Corporation of Kochi v. P.K. Ramachandran and others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE** **&** **THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN** **MONDAY, THE 10[TH] DAY OF APRIL 2023 / 20TH CHAITHRA, 1945** **RFA NO. 521 OF 2017** **AGAINST THE JUDGMENT AND DECREE IN O.S.NO.40/2013 OF III** **ADDITIONAL SUB COURT, ERNAKULAM** **------** ## **APPELLANTS/DEFENDANTS 1 & 2 IN THE O.S.:** - **1 THE CORPORATION OF KOCHI, REPRESENTED BY ITS SECRETARY, OFFICE OF CORPORATION, KOCHI-682018.** - **2 THE PROJECT ENGINEER, OFFICE OF CORPORATION OF KOCHI, KOCHI-682018.** **BY ADVS. SRI.RAJU JOSEPH (SR.) D.G.VIPIN SRI.C.JOSEPH ANTONY SRI.S.SUDHISH KUMAR V.V.SIDHARTHAN (SR.)(S-455)** ## **RESPONDENTS/PLAINTIFF AND 3RD DEFENDANT IN THE O.S.:** - **1 P.K. RAMACHANDRAN, ENGINEERING CONTRACTOR, DEEPA MANDIR, KARUVELIPADY P.O., KOCHI-682025, REP. BY ITS MANAGING PARTNER P.K.RAMACHANDRAN.** - **2 THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVT., LOCAL SELF GOVT. DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM-695001.** - **3 M/s.P.K.RAMACHANDRAN, ENGINEERING CONTRACTOR, DEEPA MANDIR, KARUVELIPADY P.O., KOCHI-682025. REPRESENTED BY ITS MANAGING PARTNER A.R.DENOOP. (ADDITIONAL RESPONDENT NO.3 IS IMPLEADED AS PER ORDER DATED 6.2.2019 IN I.A.NO.5/18.)** **R.F.A.No.521 of 2017** -:2:- **BY ADVS.** **K.BABU THOMAS for R1 & R3 MARYKUTTY BABU** **BY SENIOR GOVERNMENT PLEADER, SRI.S.GOPINATHAN for R2** **THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 20.12.2022, THE COURT ON 10.04.2023 DELIVERED THE FOLLOWING:** **R.F.A.No.521 of 2017** -:3:- **A.MUHAMED MUSTAQUE & SHOBA ANNAMMA EAPEN, JJ. ----------------------------------------R.F.A.No.521/2017** **----------------------------------------Dated this the 10[th] day of April, 2023** ## **J U D G M E N T** A.Muhamed Mustaque, J. This appeal was preferred by the Corporation of Kochi represented by their officials, challenging a decree in a suit for declaration and realisation of money. The appellants are defendants 1 and 2 in the suit. The plaintiff was a contractor engaged by the appellant. We shall refer to the parties with reference to their status in the trial court. 2. The plaintiff was engaged for the construction of a new office complex of the Cochin **R.F.A.No.521 of 2017** -:4:- Corporation at Marine Drive. On 4/4/2006, an agreement was executed. The plaintiff could not complete the entire work. The defendants, by a resolution passed by the Council of the Cochin Corporation, on 18/5/2009, decided to terminate the contract. The plaintiff challenged the decision of the Corporation before the Government invoking Section 57 of the Kerala Municipality Act, 1994. Under Section 57, the Government has the power to rescind or cancel the resolution. The Government by order dated 3/8/2012, declined to interfere in the matter. The Government also declined the recommendation of the first defendant to entrust the balance works at an enhanced rate to the plaintiff. The suit was filed on 15/1/2013. The plaintiff prayed for a declaratory relief in the suit to the effect that the termination was illegal and, consequently, sought for realisation of money towards the unpaid cost of the work. The total claim made by the plaintiff ## **R.F.A.No.521 of 2017** -:5:- was for recovery of Rs.6,78,26,101/-. The trial court awarded Rs.6,18,86,937/- under various heads. 3. The learned Senior Counsel appearing for defendants 1 and 2 submitted that the suit was barred by limitation. According to the learned Senior Counsel, the agreement was terminated on 18/5/2009 and the suit was filed only on 15/1/2013. It was argued that the time taken before the Government, in challenging the decision of termination will not save the period of limitation. According to the learned Senior Counsel, the period of limitation has to be reckoned with when payment was denied by termination. It was further argued that the plaintiff cannot claim any amount other than in accordance with the terms of the agreement. 4. The learned counsel for the plaintiff submitted that the right to sue would accrue only after the preparation of the final bill and the **R.F.A.No.521 of 2017** ## -:6:- appellant-Corporation issued a communication on 8/10/2012 fixing 9/10/2012 for joint measurement. It was also submitted that the right to the claim for payment would arise only after the finalisation of the bill and not before that. The counsel further argued that the declaratory relief is perfectly maintainable as the plaintiff invoked alternate remedy challenging termination, before the Government, invoking Section 57 of the Kerala Municipality Act, 1994. 5. Though the trial court had not framed the issue regarding limitation, as seen from the impugned judgment, the trial court in para.13 onwards considered the said issue. The trial court is of the view that since the plaintiff invoked statutory remedy before the Government, the period covered by the statutory remedy can be excluded for the purpose of limitation. 6. There are two aspects involved in regard to the question relating to limitation. The first **R.F.A.No.521 of 2017** -:7:- one is in relation to challenging limitation through a declaratory relief. This is decisive in the nature of certain claims made by the plaintiff based on cost escalation. The second is in relation to the money claimed. 7. Admittedly, the termination was based on the resolution of the Council of the Cochin Corporation. The Government has the necessary power to cancel or amend the resolution passed by the Council invoking Section 57 of the Municipality Act. But the plaintiff moved the Government on 27/6/2009. The Government considered the request pursuant to the judgment of this Court in W.P.(C). No.4319/2010, dated 10/2/2010. The request before the Government to interfere with the decision of termination and give an enhanced rate of 109% above the 2004 PWD Schedule of Rates ( **SoR** ), was rejected by the Government only on 3/8/2012. The suit was filed immediately thereafter. Therefore, the plaintiff **R.F.A.No.521 of 2017** ## -:8:- having invoked the statutory remedy, the cause of action to file the suit would depend upon the outcome of such statutory remedy availed. The Government could have interfered with the resolution passed by the Council. Therefore, the right to sue accrued, as against termination, only when the Government took a decision on the resolution on 3/8/2012. In such circumstances, we are of the view that the declaratory relief was within time. 8. In regard to the monetary claim, admittedly no final bill was prepared as is evident from Ext.A76. By Ext.A76, the Corporation issued a communication for taking a joint measurement, on 8/10/2012. The period of limitation would run in a contractual matter only when the final measurement is taken when contract envisages preparation of final bill. The starting point of limitation, therefore, is the date of the final bill. **{** See the judgment of the Apex Court in **R.F.A.No.521 of 2017** ## -:9:- **M/s.Aries and Aries v. Tamil Nadu Electricity Board [AIR 2017 SC 1897]}.** In this matter, no final bill was prepared even though a communication was issued for taking joint measurements. Thereafter, the plaintiff prepared a final bill with the assistance of an expert. The period of limitation has to be computed only from the date when the first defendant refused to prepare the final bill and effect the payment thereon. Therefore, the period of limitation would run only after the date of Ext.A76, i.e. 8/10/2012. In such situations, Article 113 of the Limitation Act,1963 would apply. The suit having been filed on 15/1/2013, we find the suit was within the period of limitation. On that ground also, we are of the view that the suit was within time. 9. The contract was terminated on 24.4.2009. According to the appellant-Corporation, the plaintiff had abandoned the work. One of the **R.F.A.No.521 of 2017** ## -:10:- reliefs sought by the plaintiff was challenging termination. The trial Judge found that the first defendant-Corporation committed the breach. The agreement was executed on 4.4.2006. The period for completion of the work was fixed on 3.12.2007. The possession of the site was handed over to the plaintiff on 17.4.2006. The plaintiff alleged that the design drawings and structures were not finalised and this had occasioned the delay in the commencement and execution of the work. It was also stated by the plaintiff that there was considerable delay in making the monthly payments. The delay appears to have forced the plaintiff to demand enhanced costs. The trial Judge found that there was a delay in finalising the design drawings and structural particulars. The various communications issued by the plaintiff, marked as Ext.A6 onwards would establish that there was delay on the side of the Corporation in responding to the request. Several communications were issued **R.F.A.No.521 of 2017** ## -:11:- for releasing the payment also. The plaintiff demanded extension of the period and cost escalation. DW1’s evidence does not contradict the plaint allegations. None of the exhibits marked to prove the breach on the side of the Corporation, were discredited or controverted. There is no difficulty in such circumstances to hold that the Corporation failed to perform its part of the contract in accordance with the agreed terms. 10. The next question is on the amount claimed by the plaintiff. It was the duty of the Corporation to prepare a final bill even if the work had been abandoned. No final bill has been prepared. The plaintiff prepared a bill and marked it as Ext.A78. Interest was calculated for the delayed payment at 16%. The learned trial judge reduced the interest claim to 12%. It is to be noted that Ext.A78 was produced before the trial court as early as on 9.1.2013. No steps were taken by the Corporation to reconcile or contradict the **R.F.A.No.521 of 2017** ## -:12:- final bill prepared by the plaintiff. The plaintiff also caused an inspection by the Advocate Commissioner of Ext.A78 bill. A retired Chief Engineer of PWD, Roy G. Vellinikkaran was appointed as an Expert Commissioner to assist the Advocate Commissioner. The report of the Expert Commissioner is marked as Ext.C1 and agreed with the claim made in Ext.A78 final bill. We also summoned expert Shri Roy J. Vellanikkaran before us during one of the hearings. He affirmed the report and submitted that the report has been prepared with reference to the PWD SoR. The Court has no expertise in the matters related to preparing bills of the works contract. Shri Roy J.Vellanikkaran prepared the report after conducting an inspection of the site and giving notice to the defendants and the plaintiff. The report also confirmed the claim made by the plaintiff in Ext.A78. **R.F.A.No.521 of 2017** ## -:13:- 11. The plaintiff claimed the enhanced rates as per the 2007 and 2008 PWD SoRs. In view of the finding that the delay was occasioned by the first defendant-Corporation itself, the Corporation cannot wriggle out of the obligation to pay the enhanced rate for the works done beyond the agreement period. Such a claim is legally sustainable **{** See the judgments of the Apex Court in **U.P. State Electricity Board and Another v. OM Metals and Minerals (P) Ltd.[(2002) 9 SCC 512] and Assam State Electricity Board and others v. Buildworth Private Ltd.[AIR (2017) SC 3336]}.** 12. In Ext.B6, the Chief Engineer acknowledged undertaking extra work by the plaintiff and advised him that such instances shall be avoided in future. The extra work was carried out due to delay in the finalization of the design and plan. The Corporation has benefited by the extra work though it is not covered by the original **R.F.A.No.521 of 2017** ## -:14:- agreement. Therefore, the Corporation is bound to pay for that extra work. In light of the discussions as above, we find no merit in the appeal. The appeal is dismissed. No order as to costs. Sd/- **A.MUHAMED MUSTAQUE, JUDGE** Sd/- **SHOBA ANNAMMA EAPEN, JUDGE** ms