JUDGMENT R.L Khurana, J. : The plaintiffs, Shri H.K. Sareen, is a Building contractor duly enlisted with the Himachal Pradesh Pubic Works Department for execution of civil and electrical works. 2. In the year 1988, the defendants had issued a notice inviting tenders for the work of "Construction of main building for I.T.I, at Shimla, In response to such notice, the plaintiff had also submitted his tender. The tender of the plaintiff was accepted by the defendants on 12.9.1988 and the work was awarded to him. After the award of work, the plaintiff made all the arrangements for the immediate start of the work. Machinery, labour and other infrastructure was carried by him to the site. In terms of the contract, the plaintiff also constructed labour huts at the site and took up the work as per the directions of defendant No.2 the .concerned Executive Engineer and his subordinate staff. Since, there were as many as 16 trees in the site where the building was to be constructed and the necessary permission to fell such trees was not granted to the defendants, the. whole site could not be made available by the defendants to the plaintiff. In the part of the she, which was handed over to the plaintiff, he started the cutting and excavation work as per the directions of defendant No.2 in anticipation that the sanction for the felling of the trees and applied for by the defendants would be accorded by the time the cutting and excavation work in the available vacant site was completed. 3. The plaintiff was informed that the sanction to fell the trees would have to be obtained from the Central Government. The plaintiff, therefore, left with no alternative, had to stop the execution of the work awarded to him till such time the requisite sanction to fell the trees was obtained by the defendants. 4. The plaintiff, thereafter has been m making repeated representations to the defendants to make the site available so as to enable him to execute and complete the work as per the contract The defendants on each occasion had been expressing their inability to make the site available for want of sanction to fell the trees. 4. The plaintiff, thereafter has been m making repeated representations to the defendants to make the site available so as to enable him to execute and complete the work as per the contract The defendants on each occasion had been expressing their inability to make the site available for want of sanction to fell the trees. While the site was not being made available to the plaintiff, he had to keep and maintain his machinery, tools, equipments and other infrastructure at the site and for this purpose he had to employ the watch and guard staff: by incurring expenses therefore. 5. The plaintiff executed the work of cutting and excavation amounting to Rs. 75,000/-. The work so executed by the plaintiff was duly measured and entered in the relevant measurements book being maintained by the defendant No. 2. However, inspite of repeated demands the plaintiff has not been paid for the work done by him. 6. At the time of submission of the tender, the plaintiff had deposited a sum of Rs. 20,000/- as earnest money with the defendant No.2. Since the plaintiff could not execute and complete the work awarded to him duo to the acts of omission and commission of the defendants, the said amount of earnest money is liable to be refunded to the plaintiff, which has not been refunded by the defendants inspite of repeated demands and the assurance given in the meeting held on 21.5.1990. 7. The total value of the work awarded to the plaintiff was to the value of Rs. 30,41,273/-. Held the plaintiff been allowed to execute and complete the work, he would have earned at least 15% of the said amount as profit The plaintiff has been deprived of such profit due to the acts of omission and commission of the defendants. The plaintiff is, therefore, entitled to be compensated therefore. 8. By virtue of the present suit, the plaintiff is seeking to recover a sum of Rs. 6,60,000/- from the defendants detailed as under :- (a) Amount of earnest money deposited. Rs. 20,000.00 (b) Cost of work done at contract prices. Rs. 75,000.00 (c) Cost of raising infrastructure at Site Rs. 50,000.00 (d) Loss of rent of machinery, tool and plant for the period Sept. 1988 to Sept 1989, and watch and ward expenses. Rs. 50,000.00. (e) Loss of anticipated profit. Rs. 20,000.00 (b) Cost of work done at contract prices. Rs. 75,000.00 (c) Cost of raising infrastructure at Site Rs. 50,000.00 (d) Loss of rent of machinery, tool and plant for the period Sept. 1988 to Sept 1989, and watch and ward expenses. Rs. 50,000.00. (e) Loss of anticipated profit. Rs.4,50,000.00 (f) Interest on earnest money at 18% p.a. Rs. 8,000.00 (g) Interest on amount of work at 18% p. a. Rs. 6,000.00 (h) Costs of notice u/s 80 C.P.C. Rs. 220.00 Total: Rs.6,60,000.00 9. The defendants, while resisting the suit admitted that the tender of the plaintiff was accepted and that the work was amounted to him It was pleaded that the work was awarded subject to various conditions and one of the condition was that the plaintiff was required to execute and agreement for the execution of the work, within fifteen days from the issue of the letter of award of work. No such agreement was executed by the plaintiff. Therefore, there is no valid and enforceable contract between the parties, it was further pleaded that in the absence of the agreement, the plaintiff could not have started the work and as such whatever work was done by him was without any sanction and authority for which the defendants cannot be held liable. The defendants further averred that the site was not cleared since as many as 16 trees existed therein and the necessary permission for foiling such trees was not accorded by the competent authority. Since the trees could not be felled for want of sanction, the site was never delivered to the plaintiffs. Further case of the defendants is that for want of necessary sanction to fell the trees, an alternative site was selected for the purpose and the plaintiff was asked to accept the same which he refused. As a result, fresh tenders were invited. The defendants admitted that work to the extent of Rs. 24,376/- only was executed by the plaintiff. It was averred that the plaintiff was not entitled to that amount since the work was carried out by the plaintiff in an unauthorized manner without requisite sanction and authority from the competent authority and without the site having been handed over to him. 24,376/- only was executed by the plaintiff. It was averred that the plaintiff was not entitled to that amount since the work was carried out by the plaintiff in an unauthorized manner without requisite sanction and authority from the competent authority and without the site having been handed over to him. In so far as the refund of earnest money is concerned, it was pleaded that since the plaintiff himself committed the breach of the contract, he was not entitled to the same. It was also pleaded that though the. plaintiff was not entitled to the refund of the earnest money, the Defendant were prepared to release the said amount which is lying deposited in a fixed deposit. The defendants further averred that the plaintiff was not entitled to the suit amount or any other amount. 10. On the pleadings of the parties, following issues were framed on 11.11.1991 :- 1. Whether a valid contract came into being amongst the plaintiff and defendants, as alleged ? OPP. 2. Whether plaintiff was prevented by the acts of omission and commission, as* alleged, on the part of defendants from performing his part of contract? OPP. 3. Whether the plaintiff is entitled to recover damages from defendants. If so, to what extent ? OPP. 4. Whether the plaintiff is entitled to refund of earnest money ? OPP. 5. Whether the plaintiff carried out some construction work on the spot. If so, to what extent and its effect ? OPP. 6. Whether the plaintiff is entitled to any interest on the amount. If so, at what rate and from which date / OPP. 7. Relief. 11. I have heard the learned counsel for the parties and have also gone through the record of the case. My findings on the above issues are as under: Issue No. 1. 12. Admittedly, no formal agreement came to be executed between the parties. 13. It is admitted case of the parties that in pursuance of the notice inviting tenders, the plaintiff had submitted his tender for the work. Such tender submitted by the plaintiff was accepted by the defendants and the work was awarded to him by the defendants vide letter dated 12.9.1988 (Ext. PW I/A). This letter reads :- "Your item rate tender dated 11.5.1988 for the subject cited work and further negotiated on 11.8.1988 in Engineer-in-Chief s offence, Shimla, amounting to Rs. Such tender submitted by the plaintiff was accepted by the defendants and the work was awarded to him by the defendants vide letter dated 12.9.1988 (Ext. PW I/A). This letter reads :- "Your item rate tender dated 11.5.1988 for the subject cited work and further negotiated on 11.8.1988 in Engineer-in-Chief s offence, Shimla, amounting to Rs. 3 041273/- (Rupees Thirty lacs, forty one thousand two hundred and seventy three) only after taking into account the cost of materials to be issued to you for item No. 8(i)(ii) and (iii) for which you have quoted labour rates and also taking into account the modified rates of items Nos. 2 and 9 of the schedule of quantities which works out to 30.61% above the amount put to tender is hereby accepted on behalf of die Government of H.P. as per break up given below :- (i) Building portion (Civil Works) Rs. 29,56,144.60 P i.e., 2859% above HPSR-1987. (ii) Water supply and sanitary installation work. Rs. 85,128.40 P i.e. 187.78°/o above HPSR -1979. (iii) Overall tendered amount of building and W.S.& S.I. Rs. 30,41,273/- i.e.30.61 % above the amount put to tender. The acceptance of the tender is subject to the following conditions:-" 14. The letter Ex.PW I/A thereafter set out various conditions, which are not necessary to be reproduced here. Paragraphs 8 to 10 of the said letter, which are relevant for the purpose of the present suit, read :- "8. You are requested to attend the office of the undersigned to sign the contract agreement for the work within fifteen days of the issue of this letter. The delay iri signing the agreement will not make you entited for any exten .on of time. Please note that no payment shall be made until the agreement is signed by you. 9. The time allowed for the completion of the above work is three years which will be reckoned from the 15th day of the issue of this letter of award. The date of start of work will be reckoned from the fifteenth day of issue of this letter or the actual date on which the work is started whichever is earlier. 10. You are requested to start the work under the directions of the Asstt. Engr. Sub Divn. No.l, Shimla, and complete the same within the stipulated period of three years." 15. 10. You are requested to start the work under the directions of the Asstt. Engr. Sub Divn. No.l, Shimla, and complete the same within the stipulated period of three years." 15. The above said letter Ex.PW I/A has been signed by defendant No.2, the concerned Executive Engineer. There is no denying that the Executive Engineer under the rules governing the business of the Public Works Department is competent and duly authorised to accept the tender and to make a contract on behalf of the Governor of the State. 16. Article 299(1) of the Constitution of India, provides:- "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 property made in the exercise of that power shall be executed on behalf of die President or the Governor by such person and in such manner as he may direct or authorise." 17. The provisions contained in Article 299(1), quoted above, are paramateria to the provisions contained in section 175(3) of the Government of India Act, 1935. 18. While dealing with the scope of section 175(3) of the Government of India Act, 1935, the Honble Supreme Court in Union of India v. A.L. Rallia Ram [AIR 1963 SC1685], has held mat section 175(3) did not in terms require that a formal document executed on behalf of the Domination of India, and the other contracting party, alone was effective. In the absence of any direction by the Governor General under section 175(3) of the Government of India Act prescribing the manner, valid contract may result from correspondence if die requisite conditions are fulfilled. It was further held that though in section 175(3) the expression "executed" had been used; the same did not by itself contemplate execution of a formal contract by the contracting parties. A tender submitted in pursuance of ad invitation issued by or on behalf of the Governor General of India and accepted in writing which has been expressed to have been made in the name of the Governor General and executed on his behalf by a person authorised in that behalf would conform to the requirements of section 175(3) of the Government of India Act, 1935. 19. 19. The above ratio applies to the facts of the present case on all fours. The tender submitted by the plaintiff was accepted vide Ex.PW I/A by defendant No.2, a duly authorised person and such acceptance has been expressed to have been made in the name of the Governor of the State. 20. Therefore, in mere absence of a formal agreement/contract, it cannot be said that there is no valid contract between the parties within the meaning of Article 299(1) of the Constitution of India. 21. In State of Punjab & Ors. v, M/s.Om Parkash Baldev Krishan [AIR 1988 SC 2149], the tender submitted by a contractor for the construction of a bridge was accepted by the Executive Engineer and the letter of acceptance was signed by the Executive Engineer. However, such letter of acceptance did not record that the acceptance was made in the name of the Governor. The Hon ble Supreme Court held since the tender had not been accepted in the name of the Governor, such acceptance did not constitute a valid contract in conformity with Article 299(1) of the Constitution. 22. Article 299(1) lays down two conditions for the validity of the contract thereunder, namely, (1) it should be expressed to be made by the Governor of the State and (2) it should the executed on behalf of the Governor by such person and in such manner as he might direct or authorise. In order that an agreement entered into by a private party with the Central or the State Government in the exercise of their-executive powers be enforceable it is not necessary that there should be drawn up a formal agreement as such but there could be a valid contract entered into by correspondence provided the two requirements are complied with. [See. S.Rajam Sole Proprietor, M/sMurray & Co. Madras-l v. The Indian Union, represented by the Secretary to Government, Ministry of Rehabilitation, New Delhi, AIR 1966 Madras 235]. 23. Again in T.Linga Gowder v. The State of Madras, represented by the District Forest Officer, Ootacumund& Ors. [See. S.Rajam Sole Proprietor, M/sMurray & Co. Madras-l v. The Indian Union, represented by the Secretary to Government, Ministry of Rehabilitation, New Delhi, AIR 1966 Madras 235]. 23. Again in T.Linga Gowder v. The State of Madras, represented by the District Forest Officer, Ootacumund& Ors. [AIR 1971 Madras 28], it has been held that though for complying with the requirements of Article 299(1) of the Constitution, the acceptance of a contract between the Government and a party must be in writing, there is no need for the execution of any formal document and it is sufficient if the acceptance in terms of the requirements of the article is clear from the correspondence between them. 24. On the facts and in the circumstances of the present case, it is held that the correspondence between the parties resulting into the acceptance of the tender of the plaintiff by the defendants vide Ex.PW I/A amount to a valid contract expressed to be made by the Governor of the State. No rules made by the Governor under Article 299(1) of the Constitution have been placed before the court showing that in executing a work contract like the one in the present case, to be binding and valid must be followed by a formal contract. 25. The issue is as such decided in favour of the plaintiff. Issue No. 2. 26. Admittedly, in the site where the building was to be constructed there existed sixteen trees. Such trees were to be felled and without the trees being felled the work of construction could not be carried out 27. There is no denying that the permission to fell the trees was to be obtained by the defendants from the concerned authority. Evidence has come on the record that though a number of letters were written by defendant No.2 to the concerned authorities, the necessary-permission to fell the trees was not granted. 23. The defendants in para 4 of their written statement (on merits) hove averred in the following terms :- "In reply to para 4 of the plaint, it is submitted that since the permission was required for felling the trees, the same was not forthcoming and, therefore, the plaintiff was not put in possession of die site.... 23. The defendants in para 4 of their written statement (on merits) hove averred in the following terms :- "In reply to para 4 of the plaint, it is submitted that since the permission was required for felling the trees, the same was not forthcoming and, therefore, the plaintiff was not put in possession of die site.... Thereafter when the permission for felling the trees was not given,- and alternate site was selected and the plaintiff was asked to accept the same, which he refused and for which fresh tender was floated....." 29. Exs PW 1/B to PW 1/F are the letters addressed by the plaintiff to the defendant No. 2 during the period 2.11.1988 to 14.9.1989, calling upon him to get the trees felled after obtaining the necessary permission. However, the requisite permission was not granted and as such the trees could not be felled and the plaintiff-was forced to abandon the work. 30. It is not the case of the defendants that the plaintiff had abandoned the work without any sufficient cause. The evidence coming on record coupled with the pleadings of the defendants as contained in para 4 of the written statement goes to show that the plaintiff was prevented from executing the work by the acts of omission and commission on the part of the defendants, since they had failed to get the necessary permission to fell the trees thereby rendering the contract impossible to be performed by the plaintiff. The issue is decided in favour of the plaintiff. Issue No. 5 31. There is no denying that the work of cutting and excavation in a part of the land, which was vacant, was carried out by me plaintiff. 32. According to the plaintiff he had carried out such work to the extent of Rs. 75000/-, while the defendants have averred that work only to the extent of Rs. 24,376/- was done. 33. Admittedly, this amount, to the extent of which the work was carried out by the plaintiff as per the defendants own showing has not been paid by, the defendants. It is averred that the plaintiff had carried out the work unauthoisedly and without instructions/from the defendants and that he was not entitled to such amount in the absence of a formal contract. 34. The plaintiff as PW 1 has not stated anything about the extent of work carried out by him. It is averred that the plaintiff had carried out the work unauthoisedly and without instructions/from the defendants and that he was not entitled to such amount in the absence of a formal contract. 34. The plaintiff as PW 1 has not stated anything about the extent of work carried out by him. He has only, stated that whatever work was carried out by him was duly measured by the defendants and entered in the record. 35. The copies of the relevant entries made in the measurement book maintained by the defendants in respect of the work done by the plaintiff are Ex.PW 2/A. 36. The onus to prove the extent of work done was on the plaintiff, which he was failed to discharge. In the absence of any evidence to the contrary, it is held that the work to the extent of Rs. -24,376/- only, as admitted by the defendants, was carried out by the plaintiff. 37. Since there was a valid contract between the parties as held under issue No.l above, and in view the fact that the plaintiff was prevented from completing the work and perform his part of the contract on account of the acts of omission and commission of the defendants, as held under issue No.2 above, the plaintiff is entitled to recover the said amount of Rs. 24,376/- from the defendants. The issue is decided accordingly in favour of the plaintiff. Issue No. 4. 38. Admittedly, a sum of Rs. 20,000/- stands deposited by the plaintiff as earnest money with the defendants. 39. It is not the case of the defendants that such amount of earnest money stands forfeited by them. . 40. In view of the findings recorded under issue No.2 above, since the contract has become impossible to be performed due to the failure of the defendants to obtain the necessary permission to fell the tree the plaintiff is entitled to the refund of earnest money of Rs. 20,000/-. The issue is decided in favour of the plaintiff. Issue No.3. 41. It has been held under issue No. 2 above that the contract between the parties became impossible to be performed and the plaintiff was prevented •from executing the work in term s_of the contract due to the acts of omission and commission of the defendants, since the defendants had failed to obtain the requisite permission for the felling of the trees. 42. 42. The defendants themselves have pleaded in para 4 of the written statement (on merits) that since the requisite permission to fell the, trees was not granted the original site had to be abandoned and alternate site was selected. 43. Section 73 of the Indian Contract Act, 1872, provides:- "73. Compensation for loss or damage caused by breach of contract.-When a contract has been broken,-the party who suffers by such breach is entitled to receive, from the party who has broken the contract compensation for any loss or damage caused to him thereby, which naturally, arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract—When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by .the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. Explanation - In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account." 44. The value of the entire work, in the present case, admittedly was to the tune of Rs. 30,41,273/- 45. It has come in the evidence of DW 1 Sunil Sharma that while justifying the rates submitted by the contractor, 10% towards contractors profit and 10% as overhead charges are taken note of. 46.As against the total value of the work, the plaintiff, as held under issue No.5 above, had carried out the work to the extent of Rs. 24,376/-. The remaining work which the plaintiff was prevented from, executing Thus comes to Rs. 30,16,897/-. After deducing 10% overhead charges therefrom, the total profit calculated at the rate of 10%, which the plaintiff might have earned had he been allowed to complete the work, comes to Rs. 2,71,520/-. 47. IN Messrs A. T. Brij Paul Singh & Bros. 24,376/-. The remaining work which the plaintiff was prevented from, executing Thus comes to Rs. 30,16,897/-. After deducing 10% overhead charges therefrom, the total profit calculated at the rate of 10%, which the plaintiff might have earned had he been allowed to complete the work, comes to Rs. 2,71,520/-. 47. IN Messrs A. T. Brij Paul Singh & Bros. v. State of Gujarat [AIR 1984 SC 1703 ], the contractor had claimed damages for the loss of profit on account of wrongfhl termination of a work contract by the State of Gujarat. No evidence was led by the contractor to prove the special damages suffered by him by way of loss of profit and the High Court of Gujarat had rejected the claim on that ground. In the appeal before the Honble Supreme Court, it was held > "..........What would be the measure of profit would depend upon facts and circumstances of each case. But that there shall be a reasonable expectation of profit is implicit in a works contract and its loss has to be compensated by way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid. In this case we have the additional reason for rejecting the contention that for the same type of work, the work site being in the vicinity of each other and for identical type of work between the same parties, a Division Bench of the same High Court has accepted 15% of the value of the balance of the works contract would not be an unreasonable measure of damages for loss or profit. We are, therefore, of the opinion that the High Court in error in wholly rejecting the claim under "this head." 48. The Supreme Court accordingly allowed, damages towards loss of profit at the rate of 15% of the costs of the remaining work. 49. The ratio laid down by the Honble Supreme Court in the above referred to case is that once the court has held that there is a breach of works contract the contractor would be entitled to damages by way of loss of profit and the measure of damages of way of loss of profit and the measure of damages if proved, the .damage would be awarded on that basis. But if the damage is not satisfactorily proved, still the contractor would be accorded the benefit of every reasonable presumption as to loss of damages. The courts jurisdiction toward damages cannot be confined to the evidence on records-only. The Court is entitled to allow damages on any other reasonable basis, even on the basis of mere guess work; 50. Following the above said ratio, the High Court of Calcutta in Deo Kumar Saraf v. Union of India, [1988 (2) Current Law Journal 325], had held the contractor to be entitled to damages towards loss of profit at the rate of 11% of the value of work. 51. In the present case, as stated above, as per the defendants own evidence contractors profit was taken at 10% of the value of work. Since, the plaintiff was prevented from completing the work due to the acts of omission and commission of the defendants he is entitled to damages at such rate of the value of remaining work, which comes to Rs. 2,71,520/-. The issue is decided accordingly in favour of the plaintiff— Issues to.6 52. The plaintiff has claimed interest on the outstanding amounts at the rate of 18% per annum. The interest so claimed on the earnest money and the amount of the work done, has been assessed at Rs. 14,780/- as per the calculations made in para 12 of the plaint! . . 53. The plaintiff, while appearing as PW1 has merely deposed that he is entitled to interest on die outstanding amount He has not stated about the rate of interest:. 54. The terms of the contract between the parties does not contain any stipulation as to the payment of interest in case o f delayed payments 55. In the absence of evidence, it is held that the plaintiff is not entitled to interest oh the amounts due for the period before the suit The issue is decided against the plaintiff. Relief. 56. As a result of the above findings, a decree for a sum of Rs. 3,15,86/-with proportionate costs is passed in favour of the plaintiff and against the defendants. 57. Since the transaction between the parties was a commercial transaction, the plaintiff shall be entitled to pendente lite and future, interest under section 34, Code of Civil Procedure, at the rate of 10% per annum on the decretal amount of Rs. 3,15,86/-with proportionate costs is passed in favour of the plaintiff and against the defendants. 57. Since the transaction between the parties was a commercial transaction, the plaintiff shall be entitled to pendente lite and future, interest under section 34, Code of Civil Procedure, at the rate of 10% per annum on the decretal amount of Rs. 3,15,896/- from the, date of suit, mat is, 15.1.1991 till the date of realisation of the amount