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TMI Blog1979 (1) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... was neither shown to be mala fide nor unreasonable. It will thus appear clear that though time was not of the essence of the contract, the respondent-defendant did not fix any further period making time the essence directing the appellant- plaintiff to complete the work within such period; instead it rescinded the contract straightaway by letter dated August 27, 1956. Such recision on the part of the respondent-defendant was clearly illegal and wrongful and thereby the respondent-defendant committed a breach of contract, with the result that there could be no forfeiture of the security deposit. In our view, therefore, the trial court was right in coming to the conclusion that the appellant-plaintiff was entitled to a refund of their full security deposit of 4,936/- as also to 5845/- being the balance of their Bill No. 1253 dated September 20, 1956 for work actually done by them and not paid for and nominal damages of 120/-. The appellant- plaintiff was also entitled to interest on the aforesaid sums and costs of suit as directed by the trial court. X X X X Extracts X X X X X X X X Extracts X X X X ..... -plaintiff had been orally informed that this period would be deducted or not taken into account for calculating the period of 12 months under the contract and that on this assurance he had commenced the work towards the end of December 1955. His case further was that in any event time was not of the essence of the contract, that on account of several difficulties, such as excessive rains, lack of proper road and means of approach to the site, rejection of materials on improper grounds by Government Officers, etc., over which he had no control, the completion of the work was delayed and that the extension of the time which was permissible under the contract had been wrongfully refused by the officers of the respondent-defendant. According to him none of these factors had been taken into account by the Government while refusing the extension and the contract was wrongfully rescinded and, therefore, the respondent-defendant was liable in damages. The total claim of Rs. 65,000/- comprised six items-(1) Rs. 4,936/- being the amount of security deposit wrongfully forfeited by the respondent-defendant, (2) Rs. 10,254/- being the amount due to him for the actual work done by him under Bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongfully rescinded the contract, that the appellant- plaintiff was entitled to damages but that he had not established the two items claimed as damages and he was entitled to a nominal sum of Rs. 120/- as damages. He further held that since the recision of the contract was wrongful the State was not entitled to forfeit the security deposit nor levy any penalty. He accordingly decreed the appellant-plaintiff's claim in respect of refund of security deposits and as regards the amount of Bill No. 1253 dated September 20, 1956 for actual work done he held that a sum of Rs. 5,845/- only would be due to him after giving credit for Rs. 4,409/- due from the appellant-plaintiff to the State. He accordingly decreed the appellant-plaintiff's suit to the extent of Rs. 10,901/- with interest thereon at 6% per annum from the date of recision till date of suit and allowed proportionate costs to him. Two appeals were preferred against the aforesaid decree of the trial court, one by the appellant-plaintiff in respect of the claims that had been disallowed (First Appeal No. 245 of 1962) and the other by the State in respect of the claims allowed against it (First Appeal No. 844 of 1961). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed with appropriate order of proportionate costs. In support of the present appeal counsel for the appellant-plaintiff raised two or three contentions. In the first place he contended that the High Court was in error in not deciding the main issue whether the time was of the essence of the contract or not ? He urged that the said issue could not be avoided in the manner done by the High Court, for, if time was not of the essence of the contract then just before the expiry of the 12 months' period or immediately after its expiry it was up to the respondent- defendant to grant some reasonable time to the appellant- plaintiff for completing the work undertaken and make the same the essence of the contract and only if the work was not completed by the appellant-plaintiff within that time the contract could have been rescinded on the ground that the appellant-plaintiff had committed a breach of a contract. According to him such course of action on the part of the respondent-defendant was obligatory, when the initial period of 12 months was not of the essence, especially when the request of the appellant-plaintiff for extension of time was pending before the concerned officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that arises for our consideration, therefore, is whether time was of the essence of the contract that was executed between the parties on July 12, 1955 (Ex. 34). It cannot be disputed that question whether or not time was of the essence of the contract would essentially be a question of the intention of the parties to be gathered from the terms of the contract. The contract in the instant case is for the construction of an aqueduct across the Alandi River at Mile No. 2 of the Nasik Left Bank Canal and unquestionably 12 months' period commencing from the date of the commencement of the work had been specified within which the construction had to be completed by the appellant-plaintiff. Indisputably, in the work order dated July 2, 1955 the Executive Engineer had directed the appellant-plaintiff to commence the work by July 5, 1955 intimating in clear terms that the stipulated date for starting the work would be reckoned from July 5, 1955. Both the trial court as well as the High Court have found that mentioning of July 5, 1955 as the date for starting the work was not nominal but was real date intended to be acted upon by the parties. It is, therefore, clear that 12 months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of waiver, the time fixed has ceased to be applicable, the employer may by notice fix a reasonable time for the completion of the work and dismiss the contractor on a failure to complete by the date so fixed." (Emphasis supplied) It will be clear from the aforesaid statement of law that even where the parties have expressly provided that time is of the essence of the contract such a stipulation will have to be read along with other provisions of the contract and such other provisions may, on construction of the contract, exclude the inference that the completion of the work by a particular date was intended to be fundamental, for instance, if the contract were to include causes providing for extension of time in certain contingencies or for payment of fine or penalty for every day or week the work undertaken remains unfinished on the expiry of the time provided in the contract such clauses would be construed as rendering ineffective the express provision relating to the time being of the essence of contract. The emphasised portion of the aforesaid statement of law is based on Lamprell v. Billericay Union, Webb v. Hughes and Charles Rickards Ltd. v. Oppenheim. It is in light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be available to the contractor. Such a provision would clearly be inconsistent with parties intending to treat the stipulated period of 12 months in cl. 2 as fundamental. Similarly, in cl. 2 itself provision was made for levying and recovering penalty/compensation from the appellant-plaintiff at specified rates during the period the work shall remain unfinished after the expiry of the fixed date. Such provision also excludes the inference that time (12 months period) was intended to be of the essence of the contract. Further with regard to the provision that is to be found in cl. 2 whereunder a time schedule for proportionate work had been set out (namely, 1/4 of the work in 1/4 of the time, 1/2 of the work in 1/2 of the time and 3/4 of the work in 3/4 of the time), the evidence of the Superintending Engineer Pandit (D.W. 1) is very eloquent. In para 13 of his deposition this is what he has stated: "In the agreement (Ex. 3.1) the rate of work is based on the valuation 1/4th time mentioned means 1/4th in 12 months. The suit contract is for Rs. 1,07,000/-. 1/4th work means the work of about Rs. 27,000/-. It is not possible to do the work of Rs. 27,000/- in 1/4th time as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot for showing that the recision of the contract was unreasonable or unjustified. In our view, the question would not be whether the recision of the contract was unreasonable and, therefore, unjustified but whether the recision of the contract in the circumstances of the case was wrongful and illegal. If time was not of the essence of the contract or if the stipulation as to the time fixed for completion had, by reason of waiver, ceased to be applicable then the only course open to the respondent-defendant was to fix some time making it the essence and if within the time so fixed the appellant-plaintiff had failed to complete the work the respondent-defendant could have rescinded the contract. The High Court has taken the view that the contract was rightly rescinded by the respondent-defendant because by about July 21, 1956 (vide letter Ex. 74) the appellant-plaintiff had done work of the value of Rs. 35,000/- as against the tender value of Rs. 1,07,000/-, that is to say, only 1/3rd of the total work had been completed and, therefore, even though time was not of the essence of the contract, the appellant-plaintiff, in the circumstances, could not have completed the work even within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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