State of Kerala v. K.M. Jacob and Others (A.S. No. 296 of 2000 (E))

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE V.CHITAMBARESH & THE HONOURABLE MR. JUSTICE SATHISH NINAN** **MONDAY, THE 13TH DAY OF FEBRUARY 2017/24TH MAGHA, 1938** **AS.NO. 296 OF 2000 (E) -----------------------** **AGAINST THE JUDGMENT IN O.S. NO.7 OF 1993 OF THE III ADDITIONAL SUB COURT, ERNAKULAM DATED 21.01.1999** ## **APPELLANT(S)/DEFENDANTS:** **------------------------** **1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY PUBLIC WORKS DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM.** **2. THE EXECUTIVE ENGINEER, PWD BUILDINGS DIVISION, ERNAKULAM, COCHIN - 31.** ## **BY SENIOR GOVERNMENT PLEADER SHRI B.JAYASURYA** ## **RESPONDENT(S)/PLAINTIFF:** **----------------------------** **K.M. JACOB, KALAMAKUDIYIL HOUSE, MEKKADAMPU P.O., MUVATTUPUZHA ERNAKULAM DISTRICT. (DIED)** ## **ADDITIONAL RESPONDENTS IMPLEADED:** **---------------------------------** **2. SMT.ALIYAMMA JACOB, W/O.LATE K.M. JACOB, KALAMAKUDIYIL HOUSE, MEKKADAMPU P.O., MUVATTUPUZHA ERNAKULAM DISTRICT.** **3. SHRI K.J. PRASAD, S/O.K.M. JACOB KALAMAKUDIYIL HOUSE, MEKKADAMPU P.O., MUVATTUPUZHA ERNAKULAM DISTRICT.** ## **AS.NO. 296 OF 2000 (E)** **4. SHRI SAIBY K.JACOB, S/O.K.M. JACOB KALAMAKUDIYIL HOUSE, MEKKADAMPU P.O., MUVATTUPUZHA ERNAKULAM DISTRICT.** **5. SHRI MATHEW P.RAJAN, S/O. LATE SMT.LISSY RAJAN, D/O.LATE K.M. JACOB, PADIPPURACKAL HOUSE, MULANTHURUTHY P.O., ERNAKULAM.** **6. SHRI JACOB P.RAJAN, S/O. LATE SMT.LISSY RAJAN, D/O.LATE K.M. JACOB, PADIPPURACKAL HOUSE, MULANTHURUTHY P.O., ERNAKULAM.** **LEGAL HEIRS OF THE DECEASED SOLE RESPONDENT ARE IMPLEADED AS ADDITIONAL RESPONDENTS 2 TO 6 VIDE ORDER DATED 05.06.2012 ON I.A. NO.356 OF 2009** **R,R2 TO 6 BY ADV. SRI.K.BABU THOMAS** **THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 25.01.2017, THE COURT ON 13.02.2017 DELIVERED THE FOLLOWING:** # **V.CHITAMBARESH &** # **SATHISH NINAN, JJ.** **==================== A.S. No.296 of 2000** **==================== Dated this the 13[th] day of February, 2017** ## **J U D G M E N T** ## **SATHISH NINAN, J.** The decree in a suit for recovery of money is under challenge by the defendants in the suit. 2. Exhibit B1(a) contract was entered into between the plaintiff and defendants in respect of a road work. The period for completion of the work was four months from the date of handing over of possession of the site. Possession was handed over on 16.07.1990 and accordingly the work was to be completed on 15.11.1990. Admittedly, the work got delayed. It did not even commence till the expiry of the stipulated period of four months. According to the plaintiff the delay was caused on the fault of **A.S. No.296 of 2000** -: 2 :- the defendants. The claim of the plaintiff is that consequent to the delay, there was hike in the costs and prices which resulted in loss to the plaintiff. So also, extra works including widening of the road beyond the original stipulated width were required to be carried out by the plaintiff and thus the plaintiff claims amounts under the said head also. 3. According to the defendants the delay was caused on the fault of the plaintiff, that extra works have been specifically provided for in the agreement between the parties and further that after execution of the supplementary agreements whereunder the plaintiff agreed to complete the works at the original rate, the plaintiff is not entitled to make any further claim. 4. On the evidence, the court below found that the delay in completion of the work was caused on the fault of the defendants. The initial level **A.S. No.296 of 2000** -: 3 :- measurements were to be taken in order to commence the work. The initial level measurements were approved only on 08.09.1991 which itself is beyond the period of contract. It is not disputed that taking of initial level measurements is a condition precedent for commencement of the work and that it was to be taken by the defendants. Though it is contended by the defendants that the plaintiff failed to make necessary arrangements for taking the initial level measurements, the 2[nd] defendant as DW1 has rather admitted their default in not intimating the plaintiff regarding taking of initial level measurements. In view of the admissions of the 2[nd] defendant as DW1, it is beyond doubt that there was undue delay on the part of the defendants in taking the initial level measurements. It is in evidence that there was delay on the part of the defendants in supplying cement. As is evident from Ext.A8 dated **A.S. No.296 of 2000** -: 4 :- 08.01.1991, there was inordinate delay in procuring cement, which was the duty of the defendants. Thus, the finding of the court below that the delay in performance of the contract was caused at the instance of the defendants, is not liable to be interfered with. 5. Plaintiff claims that consequent to the delay in carrying out the work, there was rise in cost of labour, materials, etc. Though the agreement between the parties, Ext.B1(a) provided for payment on the basis of PWD schedule of rates of the year 1988, the expenses actually incurred by the plaintiff are much higher and payment is claimed at the revised rates as fixed by the PWD in the year 1990. The said claim is challenged by the defendants relying upon the supplementary agreements entered into by the plaintiff whereunder the work is agreed to be completed at the rates originally fixed. **A.S. No.296 of 2000** -: 5 :- Plaintiff challenges the validity of the said clause in the supplementary agreements alleging undue influence, coercion, etc. 6. Performance of the contract was delayed at the hands of the defendants. The fact that the PWD itself has revised rates in the year 1992 makes it beyond controversy that there has been increase in price and rates. The contention of the plaintiff is that unless the supplementary agreements were executed by him, payment of part bills would not be effected by the defendants which compelled the plaintiff to execute supplementary agreements. The question as to whether execution of supplementary agreements of the said nature would disentitle the plaintiff from making a claim subsequently for enhanced rates came up consideration before the Apex Court in **K.N. Sathyapalan (Died) By L.Rs. v. State of Kerala and Another** ([2007] 13 SCC 43) **A.S. No.296 of 2000** ## -: 6 :- ## wherein it is stated thus: “31. The question which we are called upon to answer in the instant appeal is whether in the absence of any price escalation clause in the original agreement and a specific prohibition to the contrary in the supplemental agreement, the appellant could have made any claim on account of escalation of costs and whether the arbitrator exceeded his jurisdiction in allowing such claims as had been found by the High Court. 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 ## **A.S. No.296 of 2000** ## -: 7 :- 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.” 7. The court below has referred to Exts.A9, A10 and A13 to A17 which are letters dated 11.01.1991, 16.02.1991, 16.05.1991 and 22.08.1991 respectively, issued by the plaintiff objecting to the rates for the work. In Ext.A9, he has specifically claimed payment at the rate fixed by the PWD in 1990. The fact of escalation of price is practically unchallenged. Here it is also pertinent to note that the 2[nd] defendant as DW1 has admitted that revised rates of 1990 came into force with effect from 01.06.1990 and that the entire work under the contract was carried out only after the said date. Therefore, the conclusion of the court below that the plaintiff is entitled for payment on the basis of the revised schedule of rates of 1990 is upheld. **A.S. No.296 of 2000** -: 8 :- 8. It is not in dispute that under the original contract the road to be constructed was to have an average width of six metres and that it was subsequently enhanced to 8 metres. The quantum of excess work done by the plaintiff has been assessed as per Ext.C1 series reports prepared by the Commissioner with the assistance of the Executive Engineer of the Kerala Irrigation Department. There is no material to arrive at a finding that the claim for additional expenses under the heads that were granted by the court below are erroneous. The challenge of the appellants was on the claim for enhanced rate rather than on the claim for additional works. The finding of the court below under the head of additional works and expenditure are not seriously challenged. At any rate there is no material to conclude that the amount decreed under the said heads are liable to be varied. ## **A.S. No.296 of 2000** -: 9 :- 9. The court below has granted interest at the rate of 12% per annum from the date of suit till realisation. We feel that grant of interest at the rate of 9% per annum would be just and proper. Hence the rate of interest is re-fixed as 9% per annum from the date of suit till realisation. The Appeal Suit is allowed to the above extent. All other findings are confirmed. No costs. **==> picture [60 x 12] intentionally omitted <==** **V.CHITAMBARESH, JUDGE.** Sd/- **SATHISH NINAN, JUDGE.** vsv /true copy/ P.S. to Judge