D Sundaresan v. State of Kerala & The Superintending Engineer, National Highways South Circle

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE &** **THE HONOURABLE MR. JUSTICE P.SOMARAJAN** **WEDNESDAY, THE 20TH DAY OF JUNE 2018 / 30TH JYAISHTA, 1940** **RFA.No. 426 of 2007** **AGAINST THE JUDGMENT IN OS 76/1995 of PRL.SUB COURT,THIRUVANANTHAPURAM DATED 31-05-2006** ## **APPELLANT/PLAINTIFF** **D.SUNDARESAN, AGED 52 YEARS, S/O. A.DIVAKARAN, CONTRACTOR, RESIDING AT, VILAYIL GARDENS, TC 28/408, KAITHAMUKKU,, THIRUVANANTHAPURAM, NOW RESIDING AT, CHITRABHAVAN, K.K.N.NAGAR, KALLAYAM, THIRUVANANTHAPURAM.** **BY ADVS.SRI.K.L.VARGHESE SMT.SANTHA VARGHESE SRI.RAHUL VARGHESE SRI.RANJITH VARGHESE** ## **RESPONDENT(S)/DEFENDANTS:** **1. STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY, GOVT. OF KERALA,, THIRUVANANTHAPURAM.** **2. THE SUPERINTENDING ENGINEER, NATIONAL HIGHWAY SOUTH CIRCLE, MEDICAL COLLEGE,, NOW AT P.M.G.JUNCTION, THIRUVANANTHAPURAM.** **BY ADV. GOVERNMENT PLEADER SRI.K.V.MANOJ KUMAR** **THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 16-03-2018, THE COURT ON 20-06-2018 DELIVERED THE FOLLOWING:** ## **A.M. SHAFFIQUE & P.SOMARAJAN, JJ.** ========================== RFA No. 426 of 2007 ==================== Dated this, the 20[th] day of June, 2018 ## **J U D G M E N T** ## _**Shaffique, J.**_ This appeal is filed by the plaintiff in OS No. 76/1995 by which a suit for realisation of money has been dismissed by the Trial Court. Before this Court, appeal has been filed claiming only a portion of the suit claim. 2. The short facts arising in the suit are as under:- The plaintiff entered into an agreement dated 6/9/1989 for carrying out certain civil work for and on behalf of the National Highways. The estimated cost of the work was `1,02,23,098/-. The work had to be completed within 18 months from the date of order to start the work. The order to start work was issued on 3/10/1989 and therefore the date of completion was fixed as 03/04/1991. The work could not be completed within the specified time and time was extended till 31/3/1993. Though several claims were made by the plaintiff, in the appeal, he has limited the claim with reference to RFA No.426/07 -:2:- relief No.(h). The said claim was made under two heads. One is compensation for loss on account of break down of departmental machinery and payment of wages to workers, departmental staff and contractor's own supervisory staff, consumables and other sundry expenses during the idling period. Though in relief No.(h), plaintiff claimed `27,67,879/-, in the appeal he had limited the claim to `14,75,316/- based on the assessment made by the Expert Commissioner appointed by the Court and specifically made mention in the Commissioner's report Ext.C1. The second claim is for an amount of `16,832/- towards repairing and refixing of RCC guide stones measured and recorded in page No.88 of Measurement Book No.335/91-92 which was omitted in the final bill for payment. According to the plaintiff/appellant, the number of days lost on account of breakdown of departmental machinery is assessed by the Commissioner based on Ext.B5 log book maintained by the respondent department. The staff operating the department machinery and wages paid to them is borne out in page 56 of M.B. No.121/90-91 aggregating `1,121/- per day. Details of salary/wages paid to the appellant's engineers/staff and labourers is borne out by a log book maintained by the appellant RFA No.426/07 -:3:- (Ext.B5) supported by entries in letter dated 11/11/1991 (Ext.A38(a)). Appellant also refers to various letters issued to the respondents where the appellant had repeatedly notified the factum of breakdown of the departmental hot mixing plant, the hours lost for each and every day and the proportionate amount of loss being suffered on account of payment of wages both to the departmental staff as well as the appellant's staff and labourers. 3. In this appeal, we are therefore concerned with the findings rendered by the court below in issue No.4 and issue No.6 4. Learned counsel for the appellant submitted that the time for performance had overrun and one of the reasons was the breakdown of departmental machinery. As per the contract between the parties, the appellant is under obligation to pay the wages and other payments to departmental staff operating the machinery, which will be deducted from the bill of the contractor. The respondent had deducted the wages paid to such employees when there was breakdown of machinery as well, which is totally illegal. Further, during the breakdown period, the plaintiff had to pay the salary and wages to his own employees. An expert Engineer appointed by the Court had on verification of the entire RFA No.426/07 ## -:4:- records found that the extra amount that had to be spent by the plaintiff as wages and other charges during the period of breakdown of machinery was `14,75,316/- which aspect of the matter has not even been considered by the Court below. Similarly, an amount of `16,232/- was not incorporated in the final bill due to a mistake which is also to be paid. It is stated that this amount is approved in Ext.B4 series at page No.88 of M Book No.335/91-92. However, while making final bill amount, this amount was not paid. 5. With reference to issue No.4, the Court below observed that plaintiff had produced a register as Ext.A95 which is not a prescribed register prepared by the department nor is it signed by any of the defendants. It is further found that plaintiff was compensated by the defendants for the breakdown of machinery during the time of work and revised estimate was accepted by the Chief Engineer and therefore the plaintiff did not sustain any loss in that regard. It is further found that plaintiff was awarded the work at 24.75% over and above the estimate and therefore since he is already paid a decent amount, he cannot sustain such a claim. It is also stated that there is no convincing evidence to RFA No.426/07 -:5:- prove that the plaintiff suffered any loss on account of wages paid for supervisory staff and some expenses beyond 03/04/1991. The Court below further found that the plaintiff has stated that he will not claim any enchained rate for the work done after the period of completion. In so far as the contract is binding on either sides he cannot escape from the stipulations in Exts.B2 and B3 series. 6. With reference to issue No.6, the Court below found that in so far as the final bill had already been settled without any protest, the said amount cannot be claimed. 7. Learned counsel appearing for the appellant placed reliance upon the following judgments:- (i) _**K.N.Sathyapalan v. State of Kerala**_ [(2007) 13 SCC 43]. This case had arisen under the Arbitration Act, 1940. One issue was regarding a claim for enhanced rate during the extended period of contract, i.e., whether in the absence of any price escalation clause in the original agreement and a specific clause to the contrary in supplemental agreement, the appellant could have made any claim and whether the arbitrator exceeded its jurisdiction in allowing such claims. It was held at paragraphs RFA No.426/07 -:6:- ## 32 to 34 as under:- _**“32.** Ordinarily, the parties would be bound by the terms agreed upon in the contract, but in the event one of the parties to the contract is unable to fulfil its obligations under the contract which has a direct bearing on the work to be executed by the other party, the arbitrator is vested with the authority to compensate the second party for the extra costs incurred by him as a result of the failure of the first party to live up to its obligations. That is the distinguishing feature of cases of this nature and Alopi Parshad case and also Patel Engg. case. As was pointed out by Mr Dave, the said principle was recognised by this Court in P.M. Paul where a reference was made to a retired Judge of this Court to fix responsibility for the delay in construction of the building and the repercussions of such delay. Based on the findings of the learned Judge, this Court gave its approval to the excess amount awarded by the arbitrator on account of increase in price of materials and costs of labour and transport during the extended period of the contract, even in the absence of any escalation clause. The said principle was reiterated by this Court in T.P. George case._ _**33.** We have intentionally set out the background in which the arbitrator made his award in order to examine the genuineness and/or validity of the appellant’s claim under those heads which had been allowed by the arbitrator. It is quite apparent that the appellant was prevented by unforeseen circumstances from completing the work within the stipulated period of eleven months and that such delay could have been prevented had the State Government stepped in to maintain the law and order problem which had_ RFA No.426/07 -:7:- _been created at the worksite. It is also clear that the rubble and metal, which should have been available at the departmental quarry at Mannady, had to be obtained from quarries which were situated at double the distance, and even more, resulting in doubling of the transportation charges. Even the space for dumping of excess earth was not provided by the respondents which compelled the appellant to dump the excess earth at a place which was faraway from the worksite entailing extra costs for the same._ _**34.** In the aforesaid circumstances, the arbitrator appears to have acted within his jurisdiction in allowing some of the claims on account of escalation of costs which was referable to the execution of the work during the extended period. In our judgment, the view taken by the High Court was on a rigid interpretation of the terms of contract and the supplemental agreement executed between the parties, which was not warranted by the turn of events”._ ## (ii) _**Assam State Electricity Board and Others v. Buildworth Private Ltd**_ [(2017) 8 SCC 146]. This was also a case arising under the Arbitration Act, 1940. One of the aspects considered by the Apex Court was with reference to an award by arbitrator in a claim for idling charges wherein the contractor has to engage additional labour and machinery. The Apex Court considered the issue relating to escalation from paragraph 14 onwards. It was held at paragraphs 14 to 20 as under:- RFA No.426/07 -:8:- _**“14.** The view which has been adopted by the arbitrator is in fact in accord with the principles enunciated in the judgments of this Court. In P.M. Paul v. Union of India, a Bench of two learned Judges of this Court has held that: (SCC p. 372, para 12)_ _“12. … Escalation is a normal incident arising out of gap of time in this inflationary age in performing any contract. The arbitrator has held that there was delay, and he has further referred to this aspect in his award. … After discussing the evidence and the submissions the arbitrator found that it was evident that there was escalation and, therefore, he came to the conclusion that it was reasonable to allow 20% of the compensation under Claim I, he has accordingly allowed the same. This was a matter which was within the jurisdiction of the arbitrator and, hence, the arbitrator had not misconducted himself in awarding the amount as he has done.”_ _This Court held that the contractor was justified in seeking price escalation on account of an extension of time for the completion of work. Once the arbitrator was held to have the jurisdiction to determine whether there was a delay in the execution of the contract due to the respondent, the latter was liable for the consequence of the delay, namely, an increase in price._ _**15.** A similar principle finds expression in another judgment of two learned Judges of this Court in Food Corporation of India v. A.M. Ahmed & Co.: (SCC pp. 79495, para 32)_ _“32. Escalation, in our view, is normal and routine incident arising out of gap of time in this inflationary age_ RFA No.426/07 -:9:- _in performing any contract of any type. In this case, the arbitrator has found that there was escalation by way of statutory wage revision and, therefore, he came to the conclusion that it was reasonable to allow escalation under the claim. Once it was found that the arbitrator had jurisdiction to find that there was delay in execution of the contract due to the conduct of FCI, the Corporation was liable for the consequences of the delay, namely, increase in statutory wages. Therefore, the arbitrator, in our opinion, had jurisdiction to go into this question. He has gone into that question and has awarded as he did. The arbitrator by awarding wage revision has not misconducted himself. The award was, therefore, made rule of the High Court, rightly so in our opinion.”_ _**16.** In K.N. Sathyapalan v. State of Kerala, this Court has held that: (SCC pp. 51-52, para 32)_ _“32. Ordinarily, the parties would be bound by the terms agreed upon in the contract, but in the event one of the parties to the contract is unable to fulfil its obligations under the contract which has a direct bearing on the work to be executed by the other party, the arbitrator is vested with the authority to compensate the second party for the extra costs incurred by him as a result of the failure of the first party to live up to its obligations. That is the distinguishing feature of cases of this nature and Alopi Parshad case_ ~~_a_~~ _nd also Patel Engg. case. As was pointed out by Mr Dave, the said principle was recognised by this Court in P.M. Paul where a reference was made to a retired Judge of this Court to fix responsibility for the delay in construction of the building_ RFA No.426/07 -:10:- _and the repercussions of such delay. Based on the findings of the learned Judge, this Court gave its approval to the excess amount awarded by the arbitrator on account of increase in price of materials and costs of labour and transport during the extended period of the contract, even in the absence of any escalation clause. The said principle was reiterated by this Court in T.P. George case.”_ _**17.** The award comports with principles of law governing price escalation firmly established by the decisions of this Court. For these reasons, we find merit in the contention of the learned counsel appearing on behalf of the claimant that the award does not suffer from any error apparent on the face of the record insofar as the aspect of price escalation is concerned._ _**18.** The High Court has also adverted to the decision of this Court in Northern Railway v. Sarvesh Chopra in support of the principle that if a party to a contract does not rescind it by invoking Sections 55 and 56 of the Contract Act, 1872 and accepts the belated performance of reciprocal obligations, the other party would be entitled to make a claim for damages._ _**19.** On the aspect of idling charges for machinery and labour, the arbitrator noted that three additional items of work were required to be carried out by the claimant which did not form part of the original work. These items of work required the mobilisation of labour and machinery separately from that which had already been mobilised. The finding which the arbitrator rendered was as follows:_ _“… It is natural that for carrying out separate works_ RFA No.426/07 -:11:- _involving different technology, separate machineries and labour with separate expertise are required to be engaged. In absence of any evidence that these 3 additional works were not separate requiring separate machineries and labour, it is reasonable to presume that the claimant mobilised separate machineries and labour for these 3 additional works. Therefore, the claimant cannot be denied the charges for these additional labour and machineries.”_ _**20.** The arbitrator held that to some extent, the claimant contributed to the delay in the execution of the work and referred in that connection to the letters addressed by the Board to the claimant. The arbitrator also observed that the inability of the claimant to place the required number of supervisors at the site also contributed to the delay in the completion of the work. The point of the matter is that the arbitrator has duly borne in mind the circumstance that “the claimant also contributed to a certain extent and must share responsibility for causing delay in completion of the project”. The award does indicate that the contributory delay on the part of the claimant was present to the mind of the arbitrator and has been duly taken into consideration in computing the extent of the claim under the award. This is not a case where the arbitrator has failed to take into account a relevant consideration or has taken into account extraneous material or consideration. Once the aspect of contributory delay was present to the mind of the arbitrator, as is reflected in the reasons in the award, and this has been taken into consideration in the assessment of damages, the award does not fall for_ RFA No.426/07 ## -:12:- _interference. While noticing this, the High Court rejected the contention that the claimant had failed to produce evidence that its men and machinery remained idle at the worksite. The finding of the High Court was as follows: (Build Worth case, SCC OnLine Gau para 37)_ _“37. … In the present case, the above amount was awarded on the basis of admitted facts. We reiterate that initially the period for execution of work was fixed for one year, which was expired on 25-6-1983 and the work could be completed only in the month of February 1985. Not only this, some part of the work related to TG-IV was completed on 31-1-1986. During this period the respondent informed ASEB vide letter dated 5-6-1983 that work front was not handed over to them and as such, Escalation Clause Order 2:6:4 would not be applicable to them. Identical reminders were given vide letters dated 7-6-1983, 16-11-1983 and 3-6-1984 and so on. Not only this, the officers of ASEB also admitted the position about non-release of work front clearly in their letter dated 8-3-1984. However, at no point of time ASEB refuted the contractor’s objection nor refuted the claim of idle charges, etc. at the same time the bills of the contractor on account of idle charges and escalation prices, etc. were put up for consideration in a meeting held on 29-1-1986. This act of ASEB clearly indicates that they had impliedly admitted substance and justification in the claim of the contractor.”_ _The view of the High Court does not warrant interference”._ ## (iii) _**R.L.Kalathia and Company v. State of Gujarat**_ RFA No.426/07 -:13:- [(2011) 2 SCC 400]. One of the issues considered by the Apex Court in the above judgment is whether issuance of no due certificate would bar the contractor to make further claims. After evaluating the various judgments, the Apex Court laid down the principles as under at paragraph 13. _**“13.** From the above conclusions of this Court, the following principles emerge:_ _(i) Merely because the contractor has issued “no-dues certificate”, if there is an acceptable claim, the court cannot reject the same on the ground of issuance of “no-dues certificate”._ _(ii) Inasmuch as it is common that unless a discharge certificate is given in advance by the contractor, payment of bills are generally delayed, hence such a clause in the contract would not be an absolute bar to a contractor raising claims which are genuine at a later date even after submission of such “no-claim certificate”._ _(iii) Even after execution of full and final discharge voucher/receipt by one of the parties, if the said party is able to establish that he is entitled to further amount for which he is having adequate materials, he is not barred from claiming such amount merely because of acceptance of the final bill by mentioning “without prejudice” or by issuing “no-dues certificate”._ 8. On the other hand, learned Government Pleader while supporting the judgment of the Trial Court contended that this is RFA No.426/07 ## -:14:- an instance where plaintiff had received the entire amount in full and final satisfaction of his claim and therefore he cannot turn around and demand any amount which was already settled between the parties. He also placed reliance upon the following judgments:- ## (i) _**State of Kerala v M.A.Mathai**_ [(2007) 10 SCC 195]. Paragraphs 7 and 8 are relevant which reads as under:- _**“7.** As noted above, the trial court proceeded on the basis as to whether the plaintiff was entitled to damages and if so what is the amount and quantum is to be fixed. It was noted that being a suit for damages, the plaintiff was claiming so many items of damages in terms of money involving many calculations. This is contrary to the respondent’s plea before us. Their stand is that the amount was not for damages but for extra work done. As noted above, it was only a suit for damages. In G.M., Northern Rly._ _v. Sarvesh Chopra it was inter alia observed as follows: (SCC p. 55, para 15)_ _“15. In our country question of delay in performance of the contract is governed by Sections 55 and 56 of the Indian Contract Act, 1872. If there is an abnormal rise in prices of material and labour, it may frustrate the contract and then the innocent party need not perform the contract. So also, if time is of the essence of the contract, failure of the employer to perform a mutual obligation would enable the contractor to avoid the contract as the contract becomes voidable at his option. Where time is ‘of the essence’ of an_ RFA No.426/07 -:15:- _obligation, Chitty on Contracts (28th Edn., 1999, at p. 1106, para 22-015) states_ _‘a failure to perform by the stipulated time will entitle the innocent party to (a) terminate performance of the contract and thereby put an end to all the primary obligations of both parties remaining unperformed; and (b) claim damages from the contract-breaker on the basis that he has committed a fundamental breach of the contract (“a breach going to the root of the contract”) depriving the innocent party of the benefit of the contract (“damages for loss of the whole transaction”)’._ _If, instead of avoiding the contract, the contractor accepts the belated performance of reciprocal obligation on the part of the employer, the innocent party i.e. the contractor, cannot claim compensation for any loss occasioned by the non-performance of the reciprocal promise by the employer at the time agreed, ‘unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so’. Thus, it appears that under the Indian law, in spite of there being a contract between the parties whereunder the contractor has undertaken not to make any claim for delay in performance of the contract occasioned by an act of the employer, still a claim would be entertainable in one of the following situations: (i) if the contractor repudiates the contract exercising his right to do so under Section 55 of the Contract Act, (ii) the employer gives an extension of time either by entering into supplemental agreement or by making it clear that escalation of rates or compensation for delay would be permissible, (iii) if the contractor makes it clear that escalation of rates or compensation for delay shall have to be made by the employer and the employer_ RFA No.426/07 -:16:- _accepts performance by the contractor in spite of delay and such notice by the contractor putting the employer on terms.”_ _**8.** In the instant case, both the trial court and the High Court have without any basis come to hold that the supplemental agreement was due to coercion, etc. For coming to such conclusion, material had to be placed, evidence had to be led. Mere assertion by the plaintiff without any material to support the said stand should not have been accepted by the trial court and the High Court.”_ ## (ii) _**Transmission Corporation of Andhra Pradesh**_ _**Limited and another v. Sai Renewable Power Private Limited and Others**_ [(2011) 11 SCC 34]. This judgment is cited to emphasise the point that to rescind a contract on the ground of duress or coercion, there have to be definite pleadings which have to be substantiated normally by leading cogent and proper evidence. ## (iii) _**Kanchan Udyog Limited v. United Spirits Limited**_ [(2017) 8 SCC 237]. This judgment had been cited to emphasise the point that novation of a contract could also take place sub silentio as held in _**BSNL v. BPL Mobile Cellular Ltd**_ [(2008) 13 SCC 597]. ## (iv) _**Visalakshi Amma v. Gangadharan Nair**_ (2017 (3) RFA No.426/07 -:17:- KLT 89). In this judgment, a learned Single Judge of this Court held that when a document is challenged for want of free consent, the said document is voidable at the option of such a party and when it is voidable and not void _ab initio_ , the person challenging the document ought to file a suit for setting aside the document. 9. The claim that has been made which is reflected in issue No.4 is regarding the expenditure incurred by the plaintiff due to the repeated break down of hot mix batching plaint, paver, dryer unit etc., which resulted in idling of labour. Plaintiff had sent letters Ext.A6 dated 16/7/1990, Ext.A8 dated 1/09/1990, Ext.A10 dated 14/09/1990, Ext,A11 dated 6/10/1990, Ext.A14 dated 13/10/1990 and Ext.A16 dated 20/10/1990 indicating the problems of the secondary unit and requesting replacement of machinery. By Ext.A17 dated 12/12/1990 and Ext.A19 dated 17/1/1991, plaintiff informed the defendants that there was no mechanical staff at site to start the work. Ext.A21 dated 01/02/1991 is a letter issued to the Chief Engineer and Superintending Engineer regarding break down of machinery and the work was being carried out reserving claims which remained to be settled. Ext.A23 is another letter dated 5/3/1991 informing RFA No.426/07 -:18:- the department about the break down of the machinery and the loss suffered by the plaintiff. Ext.A24 is yet another letter dated 9/2/1991 informing the department that the gasket of machine is disintegrated and has fallen apart. He had also claimed damages for the delay. Ext.A26 dated 1/7/1991 and Ext.A29 dated 12/8/1991 are also similar in nature. After completion of the original period for performance of the work, the plaintiff submitted an application in the prescribed format. The reason stated for the shortfall was due to repairs to central mixing plant and bad weather. The Executive Engineer has granted extension of time as recommended by the Assistant Engineer without imposing any penalty. Ext.A64 is the said recommendation dated 30/8/1991. Ext.A67 is another letter dated 30/8/1991 issued by the Executive Engineer to the Superintending Engineer regarding the progress of the work. It is stated that the works were being badly affected mainly due to repeated breakdowns and failure of HM plant as the machinery is an old one under the central machinery unit. Exts.A31, A33, A34 and A35 are all letters issued by the appellant indicating the problems being faced due to breakdown of machinery for one reason or other. Ext.A38(a) RFA No.426/07 -:19:- dated 11/11/1991 is a detailed claim given by the plaintiff due to break down of machinery. Ext.A40 is yet another letter dated 21/12/1991. By Ext.A43 dated 10/1/1992, the Executive Engineer issued a letter to the Superintending Engineer stating that the reason stated by the contractor was genuine and therefore the period of contract should be extended without any penalty. By Ext.A47 dated 25/5/1992, the plaintiff made repeated requests for various claims including extra/revised rate of works. It is also indicated that the department was getting supplementary agreement executed in unilaterally prescribed forms stating that no claim for revision of rates will be made failing which even admitted amounts will not be allowed. By Ext.A70 dated 5/11/1992, the Executive Engineer had issued a letter to the Superintending Engineer regarding recommendation relating to extension of time for completion upto 31/3/1993 and indicating that the reason stated by the plaintiff was genuine. Ext.A59 dated 6/12/1993 is a letter issued by the plaintiff stating that he had signed the last bill under protest, duress, undue influence and without prejudice to his rights and claims whatsoever. On the basis of this evidence it is contended that all along the plaintiff RFA No.426/07 -:20:- had been protesting to the delays claiming compensation/ enhanced rates. 10. As far as the number of days lost due to breakdown of machinery is concerned, the same had been assessed by the Expert Commissioner PW2 as evident from Ext.C1 report. He has arrived at the said figure based on Ext.B5 log book maintained by the respondents. In the report at page 5, under item A, the wages paid to the staff every day has been recorded. The total number of days will come to 2129 days. The Commissioner had however committed a calculation error and the number of days recorded was 1129. From the materials placed on record especially the Expert Commissioner's report, the contractor has lost 214 days on account of idling of machinery and during the said period, he had to pay `6,894/- per day as wages for the departmental staff as well as to the plaintiff's staff. Therefore the total claim would come to `14,75,316/-. As far as the claim under issue No.6 is concerned, the said amount finds a place in the measurement book and it was not paid. The only ground taken by the respondents is that the final bill had already been settled and therefore no amount is payable. RFA No.426/07 -:21:- 11. The first question to be considered is whether the plaintiff is entitled to claim the aforesaid amounts after receiving the final bill amount in full and final settlement of the claim and further promising that no escalation shall be claimed for the work done during the extended period. This is not a case in which plaintiff claims any escalation of rate. Plaintiff claims damages for the breach of contract committed by the defendants. The breach of contract according to the plaintiff is the idling of machinery. The damages quantified by the plaintiff is based on the wages he had to pay during the idling period. The machinery is admittedly supplied by the department and they are bound to maintain and keep it ready. If on account of breakdown of the machinery the contractor becomes obliged to pay wages for the staff who were idling which includes departmental staff as well as contractor's staff. Necessarily, it is a loss suffered by the contractor. Is he not entitled to recover such loss from the department is the question. Exts.B2 and B3 series relied upon by the learned Government Pleader by which the contractor had promised not to seek any escalation of rates on account of extension of period has no application to the facts of the case. When the factum of idling of RFA No.426/07 -:22:- machinery is not disputed, the consequences relating to the same has to follow and therefore there is justification on the part of the plaintiff to claim the said amount. Judgments relied upon by the learned Government Pleader have no application to the facts of the case. As already stated, extension of the period of contract by stating that the contractor will not claim any escalation in the rates does not apply to the factual situation. Even otherwise, in _**K.N.Sathyapalan**_ (supra), the Apex Court held that though the parties are bound by the terms agreed upon in the contract, in the event one of the parties to the contract is unable to fulfill its obligations under the contract which has a direct bearing on the work to be executed by the other party, the arbitrator is vested with the authority to compensate the second party for the extra costs incurred by him as a result of failure of the first party to live up to its obligations. This finding has been rendered despite the fact that there was no price escalation clause in the original agreements and there was a specific prohibition in the supplementary agreement that the contractor was not entitled for escalation of price. This is also an instance where appellant was prevented form carrying out the contract for 214 days on account RFA No.426/07 -:23:- of idling of machinery. During this period he had to pay salary and wages to the departmental staff as well as his staff. This is definitely an item of damages that a party to a contract will suffer on account of an admitted breach by the other party and there is no rule of law which prevents awarding such compensation. Still further, in _**Assam State Electricity Board**_ (supra), the Apex Court had while considering an almost similar claim after referring to the judgments in _**P.M.Paul v. Union of India**_ (1989 Supp (1) SCC 368), _**Food Corporation of India v. A M Ahmed and Company**_ [(2006) 13 SCC 779] _**K.N. Sathyapalan**_ (supra) and _**Northern Railway v. Sarvesh Chopra**_ [(2002) 4 SCC 45] held that the contractor was called upon to undertake three additional items of work which did not form part of the original work which requires mobilisation of labour and machinery separately in that regard. An award was passed granting the claimant charges for the additional labour and machineries. The said finding of the arbitrator was upheld by the High Court which was confirmed by the Apex Court. It is relevant to note that in an instance where the defendant had agreed to supply the machinery for carrying out the work, if there is breakdown of the machinery, necessarily, it is RFA No.426/07 -:24:- required to be repaired and maintained properly without any delay. In this case, it is found by the Expert Commissioner and the Advocate Commissioner who were also examined before Court that on account of idling of the machinery, the work could not proceed for 214 days. The contract provided that, on a day to day basis, the contractor had to pay `6,894/- as wages to the departmental staff as well as to plaintiff's staff. When the Advocate Commissioner along with the Expert Commissioner had clearly indicated the amounts paid based on the documents produced by the department and the plaintiff, there is no reason to doubt the quantum of expenses incurred by the plaintiff for maintaining the departmental staff and their own staff during the idling period. 12. The Court below had however proceeded on the basis that already the contractor was awarded the work at 24.75% above the schedule of rates and therefore he cannot claim anything more than the said amount. This view is highly untenable. The work is awarded at a specified rate which is 24.75% above the schedule of rates and it is not a bounty to the contractor. That is the agreed rate. The contractor does not claim RFA No.426/07 -:25:- any escalation in rate as such. Though earlier a claim has been made in the suit, in the appeal, they have not re agitated the said claim. The compensation is claimed for the delay on the part of the department in maintaining the machinery which they have offered to provide for carrying out the work and the claim is quantified as per the amount spent by the contractor for idling of labour. The contractor had paid wages and other perks for the departmental staff as well as his own staff which amount alone he is claiming. The Court below proceeded on the basis that Ext.A95 is the only document to prove the said claim. In fact, an Advocate Commissioner was appointed. He along with the Expert Commissioner has verified all the documents and had clearly indicated that 214 days has been lost due to idling of machinery and the per day loss for the contractor as wages alone for departmental staff and his staff is `6,894/- per day. We are of the view that the contractor is entitled to receive the said amount from the department with proportionate costs. 13. Now coming to the claim made under issue No.6, it is not disputed that this was an amount payable to the contractor whereas the only contention urged is that the final bill had been RFA No.426/07 -:26:- settled. An amount of `16,232 for repairing and refixing 260 numbers of guide stones is approved as per M book No.335/91-92 (Ext.B4 series). Once it is approved, it is an amount legally due under the contract which is liable to be paid. If it is not paid, merely for the reason that the final bill had been settled does not indicate that a mistake in payment could enure to the benefit of the defendant. As held by the Apex Court in _**R.L. Kalathia and Company**_ (supra), even after execution of full and final discharge voucher, if one of the party is able to establish that he is entitled for further amount for which he is having adequate materials, he is not barred from claiming such amount. This is also an instance where the claim is undisputed and the dispute is raised only on account of the fact that the final bill had been settled and the contractor has given a full and final settlement voucher. Judgment in _**R.L. Kalathia and Company**_ (supra) supports the plaintiff for obtaining a decree. Hence, the appellant/plaintiff is entitled for an amount of `16,232/-. In the result, the appeal is allowed. We set aside the judgment of the Trial Court and the suit is decreed as under:- The defendants shall pay the plaintiff an amount of RFA No.426/07 ## -:27:- `14,91,548/- (Rupees Fourteen lakhs ninety one thousand five hundred and forty eight only) with interest at the rate of 9% per annum from the date of suit till realisation along with proportionate costs before the Trial Court and before this Court. Sd/- ## **A.M. SHAFFIQUE, JUDGE** Sd/- ## **P.SOMARAJAN, JUDGE** Rp //True Copy// PS to Judge