9911796707
TMI Blog1993 (6) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... hed certain conditions while submitting the tender, but later on withdrew those conditions and submitted the letter to that effect. Briefly, therefore, the tender of the plaintiff was accepted at the rate 4.91 per cent above estimated amount of the tender. It seems that the tender was published for Rs. 4,55,273/-, but in pursuance of the acceptance of the tender of the plaintiff, the estimated cost of the work rose to Rs. 4,77,627/-. The appellant/defendant No. 2 issued the work order AB/T/4781/78 on 5-7-1978 and it is not in dispute that the plaintiff started the work of the construction of the bridge across the said Serpani river. The prescribed time limit for this work was 18 months which on the basis of 5-7-1978 was 4-1-1980. It is, however, not in dispute that this date remained on paper and on account of several circumstances beyond the control of the plaintiff as well as the defendants, the construction of the bridge was completed on 15-2-1981. 2. The allegations of the plaintiff are that during the execution of the work, the plaintiff found several defects in putting up the foundation both for abutment and piers. The excavation had to be done deeper than the designed level ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as that under the stipulated conditions of tender, the plaintiff was not entitled to the additional amount or extra rates for excess excavation and dewatering. 3. Turning to the further contentions raised by the plaintiff, it is stated that the plaintiff was expected to excavate 431.20 cubic metres for foundation in hard strata including shoring and structuring at the above stipulated rate, but the defendants called upon him to go deep in the matter for excavation. The plaintiff has contended that this was strictly done on the implied consent or rather implied persuasion by defendant No. 2. Besides the above letters, the plaintiff sent further letters on 14th December, 1978 and 1-2-1979 claiming Rs.75/- per cubic metre for the purposes of excavation. This was based on the reasoning that he had to employ additional labors .The defendant did not dispute this position. On the other hand, according to the plaintiff, the defendant No. 2 promised the plaintiff that he will be paid the difference at the claimed rates and as per the instructions of the Executive Engineer, the plaintiff completed the excavation for foundation to the additional depth of 1.81, 0.31, 0.01, 106 R.M. in the pie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther contention of the plaintiff is that on account of rise in prices of the construction material, wages of labourers, transport charges, etc., there was escalation in the cost and the Government Notification, dated 15-9-1981 permitted 10% escalation in cost of the estimated amount in tender. He has, therefore, also claimed the escalation in the tender amount. 7. According to the plaintiff, his repeated request to the defendants to pay him this amount, fell on deaf ears and, therefore, the plaintiff had to give notice under Section 80 Civil Procedure Code on 12th May, 1982. However, as there was mistake in calculation in the claim amount, the same was rectified in the another notice, dated 22nd April, 1983. Accordingly, the second notice was given. The plaintiff claimed Rs. 2,56,592/- as the amount due on 31st March, 1983. This was inclusive of the interest by way of damages at the rate of 18% for the period from 1-5-1979 to 31-3-1983. The plaintiff accordingly filed suit for Rs. 2,97,000/- with interest of 18% from the date of institution of the suit till payment. 8. This was stoutly resisted by the defendants in the written statement at Ex. 10. The defendants admitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out by him and in that light, he is bound by the terms of tender agreement. Regarding the claim for excavation at Rs. 75/- per cubic metre, it is stated that the said claim is not at all supported by either tender rates or D.S. rates. In view of the conditions laid down in specification No. 2 in the tender, the respondent/plaintiff was not at all entitled to additional amount for dewatering sequel to additional depth both in respect of the abutments and piers. 11. Further attention is drawn to Cl. 50 of the tender agreement and the appellants/ defendants have emphatically stated that the proper procedure for the plaintiff was to refer the dispute to Superintending Engineer. The same having not been done, the plaintiff now cannot lay claim for any additional amount. He is, therefore, not entitled to Rs. 40,972/-for extra excavation of Rs. 28,614/- for additional dewatering. 12. Regarding the depth levels, a chart is furnished in paragraph 11 of the written statement and it is suggested that the plaintiff was required to go down by 3 mtrs. only in case of two structures, namely, right side abutment and pier No. 1, but certainly not in case of other abutment and remaining p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the additional claim at the rate of Rs, 1,000/- per running metre for dewatering which was required to be done for going below the designed level in the contract. He also upheld the claim regarding additional rubble trap for the abutment and the piers sequel to the increase in depth of those parts of the construction. He also upheld the claim regarding the escalation costs to the tune of Rs. 53,170/- and also the interest of Rs. 61,345/- as claimed in the plaint. In keeping with these findings, the learned trial Judge was pleased to decree the claim of the plaintiff to the extent of Rs. 2,18,755/- together with interest at the rate of six per cent per annum from the date of filing of the suit till realization. 16. Being aggrieved by this judgment and decree, the appellant/State has preferred this Appeal and the learned Assistant Government Pleader has vehemently contended that the entire claim is not maintainable firstly in view of the explicit terms provided in the tender and secondly the claim is inclusive of the interest on interest, which is also not permissible in view of the ratio laid down by this Court. On the other hand, according to the learned Assistant Government Pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sential in order to create a satisfactory contract for the contractual obligations of the parties to be expressed in a suitable documentary form. In addition to the drawings, specifications or bills of quantities prepared for the particular project, the form and conditions of contract applicable to the work must be identified and specifically set out. Normally, this is done by selecting standard forms widely available for the Government Contracts. The tenders should normally contain various details, but there should be ordinarily the provision for extension of time and also for payment of extra work for which no rates are specified. On the completion of tender as above and the communication of its acceptance to the contractor, a valid and legal contract comes into force. Filing of tender is in the form of lodging a proposal and acceptance of the tender and the rates mentioned therein is the acceptance of tender which brings into existence the concluded contract between the parties. A term which is not actually included in a written contract cannot be implied unless the Court comes to a clear conclusion that both the parties must have intended that the term should be implied. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned therein may not be complete or that nature of soil is unknown. He should visualise all probable contingencies and also all other matters which could in any way influence tender or the contract. This risk in such contracts has to be taken by the contractors. He cannot resile and say that he was unaware of the soil or local conditions. 18. Regarding the extra work, it is generally commented that when the contractor does an extra work, the liability to pay by the employer depends upon various considerations. Normally, there is a condition that the contractor must obtain in writing orders for the extra work. The said orders must be signed and duly authorised and if these conditions are complied with, the claim for extra work can be entertained. Where the contractor undertakes voluntarily extra work without obtaining specific instructions in that behalf, he does it at his own costs and he cannot claim any extra charges for such work. It must also be emphasized that it is contemplated by the contract, the contractor must be paid for it and will be paid for it, according to the prices regulated by the contract. In the book "Building Contracts" by D. Keating (4th Edi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates are provided in the original tender, the contractor cannot claim any extra rate. He can claim extra rate only if that class of work is not provided in the tender. 20. The nature of contract would be clear by reference to the nature of work that has been entrusted to the respondent/plaintiff. The plaintiff was to carry out the construction of bridge over Serpani river, the specifications for which have been given in the tender. When we look to Schedule 'B', it provides for excavation for foundation in hard strata including showering and structuring as necessary and doing of extra work as directed. It also provides for abutment and piers and for that purpose, providing coursed rubble trap masonry, cement material for foundation of piers, abutment, etc. Incidentally, the work regarding dewatering is also mentioned in the tender. Now, when we look to the specifications attached to the said tender, specification No. 2 clearly provides that no extra rate would be paid for the additional dewatering arising out of additional depth, width and length of foundation. When we take into consideration all these conditions, we feel satisfied that the work of excavation, work of prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the main tender. It was, therefore, within the contemplation of the contractor that he may be required to suffer hostile conditions during construction. With this condition, the tender was submitted. As indicated, the tender itself was 4.91 per cent above the estimated amount. The appellant/ defendants, therefore, jacked up the price of estimate from Rs. 4.55 lacs and odd to Rs. 4.77 lacs on the basis of 4.91 per cent above the estimated level. Surprisingly enough and although fully aware of what he was doing, the contractor was pleased to resubmit another letter, dated 29-6-1978, which is part of Ex. 50, and the said letter needs reference in detail. That letter reads that : "With reference to the above letter, it is to state that the water flow in Serpani river is very fast and it is difficult in the flow dewatering. The condition put forth by me (the contractor) with the tender, dated 17-6-78 is hereby withdrawn by me. Due to high market rates, the rates put forth to tender 4.91 per cent above the estimates are reasonable, which may please be accepted." This letter unequivocally lays down that the contractor had given up the condition for claiming any special ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther dispute, the decision of the Superintending Engineer of the Circle would be final. In clause 30 of the tender, it is provided that all the questions relating to the specifications, designs, drawings and instructions hereinbefore mentioned and as to quantity of work or material used in the contract or as to any other question, claiming right in the matter or even whatsoever in any way arising out of the or relating to contract, designs, drawing, specifications, estimates, instructions, orders or those conditions or otherwise concerning the work or the execution or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment thereof, the same shall be referred to the Superintending Engineer of the Circle and as indicated the above decision of the Superintending Engineer would be final. It may be stated here that there is no iota of evidence, in the evidence, which we shall discuss hereafter, to show that the contractor had taken any step to approach the Superintending Engineer in regard to his additional claim. On the other hand, there is a clear admission by the contractor in his evidence that he did not take any steps t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in para 11 of the written statement. So far as other depths are concerned, they vary between 1 to 1.5 mtrs. in case of other abutment and piers. It would not, therefore, be proper to say that the uniform depth of additional 3 mtrs. had to be undertaken by the contractor. Regarding excavation, he has stated that all along he encountered hard strata and not the soft strata as suggested in the written statement. He mainly relies on letters Exhs. 25, 27 and 28 sent by him to the Executive Engineer claiming extra rates. He has made a grievance that none of these letters were replied in time. All along he was telling the Deputy Engineer Kinikar that he was doing work under his direction and that he was entitled to claim extra rates. He further admits that on 14-2-1978 vide Ex. 51 Kinikar had made an endorsement that the contractor was not ready to undertake the work and that the said should be done departmentally. The contractor was also asked to maintain the record of boring and pumping material, but he has disowned the endorsement Ex. 25. Now, it would be seen that on 14-2-1978 possibly the tender was in contemplation. Because the tender has been accepted on 3-7-1978 and the work or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the labour charges had increased, that he had to pay for extra lead and lift charges because of the additional depth. The details thereof have been mentioned in Exhs. 25 and 26. On account of the extra excavation he had also to do the work of dewatering from the increased depths for which he operated 3 to 4 pumps and he was, therefore, entitled to the extra rates mentioned in the plaint. He is aware of the conditions mentioned in the specification Nos. 2-A and 2-B, Ex. 50 about dewatering. They provided for no extra charges for additional dewatering sequel to additional depth, additional width or additional length. 27. Regarding the additional coursed rubble trap he has stated that whereas according to the tender he was required to carry out 290 cubic metres work. He actually carried out 596.62 cubic metres which means that he carried out additional 379.20 cubic metres. As per clauses 37 and 38, the extra work up to 25 per cent was liable to be paid at the same rate but not the entire. In terms of the above clauses, he was required to do 840 cubic metres work, but in fact he did the work of 1097 cubic metres in regard to the abutment and piers, he did 257 cubic metres of const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when the contractor was anxious to get extra rates, it is unlikely that he would not have received those letters. On the other hand, in his attempt to disclaim those letters, he exposes himself as an incredible witness. The contractor wants to acknowledge only those letters which are convenient to his cause, but when they are detrimental to his case, he has resorted to the theory of blank denial. Incidentally, we must observe that in the notice Ex. 91, dated 12-5-1982, which contains hand cover Exh. 58, the stand of the P.W. Department is manifest. All the items which have been claimed by the contractor have been fairly explained by the Department. The stand of the Department has been that the extra work has been paid at the tender rate and the contractor could not have claimed anything more than that. On perusal of the scheduled list of bills, we are satisfied that the contractor had been paid at the rates mentioned in the tender and also in the District Schedule of Rates for the extra work. It should be stated here that when the letter, dated 12-5-1982 was sent to the contractor, the same was refused by him. The address mentioned on that letter is the official address of the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contractor only out of his own calculations but without any legal basis thereof. 30. Now, before proceeding to examine the evidence of the witnesses examined on behalf of the Department, we feel it our duty to traverse through the four letters Exhibits 25 to 28, which, according to the contractor, are his trump cards to support his claim for extra charge. In the letter Ex. 25, which appears to be dated 24-10-1978, (the date which we reckon from the subsequent letter Ex, 26), it is stated that at the instance of the Officers of the Department, he was required to excavate at more depth and for that purpose, he was required to bore to bring about additional depth of 1 ft. He also referred to the additional level charges and he has computed the figure of rates of Rs. 820/-for digging the depth of 1 ft. He also claimed that he was required to spend for dewatering. He, therefore, requested the Executive Engineer to reconsider the rates which are payable to him. In Ex. 26, dated 14-12-1978 he seems to have rejected the same. He has emphasized that he had to go 3 mtrs. deep below the designed level. He has, therefore, claimed Rs. 75/- per cubic metre for excavation for foundation, Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould persuade this Court to hold that the appellant/defendants are bound by the contract to pay the enhanced rates claimed in the letters. 32. However, when we look to other documents, we feel convinced that at no stage the appellant/defendant agreed to pay the extra rate claimed by the plaintiff. At Ex. 70, which is of 15-3-1979, there is a communication by the Deputy Engineer to the contractor that he should attend his office for signing extra item rate list for the works carried out by him. We may state that the contractor has refused to have received such letters. The suggestions are made to this effect to the Officers of the Department. It is true that written acknowledgments are not there on record, but the plaintiff/contractor has clearly admitted that he was being called for meeting from time to time. In one of his letters at Ex. 41, he has stated that he could not attend the meeting because of the personal difficulty. We also cannot lose sight of an important background of this case, and that is, contractor was making the grievance about extra rate for extra item. His grievance that he did not receive the Department letters, cannot be accepted. He should have been rather ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed rubble trap. On the other hand, in letter Ex. 91, dated 21-5-1982, it is clearly indicated by the Executive Engineer that the contractor had scratched out his signature from the Level Book, possibly because the Field Book reflected the true situation regarding excavation, additional trap material, etc. As stated above, in Ex. 48 notice dated 6th of May, there is claim for extra rates for excavation for foundation, dewatering in abutments and piers. It has been rightly suggested by the learned A.G.P. that this notice reflected only two items. The addition of third claim for coursed material in the subsequent notice should persuade the Court to hold that this claim is nothing but afterthought. The contractor was called upon for discussion on 20th March, 1980 and again on 18-11-1980, but it is manifest that no such discussion took place between the contractor and the Officers of the defendant in regard to the extra claim. There is also no suggestion from the contractor that he tried to meet these Officers, but they scrupulously avoided meeting him because this is most unlikely when the Executive Engineer was rather anxious to see that the project is completed and made available to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only on the approval by Higher Officers the rates would be paid. He has discounted the rate of Rs. 75/- per cubic metre for excavation as propounded by the contractor. According to him, no such rates are to be found in the tender as well as the District Schedule of Rates. There is a clear indication to that effect in the letter, dated 21-1-1979. He has also stated that when it was obligatory on the part of the contractor to approach the Super- intending Engineer for settlement of disputes canvassed by him, the contractor did nothing and on that count, the claim could not be considered. Regarding lead and lift, the same view is expressed by him. So far as the masonry work is concerned, he has also stated that such work is accordingly paid for in consonance with the conditions of tender. So far as escalation is concerned, he has stated with all emphasis that no escalation has been provided in the tender and that the notifications relied upon by the contractor do not envisage anything in that behalf. It is further submitted that these notifications embrace those works for which the estimates are for Rs. 5 lacs and above and for the period of 12 months. In the cross-examination, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls out that the terms of the tender did not permit the respondent/plaintiff to claim anything more than Rs. 30/- per cubic metre. The additional excavation had to be computed at the same rate in view of the conditions, to which we have referred in the foregoing discussion. 36. Oswal, in his further cross-examination, has clearly indicated that it was not compulsory for the contractor to do the extra work. He could have left the work or could have declined to do extra work. He is unable to say as to why the contractor did the extra work in spite of his rates being not approved by the concerned Officers of the Department. 37. Murlidharrao Ahirrao, the Deputy Engineer has deposed that contractor did not sign the receipt of letters, but we have indicated that those letters were received by the contractor. He was vitally concerned with those letters and it is unlikely that he would not receive these communications coming from the defendants, which were going to decide the fate of his claim for additional amount. The other witness Dinanath Sonawane has been examined to prove the despatch of letter, dated 12-5-1982 Ex. 92 and the refused envelope Ex. 58. We have indicated above that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssured the contractor that he would be paid for the extra work at extra rates. This was obvious because this was naturally not the function of the Executive Engineer or for that purpose the Deputy Engineer or the Junior Engineer. The payment of rates has been the work of Senior Officer, possibly the Chief Engineer, who as per terms of tender is the final authority to decide the disputes regarding the rates, the nature of work, etc. Kinikar has emphatically stated that there was no change whatsoever in the design of the work. The basic design of the bridge remained the same. All that was necessary was to have a little more excavation as soft strata was found at early stages of the excavation. He has stated that the contractor was persuaded to do extra work, but it never implied that he was entitled to such rates as have been put in Exhs. 25 to 28. He has also stated that the contractor was never under compulsion to carry out the extra work. He could have left the extra item. The contractor carried out the work in spite of the correspondence by the Department about the proposed approval of the enhanced rates for the extra work done by the contractor. The evidence of these witnesses c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oregoing paragraphs. 43. It would be also pertinent to note that the Supreme Court in [1975]3SCR407 in the case of Bombay Housing Board v. M/s. Karbhase Naik & Co., has virtually clinched the issue which has been taken up by the contractor. In that case also the said dispute was considered and the Supreme Court succinctly recorded its observations as below (at page 765) : "We do not think that the respondent was bound to carry out the additions and alterations as there was no reply to the notice stating the rates it intended to charge. But it was free to commence and complete the work on the basis that since the rates quoted by it were not accepted, it would be paid at such rates to be fixed by the Engineer-in-charge and that if it was dissatisfied with the rate or rates fixed by the Engineer-in-charge, it could raise a dispute before the Superintending Engineer and that the time limit for completion would be extended in cases of additions or alterations as stated in the last sub-para of clause 14. The High Court was of the view that clause 14 had no application because it thought that the respondent was bound to carry out the work as directed by the Engineer-in-charge ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded contract on the basis of which the contractor can claim enhanced rate for the extra work. Repeating the observations we are of the view that in the absence of some positive act on the part of the Engineer-in-charge agreeing to the rate, there was no agreement as to the rate and that the respondent was not bound to carry out the work when there has been option to the contractor to stop the work or to abandon the work for want of extra rates. We cannot say that the conduct on the part of the Engineer was such that there was any implied consent. Ultimately, we cannot lose sight of the situation that the Government department comprises of long and big hierarchy of Officers and Subordinates and that is why conditions are explicitly laid down as to who is competent to approve the rates or who is competent to decide the disputes in that behalf. As stated above, Chief Engineer of the Circle seems to be the final authority in the matter of these disputes. If, in that situation, the contractor chooses to seek remedy for his grievance with the Executive Engineer-in-charge, we feel that the Engineer-in-charge was in no way competent to accord any sanction. All that he could do is to send t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olly unwarranted. He has also questioned the propriety of the learned trial Judge in awarding the interest on the principal plus the interest prior to the suit. For that, we feel, that he is supported by the ruling of this Court reported in AIR1992Bom482 in the case of Union Bank of India v. Dalpat Gaurishankar Upadyay. Without probing any further, we feel, that the ratio laid down in that ruling deserves to be upheld. It is observed that the expression "principal" used in Section 34 of the Civil Procedure Code, means the original amount without the addition thereto of any interest whatsoever. Therefore, granting interest on the principal plus interest prior to the suit would be obviously erroneous. To that extent, therefore, the trial Court has faltered and the same has to be rectified in this appeal. The learned A.G.P. has drawn our attention to the Interest Act, 1978 (14/78) which governs the transaction where no interest has been stipulated nor usage has been established in that behalf. As we have observed here before that so far as the claim of interest is concerned, there is no condition whatsoever in the tender awarding or contemplating the payment of interest by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies on the proviso, which reads as follows. "Provided that where the liability in relation to the sum so adjusted had arisen out of a commercial transaction, the rate of such further interest may exceed 6% per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate; the rate at which the monies are lent or advanced by the Nationalized Banks in relation to the commercial transactions." The emphasis is on the commercial nature of transaction. If the respondent/plaintiff can establish that this is a commercial transaction, then he can certainly agitate that question and certainly say that he is entitled to the interest rate of 18%, which is the normal lending rate by the Banks. The loans are advanced at that rate. However, it is vital that he has to establish that this is a commercial transaction connected with the industry, trade or business of the party in regard to the liability. Here we are very sure that it is the appellant/State which has incurred the liability, but after all it is a matter of debate as to whether the appellant/Government is industry, trade or business. The learned advocate for the respondent has contended th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory comprises the sovereign or regal functions of the State, which are the primary or inalienable rights of a Constitutional Government. For that purpose, it was indicated that policing justicing legislating Defence and Foreign affairs are the regal functions, which cannot be carried out by any authority except the State. Such functions would definitely fall outside the definition of industry. (b) The second category is the economic activity which may not come within the ambit of the previous category, which have the elements of economic adventures, clearly partaking all the nature of trade and business undertaken by it as part of the welfare activities and other organized activity not stamped with the total indicia of business yet bearing a resemblance to or being analogous to trade and business. The illustrations which can be cited of the industry are the opening of fair price shop by the Government for distributing grains and other articles at subsidised rates. The other activity would be opening the State Transport Undertakings wherein there is an organized activity of running the public service vehicles at stipulated rates. These activities of the State can well be governed un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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