KARNATAKA POWER CORPORATION LTD., A GOVERNMENT OF KARNATAKA UNDERTAKING v. M/S BANGALORE CONSTRUCTION COMPANY, A PARTNERSHIP FIRM

defendants to appear at the spot to take accounts they did not appear but gave an untenable and evasive reply on 01-03-1986. They also filed a Writ Petition No.3468/1986 to stay the letter of rescinding the Contract and ultimately, the petition was dismissed on 02-04-1986. (i) The defendants filed OS No.1014/1986 before the City Civil Court Bangalore, seeking injunction and a Court Commissioner was appointed to record the measurements of the work done under the contract and after the Court Commissioner submitted his 8 RFA NO. 1188/2010 report dated 21-06-1986 and 06-08-1986, the suit came to be withdrawn.

5. On the above grounds, the plaintiff-Corporation made following claims: (A) The plaintiff has sustained loss of Rs.7,21,273.50 ps., due to consequences of breach of contract. (B) The plaintiff had issued 405.31 MT of steel for execution of the work and out of it 14.955 MT was unaccounted and therefore, the defendants are liable to pay a sum of Rs.1,49,398.06 ps., as value to unaccounted steel. (C) The plaintiff had issued 21,411 bags of cement to the defendants and a quantity of 566 bags remained unaccounted and as such, sum of Rs.27,690/- is liable to be paid by the defendants. (D) The plaintiff has to locate several of its offices in rented buildings and the rentals per month for such premises was Rs.53,690.14 ps. If the defendants had 9 RFA NO. 1188/2010 completed the contract within a stipulated time, the plaintiff could have saved a sum of Rs.13,58,815.10 ps., paid as rentals for its offices, which is liable to be paid by the defendants. (E) Due to the delay in execution of the work by the defendants, plaintiff had to continue the services of supervisory staff till the completion of the building by piece work contractors and as such, a sum of Rs.4,28,750/- is to be paid by the defendants for the period of 01-06-1985 to 30-06-1987. (F) The plaintiff is entitled to adjust the sum of Rs.3,65,503.31 ps., towards the amount due to the defendants under the contract and a sum of Rs.12,364/- towards extra items/works done by the defendants. Therefore, the defendants are liable to pay the sum of Rs.26,85,926.66 ps., and after deducting the dues the plaintiff defendants, liability of the defendants 10 RFA NO. 1188/2010 Rs.23,08.059/-. Thus, plaintiff claimed Rs.23,08,059/- along with interest at 12% p.a.

6. After service of summons, defendants have appeared before the trial Court through their counsel and filed their written statement. The contentions of the defendants are as below: (a) As per the allegations of the plaintiff-Corporation there was breach of agreement on 29-12-1985 and the present suit is filed on 20-2-1989 and therefore, the suit is barred by limitation. (b) The site was handed over to the defendants on 31-3-1982 and commenced the work in April 1982, but not on 4-5-1982 as claimed by the plaintiff. It was denied that the progress of the work was slow and there were several letters to speed up the work. (c) Even at the time of signing the agreement the plaintiff had not supplied the entire drawings and designs in respect of each and every item of work to 11 RFA NO. 1188/2010 be carried out, so that the defendants could have chalked out the programme of the work and complete the same within stipulated time. (d) Even after the delayed supply of designs and drawings, on several times they were changed which resulted rescheduling of the work by defendants, dismantling the fabricated structures and re-designing such structures. Therefore, the delay in progress of the work was completely attributable to the acts, omissions and commissions of the plaintiff. There was no justification for penalty of Rs.50/- per day from 1-3-1983. (e) It is admitted that the defendants claimed enhancement of the rates for the work done and to be done and also that the time stipulated for the work was extended for eight months. There were valid reasons and the written statement narrates those reasons in detail. 12 RFA NO. 1188/2010 (f) The time and rates stipulated under agreement was relevant only if both the parties discharged their duties in accordance with the terms and conditions of the agreement. Since there was delay on the part of the plaintiff and violations of the terms of the agreement, the plaintiff had failed to perform its part of the agreement. (g) The rates of the material as well as cost of labour had increased nearly 3/4 and it was impossible for the defendants to carryout the works at the rates stipulated in the contract. Despite request by the defendants, the plaintiff-Corporation did not take any decision. But the Corporation went on to levy penalty since it was in dominating position. (h) The defendants deny the allegations that they had completed works of the value of Rs.33.11 lakhs if any work remained unexecuted as on 21-09-1984, it was mainly due to the failure of the plaintiff-Corporation in not making available the 13 RFA NO. 1188/2010 drawings and designs, in not taking decisions regarding height of floors, not communicating its decision regarding fabrication of the works, etc. (i) Defendants denied that during the extended period of contract work only to the extent of 2.56 lakhs was carried out. Therefore, the defendants by their letter dated 14-10-1985 intimated the plaintiff that if its demands are not considered and grievance remedied, they are not interested in continuing the work. Even then the plaintiff-Corporation terminated the contract by its letter dated 21-02-1986. The defendants denied that they had committed any breach of contract. (j) The defendants also denied the several of the claims made by the plaintiffs specifically and meticulously. (k) It was alleged that since the defendants had filed OS No.3423/1986 against the plaintiff-Corporation, the present suit was filed as a counter blast. On these 14 RFA NO. 1188/2010 grounds, the defendants sought for dismissal of the suit.

7. On the basis of the above pleadings, the trial Court framed the following issues for its consideration: "1. Whether the plaintiff proves the defendants have committed breach of terms of contract, agreement entered into between the parties?

2. Whether the plaintiff proves by 21.9.84 the date originally stipulated for the completion of the contract, the defendants had executed the work of the value of Rs.33.11 lakhs as against the stipulated work of the value of Rs.46.13 lakhs?

3. Whether the plaintiff further proves the defendant has abandoned the work from 29.12.1985 and during the period from 21.5.1985 up to the date of stoppage of the work the defendants had executed work of the value Rs.3.44 lakhs as against the value of Rs.25.31 lakhs?

4. Whether the plaintiff proves that the contract of the defendants was properly rescinded on 21.2.1986 by letter No.CD/C3-T9C?

5. Whether the plaintiff proves they have sustained loss to the extend of Rs.7,21,273=50 ps.? 15 RFA NO. 1188/2010

6. Whether the plaintiff proves the damages sustained by them amounting to Rs.31,58,815=10 ps. as stated in para 16 (d) of the plaint?

7. Whether the plaintiff proves owing to delay in execution work under the contract the plaintiff had incurred loss of Rs.4,28,750/-?

8. Whether the plaintiff further proves that on account of the negligence of the defendants, the defendants are liable to pay Rs.23,08,059/-?

9. Whether the plaintiff proves the defendants are liable to pay interest at 12% per annum?

10. Whether the suit is barred by Limitation?

11. Whether the plaint has been signed and verified by competent persons?

12. Does the defendant prove the site was not handed over to the defendant as contended by the plaintiff and the plan has been supplied to the defendants at a very late stage and also there were modifications to the original plan to that of the work to be carried out by the defendant?

13.Whether the defendants prove the delay completion of the work only on account of the faults of the plaintiff's and not on the part of the defendants?

14. To what relief the plaintiff is entitled to?" 16 RFA NO. 1188/2010

8. In order to prove its case, the Executive Engineers of plaintiff-Corporation were examined as PWs 1 and 2 and Exhibits P1 to P41 were marked in evidence. Defendants have not led any oral evidence, but got marked Exhibits D1 to D82 through PW2 on their behalf.

9. The trial Court after hearing both the parties, has answered issue Nos. 1 to 4, 11 in the affirmative, issue No.5,8 and 12 in partly affirmative and in partly negative and issue Nos. 6,7,9,10 and 13 in the negative and ultimately, partly decreed the suit with costs.

10. Being aggrieved by the said judgment and decree, the plaintiff-Corporation is before this Court in appeal.

11. On issuance of notice, respondents Nos. 1 and 3 have appeared through their counsel. Respondent No.2 is deleted and respondent No.4 served and unrepresented.

12. The trial Court records were secured on admitting the appeal and heard arguments 17 RFA NO. 1188/2010 learned counsel appearing for appellant and learned Senior Counsel appearing on behalf of the counsel on record for respondent Nos. 1 and 3. Arguments by appellant/plaintiff:

13. The learned counsel for the appellant- plaintiff Corporation submits that though the trial Court comes to the conclusion that there was breach of contract by the defendants, while considering Issue No.5, it has not awarded the claims made by the appellant-Corporation in its entirety. He submits that though the claim made by the plaintiff was to the extent of Rs.7.21 lakhs in respect of the extra work which was entrusted to the piece contractors, the same was not considered by the trial Court and it has awarded a sum of Rs.53,126.05 ps. It is submitted that had the plaintiff proceeded with the defendants as the Contractor, he would have spent a sum of Rs.15.19 lakhs but on the other hand, they have to spend Rs.22,40,126.05 ps., for which the defendants are liable. He submits that 18 RFA NO. 1188/2010 the trial Court failed to consider the evidence of PW.2 in a proper perspective.

14. So far as Issue No.6 is concerned, he submits that the plaintiff-Corporation had to work from rented premises as the building was under construction. Due to the breach committed by the defendants, the offices of the plaintiff-Corporation had to continue to work from the rented premises for a longer period. Therefore, the rent of such premises towards longer period of occupation is also liable to be paid by the defendants as damages. It is submitted that the Company Secretary had issued a certificate about the money spent towards the rents and the same should have been accepted by the trial Court. It is submitted that the unliquidated damages should have been considered by the trail Court though there was no such clause in the Contract.

15. Regarding issue No.7, it is submitted that the plaintiff-Corporation had to continue the services of the 19 RFA NO. 1188/2010 Supervisory staff for completion of the balance work beyond the time fixed under the agreement. The trial Court in para 54 of the judgment rejected the claim on the ground that there was no such clause in the contract and therefore, the defendants are not liable to pay towards the salary of the supervisory staff. It is submitted that when there is breach of contract, all incidental expenses incurred by the plaintiff should have been compensated by the defendants. Therefore, the rejection of claim of Rs.4,28,750/- as per the Certificate at Ex.P37 issued by the Company Secretary should have been allowed by the trial Court.

16. It is submitted that the suit is filed within three years from the date of Ex.P12, the letter under which the Contract was terminated. It is also submitted that even after the alleged abandonment of the work on 29-12-1985, the defendants had continued the work and therefore, it was the date as per Ex.P12 which is relevant for Limitation. Therefore, in the absence of any cross- objection or appeal 20 RFA NO. 1188/2010 by the defendants, the claim of the plaintiff has to be allowed. Arguments by respondents/defendants:

17. The learned Senior counsel appearing for the defendants/respondents No.1 and 3 herein, in his elaborate and meticulous arguments has contended that even though the defendants have not filed any cross- objection, by virtue of Order 41 Rule 33 of CPC he is entitled to lay a challenge to the findings rendered against the defendants. In this regard, he relies on the judgments in the case of Pannalal Vs. State of Bombay and others1 and in the case of Saurav Jain and others Vs. A.B.P Design and others2 .

18. The first contention of the learned counsel for the defendants is regarding the limitation. He submits that the plaintiff clearly admits that the breach of contract was on 29-12-1985 and PW.2 also states in his cross- examination that the breach of contract occurred on 1 AIR 1963 SC 1516 2 Manu/SC/0509/2021 21 RFA NO. 1188/2010 29-12-1985. The trial Court also holds that the breach occurred on 29-12-1985. Article 55 of the Limitation Act, prescribes a period of 3 years from the date of breach of contract to claim damages. The plaint was filed on 20-2-1989 and therefore, the suit is obviously time barred. He submits that the trial Court wrongly held that the termination of the contract vide Ex.P12 dated 21-2-1986 is the starting point of limitation.

19. He submits that Article 55 employs the words 'Breach' and 'Broken' and they connote the same meaning in reference to commencement of the limitation under the said Article. The word 'Broken' does not refer to termination of the contract, but it is breach of the contract. It is submitted termination of the contract subsequent to the breach and the limitation has to be reckoned breach, termination/rescission. In this regard, he relies on the judgments in the case of Food Corporation of India and 22 RFA NO. 1188/2010 others Vs. Babulal Agrawal,3 State of Gujarat Vs. Kothari and Associates4, The Senior Regional Manager, Food Corporation of India Vs. G.V.V.N. Hanumantha Rao and others5 and Rajgopal Naidu Vs. Aiyyaswamy Chettiar and others6. Relying on the judgments in the case of K. Ramkumar Vs. Marappa and others7 and in the case of Kamalesh Babu and others Vs. Lajapat Rai Sharma and others8, he further submitted that the question of Limitation being a question of law may be raised by the defendants in appeal also.

20. Regarding 'Breach of Contract', he submitted that to ascertain as to who has committed the breach of contract, the nature of the Contract is to be appreciated. The Contract between the plaintiff and the defendants being the reciprocal in nature, it required both the parties to discharge their obligations. In this regard, he relied on Sections 52 and 54 of the Contract Act. ORDER (i) The appeal is dismissed. (ii) The impugned judgment and decree passed by the trial court in OS No.1094/1989 on 23-11-2009 is set aside. (iii) The suit of the plaintiff against the defendants stands dismissed as barred by time. (iv) The amount paid by the defendants, if any, pursuant to decree, be refunded to them. Sd/- JUDGE Sd/- JUDGE tsn*/NR