Durg, Chhattisgarh. 3 - The Executive Engineer, W.R.D. Water Resources Division, Bemetara, District Durg v. M/s B.P. Dwivedi, Contractor, B-20
Case Details
1 ASHOK SAHU Digitally signed by ASHOK SAHU Date: 2025.02.03 10:41:47 +0530 2025:CGHC:5609 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR CR No. 151 of 2016 1 - State Of Chhattisgarh, Through The Secretary, Government Of Chhattisgarh, Water Resources Department, Mahanadi Bhawan, Mantralaya, Naya Raipur, Chhattisgarh. 2 - The Superintending Engineer, Water Resource Department, Shivnath Circle, Durg, District : Durg, Chhattisgarh. 3 - The Executive Engineer, W.R.D. Water Resources Division, Bemetara, District Durg Now Bemetara Chhattisgarh. ... Petitioners versus M/s B.P. Dwivedi, Contractor, B-20, VIP Estate, Vidhan Sabha Road, Raipur, Chhattisgarh. (Cause Title taken from Case Information System) ... Respondent For Petitioners
Legal Reasoning
: Mr. Rahul Tamaskar, Govt. Advocate For Respondent : None Hon'ble Shri Justice Sanjay K. Agrawal Order On Board 2 30.01.2025 1. Invoking the revisional jurisdiction of this Court under Section 19 of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983, the petitioners herein have filed a revision petition calling in question the legality, validity and correctness of the award dated 19.07.2016 passed by the Chhattisgarh Madhyastham Adhikaran, Raipur, in Reference Case No.10/2009, by which the reference petition filed by the respondent/contractor has been allowed in part and an amount of Rs.3,00,000/- (Rupees Three Lakh Only) towards the loss of profit along-with interest @ 6% per annum from the date of presentation of the petition till realization of award amount and Rs.3,00,000/- (Rupees Three Lakh Only) has also been awarded as cost of the petition. 2. The aforesaid challenge has been made on the following factual backdrop of the case : (i) That, a work contract agreement was executed into in between the petitioner No.2 and respondent contractor for the work of construction of Mudia Reservoir Dam including Nalla closure (with watering) puddle trench excavation and filling, boulder toe, seepage drains, work of pitching, two sluices and construction of approach and steel channel (as 3 per schedule). The work order was issued on 19.04.2005 vide order No.1069/SAC. (ii) The stipulated period of completion of work was 12 months including rainy season. Thus, the stipulated date of completion of work was on or before 18.04.2006. The amount of contract was Rs.118.07 Lakh. The stipulated period was extended as many as for three times, however, the execution of work could not be commenced. 3. It is the case of the respondent/contractor that the vacant land could not be provided to the contractor as acquisition of land could not be completed and therefore, the respondent/contractor is entitled for loss of profit of Rs.11.00 Lakh i.e. 10% of the contract amount of Rs.118.07 Lakh and also claim for loss of overheads due to infructuous expenditure of Rs.8.80 Lakh, which the petitioners denied and file its reply stating that the claim was barred by limitation and therefore, the reference petition is liable to be dismissed. 4. The Tribunal by its impugned award partly allowed the reference petition holding that the work could not be commenced by the contractor on account of causes purely attributable to the department and the contractor was not responsible. However, the Tribunal has rejected the claim 4 under loss of overheads due to infructuous expenditure on overheads amounting to Rs.8.80 Lakh and proceeded to grant an amount of Rs.3,00,000/- (Rupees Three Lakh Only) for loss of profit to the contractor along-with interest @ 6% per annum from the date of presentation of petition till the date of its realization and also awarded Rs.3,00,000/- (Rupees Three Lakh Only) as cost to the contractor. 5. Feeling aggrieved against the order of granting loss of profit to the tune of Rs.3,00,000/- along-with interest @ 6% per annum and cost of Rs.3,00,000/-, the State has preferred this revision petition under Section 19 of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983. 6. Mr. Rahul Tamaskar, learned counsel for the petitioners, submits that the loss of profit has not been proved mainly because the work could not be commenced by the contractor for various reasons, for which the department cannot be made responsible for the loss of profit. As such, the impugned award awarded in favour of the respondent/ contractor is liable to be set aside and even the cost to the extent of Rs.3,00,000/- is wholly unsustainable in law and is also liable to be set aside. 5 7. Despite second round of hearing, none appeared nor any representation is made on behalf of the respondent. 8. 9. I have heard learned counsel for the petitioners, considered their rival submission and went through the records with utmost circumspection. The Tribunal, after appreciating the oral and documentary evidence on record, in paragraphs 13 & 14 has clearly recorded a finding that the land acquisition proceedings could not be concluded and the notification under Section 6 of the Land Acquisition Act was issued on 30.09.2005; whereas initial stipulated period fixed for completion of work was 18.04.2006 and therefore, the work could not be commenced by the contractor on account of causes purely attributable to the department and the contractor was not responsible. The finding recorded by the Tribunal in this regard in paragraphs 13 & 14 are as under : "13. The work could not be commenced within the stipulated period of 12 months even during the span of extended period which is evident from averments made in the pleadings and affidavit filed by both the parties. It is also an admitted fact that lands were required to be acquisition, as private lands were involved and the acquisition proceedings were initiated by issuing notification under Section 4 & 6 of the 6 Land Acquisition Act on 05.08.2005 and 30.09.2005 respectively. Whereas initial stipulated period fixed for completion of work was 18.04.2006, which goes to show that the contractor had not in possession of the work site at the time when work order was issued to him, and even thereafter for about 24 months. The respondents have not specified as to when the proceedings of land acquisition were got completed including the payment of compensations to the villagers. But pleadings it goes to show that till the date of making reference to the final authority by the petitioner all the above proceedings were not completed. Thus it is clear that the contractor was not provided land to commence the work. 14. It would be worthwhile to reproduce here the findings recorded by the final authority vide his order dated 14.10.2008 which reads as hereunder :- vfHkys[kuqlkj Bsdsnkj }kjk vuqca/k ds vfrfjDr viuh 'krsZ vyx&vyx ls j[kk tkuk U;ks;ksfpr izrhr ugh gksrk Bsdsnkj us vius i= dh daf.Mdk 9 esa mYys[k fd;k gS fd *dk;Z vHkh izkjaHk ugha gqvk g*S ls Kkr gksrk gS fd mlds }kjk dksbZ dk;Z laiknu ugh fd;k x;k gS A tcfd foHkkx }kjk 'kkldh; Hkwfe lfgr caM ykbZu ij ys vkmV ns fn;k x;k FkkA mDr izdj.k dh foospuk rFkk Bsdsnkj ,ao foHkkx ds chp gq, i= O;ogkj esa ;g ik;k x;k gS fd foHkkx }kjk Hkw& vtZu ,oa Hkwfe dk eqvkotk Hkqxrku ugha djus ds fy, Bsdsnkj nks"kh ugha gSA vr% Bsdsnkj dh jksdh xbZ jkf'k;ksa dk Hkqxrku tkjh fd;k tkos ,ao Bsdsnkj }kjk dk;Z izkjaHk ugh djus ds dkj.k mlds }kjk nkok fd;k xk;k ykHk :- 11-80 yk[k ,oa 7 fofo/k 'kh"kZ dh jkf'k :- 23-60 yk[k dh {kfriwfrZ nkok vekU; fd;k tkrk gSA From the above facts and circumstances brought on the record we hold that the work could not be commenced by the contractor on account of causes purely attributable to the department and the contractor was not responsible. 10. Mr. Rahul Tamaskar, learned counsel for the petitioners, though made an attempt to contradict the above findings recorded by the learned Tribunal, but he could not demonstrate that the findings are perverse and contrary to the record. As such, the finding so recorded by the Tribunal that the respondent/contractor could not commence the work on account of reasons purely attributable to the department/State for which the respondent contractor was not responsible is hereby affirmed. 11. The first claim with regard to loss of overheads due to infructuous expenditure on overheads amounting to Rs.8.80 Lakh has not been found proved by the Tribunal, which has also not been challenged by the respondent/ contractor and, as such, this finding has became final. 12. Now, the respondent/contractor has claimed 10% of the original contract amount i.e. Rs.118.07 Lakh, which comes to Rs.11 Lakh, which the Tribunal has found that the 8 petitioner could not commence the work on account of non- availability of land for which the department is responsible and proceeded to grant an amount of Rs.3 Lakh for loss of profit along-with interest @ 6% per annum, which is sought to be challenged by the department. 13. In this regard, the Supreme Court in case of M/s. A.T. Brij Paul Singh and Bros. Vs. State of Gujarat1 has clearly held that in a works contract, the party entrusting the work commits breach of the contract, the contractor would be entitled to claim damages for loss of profit which he expected to earn by undertaking the works contract. Para 9 of the report states as under:- “9. It was not disputed before us that where in a works contract; the party entrusting the work, commits breach of the contract, the contractor would be entitled to claim damages for loss of profit which he expected to earn by undertaking the works contract. What must be the measure of profit and what proof should be tendered to sustain the claim are different matters. But the claim under this head is certainly admissible. Thereafter, Their Lordship allowed 15% of the value as damages for loss of profit by holding as under:- 11. Now, if it is well-established that the respondent was guilty of breach of contract inasmuch as the rescission of contract by the respondent is held to be unjustified, and the 1 AIR 1984 SC 1703 9 plaintiff-contractor had executed a part of the works contract, the contractor would be entitled to damages by way of loss of profit. Adopting the measure accepted by the High Court ha the facts and circumstances of the case between the same parties and for the same type of work at 15% of the value of remaining parts of the works contract, the damages for loss of profit can be measured.” 14. Thereafter, the Supreme Court in case of Dwarka Das Vs. State of M.P. and another 2 noticing the decision of Supreme Court in case of M/s. A.T. Brij Paul Singh and Bros (supra)clearly affirmed the principle that claim of expected profits is legally admissible on proof of the breach of contract by the erring party. Para 9 of the report states as under:- “9. The claim of the petitioner for payment of Rs. 20,000/- as damages on account of breach of contract committed by the respondent-State was disallowed by the High Court as the appellant was found to have not placed the material on record to show that he had actually suffered any loss on account of the breach of contract. In this regard the appellate Court observed : “It is not his case that for due compliance of the contract he had advanced money to the labourers or that he had purchased materials or that he had incurred any obligations and on account of breach of contract by the defendants he had to suffer loss on the above and other heads. Even in regard to the percentage of profit he did not place any material on record but relied upon assessment of the profits by the Income Tax 2 AIR 1999 SC 1031 10 Officer while assessing the income of the contractors from building contracts.” Such a finding of the appellate Court appears to be based on wrong assumption. The appellant had never claimed Rs.20,000/- on account of alleged actual loss suffered by him. He had preferred his claim on the ground that had he carried out the contract he would have earned profit of 10% on Rs.2 lacks which was the value of the contract. This Court in A.T. Brij Pal Singh (supra), while interpreting the provisions of Section 73 of the Contract Act, has held that damages can be claimed by a contractor where the government is proved have committed breach by improperly rescinding the contract and for estimating the amount of damages Court should make a broad evaluation instead of going into minute details. It was specifically held that where in the works contract, the party entrusting the work committed breach of contract, the contractor is entitled to claim the damages for loss of profit which he expected to earn by undertaking the works contract. Claim of expected profits is legally admissible on proof of the breach of contract by the erring party. “What would be measure of profit would depend upon facts and circumstances of each case. But that there shall be a reasonable expectation of profit is implicit in a works contract and its loss has to be compensated by a way of damages if the other party to the contract is guilty of breach of contract cannot be gainsaid. In this case we have the additional reason for rejecting the contention that for the same type of work, the work site being in the vicinity of each other and for identical type of work between the same parties, a Division Bench of the same High Court has accepted 15 percent of the value of the balance of the works contract would not be an unreasonable measure of damages for loss of profit………… 11 Now if it is well-established that the respondent was guilty of breach of contract inasmuch as the rescission of contract by the respondent is held to be unjustified, and the plaintiff-contractor had executed a part of the works contract, the contractor would be entitled to damages by way of loss of profit. Adopting the measure accepted by the High Court in the facts and circumstances of the case between the same parties and for the same type of work at 15 percent of the value of the remaining parts of the work contract, the damages for loss of profit can be measured. To the same effect is the judgment in Mohd. Salamatullah v. Government of Andhra Pradesh, AIR 1977 SC 1481. After approving the grant of damages in case of breach of contract, the Court further held that the appellate Court was not justified to interfere with finding of fact given by the trial Court regarding quantification of the damages even if it was based upon guess work. In both the cases referred to hereinabove. 15% of the contract price was granted as damages to the contractor. In the instant case however the trial Court had granted only 10% of the contract price, which we feel was reasonable and permissible, particularly when the High Court had concurred with the finding of the trial Court regarding breach of contract by specifically holding that “we therefore see no reason to interfere with the finding recorded by the trial Court that the defendants by rescinding the agreement committed breach of contract.” It follows therefore as and when the breach of contract is held to have been proved being contrary to law and terms of the agreement, the erring party is legally bound to compensate the other party to the agreement. The appellate Court was, therefore, not justified in disallowing the claim of the appellant for Rs.20,000/- on account of damages as expected 12 profit out of the contract which was found to have been illegally rescind.” 15. In the aforesaid two judgments, M/s. A.T.Brij Paul Singh (supra) and Dwarka Das (supra), the claim of expected profits is legally admissible on proof of the breach of contract by the erring party. In this case, the Tribunal has clearly recorded a finding that the respondent/ contractor could not commence the work on account of non- availability of land, for which the department is solely responsible as the land could not be acquired. However, only Rs. 3,00,000/- (Rupees Three Lakhs Only) as lum- sump amount for loss of profit has been awarded which appears to be reasonable along-with interest @ 6% per annum, as the final authority also by order dated 14.10.2008 directed for payment of withheld amount, but rejected the claim towards loss of profit and, as such, an amount of Rs.3,00,000/- (Rupees Three Lakhs Only) against loss of profit along-with 6% interest is legally justified and, as such, to that extent, I am not inclined to interfere with the award passed by the learned Tribunal. However, the cost of Rs.3,00,000/- (Rupees Three Lakhs Only) as awarded by the Tribunal is reduced to Rs.10,000/- only. As such, the revision petition is allowed in part and it is held that the respondent/contractor is entitled for 13 Rs.3,00,000/- (Rupees Three Lakhs Only) along-with interest @ 6% per annum from the date of presentation of the petition till realization of award amount but with regard to cost, the respondent/contractor is only entitled for Rs.10,000/-. 16.
Decision
In the result, the revision petition is partly allowed to the extent indicated herein above. Ashok Sd/- (Sanjay K. Agrawal) Judge