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Krishna Menon Vs. CochIn Devaswom, Board and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKerala High Court
Decided On
Case NumberA.S. No. 836 of 1958
Judge
Reported inAIR1963Ker181
ActsContact Act, 1872 - Sections 70 and 73
AppellantKrishna Menon
RespondentCochIn Devaswom, Board and anr.
Appellant Advocate M.K. Narayana Menon, Adv.
Respondent Advocate P.K. Krishnankutty Menon, Adv. for Respondent I and; Kochanujan Thirupad, Adv. for Respondent No. 2
DispositionAppeal allowed
Cases Referred and Craven Ellis v. Canons Lord Justice Denning.
Excerpt:
contract - recovery - sections 70 and 73 of contract act, 1872 - appeal filed for recovery of certain amount due to appellant under contract entered between parties - respondent refused to remit amount on ground that work done was not in accordance with contract - circumstances shows that work was accepted by respondent and receipt of acceptance issued in respect of same - respondent was enjoying benefit of same - so although the work contracted was not done in accordance with specification of contract respondent as enjoying same liable to pay for it - matter remitted back lower court for determination of amount due. - - (1) there was substantial performance by the plaintiff of the contract, (2) there was an acceptance by the defendant of the work done by the plaintiff and even if.....k.k. mathew, j. 1. plaintiff is the appellant. the suit was to recover money under two heads, rs. 97/- and interest due for the repairs to electric installation in the temple at ernakulam and rs. 2510/8/- for the complete electric installation of sree krishna swami temple at chittur. the defendant is the cochin devaswom board. the plaintiff's case was that he contracted with the defendant for executing the work of installing electric light in the sree krishna swami, temple according to the specification given by the defendant. ext. d2 dated 12-3-1953 is the tender made by the plaintiff. the tender was accepted by the defendant under ext. p3. the acceptance was on the definite understanding that the work must be completed by 10-9-1128. in pursuance to that, ext. d3 agreement was executed.....
Judgment:

K.K. Mathew, J.

1. Plaintiff is the appellant. The suit was to recover money under two heads, Rs. 97/- and interest due for the repairs to electric installation in the temple at Ernakulam and Rs. 2510/8/- for the complete electric installation of Sree Krishna Swami Temple at Chittur. The defendant is the Cochin Devaswom Board. The plaintiff's case was that he contracted with the defendant for executing the work of installing electric light in the Sree Krishna Swami, Temple according to the specification given by the defendant. Ext. D2 dated 12-3-1953 is the tender made by the plaintiff. The tender was accepted by the defendant under Ext. P3. The acceptance was on the definite understanding that the work must be completed by 10-9-1128. In pursuance to that, Ext. D3 agreement was executed by the plaintiff on 19-3-1953. Ext. D3 (a) is the order of the Board accepting the agreement. The work was completed by the plaintiff and he got a formal receipt of acceptance of work under Ext. P6 on 12-9-1128. Thereafter the plaintiff sent three bills, Exts. P7, P8 and P8 (a) for Rs. 2545-8-0. As the bills were not honoured, the plaintiff instituted the suit after issuing the notice under Section 124 (I) of the Hindu Religious Institution Act 1950.

Thereafter, the defendant cancelled the contract by Ext. D14 on 14-2-1954. That was after the suit was instituted, but before the service of summons. Even before the suit, Ext. P9 communication was sent by the commissioner of Devaswoms on 14-5-1953 directing the plaintiff to rectify certain defects in the installation. Plaintiff replied to that on 23-5-1953. In the suit a commission was taken out to ascertain the nature and the extent of the work done by the plaintiff. Ext. P16 is the report of the commissioner. The material defect noted by the commissioner in his report was that whereas according to the contract between the parties, upto the circuit line 3/20 wire had to be used, the plaintiff had used only 1/18 wire. According to the report, this would make a difference of Rs. 2/- per point in the matter pf cost. If the contract had been carried out in accordance with the strict specification, Rs. 163/- would have been the additional cost which the plaintiff would have had to incur. The commissioner also reported that the strength and durability of the wire will be less in the case of 1/18 wires than in the case of 3/20 wires.

2. The main defence to the suit was that the plaintiff had been paid in full for the work done in the Ernakulam Temple, but that the work done in the Chittur Temple was not in accordance with the specifications, and in spite of repeated requisitions to the plaintiff to conform to the specification, he did not perform the contract according to the terms thereof, whereupon the contract was cancelled, and that there was no liability to pay any amount either under contract or for the value of the work done.

3. The lower court found that the plaintiff was not entitled to get any further amount for the work in the Ernakulam Temple and as regards the work done in the Chittur Temple the plaintiff was not entitled to recover any amount under that contract as he did not perform an essential term in the contract. That court also found that there was no acceptance of the work as done by the plaintiff and therefore there was no obligation on the part of the defendant to pay any amount by way of quantum meruit. The lower court discussed the question whether the plaintiff was entitled to get any remedy under Section 64 of the Contract Act but found that he was not entitled, both substantively and also because the notice issued to the defendant under Section 124 (I) of the Hindu Religious Institution Act did not make any claim under Section 64 of the Contract Act. For these reasons that court dismissed the suit except in respect of Rs. 126/- for the extra work done by the plaintiff and not covered by the agreement.

4. On the question whether plaintiff is entitled to get any further amount for the work done in the Ernakulam Temple, no argument was addressed to me and I think the finding of the lower court is correct and has to be affirmed.

5. The contentions raised by appellant before me were: (1) There was substantial performance by the plaintiff of the contract, (2) There was an acceptance by the defendant of the work done by the plaintiff and even if the contract was not performed substantially he is entitled to recover remuneration for the work which he had actually-done and the benefit of which was enjoyed by the defendant.

6. In order to decide the question whether the contract was substantially performed a decision as to the materiality of the term in the contract not complied with is important. Under Ext. D3, the agreement was that the plaintiff must use 3/20 wires upto the circuit point and for therest 1/18 wires. Plaintiff was bound to carry out the work according to that specification. Conditions Nos. 1 and 2 in Ext. D-3 prescribed that the circuits were to be wired by 3/20 and not by x/18 wires. The plaintiff was maintaining right through that he had used 3/2o wires for all the circuits. Even is his deposition, he spoke to that case, although as a matter of fact, the commissioner in Ext. P16 found, that 3/20 wires were not used for the circuit. The question, therefore, is whether this was an essential term in the contract, and that will depend to a certain extent upon the purpose for which the prescription of 3/20 wires was made. Plaintiff as P. W. I admitted that 3/20 wires will stand greater voltage and will be more durable than 1/18 wires. The capacity of1/18 wires to take load also will be less. That it was one of the conditions in the contract, is clear from the fact that it is specifically mentioned in Ext. D1 estimate also.

7. But the question still remains whether the non-observance of that condition went to the root of the matter. The question for consideration in cases like this is whether the whole contract fell on account of non-performance of a material part thereof, or in other words the enquiry must be whether the consideration for the promise failed in toto.

8. In Boone v. Eyre, (1779) I Hy and B1 3730 Lord Mansfield said:

'The distinction is very clear, where mutual covenants go to the whole of the consideration on both sides, they are mutual conditions, the one precedent to the other. But where they go only to a part, where a breach may be paid for in damages, there the defendant has a remedy on his covenant, and shall not plead it as a condition precedent. If this plea were to be allowed any one negro not being the property of the plaintiff would bar the action.'

That was a case where the plaintiff conveyed to the defendant a plantation in the West Indies, together with the stock of negroes upon it, in consideration of 500 and an annuity of 160 per annum, and covenanted that he had a good title to the plantation and was lawfully possessed of the negroes. The defendant covenanted that the plaintiff well and truly performing all and everything therein contained on his part to be performed, he the defendant, would pay the annuity. The breach alleged was non-payment of the annuity and to this defendant pleaded that the plaintiff was not at the time of making the deed legally possessed of the Negroes. The judgment was given for the plaintiff and it was in the course of the judgment that Lord Mansfield made the above observation. The ratio of that case is that a covenant as to the title to Negroes was an independent covenant, which did not go to the root of the whole contract.

9. The question came up for consideration in Mersey Steel and Iron Co., v. Naylor Benzen & Co., (1884) 9 AC 434 at p. 443, where Lord Blackburn said:

'The rule of law, as I always understood it, is that where there is a contract in which thereare two parties, each side having to do something if yon see that the failure to perform one partof it goes to the root of the contract, goes to the foundation of the whole, it is a good defence to say, 'I am not going on to perform my part of it when that which is the root of the whole and the substantial consideration for my performance is defeated by your misconduct' ......... I repeatedlyasked Mr. Cohen whether or not he could find any authority which justified Mm in saying that every breach of a contract, or even a breach which involved in it the non-payment of money which there was an obligation to pay, must be considered to go to the root of the contract, and he produced no such authority. There are many cases in which the breach may do so; it depends upon the construction of the contract. ............ The rules oflaw so laid down are well illustrated by the cases where specified work is agreed to be done for a specified sum. In such cases the general rule is that, in the absence of express indication to the contrary, entire performance is not a condition precedent to the right to recover the specified sum; so long as there is substantial performance the contractor is entitled to the stipulated price subject only to a cross-action or counter-claim for the omissions or defects in execution.'

10. In Dakin v. Lee (1916) I KB 566, the Court of Appeal re-affirmed the position. In that case the plaintiffs had substantially completed the contract work but there were certain defects and omissions. Pickford L. J., said:

'What the plaintiffs have done is to perform the work which they had contracted to do, but they have done some part of it insufficiently and badly; that does not disentitle them to be paid, but it does entitle the defendants to deduct such an amount as is sufficient to put that insufficiently done work into the condition in which it ought to have been according to the contract.'

Although it has been said that the entire performance of the contract by the plaintiff is not in general a condition precedent to his right to demand performance of the defendant, yet it may he so; and in cases where entire performance in the manner specified is expressly made by the contract a condition precedent, the plaintiff cannot sue to recover a compensation for what he has done until the whole is complete. He cannot be allowed to throw over the terms of his bargain and recover on a quantum meruit for doing part only of the stipulated work in the manner specified in the contract. Cases where the plaintiff failed because entire performance was a condition precedent will be found on examination to be but illustrations of that wider principle of the law namely, that where there is a failure of performance by the plaintiff which goes to the whole of the consideration for the defendant's promise, the defendant is excused from performance of his promise; where entire performance is a condition precedent, the whole and no less is the consideration for the defendant's promise.

(Ioa) On a consideration of the documents and other evidence I think that the terra in Ext. D3 about the quality of the wire to be used was an essential condition of the contract which went to the root of the matter. For the several reasons mentioned by the lower court including the strength and the durability of the 3/20 wires, I take itthat the parties have stipulated this as an essential condition of the contract. If that be so, then it is not open to the plaintiff to claim to recover any amount on the basis of the contract. I agree with the conclusion of the court below on this point.

11. The further question to be considered is whether there was an acceptance of the work as performed. The defendant was insisting upon cancelling the contract. Ext. D10 is a memo issued by the defendant on 9-4-1953 calling upon the plaintiff to perform the work in the manner specified in the agreement: it is stated there, that, otherwise serious consequences would follow. Exts. D12 and D13 are memos issued by the commissioner on 14-5-1953 and 20-6-1953 respectively to the same effect. The suit was instituted on 30-1-1954 and before the service of the summons the contract was cancelled by the defendant by Ext. D14 dated 14-2-1954. Plaintiff had completed the work on 24-4-1953. From these facts, it is clear that the defendant was insisting upon performance of the contract in the manner specified in the agreement, and the plaintiff was always maintaining that he had done the work according to the contract.

12. No claim in the nature of a quantum meruit can be founded upon a contract which has not been performed, unless the person who has a right to insist on its performance has elected to accept some benefit resulting from its partial or defective performance, or the circumstances are such as to show, in some other way, that a new contract has arisen between the parties. This is further qualified by the doctrine that where a contract has been only partly performed, the mere fact that the part performance has been beneficial is not enough to render the party benefited liable to pay for it; it must be shown that he has taken the benefit of the part performance under circumstances sufficient to raise an implied promise to pay for the work done, notwithstanding the non-performance of the special contract. Thus, if a builder contracts to build and complete a house for a lump sum payable on completion, and he partially builds the house, but fails to complete it, the fact that the owner of the premises has resumed possession of them does not entitle the builder to sue either on the special contract or for work and materials; for the special contract has not been performed, and the mere fact that the owner has taken possession of his own premises does not afford an inference that he has dispensed with the special contract and made a new contract to pay for the work actually done.

13. In Sumpter v. Hedges (1898) I Q.B. 673, Collins L.J., pointed out that, in order to raise the, inference of a new contract, to pay on a quantum meruit for the work done from the defendant's having taken the benefit of that work:

'the circumstances must be such as to give an option to the defendant to take or not to take the benefit of the work done. It is only where the circumstances are such as to give that option that there is any evidence on which to ground the inference of a new contract. The mere fact that a defendant is in possession of what he cannot help keeping, or even has done work upon it, affordsno ground for such an inference. He is not bound to keep unfinished a building which in an incomplete state would be a nuisance on his land.'

(See also the classic judgment of Bowen L. J., in 34 Ch. D.248 and 249).

14. It is necessary at this stage to set Cot the relevant clauses in Ext. D3. The material portion of Clause II runs as follows:

'The contractor shall within 7 days of the cancellation of the contract in writing refund to the Devaswom Commissioner all amounts due from him on all accounts and shall remove from the work site or premises the work, if any, done by him. If the amounts are not paid and the work removed within that period, it may at once be demolished and removed at his expense by the Devaswom Department and the materials sold by public auction. The proceeds of the sale after meeting the expenses of removal and sale may be credited against the amount due by the contractor on account of loss arising out of resale or otherwise.'

Clause 16 reads as follows:

'The Devaswom Board reserve to themselves the right to abandon the work at any stage if they find such a course necessary irrespective of what has been agreed to therein. Should the work be abandoned, the Devaswom Commissioner shall give due notice of the fact to the contractor who will not be entitled to claim any compensation by way of damages or indemnification on any account whatsoever.'

It was contended on the strength of Clause II that in case the plaintiff did not dismantle the work in the event of the cancellation of the contract by the defendant, it was open to the defendant to have dismantled the work itself and sold it in auction and pay the proceeds if any to the defendant. Instead of doing that, the defendant continued to enjoy the benefit of the work, from which a promise to pay a reasonable remuneration most be implied.

15. There are two important matters which will go to show that the defendant accepted the work, as done; one is, that it applied for connection when the work was finished and the other is that even after the neglect of the plaintiff to dismantle the work the defendant continued to enjoy the benefit of the defective work. It was perfectly; open to the defendant under Clause II in the contract to have dismantled the work itself and sold the materials in auction and offered the sale proceeds after meeting its claim to the plaintiff. That not having been done, I think there was an acceptance of the work as done and therefore the plaintiff was entitled to be paid on quantum meruit. This is not a case where the defendant had no option to accept or refuse the benefit of the work done. It could have, on the refusal or the plaintiff to dismantle the work on demand, dismantled it itself, and sold the material in auction, and paid the proceeds to the plaintiff after deducting the cost of dismantling the work and damages, if any, thus indicating its intention to reject the work done. Clause 16 is clear that defendant had the right to abandon the work, if it found such a course necessary and in that event the commissioner must give due notice to theplaintiff. There is no case that the commissioner gave any such notice. To my mind, this also is a clear indication that the defendant did elect to accept the benefit of the work as done. The defendant had the election to retain the thing or dismantle it. It did not adopt the latter course and the only inference consistent with justice and equity which I can draw from its conduct is that it elected to accept the performance of the work as done and pay for it. The fact that the defendant was insisting on the performance of the contract in accordance with the provisions in the agreement, or the fact that the defendant went through the formality of cancelling the contract at a later stage does not mean that the defendant did not elect to accept the benefit of the defective performance. The lower court has considered this question in para 12 of its judgment. The material portion relevant to the present purpose runs as follows:.

'On these materials, I am unable to spell an acceptance by the defendant of performance of the contract, by the plaintiff. The only thing that the plaintiff has been able to point out as a circumstance was that the lights which he had installed, are still burning, and are being used by the temple, without the defendant himself dismantling them. When all that the defendant can do, had been done as stated above, it was open to the plaintiff, to have them removed or dismantled. In any event, the user of the lights by the defendant does not indicate acceptance of the contract, though in a suit properly framed for the purpose, the defendant may, perhaps, render himself liable to the plaintiff for unlawful use of the installation, it if is really so. Various defences may be open to the defendant in such a case. For the present, this circumstance has no bearing on the issue under discussion.'

It is necessary to distinguish between the obligation under the original express contract and the implied in fact contract arising from the subsequent conduct of the parties. That the original contract has been broken by one party to the contract and that the other party has cancelled the contract or more accurately rescinded it, does not mean that parties cannot by their conduct enter into an implied contract to pay for the work as already done. I do not know whether the defendant had done all that it had to do. There was no demand by the defendant, to the plaintiff to dismantle the work. What prevented it from demanding the dismantling of the installation by the plaintiff? What prevented it from dismantling it itself if after giving notice to the plaintiff he did not remove it? The fact that the plaintiff did not voluntarily dismantle the installation only shows that the plaintiff was insisting that he had performed the work according to the terms of the agreement. The core of the matter lies in the conduct of the defendant in applying for connection to the electricity department, when as a matter of fact it knew that the work had been defectively performed and when the contract gave the option to it to dismantle and sell the materials and pay the proceeds if any to the plaintiff if the plaintiff refused to dismantle on demand. That is why I said that the only inference possible fromthe conduct of the defendant is that it accepted the benefit of the work done. The belated cancellation of the contract, which could certainly have been done long before, as the facts and circumstances which entitled the defendant to do so existed at any rate on the date of the completion of the work by the plaintiff cannot certainly enhance the right of the defendant. The enjoyment of the benefit of the work after knowledge of its defects, without resorting to an immediate cancellation of the contract, and the failure to exercise its option of dismantling the work, in case the plaintiff refused to do so, can only spell one thing and one thing only, an acceptance of the-work as done. If the conduct of the defendant was inconsistent with what it was saying, you will certainly attach more importance to what it did than to what it said.

16. Then it was contended that the notice issued by the plaintiff to defendant spoke only of: agreement and claimed damages only on the basis of the breach of the agreement by the defendant and that the claim for recovery of any amount for work done on quantum meruit was not put forward in the notice. Section 124 (I) of the Hindu Religious Institution Act runs as follows:

'No suit shall be instituted against the Board until the expiration of two months after a notice in writing has been delivered or left at the office of the Board stating the cause of action, the relief sought, and the name and place of abode of the intending plaintiff, and the plaint shall contain a statement that such notice has been so delivered or left.'

It was contended that the cause of action now pleaded being different from the one alleged in the notice precluded the plaintiff from getting any relief. In order to appreciate that contention it is necessary to decide the question whether the claim for recovery of money on the basis of the work done is really a contractual obligation. The question what exactly is the nature of basis of the right of a party who sues for compensation for work done was considered by Winfield in 63 Law Quarterly Review, Page 35:

'Where one party to a contract has disabled' himself from fulfilling his obligations under it, the other party is entitled to treat the contract as at an end, and he can sue either (i) for damages for breach of contract, or (ii) as upon a Quantum meruit for what he has done under the contract, whether it amounts to total or partial performance of it. The essential difference between the two remedies is that (i) is contractual, and (ii) is quasi-contractual, for it proceeds upon the assumption that the contract has disappeared, nor has it any relation to a new or substituted contract, for none has been made. Quantum meruit may be a mode of redress on a new contract which has replaced an earlier one. The position is that the parties (or one of them) have not observed the terms of the earlier contract, but it can be implied from their conduct that they have substituted another contract for the first one. If they have done so, and one party does not fulfil his duty under the second contract, the other party can sue quantum meruit for what he has done under the contract. Herethe obligation sued upon is consensual and notquasi-contractual.''

It is impossible to bring under any particular legal rubric action for compensation on quantum meruit. It may be either contractual or quasi-contractual. From the mere fact that the contract is an implied in fact contract it does not follow that the obligation is quasi-contractual. It is a genuine contract, the only thing is that the contract is made out not by express words but by implication from the facts and circumstances of the particularcase. Therefore, I think that this is a case where the work done by the plaintiff, although not according to the specification, was accepted by the defendant and it enjoyed the benefit thereof and a promise to pay has to be inferred, not by any imputation of law but by implication from the facts and circumstances of the case. I am fully aware ofthe decision in Craven-Ellis v. Canons, Ltd. (1936) 2 KB 403 where the plaintiff who had done work for the defendant, on the assumption that a con-tract existed between them, but the contract intruth was a nullity, was allowed to recover reason-able remuneration for the work done by suing inquasi contract on quantum meruit. In the courseof the discussion Greer L. J. observed that, where the Court awards compensation for work done and accepted, there was a promise implied by law topay a reasonable price therefor. The learned Judgesaid :

'For these reasons this case seems to me to show that the obligation is one which is imposed by law in all cases where the acts are purportedto be done on the faith of an agreement which issupposed to be but is not a binding contract between the parties.'

But considering the facts in that case, it fell underthe category mentioned by Winsfield where the obligation to pay arose not out of any implied infact contract, but on account of a promise implied by law ...... a case of a genuine quasi-contract. Inthe case in hand the obligation arose because thedefendant which had an opportunity of acceptingor rejecting the work by its conduct accepted the work thereby implying that it will pay for it. That is a case of a genuine contract although thecircumstances from which the contract is inferred is not based on any express offer and acceptance and I think the liability of the defendant which I am enforcing is really based on a contract and that the notice issued mentioned that as the cause of action.

'Third. Although the parties may have come to a valid express contract, nevertheless if subsequently facts take place from which the Court can infer that the mutual intention was to varyor rescind the express contract and to pay a reasonable remuneration for the services actually rendered. then the plaintiff can sue upon a quantummeruit. But there must be facts from which that inference can properly be made. The mere fact that the defendant takes the benefit of work which he has had no opportunity of accepting or refusing does not suffice. As A. L. Smith L. J. said : 'There must be evidence of a fresh contract to pay for the work already done.' The obligation to pay in these cases is therefore consensual. It does not arise quasi ex contractu.'

(See 55 Law QuarterlyReview P. 54 at 60, quantum meruit and Craven Ellis v. Canons Lord Justice Denning.)

17. In the circumstances I come to the conclusion that the plaintiff is entitled to get compensation on the basis of the work which he has actually done. The reason for my holding so is that although the plaintiff has not performed the work in accordance with the specification of the contract and although the installation of 3/20 wires upto the circuit point was a condition precedent to his claiming the remuneration on the basis of the contract, the defendant, having had an option either to accept or reject the work accepted it and enjoyed the benefit of it, is liable to pay for the same not on the basis of any quasi contract but on the basis of an implied in fact agreement deducible from its conduct and other circumstances attending the case. I therefore hold that the plaintiff is entitled to recover compensation for the work actually clone. The lower court has not considered the question as to what exactly would be the value which the plaintiff would be entitled to get for the work which he had actually done, and the benefit of which was enjoyed by the defendant and therefore that question has to be enquired into by the court below and that court will pass a decree for the same.

18. In the result, I set aside the decree of the lower court and remand the case to the court below for the purpose of finding the amount duo to the plaintiff in accordance with the observation made above. The appellant will be entitled to get a refund of one-half the court-fee paid on the memorandum of appeal and the rest of the costs here and in the court below will be provided in the decree to be passed by the lower court.


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