Corporation of Thiruvananthapuram v. P. Sreekumar

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN** **TUESDAY, THE 25TH DAY OF SEPTEMBER 2012/3RD ASWINA 1934** **RFA.No. 62 of 2004 (A)** **----------------------** **O.S.1406/1995 of I ADDL.SUB COURT,TRIVANDRUM** **APPELLANT(S)/APPELLANT/DEFENDANT: ---------------------------------** **CORPORATION OF THIRUVANANTHAPURAM, REPRESENTED BY ITS COMMISSIONER, OFFICE OF THE COMMISSIONER, CORPORATION BUILDINGS, MUSEUM JUNCTION, THIRUVANANTHAPURAM.** **BY ADV. SRI.N.NANDAKUMARA MENON,SC,TVM CORPN.** ## **RESPONDENT(S)/PLAINTIFF:** **-------------------------** **P.SREEKUMAR, S/O. PADMANABHAN NAIR, AGED 44 YEARS, CONTRACTOR, RESIDING AT TC.50/39 PARASAKTHI, KALADI, THIRUVANANTHAPURAM.** **BY ADVS. SRI.K.L.VARGHESE SMT.SANTHA VARGHESE** **THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 25-09-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **VPV** ## **P.N.RAVINDRAN, J.** **-------------------------R.F.A.No.62 of 2004** **-------------------------------Dated this the 25[th] day of September , 2012** ## **J U D G M E N T** The defendant in O.S.No.1406 of 1995 on the file of the Court of the First Additional Subordinate Judge of Thiruvananthapuram is the appellant in this appeal. The respondent is the plaintiff therein. The brief facts of the case are as follows: 2. The respondent is a registered contractor of the Thiruvananthapuram Corporation. The council of the Thiruvananthapuram Corporation that met on 7.10.1993 resolved to construct a community hall in Manakkad Division at an estimated cost of Rs.4,00,000/-. By Ext.B4 order dated 1.3.1994, the State Government accorded administrative sanction for the said work. The appellant had in the meanwhile issued a tender notification dated 21.1.1994 inviting tenders from registered contractors. Pursuant thereto, the respondent and others submitted their tenders. The tender submitted by the respondent was accepted and Ext.B3 work order was issued on 22.2.1994. By the said work order he was directed to execute a formal agreement and to start the work immediately and to complete it before 30.4.1994. He was also R.F.A. No.62 of 2004 2 called upon to furnish security to the tune of Rs.20,000/-. 3. Pursuant thereto, the respondent furnished security in the form of a National Savings Certificate of the aggregate value of Rs.20,000/-. He also executed a formal agreement on 4.5.1994. It appears that the work could not be proceeded with and it was stopped and was later closed. The respondent thereupon instituted the suit contending that though a formal agreement was executed on 4.5.1994 agreeing to complete the work within two months from the date of execution of the agreement and he commenced the work by digging pits for the column footings and had also collected materials at site, on account of an objection raised by the Harijan Welfare Department, the work had to be stopped, that he was therefore forced to request the work to be closed, that in spite of repeated requests made by him the appellant did not take steps to remove the obstruction in continuing the work and that due to inordinate delay, he requested the appellant to either take steps to enable him to proceed the work or to close the work, take the measurement, assess the value of materials and relieve him from the obligation to perform the work after settling his claim including his claim for prevented profits. In the suit the respondent claimed payment of the sum of Rs.1,05,573/- comprising of Rs.55,624/- towards prevented profits, Rs.44,900/- towards cost of materials collected at the site and Rs.5,049/- being the money spent R.F.A. No.62 of 2004 3 for the work done. 4. The appellant resisted the suit contending inter alia that though by Ext.B3 work order dated 22.2.1994, the respondent was directed to execute a formal agreement and to complete the work before 30.4.1994, he executed the agreement only on 26.9.1994 and did not complete the work in time, that even as per the agreement the work was to be completed before 25.12.1994, that he did not commence the work as agreed, that even before the execution of the agreement the respondent wanted to abandon the work and had sent Ext.B2 letter dated 1.9.1994 requesting for closure of the work on the ground that 1994 PWD schedule of rates has come into force. The appellant contended that thereafter the respondent again requested the defendant to close the work by sending Ext.A1 letter dated 28.2.1995 raising an untenable contention that the work could not be executed as the work site was not handed over, that the respondent was from the very beginning itself attempting to evade his obligations on the ground that the land does not belonging to the appellant and that acting on Ext.A1 request made by the respondent, the work was closed. The appellant contended that no loss was caused to the respondent on account of the act of the appellant and that the security issued in the form of National Savings Certificate was returned to him after the suit was instituted. R.F.A. No.62 of 2004 4 5. On an application made by the respondent, an Advocate Commissioner was appointed to inspect the work site along with Sri.P.Sukumaran, Superintending Engineer (Retd.) who was appointed as Expert Commissioner to inspect the work site and to assess the value of the materials collected at the site, to measure the work if any done and to assess the value thereof. The Advocate Commissioner appointed by the court below submitted Ext.C1 report dated 2.11.1999 enclosing with it the report dated 25.8.1997 submitted by the Expert Commissioner. In the court below, Sri.P.Sukumaran, Superintending Engineer (Retd.) who was appointed as Expert Commissioner, was examined as PW-1 and Exts.A1 to A6 were produced and marked on the side of the plaintiff. On the side of the defendants the Assistant Engineer (Projects), was examined as DW-1 and Exts.B1 to B7 were marked. The court below on an analysis of the evidence, oral and documentary available in the case held that the appellant committed breach of the agreement. The court below also held that the respondent is entitled to receive the sum of Rs.1,795/- towards the value of the work done by him, Rs.4,404/- towards the cost of the materials collected at the work site and Rs.55,624/- towards prevented profits. As regards the claim for refund of security deposit the court below held that pending the suit, the National Savings Certificate was returned and therefore no amount is payable on that R.F.A. No.62 of 2004 5 count. The suit was accordingly decreed in part, allowing the respondent to realise the sum of Rs.61,823/- with interest at the rate of 6% per annum from the date of the suit till realisation and proportionate costs from the appellant. Hence this appeal by the defendant. 6. I heard Sri.P.K.Manoj Kumar, learned counsel appearing for the appellant and Sri.Rahul Varghese, learned counsel appearing for the respondent. Sri.P.K.Manoj Kumar, learned counsel for the appellant contended that the work was closed on the request made by the respondent and therefore the court below erred in holding that the appellant had committed breach of the contract. The learned counsel contended relying on Ext.B5 letter dated 13.8.1994 sent by the Taluk Development Officer for Schedule Castes, Vanchiyoor, Thiruvananthapuram to the Commissioner of Thiruvananthapuram Corporation that nothing prevented the respondent from executing the work and therefore the finding of the court below that the work site had not been handed over to the respondent and that he was thereby disabled from proceeding with the work cannot be sustained. With reference to Ext.C1 report submitted by the Advocate Commissioner, the learned counsel for the appellant contended that as the Advocate Commissioner was not examined, the court below erred in relying on Ext.C1 report to hold that the respondent is entitled to receive the sum R.F.A. No.62 of 2004 6 of Rs.1,795/- towards the value of the work done and Rs.4,404/towards the cost of the materials collected at the site. The learned counsel contended that the court below has not even adverted to the objection raised by the appellants to Ext.C1 report submitted by the Advocate Commissioner/Expert Commissioner. The learned counsel for the appellant submitted that as the report has not been properly proved, the judgment under appeal may be set aside and the suit remanded to the trial court for fresh disposal in order to enable the plaintiff to examine the Advocate Commissioner and to formally prove Ext.C1 report. The learned counsel also contended that the appellant may be afforded an opportunity to examine the officers who were in charge of the work at the relevant time and also to produce the documents in their possession. 7. Per contra, Sri.Rahul Varghese, learned counsel appearing for the respondent contended that no reliance can be placed on Ext.B5 letter dated 13.8.1994 to come to the conclusion that there was no obstruction in the commencement of the work or that the work site had been handed over, that all that is stated in the said letter is that the Harijan Welfare Department has taken steps to auction the right to cut and remove trees standing in the land and that the said letter does not state that the trees have been cut and removed and the site rendered fit for execution of the work. The learned counsel also R.F.A. No.62 of 2004 7 contended that the appellant was satisfied that the respondent was not at fault in not executing the work and that Ext.A3 notice dated 7.8.1995 cuts at the root of the case set out by the appellant that there was no obstruction in executing the work and that the respondent was at fault. The learned counsel contended relying on Ext.A3 notice that the work was closed otherwise than at the risk and cost of the respondent and therefore, the appellant cannot be heard to contend that it was not at fault and that it was the respondent who had committed the breach of the contract. With reference to Ext.C1 report, the learned counsel for the respondent contended that Ext.C1 was marked by consent and no objection was taken to the admissibility of the document or regarding the mode of proof and therefore, the appellant cannot at this point of time be heard to contend that the court below erred in relying on Ext.C1. The learned counsel for the respondent contended that though the report dated 25.8.1997 submitted by the Expert Commissioner was produced by the Advocate Commissioner along with his report dated 1.11.1999 and a copy thereof was furnished to both sides, the appellant did not file any objection to the report till they submitted an objection dated 18.1.2002, four days prior to the commencement of the trial. The learned counsel contended that the appellant who did not chose to file its objections to the commission report for more than three years and R.F.A. No.62 of 2004 8 did not examine the officers who were in service at the relevant time or the Project Engineer who was in office at the relevant time and were present when the Advocate Commissioner inspected the site, cannot be heard to contend that no reliance can be placed on the findings and observations in the commissioner's report or to seek a remand of the case at this distance of time. 8. I have considered the submissions made at the Bar by the learned counsel appearing on either side. The materials on record disclose that the tender notice was issued on 21.1.1994. The tender submitted by the respondent being the lowest, was accepted and Ext.B3 work order dated 22.2.1994 was issued to him. Though the tender notice is not produced, it is evident from Ext.B4 order passed by the Government according administrative sanction for the work that the proposal was to put up a community hall in Shinkarathoppu Colony which admittedly is property belonging to the Harijan Welfare Department, presently known as the Scheduled Castes Development Department. Though the work site belonged to the Harijan Welfare Department, by Ext.B3 work order dated 22.2.1994, the appellant called upon the respondent to execute the agreement, to furnish security for Rs.20,000/- and to complete the work before 30.4.1994. A formal agreement was however not entered into before 30.4.1994. While the respondent contended that a formal agreement was R.F.A. No.62 of 2004 **==> picture [12 x 9] intentionally omitted <==** executed on 4.5.1994, the stand taken by the appellant is that the formal agreement was entered into only on 26.9.1994. It is also contended that the work had to be executed and completed on 25.12.1994. The appellant had in paragraph 5 of the written statement filed by it, admitted in categorical terms that the land where the work was to be executed belonged to the Harijan Welfare Department. Ext.A3 notice by which the work was closed sets out in categorical terms that possession of the work site was not handed over by the Harijan Welfare Department and that in such circumstances, the council of the Corporation has resolved to close the work. Though in the written statement the stand taken by the appellant is that the respondent was at fault, a reading of Ext.A3 notice whereby the work was closed, establishes beyond doubt that the tenders were invited, the work order issued and formal agreement executed for constructing a community hall notwithstanding the fact that the work site belonged to a department of the Government which had not formally handed over possession of the work site to the appellant or issued any proceedings permitting the appellant to get the work executed through a contractor appointed by the appellant. The Assistant Engineer (Projects) of the appellant Corporation who was examined as DW-1 has stated that the files would not disclose that the site had been handed over to the respondent. In the light of the materials on R.F.A. No.62 of 2004 10 record, I am of the considered opinion that the finding entered by the court below that the appellant who failed to hand over possession of the work site to the contractor, had committed breach of the contract, cannot be assailed. 9. That takes me to the question whether the award of the sum of Rs.1,795/- towards value of the work done, Rs.4,404/- towards the cost of materials collected at the work site by the respondent and the sum of Rs.55,624/- towards prevented profits merits interference. The appellant attacks the award of Rs.1,795/- towards value of the work done and Rs.4,404/- towards the cost of materials on the ground that apart from Ext.C1 report, there is no material to substantiate the plea that the plaintiff had commenced the work or spent any money in the work or collected materials at the site. The Expert Commissioner appointed by the court below inspected the work site on 16.10.1996 with notice to both sides and their counsel. He also verified the records maintained in the office of the Executive Engineer of Thiruvananthapuram Corporation. He had after inspection of the work site reported that the respondent had carried out earth work for 12 numbers of column footings including levelling of the site. He had estimated that as per the terms of the agreement, the cost of the said work is Rs.1,795/-. In this context it is relevant to note that the appellant had in paragraph 10 of the written statement admitted the R.F.A. No.62 of 2004 11 fact that the respondent had carried out earth excavation work for 7 columns. The only defence put forward by the appellant was that the work was not measured as not even one item of work was completed. In the light of the admitted fact that the respondent had admittedly done earth excavation for 7 columns and in the absence of any challenge to the rate adopted by the Expert Commissioner to determine the value of the work done, I am of the opinion that the award of the sum of Rs.1,795/- towards value of the work done by the respondent does not merit interference. As regards the cost of materials, the Expert Commissioner had reported that a total quantity of 307.12 kgs of M.S. rods were seen collected at the site and as per the prevailing market value its cost will be Rs.4,404/-. Though in the written statement the appellant had raised a plea that no material was collected for the work and the respondent is not entitled for any amount on this count, the appellant had in paragraph 12 of the written statement averred that even if some amount is invested it being not admitted, it is not under an obligation to compensate the respondent. Objections to the Expert Commissioner's report were filed only on 18.1.2002, four days before the trial commenced and more than three years after the Expert Commissioner submitted the report. That apart, the appellant did not examine Sri.N.Rajamani, Assistant Engineer (Project) who was present when the Expert Commissioner inspected R.F.A. No.62 of 2004 12 the work site on 16.10.1996, to speak to the fact that no material was available at the work site on the date of inspection. In the light of the materials on record and in the absence of any evidence to show that the assessment made by the Expert Commissioner/Advocate Commissioner is false and having regard to the long delay in filing objections to the Commissioner's report, I am of the opinion that the court below was perfectly right in overruling the objections to the commissioner's report. 10. Then the only question that remains to be considered is whether the award of the sum of Rs.55,624/- towards profits merits interference. The Apex Court has in **MSK projects India (JV) Ltd. v. State of Rajasthan and another [(2011) 10 SCC 573]** referred to and relied on by the learned counsel for the respondent held that loss of expected profits attributable to breach of contract by the opposite party is recoverable. In **Dwaraks Das v. State of M.P. and Another [(1999) 3 SCC 500]** , the Apex Court upheld award of 10% of the contract price as damages, after noticing that the Apex Court had earlier upheld award of 15% of the contract price as damages. A Division Bench of this Court has in **C.T. Xavier and Ors. v. P.V.** **Joseph & Another (AIR 1995 Ker. 140)** held that award of 10% of the contract price towards profits should be held to be reasonable. Earlier, a Division Bench of this Court had in **State of Kerala v.** R.F.A. No.62 of 2004 13 **Bhaskaran (1984 KHC 380)** upheld a similar plea. In the light of the binding decisions referred to above and the finding of the court below that the appellant had committed breach of the contract, the award of 10% of the contract price towards loss of profits cannot be said to be unreasonable. I accordingly uphold the said finding. For the reasons stated above, I hold that there is no merit in the instant appeal. The appeal fails and is accordingly dismissed. However having regard to the fact that the appellant is a public authority, I refrain from awarding costs. **Sd/-** **P.N.RAVINDRAN JUDGE** /True Copy/ P.A.To Judge rkc/vpv