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K. Abdulkhadar Vs. the Plantation Corporation of Kerala Ltd., Kottayam - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKerala High Court
Decided On
Case NumberA.S. No. 114 of 1977
Judge
Reported inAIR1983Ker1
ActsContract Act, 1872 - Sections 23 and 55
AppellantK. Abdulkhadar
RespondentThe Plantation Corporation of Kerala Ltd., Kottayam
Appellant Advocate M.A. George and; K.L. Varghese, Advs.
Respondent Advocate M. Pathrose Mathai and; Joseph Vellappally, Advs.
DispositionAppeal allowed
Cases Referred and Charles Rickards Ltd. v. Oppenhaim
Excerpt:
.....work before the end of february 1971. this notice ext. since the defendant failed to complete the work, the plaintiff corporation arranged to get the work completed otherwise. 24,005.36'.the principal defence to the suit is that it is on the failure of the plaintiff to hand over possession of the site on which the road is to be made that the defendant could not complete the work within the time mentioned in ext. according to the defendant it is the plaintiff who had committed breach of contract for its failure to deliver possession of the premises to facilitate construction of the road in compliance with the agreement ext. george submits that the time fixed is not an essential condition of the contract, nor is it enforceable for the reason of the plaintiff's failure to deliver..........issuing ext. a-24 notice terminating ext. a-l contract, had rendered the balance extent of the road work over and above the part performed by the defendant, and p. w. 4 on acceptance of his tender by the plaintiff had completed the work except asregards the 600 meters at the commencement point. he has also deposed that the area involving 600 meters had not yet been acquired by the plaintiff and was not available for the construction of the road. he was, therefore, relieved of his responsibility to make the road on lands belonging to strangers. this would also make it clear that the plaintiff had not been able to acquire the entire area of land over which the road is to be laid even at the time when p. w. 4 had executed the work. an agreement which involves injury to the properties of.....
Judgment:

Balakrishna Menon, J.

1. The defendant is the appellant.

2. The suit is by the Plantation Corporation of Kerala Ltd., Kottayam for recovery of a sum of Rs. 24,005.36 by way of damages for breach of contract by the defendant. The plaintiff Corporation had invited tenders to carry out the work of the construction of a road from Peruvannamuahi to porambra Estate of the plaintiff-Corporation at an ' estimated cost of Rs. 3,25,614.00. The defendant's tender was the lowest for Rs. 2,83,174.00. As per Ex. A3 dated 28-5-1970 the plaintiff accepted the tender and a formal agreement Ext. A1 dated 24-6-1970 was executed between the plaintiff and the defendant. Ext. Al requires the contractor to commence the work as soon as the agreement is executed, and the site handed over to him, and requires the work to be completed before February 1971.

Clause 11 of the terms and conditions of the tender notification annexed to the agreement requires the work to be completed in 9 months from the date of order to start work, and in any case not later than the end of February. 1971. Clause 22 provides for penalties for the delay in the execution and completion of the work and Clause 23 provides for, extension of time by the Chief Construction Engineer of the plaintiff-Corporation, if alterations of designs etc. are found necessary. Ext. A5 dt. 1-7-1970 is the order by the plaintiff to commence the work at the earliest. The agreement is ambiguous in regard to the time within which the work is to be completed. The plaintiff-corporation had been complaining about the tardy progress of the work, and Exhibits A7 to A9, A17 and A20 to A23 are its letters in that behalf.

3. As per Ext. A19 letter dated 25-1-1971, the plaintiff had required the defendant to resume the work before 2-2-1971, on failure of which the defendant was told, the contract would be cancelled, and the remaining portion of the work carried through some other agency at the risk of the defendant. Ext. A20 letter dated 5-2-1971 required the defendant to speed up the work failing which he was told penal action under the agreement would be taken. Ext. A21 dated 1-3-1971 requires certain specified items of work to be carried out before 6-3-1071, on failure of which also, the defendant was told penal action under the agreement would be taken. As per Ext. A22 letter dated 5-3-1971, the defendant was informed that the time for completion of the work is over and unless immediate action is taken to speed up the work it will not be possible to complete the masonry work and metalling before May 1971.

4. However on 17-3-1971 the plaintiff issued Ext. A24 notice terminating the agreement for the failure of the defendant to complete the work before the end of February 1971. This notice Ext. A24 states that time for completion of the work expired on 28-2-1971, that the defendant had done only the earth-work for laying the road and had also made a few culverts as against the number of culverts and two bridges yet to be made and the metalling of the road yet remaining to be done in terms of the contract.

5. Paragraph 14 of the plaint is extracted below.

'Since the defendant failed to complete the work, the plaintiff Corporation arranged to get the work completed otherwise. By getting the work so completed, the loss to the plaintiff-Corporation is Rs. 56,473.00 which the defendant is liable to compensate to theplaintiff-Corporation. After appropriating Rs. 32,467.64 consisting of:--

1. Rs. 12,703.64 towards amount due to the defendant as per up-to-date Bill.

2. Rs. 7,914.00 retention in previous Bill.

3. Rs. 11,350.00 security deposit and

4. Rs. 500.00 permanent earnest money deposit the balance amount due from the defendant towards the loss sustained by the plaintiff Corporation is Rs. 24,005.36'.

The principal defence to the suit is that it is on the failure of the plaintiff to hand over possession of the site on which the road is to be made that the defendant could not complete the work within the time mentioned in Ext. Al. According to the defendant it is the plaintiff who had committed breach of contract for its failure to deliver possession of the premises to facilitate construction of the road in compliance with the agreement Ext. Al. He has made a counter claim for an estimated amount of Rs. 50,000.00 for the value of the work already done, for refund of security and earnest money and also for damages for breach of contract on the part of the plaintiff.

The trial court found that the defendant has committed breach of contractin not having completed the work within the time mentioned in Ext. Al andthe plaintiff had to incur damages mentioned in para 14 of the plaint on account of the reauction of the work andentrustment to P. W. 4 at a higher cost.Accordingly the suit was decreed forthe recovery of damages mentioned inpara 14 of the plaint. The defendant'scounter-claim was dismissed on the basisof the finding that it was the defendantwho committed breach of contract, andthe amount due to him as earnest money,security deposit and the value of thework done was adjusted towards thecompensation by way of damages dueto the plaintiff as mentioned in para 14of the plaint.. It is against this decreeof the trial court that the defendant hascome up in appeal.

6. Learned Counsel for the appellant Sri M.A. George submits that the time fixed is not an essential condition of the contract, nor is it enforceable for the reason of the plaintiff's failure to deliver possession of the premises to the defendant. Clause 3 of Ext. A-l agreement is extracted below:

'(31 Time shall be considered as the essence of the agreement and the contractor hereby agrees to commence the work as soon as this agreement is executed and the site (or premises) is handed over to him and agrees to complete the work before 2/1971 months from the date of such handing over of the site (OR premises) and to show proportionate progress'.

Clause (2) of the Notes in Ext, Al provides that the accepted tender with conditions of contract annexed should beattached to the agreement and marked as Schedule A. Clause (11) of Schedule A is extracted below:--

'(11) The work should be completedin all respects in 9 months from the date, the order to start work is issued and in any case not later than end of February 1971'.

As per the terms of the contract, the defendant is required to commence the work only after the site is handed over to him, and he had nine months' time to complete the work from the date on which the order to start work is issued to him or till the end of February. 1971, whichever is earlier. As already noticed, Ext. A5 order to start work is dated 1-7-1970. Nine months' time from that date expires only on 31-3-1971. Clause (3) of Ext. Al and Clause (11) of Schedule A thereto make the term as to the time for completion of work ambiguous. Learned Counsel relies on the decision of the Supreme Court in Hind Constant, Contractors v. State of Maharashtra (AIR 1979 SC 720) to contend that time is not of the essence of a works contract. After quoting a passage from Halsbury's Laws of England, 4th Edition, Vol. 4, page 1179, it is stated thus in Para 8 of the above decision:

'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 clauses providing for extension of time in certain contingencies or for payment (ME fine orpenalty 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, (1949) 3 Exch. 283 at p. 308. Webb v. Hughes (1870) 10 Eq. 281 and Charles Rickards Ltd. v. Oppenhaim, (1950) 1 K. B. 616.'

After considering the clauses in the contract concerned the Supreme Court stated at para 9:

'9. Having regard to the aforesaid material on record, particularly the clauses in the agreement pertaining to imposition of penalty and extension of time it seems to us clear that time (12 months period) was never intended by the parties to be of the essence of the contract. Further from the correspondence on the record particularly, the letter Ext. 78 by which the contract was rescinded it does appear that the stipulation of 12 months,' period was waived, the contractor having been allowed to do some more work after the expiry of the period, albeit at his risk, by making the rescission effective from August 16, 1956.'

Clause (19) of the Special Conditions attached to the Agreement Ext. A-l provides for damages for delayed completion of the work and Clause (20) provides for extension of time in certain circumstances. These clauses in the special conditions forming part of the agreement make it abundantly clear in the light of the decision of the Supreme Court that time is not of the essence of the contract of work to be performed in the present case. It would have been open to the plaintiff to have issued a notice to the defendant requiring him to complete the work within a particular time fixed, making the time so fixed as an essential condition of the contract. No such notice is issued. Ext. A 19,notice dated 25-1-1971 requires the work to be recommended before 2-2-1971 and exhibits A20 and A21 notices require the work to be speeded up, failing which the defendant is told that penal action under Ext. Al agreement will be taken against him. Ext. A22 notice dated 5-3-1971 allows time till May 1971 for the completion of the masonry work and metal-ling. Ext. A23 notice dated 10-3-1971 requires the work to be resumed on or before 16-3-1971. The notices Exts. A21, A22 and A23 are issued after 28-2-1971. Even before the nine months' time alternatively fixed in Ext. A1 and the time allowed under Ext. A22 had expired, the plaintiff issued Ext. A24 notice terminating the agreement Ext. Al. There can therefore be no doubt that it is the plaintiff who is guilty of breach of the agreement in unilaterally terminating the same.

7. There is also a more serious infirmity in Ext. Al contract. In para 8 of the plaint it is stated as follows:

'In the construction of the road, the main works agreed to be done were formation and metalling of road for a length of about 5 kilometers and putting up of 44 culverts and 2 bridges. Except for a length of 600 meters at the commencement of the road, the land for which had yet to be acquired the entire site was available to the defendant for the work immediately on execution of the agreement'

P. W. 1 the Chief Construction Engineer o| the plaintiff-Corporation has deposed that the total length of the road to be constructed as per the agreement is 4560 metres out of which an extent of 600 meters at the entrance to the site of work belongs to third parties and the same had not been acquired even on the date of suit. Ext. A-l agreement between the parties is therefore for the construction of the road not merely on the land of the plaintiff but also on lands belonging to third parties in respect of which the plaintiff had no right of entry. The evidence of P. W. 1 as well as the passage in para 8 of the plaint extracted above would clearly show that the plaintiff had been contemplating the acquisition of land along which the road 600 metres in length had to be laid to complete the work in terms of Ext. A-l. According to P. W 1 the road to a length of 100 meters would fall within the compound of a Roman Catholic Church.

The plaintiff after issuing Ext. A-24 notice terminating Ext. A-l contract, had rendered the balance extent of the road work over and above the part performed by the defendant, and P. W. 4 on acceptance of his tender by the plaintiff had completed the work except asregards the 600 meters at the commencement point. He has also deposed that the area involving 600 meters had not yet been acquired by the plaintiff and was not available for the construction of the road. He was, therefore, relieved of his responsibility to make the road on lands belonging to strangers. This would also make it clear that the plaintiff had not been able to acquire the entire area of land over which the road is to be laid even at the time when P. W. 4 had executed the work. An agreement which involves injury to the properties of other persons is void under Section 23 of the Contract Act and cannot be enforced in law. No claim for damages is sustainable for the breach of such an unlawful agreement.

8. The learned Counsel for the plaintiff-respondent submits that the claim for damages is the extra cost that the plaintiff had to incur in completing the balance work on the available extent of land and the fact that land to an extend of 600 meters had not been acquired and made available to the defendant for work is not a valid defence to the suit. We do not find any substance in this argument, even though the specifications of the work to be done are provided for in Ext. Al, it is not a contract for piece-work. The contract is for the entire work for considered ion fixed at a specified sum of money, and the court is not competent to impose a different contract on the defendant, for part of the work, albeit it is a major part. On the terms of Ext. Al the defendant is not obliged even to commence the work unless the entire site is handed over to him.

9. The defendant has made a counter-claim for value of the work already done and for refund of earnest money and security deposit. There is also a claim for damages for breach of contract by the plaintiff. The amount due to the defendant for the cost of work already done by him and by way of refund of earnest money and security deposit is mentioned in para 14 of the plaint extracted above. The total amount due to the defendent, admitted in para 14 of the plaint, is Rs. 32,467.64. Learned Counsel for the defendant-appallant submits that his client is not pressing the claim for damages for breach of contract, as it had not been possible for him to make out the claim at this distanceof time. The amount of Rs. 32,467;64 admitted in para 14 of the plaint is due to the defendant as he- is entitled to a refund of the security deposit and earnest money and also to the value of the work done in pursuance of Ext. Al agreement. His claim for the cost of work done falls under S. 70 of the Contract Act the earnest money is paid and the security deposit made before Ext. Al is executed. The defendant is, therefore, entitled to succeed in the counter-claim to the extent of Rs. 32,467.64 admitted in the plaint.

The result is, we allow the appeal, set aside the judgment and decree of the court below and dismiss the suit with costs. The defendants counter-claim is decreed to the extent of Rs. 32,467.64 with interest at 6% from the date of the written statement. The defendant is entitled to his costs in the appeal, and also to the proportionate costs in the counter-claim in this Court and in the court below.


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