Allowed

M/S.Neel Under Water Services v. K.S.E.B.

Kerala HC28 Nov 2016RSA/1326/2004

Case brief

AI extract

What is this about?

In a second appeal arising from a contract dispute over underwater plugging work at Malampuzha Dam, the Kerala High Court set aside lower court orders dismissing the plaintiff's claim. The Court held that statutory requirements for extra work were met, making the defendants liable to pay additional costs incurred to make the main work executable, relying on Section 70 of the Indian Contract Act.

What did the court decide?

Impugned judgments and decrees set aside; original suit decreed allowing the appellant to realize Rs.57,940/- with 6% interest from the trial court decree date.

M/S.Neel Under Water Services Vs K.S.E.B. — Contract and Commercial Disputes | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE K.HARILAL

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MONDAY, THE 28TH DAY OF NOVEMBER 2016/7TH AGRAHAYANA, 1938

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RSA.No. 1326 of 2004 (G)

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AGAINST THE JUDGMENT & DECREE DATED 30-06-2004 IN AS 360/2001 of III ADDITIONAL DISTRICT COURT (AD HOC), FAST TRACK COURT NO.1, THRISSUR

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AGAINST THE JUDGMENT & DECREE DATED 06-08-2001 IN OS 620/1999 of MUNSIFF'S COURT, THRISSUR

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APPELLANT/APPELLANT/PLAINTIFF:

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M/S.NEEL UNDER WATER SERVICES

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C.C.NO.1/1641, COCHIN-1,

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REP. BY ITS PROPRIETOR ANTONY. (DIED. LRS IMPLEADED)

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ADDL.APPELLANTS:

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MRS.ROSE ANTONY, W/O.LATE V.J.ANTONY, RESIDING AT VALIAPARAMBIL HOUSE, CC XIV/28A, KOCHI-2.

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V.A.GILBERT, S/O.LATE V.J.ANTONY, RESIDING AT VALIAPARAMBIL HOUSE, CC XIV/28A, KOCHI-2.

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NIXON V.A., S/O.LATE V.J.ANTONY, RESIDING AT VALIAPARAMBIL HOUSE, CC XIV/28A, KOCHI-2.

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TERESA ANTONY, D/O. LATE V.J.ANTONY, RESIDING AT VALIAPARAMBIL HOUSE, CC XIV/28A, KOCHI-2.

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(LEGAL HEIRS OF DECEASED SOLE APPELLANT ARE IMPLEADED AS ADDITIONAL APPELLANTS 2 TO 5 AS PER THE ORDER DATED 05/10/2015 IN IA 2482/2015)

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ADDL.APPELLANTS 2 TO 5 BY ADVS.SRI.S.SREEKUMAR (SR.)

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SRI.P.MARTIN JOSE SRI.P.PRIJITH SRI.THOMAS P.KURUVILLA

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....2

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RSA.No. 1326 of 2004 (G)

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RESPONDENT(S)/RESPONDENTS/DEFENDANTS:

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KERALA STATE ELECTRICITY BOARD, REP. BY ITS SECRETARY, VYDHYUTHI BHAVAN, PATTOM, THIRUVANANTHAPURAM.

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THE DEPUTY CHIEF ENGINEER, CIVIL CIRCLE, VYDYUTHI BHAVAN, THRISSUR-4.

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BY ADVS. SRI.P.A.AHAMMED, SC FOR KSEB SRI.P.SANTHALINGAM (SR.) SRI.S.SHARAN, SC, K.S.E.BOARD

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THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 28-11-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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OKB

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K.HARILAL, J.

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R.S.A. No.1326 of 2004

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Dated this the 28^th day of November, 2016

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JUDGMENT

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The appellant herein is the plaintiff in O.S. No.620 of 1999 on the files of the Munsiff's Court, Thrissur as well as the appellant in A.S. No.360 of 2001 on the files of the III Additional District Court (Ad hoc), Fast Track-I, Thrissur. The appellant is a proprietary concern represented by its proprietor, by name Antony. The parties are referred to as in the Original Suit.

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The plaintiff had undertaken a contract work under the quotation invited by the defendants for under water plugging of airvent between two penstock openings in Malampuzha Dam. In response to the quotation submitted by the plaintiff, the work was awarded to him for an amount of Rs.1,15,000/- and an agreement was executed on 04.10.1997, incorporating the terms and conditions of the work. The plaintiff further averred that at the time of

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RSA.1326/04 :2:

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inspection, on 14.05.1997, for submitting the quotation, stop log gate was operational and could depend upon this gate, to arrest water for executing the work, for which the tender was called for. On 04.10.1997, the stop log gate was found not operational and the matter was informed to the defendants. The defendants wanted the plaintiff to adopt any other method to arrest the flow of water, to execute the work. To arrest the flow of water temporarily from upstream, so that temporary airvent can be plugged inside the tunnel, to stop the leaking completely and the said work was an additional work, for which substantial amount was required.

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On 14.10.1997 the plaintiff informed the 2^nd respondent about the necessity to execute additional work and thereafter executed the additional work by incurring Rs.50,450/-. Thereafter the appellant submitted a bill for the additional work; but it was not honoured by the respondents. Consequently the plaintiff caused to issue a lawyer notice, against which the defendant sent a reply denying the claim raised by the plaintiff. In that circumstance, the appellant was constrained to file the

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RSA.1326/04 :3:

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aforesaid suit claiming an amount of Rs.50,450/- with interest from the defendants.

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In the written statement, the defendants denied the claim for additional work raised by the plaintiff. According to the defendants, at the time of execution of the work the stop log gate was not fully operational. Even if it had been operational, the flow through the pipe could not have been fully arrested from the upstream side because the rubber seal is fitted at the upstream phase of the gate. The blocking of air vent was insisted for carrying out some urgent repairs on the butterfly valves and the question of completely arresting the flow using stop log gate does not arise at all even if it was operational. It is also contended that as per Article 1 of the Agreement, the plaintiff was bound to block air vent by any means. All the works done by the plaintiff would come under the purview of contract and hence the claim of additional work cannot be claimed and the plaintiff is not eligible for any additional payment.

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On the rival pleadings, both parties adduced evidence consisting of the oral testimonies of P.Ws.1 and 2

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RSA.1326/04 :4:

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and D.W.1 and Exts.A1 to A8 and B1 to B6. After considering the aforesaid evidence the trial court dismissed the suit on a finding that the defendants were not liable to pay for the additional work done by the plaintiff. In appeal, the appellate court also confirmed the findings of the trial court and dismissed the appeal. Thus, the concurrent finding whereby the courts below found that the defendants have no legal obligation to pay the cost of the additional work alleged to have been done by the appellant is challenged in this Regular Second Appeal.

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Heard the learned counsel for the appellant and the learned standing counsel for the respondents.

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Admittedly, the underwater plugging of air vent between two penstock openings in Malampuzha Dam was awarded to the plaintiff for an amount of Rs.1,15,000/- and an agreement was executed on 04.10.1997. It is the case of the plaintiff that when he inspected the work site on 14.5.1997 for submitting quotation, the stop log gate was operational and could depend upon this gate to arrest flow of water enabling the plaintiff to do the aforesaid work awarded to him. But, when he inspected the work site on

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RSA.1326/04 :5:

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04.10.1997 the stop log gate was found not operational and he informed the defendants that the work awarded to him cannot be executed unless the stop log gate is made operational by doing additional work. Thereafter the plaintiff executed the additional work by incurring Rs.50,450/- and submitted the bill claiming the said amount, which stands refused by the defendants.

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On the other hand, the defendants admitted the execution of the additional work. But, it is the case of the defendants that the additional work was not necessary for arresting the flow of water enabling the plaintiff to do the work awarded to him. More over, as per Article 1 of the Agreement, the plaintiff was bound to block air vent by any means and thereby the additional work which is said to have been executed by the plaintiff forms a part of the work awarded to him. The defendants had no obligation to prevent the flow of water through the pipe enabling the plaintiff to execute the work and it was the responsibility of the plaintiff to plug the air vent by any means and should perform everything required for the work so as to arrest leakage through air vent permanently. But the

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RSA.1326/04 :6:

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additional work done by the plaintiff can be treated as a preliminary work, forming the part of the work. In view of the above said rival pleadings, the question to be considered is, whether the additional work done by the plaintiff forms a part of the work awarded to him under the agreement dated 4.10.1997.

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In Ext.B1 quotation notice, the description of the work is seen clearly stated without any ambiguity and it reads as follows:- “Underwater plugging of airvent, which is to be provided between the two penstock openings in Malampuzha dam. The leakage through the air vent permanently stopped by any method. The quotationer must specify the following details:

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(1). Method of plugging

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(2). Guarantee period.

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(3). Time required to complete the work.

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In response to Ext.B1 quotation notice, the plaintiff submitted Ext.B3 quotation, wherein the method of plugging is specifically described as follows:-

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“ Method of plugging: First we have to inspect the air vent and take the measurements. In order to inspect there is no gap to enter inside the penstock mouth. For inspection and work we

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RSA.1326/04 :7:

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have to make space to enter inside the penstock pipe, for that we have to remove the mud by air lifting with air lift pump. This will take a minimum of 3 days. After which we could take measurements. As per the measurements we have to make a plug suppose if the air vent is 12” dia, we have to make a plug of f” thick, made up of concrete with a dia of 10.5” to 13.5” and centre 1” dia hole. “

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Further, Ext.B1(a) letter sent by the plaintiff to the 2^nd respondent shows the nature of additional work to be done as a requirement precedent to do the work awarded to him. The letter reads as follows:-

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“Refer to the above, we are pleased to inform you that as per your order, our diving team reached Malampuzha on 4^th October'97. As discussed with assistant Executive Engineer, we opened the manual door and went inside the tunnel and saw the leakage of water through the airvent. In the afternoon we closed the manual door and stop log gate in order to arrest the water but it was of no use since the closed gate could not prevent the heavy leakage of water. Any how we have to arrest the water for the divers to dive and work at upstream tunnel mouth to plug. Now we have adopted certain methods to temporarily arrest the water from

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RSA.1326/04 :8:

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upstream so that we can temporarily plug the air vent from inside the tunnel to stop leakage completely.”

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On a combined reading of Exts.B1, B3 and B1(a) in juxta position, obviously, it is seen that the additional work does not find a place in Ext.B1 or Ext.B3. It is to be remembered that the arrest of water through the pipe is a preliminary requisite for doing the work and it could not be done since the stop log gate was not operational. In view of Exts.B1, B3 and B1(a), I am unable to accept the contention that the additional work is a preliminary work for the execution of the main work and it is obligatory on the part of the plaintiff to do the preliminary work also. On the other hand, this Court finds that it was incumbent upon the defendants to facilitate the conditions required for doing the main work so long as the additional work is unconnected with the main work awarded to the plaintiff. Similarly, this Court rejects the contention that the additional work was not necessary for doing the work awarded to the plaintiff. Had it been so, the defendants certainly could have denied the permission to do the additional work by sending Ext.B1(a) letter. Thus, from the

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RSA.1326/04 :9:

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correspondence between plaintiff and defendants with respect to the additional work, it is discernible that the stoppage of water flow by doing the additional work was necessary for conducting the work awarded to the plaintiff.

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Thus, in the above analysis, it can be safely concluded that the additional work done by the plaintiff does not form a part of the work awarded to the plaintiff under Ext.B1 quotation and the plaintiff has no obligation to do the work under Ext.B1. It follows that he was constrained to do the additional work for the execution of the work awarded to him within the specified time only.

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Then, the question to be considered is whether the plaintiff can claim the amounts spent for additional work without a written agreement for the same? Here, the learned counsel for the defendants drew my attention to clause 38(2) of Ext.B6 General conditions of contract and instructions to tenders. According to clause 38 of the General conditions, there shall be an order in writing to execute an extra item of work duly signed by the concerned agreement authority and notice informing extra items

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RSA.1326/04 :10:

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involved should be given to the authority and he shall proceed with the execution of the extra item only after receiving the written instruction. It is true that the plaintiff has not obtained the written instruction from the defendant though he had issued Ext.B3 notice informing the requirement of doing extra item.

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At this juncture, the circumstance under which he was constrained to do the extra work also must be noted. What is discernible from clause 38(2) is that the said provision is intended for doing extra items after the completion of the main work. But, in the instant case, the execution of the extra item was indispensable for the execution of the main work and unless the extra item was done, the main work could not be executed within the time. Then, the learned counsel for the defendant invited my attention to Article 299(1) of the Constitution of India. According to Article 299(1) of the Constitution of India, all contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of

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RSA.1326/04 :11:

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property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise. In short, a government contract cannot be awarded to a contractor without a written agreement. Therefore, according to the learned counsel for the defendant, in the absence of written agreement between the plaintiff and defendant, no amount can be awarded to the plaintiff for the additional work done by him.

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Per contra, learned counsel for the plaintiff drew my attention to Section 70 of the Indian Contract Act and contended that even in the absence of written agreement, the bill amount can be awarded to a contractor if the statutory requirements under Section 70 of the Indian Contract Act are satisfied.

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In view of the above submissions, the question is whether there is any conflict between Article 299 of the Constitution of India and Section 70 of the Indian Contract Act. This question was considered by the Apex Court in State of W.B. v. M/s.B.K.Mondal and Sons [AIR 1962 SC 779]. In the above decision, the Apex Court held that there is no

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RSA.1326/04 :12:

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conflict between Article 299 of the Constitution of India and Section 70 of the Indian Contract Act. The Apex Court held that-

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“Turning to the facts of this case it is clear that both the Courts have found that the acts done by the respondent were done in fact in pursuance of the requests invalidly made by the relevant officers of the appellant, and so they must be deemed to have been done without a contract. It was not disputed in the Courts below that the acts done by the respondent have been accepted by the appellant and the buildings constructed have been used by it. In fact, both the learned judges of the Appellate Court have expressly pointed out that the appellant did not contest this part of the respondent's case. "I should mention", says S. R. Das Gupta, J., "that the appellant did not contest before us the quantum decreed in favour of the plaintiff"; and Bachawat, J., has observed that

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"the materials from the record also show that the Government urgently needed the work which was done by the respondent and that the Government accepted it as soon as it was done and used it for its benefit".

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In fact the learned judge adds that "the learned AdvocateGeneral frankly confessed that this is a case where "the Province of Bengal was under a moral obligation to pay the respondent', and has further added his comment that "an obligation of this kind which is apart from the provisions of S.70 of the Indian Contract Act a moral and natural obligation is by the provisions of that Section converted into a legal obligation".

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RSA.1326/04 :13:

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Therefore, once we reach the conclusion that S. 70 can be invoked by the respondent against the appellant, on the findings there is no doubt that the requisite conditions of the said Section have been satisfied. That being so, the Courts below were right in decreeing the respondent's claim.”

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In the light of the above decision, this Court is of the view that even in the absence of a written contract, there is an obligation to pay the amounts for the additional work so long as the execution of the work is not denied by the defendants and the fact that execution of that work was required to execute the main work awarded to the plaintiff. The above view is supported by the observation of the Apex Court that “an obligation of this kind which is apart from the provisions of Section 70 of the Indian Contract Act a moral and natural obligation is by the provisions of that Section converted into a legal obligation.” In the instant case, the defendants have no case that the additional work was not done or done gratuitously or the defendants are not enjoying the benefit of that additional work. It is discernible from the correspondence evidenced by Exts.B1 to B6 that the plaintiff has successfully completed the execution of the main work and the amount was awarded to him as per the

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RSA.1326/04 :14:

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conditions. Since the additional work satisfies the requirements under Section 70 of the Indian Contract Act, this Court is of the view that it is obligatory on the part of the defendants to pay the amount due to the plaintiff for the additional work done by him. The courts below miserably failed to appreciate facts, evidence and law in its correct perspective and the findings are vitiated by perversity. Consequently, the impugned judgments and decrees passed by the courts below are set aside and the original suit will stand decreed allowing the appellant/plaintiff to realise a sum of Rs.57,940/- with 6% interest from the date of trial court decree till realisation of the decree amount from the defendants.

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This Regular Second Appeal is allowed as above.

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All pending interlocutory applications will stand closed.

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Sd/K.HARILAL, Judge.

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dst/okb/aks

M/S.Neel Under Water Services v. K.S.E.B.

Case brief

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M/S.Neel Under Water Services v. K.S.E.B.

Case brief

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