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2011 DIGILAW 642 (GAU)

Food Corporation of India v. Makhama

2011-08-01

AMITAVA ROY, B.D.AGARWAL

body2011
JUDGMENT Amitava Roy, J. 1. In challenge is the judgment and order dated 14.1.2009 passed by the learned Civil Judge, Senior, Aizawl District, Aizawal, in Civil Suit No. 1/2000 decreeing the suit of the Respondent Plaintiff for an amount of Rs. 15,07,019/- together with the interest @ 6% per annum from 19.9.1998. 2. Heard Mr. AR Borbhuiya, learned Counsel for the Appellants and Mr. Lalramzuava, learned senior counsel for the Respondent assisted by Mr. AR Malhotra, Advocate. 3. Before adverting to the grounds urged, it would be appropriate to outline the pleaded versions of the parties. 4. The Respondent Plaintiff who was awarded a contract for construction of F.C.G. Go down of the Appellant corporation along with the ancillary works, had instituted the aforementioned suit for realization of an amount of Rs. 16,93,724/- by way of escalation cost for the execution thereof. The terms and conditions were inter alia contained in the tender documents as well as in the contract agreement bearing No. Engg/NEF/Agr.299/95 dated 17.1.1994. Though the originally stipulated period for completion of the works was 12 months, the work site was handed over to the Respondent Plaintiff only on 19.2.1994 and the layout plan was finalized on 29.11.1994. The Respondent Plaintiff pleaded as well that due to other impediments and hindrances beyond his control the execution of the works was delayed. He, in the circumstances, being without any other alternative prayed for extensions of time which was duly granted to him by the authority empowered to do so in terms and conditions of the aforementioned contract. The extension to be precise, was granted up to 20.4.2000. Being confronted with the rise in execution charges, he had on 10.6.98 submitted the escalation bill in the prescribed form which was forwarded by the Assistant Manager (CE), FCI, District Aizawl with necessary recommendation to the Deputy Manager (C), FCI, NE Region, Regional office, Shillong. As out of the aforementioned amount in all, an amount of Rs. 1,86,705/- was released to the Respondent Plaintiff on account of escalation charges and inspite of the notice dated 20.5.99 served through his learned Counsel, no further payment was made, the suit was filed seeking the aforementioned relief. 5. As out of the aforementioned amount in all, an amount of Rs. 1,86,705/- was released to the Respondent Plaintiff on account of escalation charges and inspite of the notice dated 20.5.99 served through his learned Counsel, no further payment was made, the suit was filed seeking the aforementioned relief. 5. The Appellant Corporation in its written statement while admitting the award of the contract to the Respondent Plaintiff and the delay in handing over the work site on 19.2.94 and the finalization of the lay out plan on 29.11.94, in essence, took the plea that he was not entitled to the escalation charges beyond the originally stipulated period of one year. It therefore justified the payment of Rs. 1,86,705.29 p, towards the escalation cost up to January,1995. According to it, the extensions of the originally stipulated period granted to the Respondent Plaintiff on his request were provisional in nature and did not entitle him to the escalation charges for the works done by him beyond the originally agreed term of one year. The Appellant corporation also dismissed the notice dated 25.5.99 as insignificant. 6. The learned trial court, on the basis of the pleadings of the parties framed the following issues: 1) Whether the suit is legally maintainable or not ? 2) Whether the Plaintiff has any cause of action ? 3) Whether the Plaintiff is responsible for delay in completing the work ? 4) Whether the hindrances caused by the Plaintiff for not completing the work in time were genuine or not ? 5) Whether the Plaintiff is entitled to any escalation cost or not. If so, to what extent and on what basis ? 6) Whether the Plaintiff is entitled to any other relief 7. The learned trial court finally on a consideration of the pleaded facts and the oral as well as documentary evidence on record decreed the suit as alluded hereinabove. 8. Mr. Borbhiya has emphatically reiterated the Appellant corporation's pleaded stand that as the Respondent Plaintiff had not completed the works awarded to him under the contract, he was not entitled to the escalation charges to the extent sought for in the suit. While affirming that the extensions granted to the Respondent Plaintiff from time to time on its request were provisional in nature, the learned Counsel has maintained that he was entitled only to an amount of Rs. While affirming that the extensions granted to the Respondent Plaintiff from time to time on its request were provisional in nature, the learned Counsel has maintained that he was entitled only to an amount of Rs. 1,86,705.29 p for the works executed by him for the period of one year as stipulated between the parties. According to Mr. Borbhuiya, as the Appellant Plaintiff had suddenly abandoned the work site without giving sufficient notice to the Appellant corporation, it was not entitled to the reliefs claimed for in the suit. This is more so, as the Appellant corporation was required to get the uncompleted portion of the works done through other contractor(s) at a heavy expenditure to its prejudice. 9. Mr. Lalramzauva, in response has argued that the Respondent Plaintiff submitted an escalation bill amounting to Rs. 16,93,724/- relatable to the works executed up to 19.11.1997. While contending that the extensions granted to the Respondent Plaintiff were up to 30.4.2000, the learned senior counsel with reference to Clause 5 of the tender document has urged that the same had been accorded by the competent authority. He asserted the absence of any provision for provisional extension in the terms and conditions of the contract and therefore dismissed the plea to the contrary. Referring to the letter dated 30.1.2001 (Ext. D 19 of the suit) the learned senior counsel pleaded that in fact, the contract was determined and/or rescinded, but though permissible under the terms and conditions of the contract, no punitive action by way of a fine or demand or realization of compensation was resorted to. Referring to the evidence of DW 1, B.B. Bandopadhyay testifying on behalf of the Appellant corporation, Mr. Lalramzauva has sought to highlight that it would be apparent there from that not only the notion of provisional extension was absent, for all intents and purposes, the Respondent Plaintiff was allowed to work till the rescission of the contract b y the Appellant corporation. The learned senior counsel further argued that as it would be evident from the evidence of this witness, Clause 10 (CC) was invocable by a contractor even before the completion of the works. The learned senior counsel further argued that as it would be evident from the evidence of this witness, Clause 10 (CC) was invocable by a contractor even before the completion of the works. According to him, the evidence of this witness further demonstrates that the Executive Engineer (Deputy Manager of Engineering) was the final authority in the matter of granting extension as in the present case and that there was an abnormal escalation of the price of the building materials and other inputs during the period of execution of the works. 10. We have lent our anxious consideration to the pleadings of the parties and the evidence on record. The arguments advanced have also been duly analyzed. That though the contract agreement dated 17.1.94 with the covenants amongst others that the works were to be executed within a period of one year was entered into, it is a matter of record that the site was handed over to the Respondent Plaintiff only on 19.2.94 and the lay out plan was finalized on 29.11.94. The cited reasons which, according to the Respondent Plaintiff had delayed the execution have also not been very seriously disputed by the Appellant corporation. That it had granted extension to the Respondent Plaintiff up to 30.4.2000 so as to enable him to continue with the work is a clear indication to that effect. As a matter of fact, DW 2, Sri N.N. Sinha in his cross examination had admitted that the purpose of extension of time was to keep the contract alive to enable the Respondent Plaintiff to continue with the execution thereof. Such extension obviously had been in exercise of the power available in Clause 5 of the terms and conditions governing the transaction. Though it was available at all relevant times for the Appellant corporation to grant extensions with penal stipulations, the same was not done. As a matter of fact, at the time of rescission of the contract, vide letter dated 30.1.2001, only forfeiture of the earnest money of the Respondent Plaintiff was effected. 11. That at the point of time when the Respondent Plaintiff ceased working, he had admittedly completed 95 % thereof is a matter of record. Admittedly he had been released an amount of Rs. 1,86,705.29p towards the escalation charges for the works done during one year as originally agreed upon by the parties. 11. That at the point of time when the Respondent Plaintiff ceased working, he had admittedly completed 95 % thereof is a matter of record. Admittedly he had been released an amount of Rs. 1,86,705.29p towards the escalation charges for the works done during one year as originally agreed upon by the parties. It is not the case of the Appellant corporation that the cost of the works had not escalated due to rise of the price of essential building materials and other incidental requisites. The plea that the Respondent Plaintiff, even if has executed the works beyond one year as initially agreed upon, would not be entitled to the escalation charges for the period of one year is untenable. This clause which occupies the center stage of dispute, deserves to be extracted: Clause 10(CC). If the cost of the materials (Not being materials supplied or services rendered fixed prices by the Department in accordance with clauses 10 & 14 hereof) and/DC or wages of labour required for execution of the work increase the contractor shall compensated for such increase as per provisions detailed below and the amount of the contract shall accordingly be varied, subject to the condition that such compensation for escalation in prices shall be available only for the work done during he stipulated period of he contract including such period for which the contract is validly extended under the provisions of Clause 5 of the contract without any action under Clause 2 and also subject to the conditions that no such compensation shall be payable for a work for which the stipulated period of completion is 6 months or less. Such compensation for escalation in the prices of materials and labour, when due, shall be worked out based on the following provisions: It is clear from this extract that if the cost of the materials excluding that supplied by the Appellant corporation and the DC or wages of labour required for execution of the work increase, the contractor shall be compensated for such increase as per the provisions contained therein and the amount of the contract would accordingly be varied, subject to the condition that such compensation for escalation in prices would be available only for the work done during the stipulated period of the contract including such period for which the contract is validly extended under the provisions of Clause 5 of the contract without any action under Clause 2 and also subject to the condition that no such compensation would be payable for a work for which the stipulated period of completion is 6 months or less. 12. As noticed hereinabove, the extensions were granted to the Respondent Plaintiff on his request under Clause 5 of the contract, without any step or measure under Clause 2 thereof. The originally stipulated period of one year was also not less than 6 months. In this view of the matter, in terms of Clause 10(CC), in our opinion, in the facts and circumstances of the case, the Respondent Plaintiff is entitled to the escalation charge for the works actually done by him even beyond the originally agreed period of one year. This is, in the face of extensions granted to him under an enabling clause of the contract and by an authority competent to do so. The plea of the Appellant corporation that the Respondent Plaintiff is entitled to escalation charge only for the works done during the originally stipulated period of one year, this lacks persuasion. 13. Significantly, the Appellant corporation has not questioned the computation of the escalation charges made by the Respondent Plaintiff for the works actually done by him. The testimony of its witness Mr. BB Bondhopadhyay in clear terms reinforces the Respondent Plaintiff's case on all material aspects. 14. We have closely perused the impugned judgment and order and have also analyzed the narration and the conclusions reached by the learned trial court on the basis of the pleadings and the evidence on record. The testimony of its witness Mr. BB Bondhopadhyay in clear terms reinforces the Respondent Plaintiff's case on all material aspects. 14. We have closely perused the impugned judgment and order and have also analyzed the narration and the conclusions reached by the learned trial court on the basis of the pleadings and the evidence on record. According to us, the learned trial court has correctly evaluated the pleadings and the materials on record and the findings arrived at cannot be rejected as either not borne out by the records or in contravention of any established proposition of law. In the above view of the matter, we find no merit in this appeal which is dismissed. 15. We find that in terms of the order of this Court dated 29.4.2009 passed in Mise Case No. 1011/09, an amount of Rs. 7,53,501/- being 50% of the decretal amount had been deposited by the Appellant corporation with the Registry of this Court at Principal seat at Guwahti. The office note dated 11.6.09 to this effect indicates that this amount had been deposited in the account of the Registrar General of the Gauhati High Court, Guwahati. This amount be released in favour of the Respondent Plaintiff on being properly identified by his advocate. In the event of the release of this amount, the same would stand adjusted against the amount finally payable under the decree to be prepared by the office in terms of this judgment. 16. In the facts and circumstances of the case, we leave the parties to bear their own costs.