, and the lead charges were specified in the agreement. It is submitted that, in respect of contractors who were entrusted

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with the canal work in the MRBCC from 114 K.M. onwards murrum was sourced from Yavagal at the rate of Rs.110.26/- per cubic metre.

¶224

(vii) The work was completed on 10.06.2001 and final payment was made in the year 2003 which was received by the plaintiff under protest. Thereafter the plaintiff has filed the instant suit for the aforementioned reliefs.

¶225

With the above background facts, the points for consideration are taken up seriatim.

¶226

In so far as first point for consideration is concerned, the plaintiff had indeed filed O.S.No.212/2000 on 27.10.2000 where he sought for a declaration that he is entitled to claim amount as per Clause 13(ii) and 15(iv) of the terms of agreement and not Clause 38 in respect of 04 items of work namely, (a) removal of silt (b) excavation as per approved drawing (c) providing and forming embankment (d) providing and forming murrum casing SR (90% P2) and to ascertain the actual amount to be due after taking into account, the total quantum of actual work done and the actual payment made. Along with the plaint, he enclosed 15 claims made in respect of

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item Nos.2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 of the tender schedule. The plaintiff withdrew the above suit on 29.03.2003 with liberty to file a fresh suit on the same cause of action. In the application filed seeking withdrawal of the suit, the plaintiff specifically stated that the tender agreement provided for settlement of disputes through arbitration and that he had wrongly filed the suit, and therefore sought permission to withdraw the suit and to file a fresh suit on the same cause of action. DW.1 did not dispute that the tender agreement did not provide for settlement of disputes through arbitration. The Trial Court did not relegate the plaintiff to arbitration, but granted liberty to file a fresh suit on the same cause of action. Defendant No.2 filed an application under Order VII Rule 11(d) of CPC to reject the plaint and the said application was also rejected by the Trial Court in terms of an order dated 09.09.2005. It is not in dispute that the plaintiff has filed the present suit after completion of the work and after part payment of the final bill, which was received under protest. Therefore, the plaintiff was justified in filing a fresh suit for the relief's sought.

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As regards the second point for consideration, there is no doubt that the plaintiff sought relief's in O.S.No.212/2000 that he was entitled to under Clauses 13(ii) and 15(iv) of the terms of the agreement in respect of items (a) to (d) mentioned supra. The plaintiff had also succinctly set out the claims in respect of item Nos.2 to 14 of the tender schedule. These claims arose during the course of execution of the contract. Ideally, the plaintiff must have filed an application under Order II Rule 3 of CPC before uniting the causes of action that arose in O.S.Nos.212/2000 and 260/2003. Nonetheless under Order II Rule 3 of CPC the plaintiff "may" unite several causes of action against same defendants. This provision of law is intended to ensure that the parties are not subjected to multiple litigations arising out of causes of action that can be joined.

¶234

In O.S.No.260/2003, the plaintiff not only sought relief for enhanced data rates for removal of silt in the canal - one of the claims earlier raised in O.S.No.212/2000, but also sought (i) revised rates for all items of work executed on account of delay attributable to the defendants; (ii) idling charges, (iii) additional unproductive overhead charges, (iv) loss of expected

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profit on the value of work that remained incomplete as on the stipulated date of completion. The relief's sought in O.S.No.260/2003 arose on account of the rejection of certain claims of the plaintiff when the defendants settled part of the final bill, which was received by the plaintiff under protest. Therefore, the plaintiff was entitled to unite both causes of action that arose in O.S.No.212/2000 and O.S.No.260/2003.

¶238

As regards the third point for consideration, in O.S. No.212/2000, the plaintiff had sought for rates under Clauses 13(ii) and 15(iv) of the tender agreement in respect of the extra item relating to removal of silt from the canal. The cause of action for this relief arose in March, 1997 when removal of silt from the canal was treated as an extra item and payment was ordered under Clause 38 of the terms of the agreement. The payment towards this item was made on 27.03.1997. The suit in O.S.No.212/2000 was filed on 27.10.2000. The limitation to make a claim in respect of this item of work was governed by Section 22 of the Limitation Act, 1963. The suit in O.S.No.212/2000 was withdrawn on 29.03.2003 and liberty was granted to file a fresh suit on the same cause of action. The

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plaintiff's claim in respect of removal of silt was a subsisting claim which ultimately stood rejected when the final bill was partially settled to the plaintiff in the year 2003. Therefore, there was a continuous breach of contract by the defendant in as much as, though time was the essence of the contract, it was subject to performance of mutual obligations by both plaintiff and the defendants. When the defendants had treated the removal of silt as an extra item, the issue that arose was whether the rate for extra item should be as per the scheduled rates or at rates mutually agreed upon. The plaintiff had persisted with his claim by furnishing data rates and had submitted his final bill claiming data rates for removal of silt and revised rates on account of delay in execution attributable to the defendants. Therefore, limitation period under Article 55 of the Limitation Act, 1963 was alone applicable which provided for three years to claim compensation for breach of contract, or, where the breach was continuing, three years from the date when such breach ceased. Therefore, it can be held, without hesitation, that the suit was well within limitation.

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Regarding, the fourth point for consideration, that the plaintiff failed to issue notice under Section 80 of CPC, at this juncture, it is pertinent to note that Section 80 of CPC reads as follows:

¶245

Notice:- (1) [Save as otherwise provided in subsection (2), no suit shall be instituted against the Government (including the Government of the State of Jammu and Kashmir or against a public officer in respect of any act purporting to be done by such public officer in his official capacity, until the expiration of two months next after notice in writing has been delivered to, or left at the office of-

¶246

(a) in the case of a suit against the Central Government, [except where it relates to a railway], a Secretary to that Government;

¶247

(b) in the case of a suit against the Central Government where it relates to a railway, the General Manager of that railway;]

¶248

(bb) in the case of a suit against the Government of the State of Jammu and Kashmir, the Chief Secretary to that Government or any other officer authorised by that Government in this behalf;]

¶249

(c) in the case of suit against [any other State Government], a Secretary to that

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Government or the Collector of the district; [* * *]

¶254

and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left.

¶255

(2) A suit to obtain an urgent or immediate relief against the Government (including the Government of the State of Jammu and Kashmir) or any public officer in respect of any act purporting to be done by such public officer in his official capacity, may be instituted, with the leave of the Court, without serving any notice as required by subsection (1); but the Court shall not grant relief in the suit, whether interim or otherwise, except after giving to the Government or public officer, as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed for in the suit:

¶256

Provided that the Court shall, if it is satisfied, after hearing the parties, that no urgent or immediate relief need be granted in the suit, return the plaint for presentation to it after complying with the requirements of sub-section (1).

¶257

(3) No suit instituted against the Government or against a public officer in respect of any act purporting to be done by such public officer in his

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official capacity shall be dismissed merely by reason of any error or defect in the notice referred to in sub-section (1), if in such notice-

¶262

(a) the name, description and the residence of the plaintiff had been so given as to enable the appropriate authority or the public officer to identify the person serving the notice and such notice has been delivered or left at the office of the appropriate authority specified in sub-section (1), and

¶263

(b) the cause of action and the relief claimed by the plaintiff had been substantially indicated."

¶264

In the present case, there is no material to show that

¶265

the plaintiff had issued any notice under Section 80 of the CPC, even though the State government is arrayed as a party. It is required to be noted that the suit is not filed only against the State Government but also against Kaveri Niravari Nigam Limited (hereinafter referred to as 'KNNL'). Furthermore, the plaintiff has not sought any relief against the State Government, all the reliefs are directed against defendant Nos.1 to 3 and 5 who are employees of KNNL which is a Government company wholly owned by the State of Karnataka, and its officers are public

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servants within the meaning of the Indian Penal code. Therefore, the suit filed against defendant Nos.1 to 3 and 5 was strictly not against State Government or a public servant/officer. However, the plaintiff had caused notices under Section 80 of CPC prior to filing O.S. No.212/2000 and the suit filed in O.S.No.260/2003 was pursuant to the liberty granted by the Trial Court to file a fresh suit on the same cause of action. Therefore, the suit cannot be rejected for non compliance of Section 80 of CPC.

¶269

As regards to the 5^th point for consideration, the

¶270

plaintiff has made the following claims:

¶271

i.	Removal of silt and slush from the excavated trenches before commencement of the Work	Rs.12,30,360-00
ii.	Towards balance payment at revised and workable rates for all the items of work done beyond the stipulated period of contract	Rs.43,48,250-00
iii.	Towards refund of penalty amount withheld from the bills of Plaintiff by the Defendants	Rs.13,650-00
iv.	Towards idling charges for machinery, T & P. Labour	Rs.6,39,000-00
v.	Towards unproductive additional overhead charges	Rs.60,35,120-00
vi.	Towards loss of expected Profit on the value work which remained incomplete on the stipulated date of completion	Rs.7,38,005-00
vii.	Towards bank commission charge for keepingthe Bank Guarantee currem	Rs.6,158-00

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	for aperiod of 9years
viii.	Total amount due from Defendants	Rs.1,30,46,551-00
ix.	Interest @ 18% pa. the above amounts from 10-6-01 the date on which the work was completed to the date of suit	Rs.54,46,217-00
	Total amount due and payable by the Defendants	Rs.1,84,92,768-00
	(One Crore Eighty Four Lakhs Ninety T and SixtyEight only	wo Seven Hundred )

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In support of these claims, the plaintiff was examined as PW.1 and he marked the following documents:

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(i) Ex.P1 which was the work order dated 07.05.1993;

¶278

(ii) Ex.P2 a supplementary agreement dated 06.08.1999 entered into between defendant No.3 and the plaintiff; (iii) Ex.P3 which is certified copy of the order sheet in O.S.No.212/2000; (iv) Ex.P4 is the certified copy of I.A. No.1 filed under Order XXIII Rule (1)(3)(a)(b) of CPC; (v) Ex.P5 which is the copy of a letter dated 24.01.1991 addressed by plaintiff to defendant No.2 demanding the payment towards excavation of silt; (vi) Ex.P6 which is a copy of the letter dated 27.03.1994 demanding mechanical lead under Clause 17 of the tender agreement for evacuating the dumped material by the earlier contractor on both sides of the canal and also demanding

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payment which was due from July, 1993; (vii) Ex.P7 which is a copy of the letter addressed by the plaintiff to defendant No.2 demanding payment for the work done based on the initial levels i.e., the removal of silt accumulated; (viii) Ex.P8 which is the inspection report of the Chief Engineer Irrigation, North on 24.10.1997 when he assured the plaintiff to pay for the excess work and advised to the plaintiff to proceed with the work. (ix) Ex.P9 was a letter addressed by the plaintiff to defendant No.2 demanding revised rates as the excavation work exceeded 125% of tender quantity, based on the assurance of the Chief Engineer during his inspection of the site on 24.10.1997, the plaintiff demanded rate of Rs.59.90/- per cubic metre as per the standard rates in 1996-1997 by applying Clause 15(iv) of the tender agreement; (x) Ex.P10 was a letter dated 10.08.1998 addressed by the plaintiff to the defendant No.5 informing him that he had worked out the rates for excess work and submitted it to the defendant No.3. the plaintiff also informed him that the based on his assurance he had started the work and therefore requested him to direct defendant No.3 to pay the requested rates for entire quantity; (xi) Ex.P13 was a letter dated 19.04.1999 addressed to the Secretary to the Government of

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Karnataka Irrigation Department, Bangalore bringing to his notice the above facts; (xii) Ex.P16 was a letter dated 13.08.1999 addressed by the plaintiff to Assistant Executive Engineer informing him that he had completed the concrete item within the time stipulated and sought for slabs for the side-lining. He also informed that the concerned Engineer in- charge when contacted for the PCC slabs informed him that there was shortage of diesel for transportation of slabs. The plaintiff therefore requested for extension of time and also demanded the new CSR rates for the work executed along with tender premium. He also demanded payments as no payment was made from March, 1999; (xiii) Ex.P17 is a letter dated 23.07.1999 addressed by the plaintiff to the defendant No.2 to settle the claims as previously stated in his letter dated 25.10.1997 (Ex.P9); (xiv) Ex.P18 was the notice issued under Section 80 of CPC dated 06.09.1999; (xv) Ex.P19 to P26 were the postal acknowledgments; (xvi) Ex.P27 was the reply by defendant No.2 enclosing therewith the paragraph wise comments to the notice of the plaintiff; (xvii) Ex.P28 was a letter dated 03.11.1999 addressed to defendant No.5 requesting him to hold a meeting for settlement of the claims; (xviii) Ex.P29 was a letter dated

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19.11.1999 addressed to defendant No.5 escalating his grievances relating to determination of the rate for removal of silt at Rs.23/- per cubic meter as on 11.03.1997. The plaintiff claimed that this rate was based on SR rates in the year 19951996. He informed defendant No.5 that since there was stoppage of work for more than 06 months, he demanded new rate for the excavation already done and CSR rates for remaining items of work to be done. He informed defendant No.5 that the rate for removal of silt was paid by applying Clause 15(iv) of the tender agreement and that the average rate for silt removal during 1992-1993, being the tendered time was derived as 15.13. He further stated that the work was required to be stopped for nearly 04 years and therefore the rate for the excess quantity was required to be determined as per the Clause 15(iv); (xix) Ex.P30 was a letter addressed by the defendant No.5 to the Superintending Engineer, KNNL, MRBCC, Dharwad evidencing that a meeting was held on 20.11.1999 to discuss the claims of the plaintiff; (xx) Ex.P31 was a telegram issued to the plaintiff to attend meeting on 20.11.1999; (xxi) Ex.P32 was a letter dated 30.06.1992 addressed by defendant No.3 to the Superintending Engineer which shows that the work at K.M No.113 of MRB canal

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was assigned to a contractor who had abandoned it in the year 1989 and that there was heavy accumulation of soil in the bed since 1989 due to rain and other reasons. It was also informed that the accumulated soil has to be first accounted while preparing detailed tender program for the balance quantity. However, the Central Office had directed to follow the D.T.P's already approved and instructed to get approval for the additional items if any, from the competent authority; (xxii) Ex.P33 was the lead chart of (a) metal and rubble (b) murrum, (c) sand (d) water (e) cement. This shows that the plaintiff had to source murrum from Belavanki quarry which was 05 K.M. away from the work site; (xxiii) Ex.P34 was the lead chart in respect of murrum from Yavagal for contractors who were entrusted with the work of 114 K.M. of MRB canal which showed the lead charges at Rs.110.26/- per cubic meter of murrum; (xxiv) Ex.P35 which was the statement furnished by the plaintiff showing the revised rates for the work carried out after the tender period. This document also contained the data rate for removal of wet silt as per the prevailing market rate in 1996-1997. It also contained the statement showing extra lead charges for murrum from Yavagal quarry. As per the data rate

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mentioned for removal of silt, the plaintiff had worked out to a sum of Rs.130.57/- per cubic meter and after deducting Rs.23/per cubic metre the plaintiff claimed Rs.12,30,368.40/-. So far as the revised rates for the work carried after the tender period, he claimed a sum of Rs.43,84,250.90/- and murrum charges at 110.26/- per cubic meter.

¶296

The plaintiff who was examined as PW.1 claimed that the delay in executing the contract was attributable to the defendants on account of not settling the rate for removal of silt, rate for excess quantity, delay in payment etc.,

¶297

DW.1, admitted in his cross-examination as follows:

¶298

"It is true that there was need for removal of silt and therefore, an estimate was prepared and submitted under Ex.P30 for approval. It is true that in Ex.D21 07.12.1994 the defendants have written to the plaintiff pointing out that accumulated silt (Hoolu) will have to be removed by the plaintiff at his own cost. I can't say as to what all happened between letter at Ex.P32 dated 30.06.1992 and letter at Ex.D21 dated 07.12.1994 since there was a time gap of 2 ½ years. It is true that on 04.06.2003 under Ex.D39 the Chief Engineer has communicated to the Superintending Engineer additional financial implication amounting to Rs. 12.64,599.96/-

¶299

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¶302

(Rupees Twelve Lakh Sixty Four Thousand Five Hundred Ninetynine and paise Ninetysix only)." He further deposed that "it is true that in Ex.D.46 against item No.1(a) silt for a quantity of 11437.84/- cubic meter is stated to have been approved by the Chief Engineer. It is now marked as Ex.D46(a). It is not true to say that with ulterior motive and to harass the plaintiff, we had not classified silt as 'Silt' and did not make payment, but we did not receive approval from the higher authorities and therefore there was a delay." He further deposed that "it is true that removal of silt in slushy form will always be costlier than earth work excavation and removal in dry form. It is not true to suggest that silt means it is always in watery and slushy condition ."

¶303

In order to understand whether the plaintiff was entitled for mutual rates, for the extra items of work, it is necessary to refer to Clause 13(ii) of the tender agreement which reads as follows:

¶304

"In case the addition is more than 25 percent then such additional quantity shall be paid at the rates entered in the Schedule of Rates prevalent at the time of making additions and alterations plus or minus the overall percentage of the original tendered rates over the current schedule Rates of the year in which the tender is accepted (as per the comparative statement' prepared at the time of acceptance of the tender)."

¶305

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Clause 15(iv) reads as follows:

¶309

"The period of stoppage ordered by the Executive Engineer or other higher authority should not ordinarily exceed six months. Thereafter the portions of works stopped may be treated as deleted from this agreement if a notice in writing to that effect is the given to the Executive Engineer other higher authority by the contractor within 7 days, after the expiry of the above period. The portion of work thus deleted be got executed on supplemental agreement on mutually agreed rates which shall not exceed current schedule rates. If the rates cannot be settled at reasonable rates with the tendered contractor, by mutual agreement, the work may be got executed either departmentally or through other agencies."

¶310

Thereby applying the rates as per Clause 38 of the tender agreement which reads as follows:

¶311

"Quantities shown in the tender are approximate and no claim shall be entertained for quantities of work executed being either more or less, than those entered in the tender or estimated, except in cases covered by Clause 13(i)."

¶312

Clause 13(i) reads as follows:

¶313

(i) The Executive Engineer shall have power to make any alterations in or additions to the original specifications drawings, designs, and instructions, that may appear to him to be necessary or advisable during the progress of the work and the contractor shall be bound to carry out the

¶314

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work in accordance with any instructions in this connection which may be given to him in writing signed by the Executive Engineer or other higher authority and such alternation shall not invalidate the contract and any additional work which the contractor may be directed to in the manner above, specified as part of the work shall be carried out by the contractor on the same conditions in all respects on which he agreed to do the main work and at the same rates as are specified in the tender for the main work, the limit of additional quantity being 25 percent."

¶317

The evidence of DW.1 categorically indicates that removal of silt was treated as an extra item. The rate offered for this extra item was based on the scheduled rates and the plaintiff was paid Rs.23/- per cubic feet. The plaintiff admitted that Rs.23/- per cubic feet was a mutually agreed rate and that it was far less than the prevailing market rate in the year 19961997 when the work was executed. The defendants have not disputed the data rates furnished by the plaintiff as per Ex.P35. They have however, placed on record the scheduled rates for the year 1996-1997 which indicate that the SR rates for removal of silt with a lift upto 1.5 metres and disposal upto 50 metres was Rs.35.30/- per cubic meter. The data rates worked out by the plaintiff show that silt and slush had to be removed manually

¶318

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from the canal bed which is 08 metres and disposing it at a distance of 1. K.M away which would reasonably work out to more than Rs.100/- per cubic meter, as the work involved substantially higher labour and deployment of machinery.

¶322

We have perused the quantification of the market rates prepared by the plaintiff for removal of silt and lead charges and we find the same to be tenable. Therefore, the claim of the plaintiff for a sum of Rs.12,30,360/- towards removal of silt and slush is just and proper.

¶323

As regards the balance payment at revised and workable rates, the plaintiff has stated that the work carried out during the period of contract was only Rs.1,12,833/- and the work carried out after the tender period was a sum of Rs.46,27,959/-. He has claimed that the value of work carried after the tender period as per the revised rates was 90,07,742.80/-. Therefore it is claimed that he is entitled to a sum of Rs.43,84,250.90/-. However, the defendants have not denied the revised rates worked out by the plaintiff. They have also not denied the fact that the work that was initially to be completed within 20 months was delayed by nearly 07 years.

¶324

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The removal of silt was preliminary work and that was approved as an extra item only in March, 1997. The excavation work and the other works following thereafter were delayed. Therefore, the plaintiff could not have been expected to execute the contract at the tendered rates. Since the defendants are responsible for the delay, they are bound to make good the loss that the plaintiff has suffered. In this regard, it would be profitable to refer to

¶327

K.N. Sathyapalan (Dead) By LRs v. State of Kerala and

¶328

Another (2007) 13 SCC 43 , wherein it was held that:

¶329

"32. Ordinarily, the parties would be bound by the terms agreed upon in the contract, but in the event one of the parties to the contract is unable to fulfill its obligations under the contract which has a direct bearing on the work to be executed by the other party, the arbitrator is vested with the authority to compensate the second party for the extra costs incurred by him as a result of the failure of the first party to live up to its obligations. Even in the absence of any clause for escalation in the agreement entered into by the parties and thus the arbitrator appears to have acted within his jurisdiction in allowing some of the claims on account of escalation of costs which was referable to the execution of the work during the extended period. If the claimant is prevented by unforeseen circumstances from completing the work within the stipulated period if such delay could have been

¶330

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prevented by the State by its diligent action and the hardships to the claimant in completing the work in time could have been taken care of by eradicating the hurdles which forced the delay in completion of work by the claimant."

¶334

In that view of the matter, the revised rates sought for the plaintiff for all items of work beyond the stipulated period of contract was rightly granted by the Trial Court.

¶335

As regards the penalty amount withheld by the defendants, they have not placed on record any letters or correspondence addressed to the plaintiff stating the reason for withholding any amount from the bills of the plaintiff towards penalty. When the material placed before the Court demonstrates that the delay was on account of the defendants, the reason for extension of the contract period is also attributable to the defendants. Therefore, the defendants could not have withheld any amount as penalty, thus the plaintiff is entitled for reimbursement Rs.13,650/-.

¶336

As regards, to idling charges for machinery, tools, plant and labour, the Madras High Court in M/S Ircon International Limited v. The Government of Tamil Nadu [ 2009 SCC OnLine Mad 1727] and Delhi High Court in North

¶337

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Delhi Municipal Corporation v. R&T Enterprises [2024 SCC OnLine Del 5436] w hile interpreting the application of the Hudson, Emden & Eichleys formulas that was upheld in McDdermott International Inc v. Burn Standard Co. Ltd & Ors [2006 ( 11 ) SCC 181] as the appropriate formulas to compute Idling charges in construction disputes, held that while applying these formulas, hard evidence of (i) actual off site expenditure towards manpower and equipment, (ii) off-site project-specific expenditure such as project specific insurance, (iii) project specific personnel at the head office, etc has to be adduced. In this court's opinion, Idling charges is a reimbursement of actual and not notional expenses incurred and therefore, the plaintiff was bound to produce material to show that he had incurred these expenses during the contractual period. The plaintiff has claimed that the excavator, tippers, diesel road roller, tractor, male coolie, female coolie and mestri, were kept idle, yet no material is produced before the Trial Court to buttress this claim.

¶341

Ex.D3 shows that the plaintiff was directed to form the service road along side the canal on 16.06.1994. It also appears that the plaintiff had formed the road accordingly. There

¶342

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is no mention as to when, why and how the diesel road roller was kept idle. The plaintiff also did not produce any material to show that he owned the diesel road roller. Likewise, he did not produce any material to show that he owned machinery mentioned above and that they were kept idle. Between 1993 to 1997, the plaintiff obviously could not have undertaken any works until the removal of silt was approved. Therefore, no machinery could have been kept idle between 1993 to March, 1997. The payment for removal of silt was made on 27.03.1997 and thereafter the actual excavation work began. There was no impediment for the plaintiff to carry on the excavation work, although he had claimed that the payments were not made. Therefore it is difficult to accept the claim of the plaintiff that excavators and tippers were kept idle. However, the fact that the work was delayed for a substantially long time and it may have resulted in idling the tools and labour and this Court therefore considers it appropriate to make a reasonable assessment and hold that the plaintiff is entitled to lump sum amount of Rs.2,50,000/- towards idling charges for labour and tools.

¶346

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¶348

As regards unproductive additional overhead charges, it is necessary to note that the overhead charges may arise in the head office or at the site office. The plaintiff did not engage any qualified personal to oversee the work and the same is evident from the tender agreement. The plaintiff himself was a

¶349

graduate engineer and he had engaged the services of a mestri/supervisor. There was admittedly no office at the site and hence, there was no watch and ward at the site. There was also no establishment at the site which was provided with amenities. The only perceivable overhead charge in the office of the plaintiff was the interest on borrowings if any, day to day expenses, sundry expenses, postal charges, and travel expenses etc.,. The plaintiff though has claimed a sum of Rs.60,35,120/- as the additional overhead charges, he has not furnished a break-up but has casually contended that 15% of the total value of the contract executed is the universally accepted norm. This overhead charges are not notional but are actual expenses incurred over the period the contract. The petitioners assertion that 15% of the value is the universally accepted norm cannot be

¶350

accepted. In this regard it is apposite to refer to Batliboi Environmental Engineers Ltd v. Hindustan Petroleum

¶351

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Corporation Limited & Anr [2023 SCC OnLine SC 1208]

¶355

wherein the Hon'ble Apex Court held that:

¶356

"Ordinarily, when the completion of a contract is delayed and the contractor claims that s/he has suffered a loss arising from depletion of her/his income from the job and hence turnover of her/his business, and also for the overheads in the form of workforce expenses which could have been deployed in other contracts, the claims to bear any persuasion before the arbitrator or a court of law, the builder/contractor has to prove that there was other work available that he would have secured if not for the delay, by producing invitations to tender which was declined due to insufficient capacity to undertake other work. The same may also be proven from the books of accounts to demonstrate a drop in turnover and establish that this result is from the particular delay rather than from extraneous causes. If loss of turnover resulting from delay is not established, it is merely a delay in receipt of money, and as such, the builder/ contractor is only entitled to interest on the capital employed and not the profit, which should be paid."

¶357

Therefore, the plaintiff was bound to place on record

¶358

the material to justify the overhead charges. However, having regard to the fact that the contractual work was delayed by nearly 07 years, there could be some element of overhead charges during delayed period. Thus, in the opinion of this Court 5% of the total value of the work executed by the plaintiff

¶359

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between 1994 till 2001 could be awarded as unproductive additional overhead charges. Therefore, the plaintiff is entitled to a sum of Rs.18,44,242/-.

¶362

As regards, the loss of expected profit, on the value of work which remained incomplete on the stipulated date of completion, it is relevant to note that the plaintiff is granted with the additional revised rates on removal of silt and revised rates on all the items of work done beyond stipulated period of contract, the ideal charges and also reimbursement of overhead charges. These charges include the profit that the plaintiff would have earned if the revised rates were given to him at the earliest point in time. Therefore, the plaintiff is not entitled to the profit on the value of work done on the stipulated date of completion. However, since the work was delayed by nearly 07 years, the plaintiff lost opportunity to participate in other tenders and therefore, the defendants are bound to compensate for the loss of opportunity and we deem it appropriate to award as lump sum of Rs.5,00,000/- being 10% of total value of work executed by the plaintiff. Since the plaintiff had kept the bank guarantee alive towards the entire period, he is also entitled to the commission

¶363

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charges levied by the bank which is a sum of Rs.6,158/-. Therefore, in all the plaintiff is entitled to a sum of Rs.82,28,660.90/-.

¶367

As regards to the interest to which the plaintiff is entitled to, on the contract. It is obvious that this contract is a commercial contract. There is no agreement between the parties regarding payment of interest. Under Section 34 of CPC, when the liability in relation to a sum adjudged arises out a commercial transaction the rate of interest may exceed 6% per annum, and shall not exceed the rate at which the money is lent or advanced to a nationalized bank in relation to a commercial transaction. The Hon'ble Apex Court in the case of I.K.Merchants, Pvt. ltd. Vs. State of Rajsthan 2022 SCC Online SC 2441, has held that the proviso to Section 34 of CPC empowers the Court to grant the rates prescribed if the liability arises out of commercial transactions. A google search of the rates of interest charged by Nationalized banks in the year 2003 shows that it was in the range of 11 to 12%. Therefore, this Court considers it appropriate to grant 9% per annum.

¶368

In so far as the claim of the plaintiff for interest from 10.06.2001 when the execution of the contract was completed, it

¶369

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is relevant to note that the plaintiff has claimed interest from 10.06.2001 and has paid the Court fees and the amounts determined by this court was payable as on the date of the plaintiff completing the contract. Therefore, the plaintiff is entitled to interest from 10.06.2001 till the date of payment @ 9% p.a. on Rs.82,28,660.90/-.

¶372

As regards to the Lead charges for the murrum transported from Yavagal quarry, the defendant No.3 admitted in the written statement that murrum in Belavanaki quarry was exhausted and attributed the delay to plaintiff in executing the contract. Therefore, it is evident that by the time the plaintiff was in a position to execute the contract, the quarry at Belanvaki was exhausted. Thus, he had no other option but to procure the murrum from the nearest Yavagal quarry which was at a distance of 19 k.m. from the work site. Ex.P34 which was the lead chart provided to contractors who were executing the civil works at 113 of MRB canal showed that the lead charges for murrum was a sum of Rs.110.26/- per cubic meter. Therefore, the plaintiff was also entitled to be paid the lead charges at 110.26/- per cubic meter of murrum procured from yavgal aquary.

¶373

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In view of the above, the following order is passed:

¶377

(i) RFA No.100494/2018 and RFA Crob. 100003/2023

¶378

are allowed in part. The judgment and decree of the Trial Court is modified. The suit of the plaintiff is decreed for a sum of Rs.82,28,660.90/- along with interest at 9% p.a. from 10.06.2001 till the date of payment.

¶379

(ii) The plaintiff is also entitled to lead charges at Rs.110.26/- per cubic meter of murrum transported from Yavagal quarry along with interest at 9% per annum from 10.06.2001 till the date of payment. The plaintiff is entitled to the proportionate costs.

¶380

(iii) Office is directed to draw a decree accordingly.

¶381

Sd/(R.NATARAJ) JUDGE

¶382

Sd/(RAJESH RAI K) JUDGE

¶383

HJ

¶384

List No.: 19 Sl No.: 1

The Managing Director v. Sri.Vasant Satyanarayana Hegde

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The Managing Director v. Sri.Vasant Satyanarayana Hegde

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