The Kerala Water Authority v. P.A.Raju and The Federal Bank Ltd. and The State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE V.CHITAMBARESH & THE HONOURABLE MR. JUSTICE SATHISH NINAN THURSDAY, THE 6TH DAY OF JULY 2017/15TH ASHADHA, 1939 A.S.No. 220 of 2002 ( ) ----------------------- (AGAINST THE JUDGMENT AND DECREE IN O.S.NO.523/1995 OF PRINCIPAL SUB COURT,ERNAKULAM DATED 17-12-2001) APPELLANTS/DEFFENDANTS 1 & 2: ---------------------------- 1. THE KERALA WATER AUTHORITY, REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR, KERALA WATER AUTHORITY, HEADQUARTERS, TRIVANDRUM. 2. THE SUPERINTENDING ENGINEER, KERALA WATER AUTHORITY, PUBLIC HEALTH, CIRCLE, COCHIN-11. BY ADVS.SRI.C.T.JOSEPH SRI.K.R.GANESH SRI.C.JAYACHANDRAN SRI.JOE POLLAYIL SRI.N.SAJU THOMAS RESPONDENTS/PLAINTIFF AND DEFENDANTS 3 AND 4: -------------------------------------------- 1. P.A.RAJU, KUNNAPPILLIL HOUSE, S/O. ABRAHAM, AGED ABOUT 36, KOOTHATTUKULAM VILLAGE, ERNAKULAM DISTRICT. 2. THE FEDERAL BANK LTD., KOOTHATTUKULAM BRANCH, REPRESENTED BY ITS MANAGER KOOTHATTUKULAM P.O., ERNAKULAM DISTRICT. 3. THE STATE OF KERALA, REPRESENTED BY THE DISTRICT COLLECTOR, COLLECTORATE, ERNAKULAM. R1 BY ADV. SRI.BIJU C. ABRAHAM THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 04-07-2017, THE COURT ON 06-07-2017 DELIVERED THE FOLLOWING: ## V.CHITAMBARESH & SATHISH NINAN, JJ. = = = = = = = = = = = = = = = = = = = = = = = = A.S.No.220 of 2002 = = = = = = = = = = = = = = = = = = = = = = = = Dated this the 6[th] day of July, 2017 ## JUDGMENT ## Chitambaresh, J. 1.Defendants 1 and 2 have filed this appeal suit against the decree passed by the court below in favour of the plaintiff and the third defendant bank and the fourth defendant State are eo nominee parties only. The operative part of the impugned judgment is as follows: “From the above findings on the entitlement of the plaintiff to recover damages, I am inclined to conclude that the plaintiff shall be allowed to recover from the defendants 1 and 2, a sum of Rs.2,73,400/- as enhanced value of works executed by him, Rs.17,040/- being the admitted unpaid final bill amount and AS220/2002 ## -: 2 :- Rs.20,686/- as compensation for deprived gains, with future interest @ 18% per annum from 5.9.1991 till realisation.” The contract with the plaintiff was terminated by the second defendant by Ext.A59 order dated 20.9.1990 which concluded as follows: - i. The original contract of the work No.42/84-85 with Sri.P.A.Raju, Kunnappillil House, Kizhakombu P.O. is terminated from the date of this order. The Executive Engineer, P.H.Division, Idukki will take necessary action to close the accounts of the contractor Sri.P.A.Raju. ii.The balance work will be arranged by the undersigned. - 2.There is no serious challenge to the sum of Rs.17,040/- AS220/2002 ## -: 3 :- awarded towards the unpaid final bill amount and we also find that the finding is rested on evidence warranting no interference in this appeal. Ext.B2(d) final bill dated 29.5.1991 coupled with Ext.B2(e) measurement book show that the suit filed on 21.10.1993 in regard to the claim for unpaid final bill amount is in time. But that is not the case in regard to the claim for enhanced value of works executed by the plaintiff and also the claim for compensation for deprived gains with future interest. We say so since the suit has been filed on 21.10.1993 well beyond the period of three years from the date of termination of the contract by Ext.A59 order dated 20.9.1990. The period of limitation for compensation for breach of contract is three years when the contract is broken as per Article 55 of the Limitation Act, 1963 [See State v. Narayana Pillai (AIR 1958 Ker 366)]. 3.Ext.A61 notice dated 18.7.1991 issued by the second AS220/2002 ## -: 4 :- defendant to the plaintiff precedes the taking of final measurements and cannot be termed as an acknowledgment of liability in terms of Section 18 of the Limitation Act, 1963. A final measurement is necessary even for discharging the admitted liability for the works completed on the rates agreed and does not stretch the period of limitation for claiming enhanced value or compensation. The claim is plainly barred by limitation and the court below erred in awarding a sum of Rs.2,73,400/- as enhanced value of works and Rs.20,686/- as compensation. 4.The plaintiff cannot sustain the claim on the above two heads even if it is in time since Exts.B1(b), B1(c), B1(d) and B1(g) supplemental agreements executed for extension of time do contain the following clause: - “The contractor shall carry out all further works as AS220/2002 ## -: 5 :- under the principal agreement within the said extended period at the rates and in the manner agreed therein subject to all the other conditions prescribed in the said agreement and shall not claim any enhanced rate for such items of work on account of the extension of time, either due to the increase in the rate of labour or materials or on any other ground whatsoever”. (emphasis supplied). The above clause specifically prohibits the plaintiff from claiming any enhanced rate for such items of work on account of extension of time unless of course the conditions stated in State of Kerala v. Mathai [2007 (2) KLT 513(SC)] exist. There is no evidence worthy of credence to hold that the supplemental agreements were vitiated by coercion and that the plaintiff agreed to the same due to bills outstanding. 5.The Supreme Court in the above decision followed General Manager, Northern Railways and another v. Sarvesh Chopra AS220/2002 -: 6 :- ## [AIR 2002 SC 1272] wherein it is held as follows: “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 any 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 contract makes it clear that escalation of rates or compensation for delay shall have AS220/2002 ## -: 7 :- to be made by the employer and the employer accepts performance by the contractor in spite of delay and such notice by the contractor putting the employer on terms.” 6.None of the conditions mentioned above exist in the present case and the plaintiff has neither repudiated the contract nor put defendants 1 and 2 on notice about the terms before venturing to complete the work in the extended time. The various supplemental agreements on the other hand contain an express clause that escalation of rates or compensation for delay would be impermissible. We therefore hold that the plaintiff is not entitled to the sum of Rs.2,73,400/- as enhanced value of works as also Rs.20,686/- as compensation for deprived gains with future interest and the decree to that extent is set aside. It should be stated that supplemental agreements in regard to excess quantities and AS220/2002 -: 8 :- extra items itself specify the rate which are taken in the claim for unpaid final bill amount. 7.The plaintiff is entitled to a decree for Rs.17,040/- towards the unpaid final bill amount with interest thereon at 18% per annum from 5.9.1991 (as awarded by the court below) till the date of realisation. The decree of the court below is modified accordingly and needless to say that the court fee payable on the plaint shall be recovered from the plaintiff since the suit was filed as an indigent person. The appeal suit is allowed in part. No costs. Sd/- - V.CHITAMBARESH, JUDGE Sd/SATHISH NINAN, JUDGE Sha/040717 -true copy- PS to Judge