Agency for Development of Aquaculture Kerala v. T.V. Thomas and Kerala Industrial and Technical Consultancy Organisation Limited (KITCO)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MRS. JUSTICE SHIRCY V.** **THURSDAY, THE 28TH DAY OF FEBRUARY 2019 / 9TH PHALGUNA, 1940** ## **RFA.No. 434 of 2003** **AGAINST THE JUDGMENT AND DECREE IN OS 249/1997 of PRINCIPAL SUB COURT,IRINJALAKUDA DATED 11-04-2003** ## **APPELLANT/FIRST DEFENDANT:** **AGENCY FOR DEVELOPMENT.OF AQUACULTURE KERALA, T.C. NO.15/1494, 'REEJA', MINCHIN ROAD, THIRUVANANTHAPURAM, REPRESENTED BY ITS EXECUTIVE DIRECTOR BY ADV. SRI.S.SUDHEESH KUMAR** ## **RESPONDENTS/PLAINTIFF AND 2ND DEFENDANT:** > 1 **T.V.THOMAS, S/O. THEKKEKUDIYIL VARGHESE, MOOVATTUPUZHA.P.O, MARADY VILLAGE, MOOVATTUPUZHA TALUK 2 KERALA INDUSTRIAL AND TECHNICAL CONSULTANCY, ORGANISATION LIMITED (KITCO) 'SHEMA; P.B.NO.1820, M.G. ROAD, KOCHI -682016 R1 BY ADVS. SRI.B.ASHOK SHENOY SMT.C.G.PREETHA SMT.NISHITHA B.BHAT SRI.K.V.GEORGE SRI.P.N.RAJAGOPALAN NAIR SRI.THOMAS P.MAKIL** R2 BY STANDING COUNSEL **THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 7.11.2018, THE COURT ON 28.2.2019 DELIVERED THE FOLLOWING:** RFA.No. 434 of 2003 2 ## **JUDGMENT** This appeal is filed by the first defendant in O.S.No.249/1997 on the file of the Sub Court, Irinjalakuda. 2. The brief facts relevant for disposal of this appeal are as follows: The plaintiff/1[st] respondent is a contractor. He entered into a contract with the 2[nd] defendant, the Kerala Industrial and Technical Consultancy Organization Ltd. (for short KITCO) for construction of dykes at Government Training Farm, Poyya for the first defendant Agency for Development of Acquaculture, (for short ADAK). The estimated amount of work was 15,50,000/-. An additional work was also entrusted for a sum of Rs.8,88,000/-. totalling to Rs. 24,38,000/-. Adding 40% tender excess for the agreed cost the amount of work entrusted to the plaintiff was Rs.34,13,200/-. The work was completed by the RFA.No. 434 of 2003 3 plaintiff on 20.1.1995. As per the contract, a maintenance period of six months from the date of completion of work was also stipulated and then it was revised to 12 months. The plaintiff though submitted the final bill, the defendants have not made payment even after several repeated requests. Hence, the suit was filed for realisation of Rs. 12,81,928.27 with 12% interest. 3. The ADAK resisted the claim though admitted the agreement contending that the first bill for Rs.17,70,998/was sanctioned as early as on 24.12.1994 and the second running account bill dated 17.1.1995 for 10,65,070/- was also sanctioned and the final bills relating to the work in the farm was submitted by KITCO as per letter dated 26.10.1995, 5.11.1995 and 6.11.1995. The bills submitted by the plaintiff were forwarded with measurement books for verification and scrutiny and the Engineer ADAK certified that the quantity of earth work done for the outer Dykes and harvest bunds was 20898.36m3 and for the yard filling RFA.No. 434 of 2003 4 it was 10,649.03m3. But on verification of the measurements books, it was revealed that there was duplication on the quantity of the earth work done with the earth taken from within farm premises. So after rectifying the defects the final report of the Civil Engineer ADAK was forwarded and found that for dyke work it was 22,134.72m3 and that for filling the yard it was 10,649.03m3. The KITCO forwarded a report valuing the work at Rs.35,33,890/-. The engineer of the ADAK valued the same at Rs.31,74,443/-. No claim certificate was given by the plaintiff on 13.2.1997 accepting the measurements. So the plaintiff is estopped from raising claim for any other amount in the suit. The KITCO had contended that the bills were forwarded to the first defendant after scrutiny and recommendation and KITCO was only a consultancy of the organization and the work was supervised as instructed by the first defendant. The first defendant had taken measurement after rain which resulted in the consolidation and setting of earth. RFA.No. 434 of 2003 5 Consequently there was variation in measurements. 4. Before the court below, the plaintiff was examined as PW1 and Exts.A1 to A17 were also marked. Dws. 1 to 5 were examined and Exts.B1 to B12 were marked for the defendants. The trial court after evaluating the evidence decreed the suit for a total sum of Rs. 16,87,596.27 with future interest at the rate of 6% on the principal amount of 12,81,928.27. Feeling aggrieved by the judgment and decree, ADAK has filed this appeal. 5. Heard Sri S. Sudheeshkumar, learned counsel for the appellant/ADAK as well Shri Ashok B.Shenoy, learned counsel appearing for the first respondent/plaintiff and learned Standing Counsel appearing for the second respondent/2[nd] defendant. 6. Admittedly the plaintiff had entered into Ext.B2(a) agreement on 23.9.1994 for construction of dykes at Government Training Farm Poyya wherein the 2[nd] defendant was the consultant of the 1[st] defendant. The estimated RFA.No. 434 of 2003 6 amount for the work was 15,50,000/-. Certain additional works were also ordered to be done for which the estimate was for Rs.8,88,000/-. So the total estimated amount was 24,38,000/-. Adding 40% of the tender excess over the agreed cost, the amount for the work was Rs.34,13,200/-. The work was completed by the plaintiff on 20.1.1995. It is also admitted that as per the agreement there was a maintenance period of six months which was extended to 12 months from the date of completion. It is also admitted that the KITCO prepared the first running account bill for the Dykes for Rs.17,70,998 and the second running bill for Rs.10,65,070/-and those bills were sanctioned .The dispute is with regard to the final bill. According to the plaintiff, under Item No.3 of the final bill prepared by the KITCO, the work carried out was 36838.52m3 and for item No.2A, the quantity of the work exceeded by 665.43m3. This measurement was done by the Civil Engineer of the first defendant as evident by Ext.B11 letter, but the first RFA.No. 434 of 2003 7 defendant limited the net payment of the final bill to Rs.9,74,729, though the amount would come to 12,79,860. 93. Ext.A11 is a copy of letter issued by the plaintiff to the first defendant and A12 is the letter issued by the Civil Engineer of the first defendant to the Farm Manager of Government Model Shrimp Farm, Poyya. Ext.A12 corresponds to Ext.B11. In Ext.B11 it has been mentioned by the Civil Engineer ADAK that he had verified the work done by the plaintiff and issued the same and payments given to the contractor as per CC 111 & part has not been included in the final bill. But the quantities executed as per CC 11 & part had been accounted in the final bill. Under the Caption Item 2 A it has been mentioned that the quantity exceeded by 665.43m3 as necessitated as per site conditions and as Item No.3 the quantity exceeded worked out to 20838.52m3 and that work was done as per the instructions of ADAK by letter dated 28.12.1994. It is pertinent to note that in Ext.B9, measurement book No.404 RFA.No. 434 of 2003 8 in page No.14, it has been specifically stated that additional area filling was done as per the letter No. E745/93 of ADAK dated 28.12.1994. But the said letter was not produced by ADAK. But from Ext.B11/A12 it could be seen that approval was given by ADAK for doing additional work and pursuant to that payment was recommended. 7. DW4, the Civil Engineer of ADAK by B11 addressed the Farm Manager of ADAK that payments given to the plaintiff as per CC11 and part had not been included in the final bill, but the quantities executed as per CC11 and part had been accounted in the final bill. As referred above Under clause 2 (item 2A) it is stated that the quantity exceeded by 665.43m3 and that was necessitated as per the site conditions and hence should be admitted for payment. Under clause 3 (Item No.3) it has been mentioned that the quantity exceeded worked out to 20838.52m3 and that has been caused as per the instruction of ADAK in the letter dated 28.12.1994 and hence payment was recommended RFA.No. 434 of 2003 9 for the exceeded quantity. It is further revealed from Ext.B11 that the quantity assessed by the KITCO was 31008.683m3 but the actual quantity worked out to 36838.52m3.Hence, there was a discrepancy of 5829.83m3. Therefore, the payment as per the actuals should be effected. It was revealed from Ext.B11 that Sinkage allowance for the yard portion was recommended as reclamation works commenced from the clayey bed which was virgin. It was also revealed that on physical inspection of the site DW4 was convinced of sinkage of natural bed region and thus the sinkage allowance was recommended and to limit it to 10 to 15%. An amount of Rs.4,60,415 was claimed as quantity of loss in sinkage and it was recommended by DW4, after physical verification. There is also reference in Ext.B11 with regard to the recoveries that has to be effected in the final bill, ie. with respect to the income tax, security deposit, KCWWF contribution etc. So DW4 had certified the additional work that had been carried RFA.No. 434 of 2003 10 out by the plaintiff and it was also revealed that the extra works were done by the plaintiff as per the instructions of ADAK by its letter dated 28.12.1994. Therefore, the failure to produce the letter before the court is, sufficient to presume that ADAK has not placed all the relevant materials before the court to assess the additional works done by the plaintiff. Further it is to be noted that the Farm Manager has informed that the final bill submitted by the KITCO had been verified in detail and it was forwarded for necessary action by Ext.A13. The plaintiff has also by Ext.A14 letter addressed ADAK and requested to sanction the final bill subject to the rectification of discrepancies in the level measurements noted by KITCO and ADAK. 8. Exts.B9 and B10 are the measurement books numbered 404 and 406 which pertains to the work done by the plaintiff. It could be seen that so many corrections have been made with respect to the measurements entered in the measurement books. But Ext.A12/B11 letter had been RFA.No. 434 of 2003 11 issued by the Civil Engineer ADAK after inspecting and verifying the site and the quantity of the work done by the plaintiff was assessed and it was admitted that the exceeded quantity of work done by the plaintiff was as per the instructions of ADAK and that was necessitated as per the site conditions. On a perusal of Ext.B2, it could be seen that the quantity of earth brought from outside the Farm premises was 16000. When it is added with the measurement taken by the Engineer of ADAK, the total will be 36858.93m3. According to the plaintiff, measurements were taken after rain which resulted in consolidation and setting of earth and consequently there was variation in the measurements, and that was admitted by the first defendant/ADAK in the written statement. Adding the exceeded quantity of work of 20838.52m3 with 16000, the quantity of earth brought from outside as per the original agreement, will come to 36838.52m3 and that is the quantity of work mentioned in Ext.B11. Provision to carry RFA.No. 434 of 2003 12 out additional work was stipulated as discernible from B2. The quantity lost in sinkage is for Rs.4,60,415. The measurement was taken by ADAK after rain which resulted in consolidation and setting of earth, and as it was revealed and convinced on inspection by DW4 that sinkage had occurred, recommended to sinkage allowance. All these facts fortifies the plaintiff's case that Ext.B11 was correct and hence recommended for payment for the work assessed as 33,838.52m3. It could only be accepted as true and correct as recommended by the Civil Engineer of ADAK, on adequate consideration especially when so many corrections were seen effected in the measurement books . 9. It is also to be noted that the plaintiff endorsed in measurement book No.406 in page No.8 that the measurements are not accepted by him and the endorsement is dated 13.2.1997. The defendants have a case that the plaintiff had executed Ext.B12 on 13.2.1997 accepting the measurements entered in page No. 1 to 67 in RFA.No. 434 of 2003 13 measurement book No. 407 and measurement in pages 1 to 8 in Measurement book No.406 and hence he is estopped from making further claims. It is pertinent to note that Ext.B12 'no claim certificate' bears no date, but according to the defendants, it was dated 13.2.1997. If that be so then there was no chance for an endorsement in page No.8 of B10 regarding the measurements that it was 'not accepted' and hence the contention of ADAK that he issued the same on 13.2.1997 cannot be accepted at any costs and it raises 'grave suspicion'. When such an endorsement is seen in the measurement book itself, it is not possible to conclude that on the very same date he issued Ext.B12 certificate against the endorsement in the measurement book. The said endorsement in the measurement book and the totality of the circumstance fortifies the case of the plaintiff that Ext.B12 is only a fabricated document. It is also to be noted that when the payment was delayed, the plaintiff had issued a lawyer notice on 2.4.1997 and a reply was received RFA.No. 434 of 2003 14 on 24.4.1997 . But in the reply notice of ADAK there was no mention about the issuance of “no-claim certificate” by the plaintiff. Moreover it is to be noted that it was produced before the court only 8.11.2001, though the suit was filed in the year 1997. So also it is to be noted that all the letters issued by the plaintiff are in his letter pad. But Ext.B12 is not in the letter head of the plaintiff but, only in a plain paper. When PW1 was cross-examined, he had vehemently denied of having issued such a document in favour of ADAK. So also DW1, though she deposed that the certificate was signed by the plaintiff in her presence, she deposed in her cross examination that the Executive Director of the Farm was present but that was not mentioned in the affidavit filed. The Executive Director was also not examined before the court to prove the genuineness of the same. Such being the scenario, I find it difficult to accept the contention of the ADAK that the plaintiff issued B12 in full and final settlement of the amount due to him so as to dis-entitle him RFA.No. 434 of 2003 15 from raising a further claim for the work done by him. In Chairman and MD, NTPC Ltd. v. Reshmi Constructions, Builders & Contractors [ **2004(2)SCC 663]** , it has been observed by the Apex Court in paragraph 27 as follows: “27. Even when rights and obligations of the parties are worked out, the contract does not come to an end inter alia for the purpose of determination of the disputes arising thereunder, and, thus, the arbitration agreement can be invoked. Although it may not be strictly in place but we cannot shut our eyes to the ground reality that in a case where a contractor has made huge investment, he cannot afford not to take from the employer the amount under the bills, for various reasons which may include discharge of his liability towards the banks, financial institutions and other persons. In such a situation, the public sector undertakings would have an upper hand. They would not ordinarily release the money unless a “No-Demand Certificate” is signed. Each case, therefore, is required to be considered on its own facts.” 10. As each case is required to be considered on its RFA.No. 434 of 2003 16 own facts, mere production of no-claim certificate in the case will not exonerate the liability of the defendants from paying the amount due to the plaintiff for the additional work undertaken by the plaintiff as per the direction of the ADAK in its letter dated 28.12.1994. For the aforesaid reasons, I do not think that the plaintiff had approached the court below to gain unlawful pecuniary benefits from the State Organizations. So considering the entire evidence available on record , I find that the first defendant/appellant could not make out a case that the entire amount due to the plaintiiff had already been paid as per the contract undertaken by him. DW4 by B11 recommended the measurements mentioned therein after physical verification of the site. The corrections and rectifications made in B9 and B10 Measurement books would only substantiate the case of the plaintiff and will not justify in denying the claim put forth by the plaintiff for the additional work done by him in the Farm. Hence, I find no merits in the appeal preferred RFA.No. 434 of 2003 17 by the first defendant and therefore, I find that it deserves a dismissal. The judgment and decree under challenge are hereby confirmed and accordingly the appeal is dismissed. The parties shall bear their respective costs. Sd/- ks **SHIRCY V.,** **JUDGE**