The Food Corporation of India v. Anupama Warehousing Establishment
2003-11-18
A.K.BASHEER, S.SANKARASUBBAN
body2003
DigiLaw.ai
Judgment :- Sankarasubban, J. A.S.No. 12 of 1991 is filed by the defendant against the judgment and decree in O.s.No.126 of 1987 of the Sub Court, Tellicherry, while R.F.A. No.125 of 2003 is filed against the judgment and decree by the plaintiff in the suit. The facts of the case are as follows: 2. In 1976, the Food Corporation of India (hereinafter called as ‘Corporation) invited offers from the parties interested in constructing godowns in their land and rent it to the Corporation on reasonable rates. In response to the invitation, susheela, Managing partner of M/s. Anupama warehousing Establishment, expressed her willingness to consider the offer. Thereafter, the District Manager of the defendant informed her to approach a Nationalised Bank for getting sufficient advance for the construction of godowns for the Corporation. It is also informed that the defendant would recommend the application if routed through them. On 20.10.1976 Susheela wrote a letter to the District Manager stating that she was interested in the proposal and that she intended to form a partnership for the purpose of raising funds to construct the godown. Thereafter, their plaintiff partnership Firm was constituted with Susheela as the Managing Partner. On 21.5.1977, an agreement was entered into between the plaintiff and the defendant. It was later canceled and a new agreement was executed on 4.6.1977. As per the terms of the agreement, the plaintiff had to ocnstruct one godwon of 5000 M.T’s capacity at Pillicode, for the use of the defendant. It was agreed that after the construction, the plaintiff would lease the godown for a period of five years at the rate of 36 paise per sq. foot per month. There was a provision that the godown should be made ready for occupation within four months of the execution of the agreement. 3. The construction had started even before the execution of the agreement. The property was purchased after the site approval of the officer of the defendant – Corporation. Under the terms of the agreement, it was made clear that the construction would be completed only by the grant of loan from Banks and that the defendant would be willing to recommend such applications to the Banks concerned. As per the terms of the agreement, the building had to be constructed under the supervision of the Corporation and the building was meant only for their use.
As per the terms of the agreement, the building had to be constructed under the supervision of the Corporation and the building was meant only for their use. Several difficulties cropped up during the progress of the construction. The cement was a material essential for the progress of the work. Though originally a time was fixed for the completion of the construction, it was never considered to be the essence of the contract. The Authorities were fully aware that time factor was inconsequential. As a matter of fact, the time was extended from time to time at least on 8 occasions. All the building materials were in short supply. So, the plaintiff cannot be in any way held responsible for the delay. Alternations, additions and modifications suggested by the defendant also have contributed for the delay. The period under the contract was extended by the defendant from time upto 31.7.1979. But in the meanwhile, the defendant wrote a letter dated 15.12.1979 by which the defendant informed the plaintiff that the proposal is not alive. The stand taken by the defendant is illegal and unjustifiable. 5. After the completion of the building, the plaintiff informed the defendant to occupy the godown, but they refused to do so. The defendant had also suggested that they would consider the hiring of the godown on a month to month basis on a reduced rate. From is suggestion of the defendant, it is clear that they only wanted a reduction of the rent and that they never considered the time as the essence of the contract. This gigantic and massive building was constructed spending Rs.17 llakhs, out of this Rs.7.6 lakhs was advanced by Canara Bank on the recommendation of the defendant. The Bank had advanced at the interest of 15%. The liability to the Bank as on the date of the plaint is Rs.14 lakhs. So, the suit was filed claiming the actual cost of construction of Rs. 17 lakhs with interest on Bank advance of Rs.12.5 lakhs, rent receivable and also for damages for mental agony. A total amount of Rs.38.8 lakhs is claimed as damages. 6. In the written statement filed by the defendant they contended that the suit is hit by section 69 of the Indian partnership Act. They also contended that the plaintiff has not performed her part of the contract.
A total amount of Rs.38.8 lakhs is claimed as damages. 6. In the written statement filed by the defendant they contended that the suit is hit by section 69 of the Indian partnership Act. They also contended that the plaintiff has not performed her part of the contract. They contended that the building was not constructed within the time stipulated and under the Contract, the time was an important factor and that the plaintiff was expected to complete the building within the time stipulated in the agreement. They admitted having extended the time fixed by the original contract. The defendant took up a stand that they were not bound to take up the building on rent as the plaintiff did not complete the construction within he time stipulated. They admitted that they have recommended for financial aid from the Bank. They also admitted that the building was constructed under their supervision strictly in accordance with this specification stipulated by them. 7. The court below framed the necessary issues. The plaintiff produced Exts. A1 to A101 and the defendant produced Exts.b1 to B58. There was no oral evidence on either side. On a detailed consideration of the documentary evidence, the court below came to the conclusion that the objection taken up by the defendant that the suit is not maintainable under Section 69 of the Partnership Act was rejected. On issue No.4, on the question whether time is the essence of the contract the court below came to the conclusion that there is ample evidence to show that the parties did not intend to make the time an important condition of the contract and so it cannot be held that the time is the essence of the contract. On issue No.2, the court below found that the plaintiff is entitled to in the suit. On issue No.5, the court below came to the conclusion that the breach of the contract was made by the defendant. Regarding the question of damages, the court below took the view that the plaintiff is not entitled to the cost of construction. The court below granted a decree only on the basis of the loss of rent. The cost of the building was not granted. Damages for mental agony was not granted.
Regarding the question of damages, the court below took the view that the plaintiff is not entitled to the cost of construction. The court below granted a decree only on the basis of the loss of rent. The cost of the building was not granted. Damages for mental agony was not granted. The Corporation filed this appeal against the granting of the damages, while the plaintiff has filed the appeal against that part of the decree, which did not grant damages as prayed for. It is against that these two appeals have been filed. 8. We heard learned counsel for the appellant and learned counsel for the respondents. 9. While learned counsel for the appellant argued that the termination of the contract was valid and that the appellant was not liable to pay any damages, learned counsel for the respondent reiterated the contentions urged by him in the court below. So far as the question whether time is the essence of the contract is concerned, there can be no rigid rule. It depends upon the facts and circumstances of each case. It cannot be argued that merely because time is proved to be not the essence of the contract, the contract could be performed at any time. Performance of a contract by the promisee at a very late stage cannot be accepted, if it does not achieve the purpose for which the contract was entered into. In the present case, we find that the requirement of the appellant corporation was the requirement to have warehouses for storing the foodgrains, Because of large stock of goodgrains, the corporation wanted warehouses. In the present case, we find that the agreement was entered into on 4.6.1977 between the plaintiff and the defendant. By this agreement, it was stipulated that the building should be constructed within four months. It is seen that the plaintiff could not perform the contract within four months. It applied for extension. Extensions were granted by the Corporation and it is pertinent to say that at all times. Permission was granted at the request of the plaintiff. The terms of the contract show that there was no obligation on the part of the corporation to perform any act for the completion of the work.
It applied for extension. Extensions were granted by the Corporation and it is pertinent to say that at all times. Permission was granted at the request of the plaintiff. The terms of the contract show that there was no obligation on the part of the corporation to perform any act for the completion of the work. The entire construction of the building was left with the plaintiff, who had of find out the raw-materials and other things for the construction of the building. It is found that the Corporation has been giving sufficient extensions to the plaintiff. Ext.B54 is the order by which last extension was granted. By this, time was extended upto 31.7.1979. When construction was not completed by 31.7.1979, the Corporation by Ext.B56 dated 15.12.1979 informed the plaintiff that the contract was terminated. It is 10 months after this that the building has been completed and notice was issued by the plaintiff to the Corporation. The mere fact that on previous occasion time was extended does not prevent the party from stipulating a time for the completion of the construction. A construction, which was agreed to be completed within four months from 4.6.1977 could be executed only by 1980. According to us, the mere fact that previously time was granted cannot lead us to come to the conclusion that one party has to wait unendingly. It is not the law. It has been clearly stated by the defendant that wherehouses were required for a particular purpose and that purpose could not be achieved by the construction of the warehouses at a later stage. 10. In Pollock & Mulla, Indian contract and specific Relief Acts, Tenth Edition at page 445, it is stated thus: “Either party’s general right to have the contract performed within a reasonable time according to the within a reasonable time according to the circumstances is, of course, unaffected by the fact of time not being of the essence; and in case of unnecessary delay by one party the other may give him notice fixing a reasonable time after the expiration of which he will treat the contract as at an end, the party who serves such a notice will himself be bound by it. Where there has been inordinate delay on both sides, it may be inferred that the contract has been abandoned, although no such notice has been given.
Where there has been inordinate delay on both sides, it may be inferred that the contract has been abandoned, although no such notice has been given. Also parties may bind themselves to use special diligence in completion, without naming any particular date…” It shows that even if time is not the essence of the contract, the contract has to be performed within a reasonable time. If it is not performed within a reasonable time, the party affected by this, is entitled to put an end of the same. 11. In the above view of the matter, we are of the view that the termination of the contract by the appellant-Corporation is legal. Hence, the claim for damages claimed by the plaintiff will not stand. Hence we set aside the judgment and decree of the court below. A.S. No.12 of 1991 is allowed and so far as R.F.A.No.125 of 2003 is concerned, it is dismissed.