5 Whether It Is To Be Circulated To ...

vs Sheth Construction Co on 29 January, 2015

Gujarat High Court

5 Whether It Is To Be Circulated To ... vs Sheth Construction Co on 29 January, 2015
C/FA/4959/1999 JUDGMENT

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

FIRST APPEAL NO. 4959 of 1999

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE AKIL KURESHI

and
HONOURABLE MS JUSTICE SONIA GOKANI

================================================================

1 Whether Reporters of Local Papers may be allowed to see

the judgment ?

2 To be referred to the Reporter or not ?

3 Whether their Lordships wish to see the fair copy of the

judgment ?

4 Whether this case involves a substantial question of law as

to the interpretation of the Constitution of India, 1950 or any
order made thereunder ?

5 Whether it is to be circulated to the civil judge ?

================================================================
STATE OF GUJARAT....Appellant(s)
Versus
SHETH CONSTRUCTION CO....Defendant(s)
================================================================
Appearance:
MR RUTVIJ OZA, ASST.GOVERNMENT PLEADER for the Appellant(s) No. 1
MR ASPI KAPADIA, SR. ADV. with MOHIT P PATHAK, ADVOCATE for the
Defendant(s) No. 1
================================================================

CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI

and

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 5 Whether It Is To Be Circulated To ... vs Sheth Construction Co on 29 January, 2015

Page 1 of 32
C/FA/4959/1999 JUDGMENT

HONOURABLE MS JUSTICE SONIA GOKANI

Date : 29/01/2015

ORAL JUDGMENT

(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1. This appeal is filed by the State Government and arises out of the judgment and decree dated
30.4.1999 passed by the learned Civil Judge(S.D.), Junagadh in Special Civil Suit No.59 of 1983.

2. Brief facts are as under:-

2.1 Respondent is a registered partnership firm engaged in the business of engineering and
construction related work. The said respondent was awarded a contract of Uben Irrigation Scheme
Part-I Earth Dam, Part-II Waste Vier and Part-III Head Regulator on both the banks at village
Bhatgam in Bheshan Mahal of Junagadh district by issuance of work order dated 10.4.1979. The
State authorities, having invited tender for such work and having found the offer of the respondent
most competitive, awarded such work at a total tender cost of Rs.2,07,41,227/-. The work was
required to be completed within a period of three years from the date of the work order i.e. on or
before 10.4.1982. The case of the respondent was that C/FA/4959/1999 JUDGMENT there were
several interruptions by the State authorities during the execution of the construction work which
led to considerable amount of silting after substantial excavation work was completed. Even the
design of the dam and materials agreed to be used were changed in view of the disaster following the
bursting of Machhu Dam Part-II at Morbi. Undisputedly the construction was completed within the
time envisaged. However, according to the contractor, the State authorities had to pay several
amounts on account of their acts and omissions. Having failed to get favourable response from the
State Government, the contractor filed Special Civil Suit No.59 of 1983 seeking to recover a sum of
Rs.40,91,834/-. In such suit the plaintiff raised following four claims:-

"Claim No.1: Amounting to Rs.8,56,324/- on account of excavation for Waste Veir

including dewatering and depositing the excavated materials as and when directed
with leads and lifts in hard rock."

This claim was substantiated on the premise that as per the tender the quantity of excavation of
hard rock of waste vier was shown at 16,400 cubic mtrs. The plaintiff had filled the rate of Rs.40/-
per cubic mtr. However, the total quantity of work actually C/FA/4959/1999 JUDGMENT executed
by the plaintiff came to 31,000 cubic mtrs. According to the plaintiff, the department had paid
Rs.26.95/- per cubic mtr. for 9680 cubic mtrs. of excavation, which was even below Rs.40/- per

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 5 Whether It Is To Be Circulated To ... vs Sheth Construction Co on 29 January, 2015

cubic mtr., which was the agreed tender rate. Further, according to the plaintiff, the defendant could
not have tied down the plaintiff to the tender rate of Rs.40/- per cubic mtr. when the actual work
quantity exceeded by nearly 90% of the original tender estimate. The plaintiff, therefore, claimed
sum of Rs.1,26,324/- by way of under paid rate of Rs.13.50/- per cubic mtr. for 9680 cubic mtrs. and
further claimed Rs.7,30,000/- at the rate of Rs.50/- per cubic mtr. extra for the entire additional
quantity of 14,600 cubic mtrs of excavation. That is how the plaintiff arrived at a sum of
Rs.8,56,324/- for the first claim.

2.2 The plaintiff's second claim was as under:-

" Claim No.2: Amounting to Rs.17,70,000/- on account of removal of silt from Block
Nos.3 to 8 for Waste Vier."

This claim was on the premise that the plaintiff had carried out substantial amount of excavation in
Blocks No.3 to 8. The department, however, did not C/FA/4959/1999 JUDGMENT permit the
plaintiff to carry out masonry work since the evacuation work in village Bhatgam had not been
completed. According to the plaintiff, the defendants, therefore, prohibited the contractor from
carrying out the masonry work to avoid adverse effect on the residents of village Bhatgam. The
department also wanted to change the hydrology of the dam (i.e.the design). This led to further
delay; slowing down the work. According to the plaintiff this led to gushing in of water in the cavities
of the excavated blocks leading to serious silting. The plaintiff, therefore, had to carry out the work
of desilting in such blocks. The total quantity of which came to 17,700 cubic mtrs. The plaintiff
claimed compensation for such additional work at the rate of Rs.100/- per cubic mtr. and thus
arrived at the said figure of Rs.17,70,000/-. 2.3 The plaintiff's third claim was as under:-

"Claim No.3: Amounting to Rs.10,80,000/- on account of using 1:5 cement sand in

noncorseable rubble masonry."

This claim was based on the plaintiff's allegation that as per the tender conditions, the plaintiff had
to carry out a total construction of 48,880 cubic mtrs. of UCR masonry work using agreed
C/FA/4959/1999 JUDGMENT composition of fly ash, sand and cement. The cement to be used was
specified as Portland cement. In fact, 12,000 cubic mtrs. of such work was done as per the original
formula. However, the department later on changed this composition of material and insisted that
the plaintiff, instead of fly ash component and the Portland cement, would use Pazolona cement.
Under the instructions of the engineers of the Government, the plaintiff carried out such work. He
claimed that for similar nature of work in the same contract, the plaintiff had filled the rate of
Rs.150/- per cubic mtr., since the tender rate was 5.5% less than the estimated work, the plaintiff
calculated his entitlement under this item at the rate of Rs.142/- per cubic mtr. He was actually
underpaid at the rate of Rs.114/- per cubic mtr. His claim, therefore, was for difference of Rs.28/-
per cubic mtr. for 36,000 cubic mtrs. of masonry work, which would work out to above sum of
Rs.10,80,000/- (a minor calculation error).

2.4 The plaintiff's fourth claim was as under:-

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 5 Whether It Is To Be Circulated To ... vs Sheth Construction Co on 29 January, 2015

"Claim No.4: Amounting to Rs.3,85,510/- on account of cost of empty cement bags

returned by the plaintiff."

C/FA/4959/1999 JUDGMENT

According to the agreement, the plaintiff was

entitled to receive Rs.2/- per every empty cement bag returned to the Government.
Since the total of 1,92,750 such bags were returned, the plaintiff raised such claim of
Rs.3,85,510/- under this head. The total of four claims comes to Rs.40,91,834/-,
which was claimed in the suit with interest at the rate of 18% from the date of the suit
till realization.

3. The defendant appeared and filed written statement at Exh.15 and denied all the claims. Reliance
was placed on Clause-14 of the agreement to contend that in case of escalation upto 30% in the
quantity, the contractor would have to carry out the work at the tender rate. For further excess work,
the rate would be depending on the tender rate in comparison to the estimated rate. With respect to
the second claim, it was contended that there was no excess excavation. No separate compensation
for de- watering was to be paid. The allegation of silting was also denied. It was denied that the work
was slowed down on account of the restrictions imposed by the Government. It was suggested that
the slow progress was attributed to the contractor's own causes C/FA/4959/1999 JUDGMENT
including shortage of labour. With respect to the third claim, it was suggested that the additional
cement required in view of the change in the composition of the material was supplied by the
Government free of cost. With respect to the last claim, it was stated that as per the tender
conditions, the Government would charge Rs.2/- per bag, if it was not returned. However, upon the
return of the bag, the contractor could not claim any compensation. On such basis all claims were
opposed.

4. On the basis of pleadings on record, the trial Court framed the following issues:-

"(1) Whether the plaintiff proves suit claim? (2) Whether the plaintiff is entitled for
interest? If yes, at what rate?

(3) What order and decree?"

5. The trial Court in its impugned judgment dated 30.4.1999 considered each claim separately in
detail and accepted all claims of the plaintiff in toto. In the final judgment, the learned Judge,
therefore, allowed the plaintiff to recover a sum of Rs.40,91,834/- from the defendant with interest
at the rate of 17% per annum on such decretal amount from the date of the suit till the actual
payment. It is this C/FA/4959/1999 JUDGMENT judgment the State Government has challenged in
this appeal.

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 5 Whether It Is To Be Circulated To ... vs Sheth Construction Co on 29 January, 2015

6. The plaintiff had examined Jashwantray Manilal Sheth, a partner of the plaintiff firm as a witness
at Exh.49. He was cross-examined at length by the defendant. This was the sole witness examined
by the plaintiff though several documents were produced and exhibited. Likewise, the defendant
examined its sole witness Vasantray Jagjivan Bhimjiyani at Exh.127, who was cross-examined by the
plaintiff. Several documents were produced by the defendant also. We would refer to the relevant
portion of the testimony of these witnesses and the contents of the documents in context of each
claim separately.

7. We may presently deal with each claim. The claim No.1 pertains to the payment for excess work
done by the plaintiff. According to the plaintiff for 9680 cubic mtrs. of work, which was part of the
original tender quantity, the defendant had paid at the rate of Rs.26.95/- per cubic mtr. as against
the tender rate of Rs.40/- per cubic mtr. The plaintiff was thus under paid by a sum of
Rs.1,26,324/-. For the excess quantity of 14,600/- cubic mtrs. the plaintiff claimed C/FA/4959/1999
JUDGMENT additional compensation at the rate of Rs.50/- per cubic mtrs. considering difficult
nature of work. Learned Assistant Government Pleader Mr.Oza for the appellant submitted that any
excess work done would be governed by Clause-14 of the tender agreement as per which upto 30% of
excess quantity, no extra remuneration would be paid. Any excess thereof would be governed by the
rate and the percentage of deviation between the rate offered by the contractor vis-a-vis the
estimated cost. He, therefore, submitted that the trial Court erred in accepting this claim of the
plaintiff.

7.1 On the other hand, learned counsel Shri Kapadia for the respondent original plaintiff contended
that the excess quantity of work done was nearly 90% over and above the tender quantity. The
nature of the work had also completely changed. The work was very difficult requiring more labour.
Clause-14, therefore, would have no application. The Court, therefore, correctly allowed reasonable
increase. 7.2 The trial Court recorded that there was no dispute about the total quantity of work
done by the plaintiff and further that for portion of such work, C/FA/4959/1999 JUDGMENT the
plaintiff was not paid even at the tender rate. It was noticed that the hydrology of the dam was
revised. This resulted into change in the design of the dam and increase in the quantity substantially
over the estimated work. The Court concluded that for 9680 cubic mtrs. the contractor was paid at
the rate of Rs.26.95/- per cubic mtr. as against the agreed rate of Rs.40/- per cubic mtr. With
respect to the excess quantity, the Court held that the original estimated quantity was 16,400/- cubic
mtrs. The actual work executed by the contractor was 32,000 cubic mtrs. There was thus additional
work to the tune of 90% of the initial quantity. In that view of the matter, in the opinion of the trial
Court, Clause-14 would have no application. For the remaining work, the Court granted a reasonable
increase and awarded Rs.50/- per cubic mtr. for the additional work done by the contractor.

8. In his deposition Jashwantray Manilal Sheth had pointed out that against the contracted quantity
of 16,400 cubic mtrs., the contractor had carried work to the extent of 32,000 cubic mtrs., which
was 90% in excess of 16,400 cubic mtrs. The contractor would be C/FA/4959/1999 JUDGMENT
remunerated at Rs.40/- per cubic mtr. The Government paid such rate for the contracted quantity
as also upto 30% excess thereof. However, for the remaining work, the contractor was paid only at
the rate of Rs.26.95/- per cubic mtr. Due to change in the design, height of the dam had to be
increased, which would lead to greater width of the dam also. The contractor also had to increase the

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 5 Whether It Is To Be Circulated To ... vs Sheth Construction Co on 29 January, 2015

height of the earthen dams on the side of the waste vier. The excavation also had to be done more.
This change in the design consumed nearly one year.

8.1 In the cross-examination of Vasantray Jagjivan Bhimjiyani, the witness of the defendant, had
admitted that on the quantity of work done over 130% of the tendered quantity, the rate paid was
even less than the tender rate.

8.2 We may notice that even while the work was going on, the contractor had protested to the extra
work and insisted that the same should be compensated at a higher rate. It was pointed out that
Clause-14 of the agreement would not apply in view of considerable increase in the total work done.
Reference in this respect can be made to the plaintiff's letter Exh.112 C/FA/4959/1999 JUDGMENT
and Exh.121.

9. From such evidence, it is established that against the tendered quantity of 16,400/- cubic mtrs. of
masonry work, due to change in the hydrology of the dam by the Government, the contractor
executed a total of 32,000 cubic mtrs. of such work. The calculations are on record and not in
dispute at all. The witness of the defendant also admitted that upto 130% of the quantity, the
contractor was paid at the contract rate, the rest was paid even less than the contract rate. It was in
this background that the trial Court had accepted the claim of the plaintiff for short payment and
further compensation by awarding Rs.50/- per cubic mtr. for the excess work. The only question is,
did Clause-14 of the agreement limit the discretion of the trial Court in awarding reasonable
compensation for the work actually admittedly done by the contractor well over and above the
agreed quantity? Relevant portion of the said Clause-14 reads as under:-

"Clause-14:

The Engineer-in-charge shall have powers to make any alterations in or additions to

the original specifications, drawings, designs and instructions that may appear to him
to be necessary or advisable during the progress of C/FA/4959/1999 JUDGMENT
the work, and the contractor shall be bound to carry out the work in accordance with
any instructions in this connection which may be given to him in writing signed by
the Engineer- in-charge and such alteration shall not invalidate the contract and any
additional work, which the contractor may be directed to do in the manner above
specified as part of the work shall be carried out by the contractor on the same
conditions in all respects on which he agreed to do the main work and at the same
rates as are specified in the tender for the main work.

Except that in the case of B-2 tender, when the quantity of any time exceeds the
quantity as in the tender by more than 30% the contractor will be paid at the rate
entered in the sanctioned estimate increased or decreased by the percentage by which
the tender is above or below the amount arrived at the estimated rates, for such
quantity in excess of 30%."

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10. When the entire design (hydrology) of the dam had undergone substantial changes, which
resulted into the requirement of the masonry work increasing to such an extent that the contractor
was required to carry out nearly 90% over and above the tender quantity, in our opinion, the trial
Court correctly concluded that such a case would not have governed by Clause-14 of the agreement.
Not only the design, the nature of work also underwent substantial changes. The height and width of
the dam had to be increased. The earthen dams and waste vier had to be strengthened. The
defendant could not have pinned down the contractor to the C/FA/4959/1999 JUDGMENT original
rate by virtue of the said Clause 14 in view of such drastically changed scenario. The only question,
therefore was, whether the increase granted by the trial Court reasonable? We may recall that on the
excess work over and above 130% of the contract quantity, the Government did not even pay tender
rate to the contractor. When the trial Court noticed that due to change in the design and other
consequential changes, not only the nature of the work but the difficulty of carrying out the work
also increased, there would be nothing unjust in the direction of the trial Court to award a
reasonable increase in the rate to the contractor over above the contract rate. On both counts that is
under payment for a part of the quantity below the contract rate and compensating the contractor at
the rate of Rs.50/- per cubic mtr. for the excess work, we do not find any error in the judgment of
the trial Court.

11. Claim No.2 pertains to compensation for removal of silt in Blocks No.3 to 8 of the waste vier.
Learned Assistant Government Pleader submitted that there was no delay in execution of the work
attributable to the Government. No instructions were issued for stopping C/FA/4959/1999
JUDGMENT the work as per the agreement. No separate payment could be made for dewatering or
desilting of the excavation. The trial Court committed an error in awarding compensation on this
count. The quantity of desilting was not established, and thus, the rate of Rs.100/- per cubic mtr.
was in any case excessive. 11.1 On the other hand Mr. Kapadia for the plaintiff submitted that on
account of instructions from the Government after considerable excavation in Blocks No.3 to 8
further work could not be done. This led to gushing of water in the cavities leading to serious silting.
Large number of labourers were required for removing such silt. Since such desilting would have to
be done in the water and slush would have to be removed, the labour force required was much
larger. The respondents never questioned the quantity of desilting.

11.2 The trial Court accepted the entire basis of the claim. Accepting the quantity as well as the rate
claimed by the contractor, the Court held that the work done was slowed down on account of the
instructions issued by the Government engineers. This resulted into serious silting of the excavated
areas.

C/FA/4959/1999 JUDGMENT

12. The plaintiff's witness Jashwantray Manilal Sheth in his deposition on this issue had stated that
after the excavation work was done in Blocks No.3 to 8, the shifting of the residents of village
Bhatgam was carried out only in the year 1981. Due to this, the excavated area remained idle for one
and a quarter years. On account of this, slush and water got collected there. Before carrying out such
work, the water and silt had to be removed. Several letters were written to the Government for this
desilting work. Authorities were also warned that if the contractor is not allowed to do the work of

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the foundation, sand, water and silt will collect. He stated that desilting work of 3,600 cubic mtrs.
had to be done in Block No.3, 4,500 cubic mtrs. in Block No.4 and 9,600 cubic mtrs. in Blocks NO.5
to 8 totaling to 17,700 cubic mtrs. He further stated that in normal excavation only dried sand and
rubble would come out whereas in desilting, besides water and rock, other impurities including silt
would have to be removed. One labourer would have to stand in the water and slush. Material would
have to be removed at a distance of at least 1000 feet. Number of labourers would be required for
C/FA/4959/1999 JUDGMENT such purpose or else silting would happen immediately again. It was,
therefore, that the plaintiff had claimed rate of Rs.100/- per cubic mtr. of work done. In the
cross-examination he admitted that despite such instructions, the work was completed within three
years period. He denied that no instructions were given by the Government to slow down the work.
He denied that the village was evacuated before the work was started. He stated that the instructions
for slowing the work were given in writing also.

13. Vasantray Jagjivan Bhimjiyani, witness of the defendant, stated that no instructions were given
to the plaintiff for slowing down the work. The defendant was not responsible for dewatering or
desilting. In the cross-examination he admitted that the evacuation of the population of village
Bhatgam took place after the contractor was awarded the work, which was, as per the record, done
in the year 1981.

14. In the letter dated 8.6.1982 Exh.111, the plaintiff had raised the claim for dewatering and
desilting pointing out that after the construction work of the dam had started, the Government
thought of making the dam gated and the contractor was instructed C/FA/4959/1999 JUDGMENT
to slow done the work of excavation of the waste vier. The shifting of the work of village Bhatgam
had also resulted in delay due to which Blocks No.3 to 8 were filled up with silt. He also specified
block wise quantity totaling to 17,700 cubmic mtrs. for which he raised the claim of Rs.100/- per
cubic mtr. We may also notice that in the letters Exhs.74,75 and 76 the Government had in writing
instructed the contractor to slow down or to stop the work. In letter Exh.74 dated 20.12.1979 the
Deputy Engineer wrote to the plaintiff that though the excavation line has been given, since the land
owners have obtained injunction from the Court, till such injunction is lifted, no further digging or
any other work should be done. Likewise, in letter Exh.75 dated 3.11.1980 the contractor was
instructed not to raise the level of the earthen dam beyond 116 feet level. In letter Exh.76 dated
10.11.1980 it was written that the contractor should provide details of work already done till now
and the programme for the monthly work to be executed. It was instructed that construction beyond
100 meters should not be carried out. Further permission to construct would be granted depending
on the progress in the shifting of residents of village Bhatgam.

C/FA/4959/1999 JUDGMENT

15. Two things thus were firmly established. Firstly that soon after the contract, the entire design of
the dam underwent major changes. In fact, it has come on record that such changes in design had to
be approved by the Government. It was rightly urged by the contractor and the fact of which one can
take judicial notice that Machhu dam disaster took place on 11.8.1979. Due to incessant rains,
Machhu Dam Part-II near Morbi town burst leading to death of thousands of residents of the town
and large scale destruction of the properties. On account of this, the Government decided to take

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greater care of the design and strength of the under-construction dams. It was in this background
that substantial changes in the design, as admitted by the witness of the defendant, took place.
Second aspect clearly emerging is that the evacuation of the residents of village Bhatgam which
would come under submergence area of the dam, could not be done timely. Whatever the reason, it
was long after the contract was awarded for construction of the dam that the actual evacuation could
be completed. Both these factors undoubtedly led to some go-slow instructions from the
Government to the contractor. It C/FA/4959/1999 JUDGMENT can be easily envisaged that such
major design changes would have to be minutely scrutinized and approved at the highest level. The
Government machinery would justifiably consume considerable time in the process. Besides, these
major changes, after the contract was awarded, the legal proceedings, as pointed out in letter Exh.74
and the delay in evacuation of the dam affected population resulted into the instructions from the
Government to the contractor to either slow down the work or halt the work at certain level. The
contention of the contractor, therefore, that the excavation work had to be stopped for long period of
time, therefore, was rightly accepted by the trial Court. On account of such delay once the excavation
has been carried out, as is natural in a flowing river, the water, slush and silt would immediately
collect. Since such water and silt would have to be removed before further construction work can be
carried out and since this occurrence could be attributed solely to the causes of the defendant, the
plaintiff was undoubtedly entitled to reasonable compensation for such work done, which was not
part of the tender agreement.

C/FA/4959/1999 JUDGMENT

16. In view of these conclusions, only questions

survive pertain to the quantity of the work and rate at which such work would be compensated. With
respect to the quantity of 17,700 cubic mtrs. of silt removed, the witness of the plaintiff had
categorically pointed this out before the Court in his deposition. As noted, even during the contract
period, the contractor had pointed out to the Government authorities under letter Exh.220, that
serious water logging and silting had taken place because of stoppage of work after excavation. The
contractor had also quantified the amount of desilting which had to be done. As against this, there
was no serious cross-examination by the defendant on this issue. Even in the cross- examination, no
serious challenge was made to the quantity of silting claimed by the plaintiff. That being the
position, we have no choice but to accept the finding of the Court accepting the plaintiff's case of
desilting of a total of 17,700 cubic mtrs. The rate of Rs.100/- per cubic mtr., however, is not founded
on any material on record. The plaintiff whose primary duty was to establish the reasonableness of
such rate through relevant material, except for pointing out the difficulties in such excavation and
C/FA/4959/1999 JUDGMENT requirement of larger labour force for such work, did not produce
any other evidence of the proof of labourers employed or any such other possible evidence.

17. While accepting the plaintiff's prayer for compensation for such additional work done, we must
ascertain the reasonable rate at which the same ought to have been done. In absence of any basis
provided either by the plaintiff or by the defendant, certain degree of guess work based on some

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 5 Whether It Is To Be Circulated To ... vs Sheth Construction Co on 29 January, 2015

reliable evidence is inevitable. We may notice that for the excavation work, the plaintiff had filled up
the rate of Rs.40/- per cubic mtrs. This was accepted by the Government as part of the contract.
Recognizing that for removing slush, silt and water, more labour force than the ordinary excavation
work would be needed, we fix the rate of compensation at Rs.50/- per cubic mtr. and thus uphold
the claim to the extent of Rs.8,85,000/- under this claim i.e. for 17,700 cubic mtrs. at the rate of
Rs.50/-.

18. Claim No.3 pertained to the compensation for changing kind of cement and the compensation of
material in Part-II of the waste vier in masonry work.

C/FA/4959/1999 JUDGMENT Learned Assistant Government Pleader submitted that though there
was change in the composition of the material to be used, the excess quantity of cement required for
such purpose was supplied by the Government free of cost. The trial Court, therefore, committed a
serious error in awarding the entire compensation claimed by the plaintiff in this respect. 18.1 On
the other hand, learned counsel Mr.Kapadia pointed out that for similar masonry work with the
composition of 1:5 of cement versus sand, the plaintiff had filled up rate of Rs.150/- per cubic mtrs.
which was accepted by the trial Court and was, therefore, not required to be disturbed. 18.2 The trial
Court accepted the claim of the plaintiff. Awarded compensation at the rate of Rs.150/- per cubic
mtr. for 36,000 cubic mtrs. of work so done.

19. Since much of the parameters of this claim are not in dispute, we may not take note of the
details, stand taken by both the witnesses in their depositions as well as by both the sides in their
written communications. Suffice it to record that admittedly C/FA/4959/1999 JUDGMENT out of
the total quantity of 48,800 cubic mtrs. of masonry work in Part-II of waste vier, the plaintiff carried
out 12000 cubic mtrs. of such work as per the original tender terms using the cement fly ash and
sand in agreed proportions. The cement to be used was Portland cement. However, after this much
work was completed, the defendant insisted on changing two parameters of the material. Firstly, the
plaintiff had to use Pazolona cement and secondly the component of fly ash was totally eliminated
replacing it by cement. Earlier composition of five parts sand and one part cement plus fly ash (in
the proportion of 80:20) was replaced by five parts of sand and one part of cement. It is also
undisputed that for other nature of work with this composition, the plaintiff had claimed rate of
Rs.150/- per cubic mtr.

20. Vasantray Jagjivan Bhimjiyani, the defendant's witness in this respect admitted that since
Portland cement was not available Pazolona cement was used. In such cement there was no need to
add fly ash. On account of this larger quantity of cement had to be used. However, significantly, he
deposed that such excess quantity of cement was supplied by the C/FA/4959/1999 JUDGMENT
Government free of cost. As against this, the cost for fly ash would have to be adjusted from the
contractor. In the cross-examination, he clarified that to show that the contractor was supplied
excess cement at no cost, he relied on the final bill Exh.128, which carried an endorsement
"remaining cement is to be issued free of cost." If one peruse the said Exh.128, it is the final bill and
and it carried the above noted endorsement that the excess cement had to be supplied to the
contractor free of cost.

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21. From the above, it can be seen that undisputedly on account of non-availability of Portland
cement Pazolona cement had to be used for the remaining construction. This cement did not require
use of fly ash. The entire one part, which was hitherto a mixture of cement and fly ash against five
parts of sand was replaced by one part of cement. Since this resulted into higher requirement of
cement, the Government supplied such cement free of cost to the contractor. Despite the
cross-examination of the defendant's witness, nothing contrary has come on record. In fact, in the
form of documentary evidence, we have the final bill which was duly acknowledged by the plaintiff
C/FA/4959/1999 JUDGMENT carrying an endorsement that the excess quantity of cement would
be supplied to the contractor free of cost. The plaintiff has not put up any case that on account of the
change of the brand of the cement, the plaintiff had to incur any extra labour or other cost. The
plaintiff's very foundation of this claim was that fly ash was replaced by cement, which was costlier
material and the contractor must, therefore, be appropriately compensated. The plaintiff had taken
a basis of Rs.150/- per cubic mtr. from the other item which required a similar composition of
materials. However, this rate was on the basis that the entire quantity of cement would be charged
to the contractor. In the present case, when it was established by the defendant that the quantity of
cement in excess of what was agreed in the contract was supplied by the Government free of cost,
the plaintiff was not entitled to any compensation on this count.

22. This brings us to the last claim of the return of the cement bags. The factual aspects are not in
dispute at all. The Government authorities under the contract supplied the cement to the contractor,
of course, at his cost. One of the conditions of the C/FA/4959/1999 JUDGMENT contract was " all
empty cement bags shall have to be returned to the Public Works Department store immediately
after they are emptied in serviceable condition. Cost of each cement bag not so returned will be
recovered from the contractor at the rate of Rs.2/- per bag." He had been charged for the cement
supplied to him. The trial Court accepted such claim and awarded the sum of Rs.3,85,510/- at the
rate of Rs.2/- per cement bag so returned.

23. As noticed earlier, the terms of the contract required the contractor to return the cement bags in
"serviceable" condition, failing which for every bag not returned, the Government would recover
"cost" of Rs.2/- per bag. Both these expressions are of some significance. Contrary to what was
canvassed before us, Rs.2/- per bag was not by way of penalty but cost of cement bag not returned.
Further the bags had to be returned in serviceable condition so that the same could be reused or
recycled. The parties thus entered into the contract for return of empty bags and for payment of cost
of Rs.2/- per bag for every bag not so returned. The contract did not provide for compensation to the
contractor, if he did return the C/FA/4959/1999 JUDGMENT bags. When the Government and the
contractor agreed to a term under which the bags had to be returned or the contractor had to bear
the cost of Rs.2/- per bag not returned, the converse would not hold good, namely, that if the
contractor does return the bag, the Government must pay Rs.2/- to the contractor. There was no
such term in the agreement. None can be read nor the above noted condition can be interpreted to
that effect. Had there been no clause of recovering cost of Rs.2/- per bag for every empty bag not
returned, perhaps it was open for the contractor to argue that the Government had supplied the
cement at his cost which would include the cost of the empty bags also and when the contractor
returned such empty bags to the Government, he must be compensated even though there was no
clause in the contract to that effect. However, in the present contract, there was a negative

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 5 Whether It Is To Be Circulated To ... vs Sheth Construction Co on 29 January, 2015

covenant,namely, that if the contractor did not return the bags, he would have to bear the cost of
Rs.2/- for every unreturned bag. This clearly indicated the intention of the parties to the contract
that the empty bags had to be returned to the Government. This claim is, therefore, required to be
declined. The trial Court committed error in accepting C/FA/4959/1999 JUDGMENT the same.

24. Before closing, last surviving issue is one of the rate of interest. The fact that the contractor
would receive the unpaid amount with reasonable interest, even the Government does not dispute.
It was, however, contended that in absence of any contract to the contrary, an imposition of interest
at the rate of 17% per annum was excessive. We are broadly in agreement with such suggestion. The
principal decretal amount would certainly be recovered with interest. Admittedly, there was no
contract for the rate at which such interest would be recovered. Awarding uniform 17% interest from
the date of the suit till realization would certainly appear on the higher side. We are conscious that
in the early 1980s when the civil suit was filed, rate of inflation was much higher than currently
prevailing. The bank rates as well as the lending rates have both over the period of time, steadily
gone down. Considering the totality of facts and circumstances of the case, passage of time and
previously prevailing interest rates as well as the current interest rates, we reduce the rate of interest
to 12% substituting 17% awarded by the Civil C/FA/4959/1999 JUDGMENT Court.

25. In the result, to sum up claim No.1 accepted by the trial Court is left untouched. Claim No.2 is
reduced to Rs.8,85,000/- from Rs.17,70,000/-. Claim No.3 of Rs.10,80,000/- is deleted. Claim No.4
of Rs.3,85,510/ is also deleted. The decretal amount, now, worked out is Rs.17,41,324/-
(Rs.8,56,324/- + Rs.8,85,000/-), which shall be receivable by the respondent plaintiff with simple
interest at the rate of 12% per annum from the date of the suit till actual payment. If there is any
amount which the appellant has deposited under the impugned decree, which is still lying with the
trial Court and which, as per the modified decree by virtue of this judgment, is refundable with
accrued interest, if any, to the appellant, the same shall be done. Appeal is allowed in part and is
disposed of accordingly.

(AKIL KURESHI, J.)

(MS SONIA GOKANI, J.)

SUDHIR

C/FA/4959/1999 JUDGMENT

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