TaxTMI 
TaxTMI 
2003 (10) TMI 381
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Kolkata. For the said purpose a draft agreement initially drawn up was given finality by Articles of Agreement dated 28-8-1993. Certain terms and conditions, however, had been altered therein with mutual consent. 3. The project was envisaged to be completed in three phases. Considerable progress was made in the matter of construction of work in Phase I. The plots where the said work was being carried out fell under the local administration of Gopalpur Arjunpur Gram Panchayat. The building plan for Phase I was sanctioned by the said Gram Panchayat in September, 1991 in terms whereof 11 blocks of houses could be constructed. The said area, however, became a municipality in terms of the West Bengal Municipal Act, 1932 known as Rajarhat Gopalpur Municipality, West Bengal Municipality Act, 1932, however, was repealed and replaced by West Bengal Municipal Act, 1993. 4. It is not in dispute that pursuant to or in furtherance of the said agreement Sumangal entered into negotiations with the owners of the agricultural lands for sale thereof wherefor sale deeds in respect of 2.32 acres of land were executed by the owners in favour of AWHO. Sumangal received the amount for considerati....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... letter dated 23-5-1995 directed stoppage of work in six/seven blocks where allegedly unauthorized construction was being carried out stating : "We came to learn that some 8 blocks of 5 storied buildings were approved by erstwhile panchayet before the origination of the above municipality. After the birth on 13-1-1994 as per norms of W.B.M. Act, 1993 and Calcutta Gazette, new plans if any, or construction job if any, has to be approved of by this Municipal Authority. We learnt some additional 6/7 blocks are being constructed at your VIP project for which no plan was submitted to the Engineering Division of this office for approval. This is a gross violation of W.B.M. Act, 1993 and 1979 T&C Development Planning Act. It is further learnt that the 7/8 blocks constructed by you on the basis of the plan sanctioned by erstwhile panchayet has also been severely deviated from actuality - which is also punishable under the law. We strongly believe that an esteemed organization like you, will not indulge in such illegal activities and refrain from all such unapproved/unauthorized work." 8. Sumangal thereafter sought advice of AWHO by a letter dated 24th May, 1995 pointing o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to Sumangal dated 27-5-1995). 10. AWHO by their letters dated 25th July, 1995 and 11th August, 1995 advised Sumangal to reorganize and recommence its work by employing sufficient strength of labour and bringing the required material to site by 11th September, 1995 to ensure that the progress of the work is substantially increased. It was threatened that if suitable action is not taken in this behalf by Sumangal AWHO may be compelled to take action under clause 129(e) of the Contract. 11. It appears that Sumangal replied thereto by its letter dated 14th August, 1995. In its response to the said letter dated 14th August, 1995, AWHO drew the attention of Sumangal to the fact that there are certain types of work which would not come within the purview of the stop work notice by the Municipality and as such the same could have been carried out. It was stated: ". . .You are again advised to reorganise your work by employing sufficient labour and bringing in the required material to ensure that the progress of the work is substantially increased by 15 September, 1995 failing which AWHO may be compelled to take action under clause 129(e) on page 176 of Contract Agreement. This is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bitrator. With the reference of the disputes and differences between the parties to the learned Arbitrator, the two suits pending at Barasat and in the Delhi High Court shall stand withdrawn from the respective courts where those are pending. Copy of this order shall be sent to the concerned courts for due compliance. The learned Arbitrator shall file the Award in this Court. It is directed that no other court shall interdict the arbitration proceedings. The appeal is disposed of accordingly. No costs." 17. Even before filing the statements of claims and counter-claims; the parties jointly requested the learned arbitrator to pass an interim award as regard the ownership of the lands as to whether AWHO by reason of the purported deeds of sale became the absolute owner of the property comprising 14.17 acres of land wherefor the following issues were raised by Sumangal: "(a)Whether or not AWHO/Party No. 2 is the absolute owner of the suit property comprising of 14.17 acres of land vide registered Sale Deeds, mutation and conversion certificates issued by the competent authority, in favour of the petitioner including the properties built thereon and that the land so acqu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso be passed/awarded." 18. The learned arbitrator, however, was not inclined to accede to the said request. Thereafter, an application was filed by AWHO before the learned Arbitrator to the effect that it may be allowed to commence and complete uninterrupted construction work as well as development of the housing project at the risk of Sumangal. Sumangal filed a reply to the said application. 19. An order was passed on the said application of AWHO by the learned arbitrator on 1-11-1997 subject to the following conditions : (a)The question as to whether such an order can be passed at the risk of Sumangal can be raised only at the time of final award. (b)The development work may be confined to 14.17 acres of land which was the subject-matter of sale and which it was stated had been demarcated at the site. (c)All those works could be subject to the ultimate decision of the case. (d)AWHO shall not give final possession of any of those flats or part of the land to any one including the person described as allottees. (e)The said order was without prejudice to any of the contentions which may be raised by the parties. (f)Constructions and development work would be....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any case, it has been made clear that this order would be subject to the final decision of the case and without prejudice to any of the rights of the parties. Another point made in the application of party No. 1 is that it was working as stated in the order of November 1, 1997 that 16 blocks/buildings existed at site have gone through the order dated November 1, 1997, and no where it is stated therein that 16 blocks/buildings exist at the site. I, therefore, find no ground to review/modify the order dated November 1, 1997. The application accordingly stands disposed of." [Emphasis supplied] The learned Arbitrator, therefore, did not determine the question as to whether he had jurisdiction to pass an interim order or not. 21. No Award was not passed by the Arbitrator for a long time although several extensions had been granted. On or about 26-2-2000 an application for revocation of the authority of the arbitrator was filed by Sumangal and by an order dated 11-5-2000 this Court constituted a board of three arbitrators instead and place of the sole arbitrator. 22. The award was filed before this Court on 29-4-2002 by the learned arbitrators whereagainst Sumangal filed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st SSPL. Issue Nos. 7 & 8 No submission was made on behalf of SSPL with regard to these issues. The issues are decided against SSPL and in favour of AWHO. Issue Nos. 9 & 10 Since we have found that as per the agreement between AWHO and DMA, the Architect was to provide drawings and specifications of the proposed flats and external services and it was the duty of SSPL to take follow up action in the matter of obtaining sanction from the statutory bodies and it was not the responsibility of the Architect to obtain sanction from the statutory bodies including the Municipality, the issues are decided against SSPL and in favour of AWHO. Issue Nos. 11 & 12 Since we have found that the Agreement dated August 27, 1993 and the preceding Letter of Intent dated January 4, 1991 and the Draft Agreement dated December 26, 1991 cannot be said to have become impossible of performance and cannot be regarded to have become void on the ground of frustration, the issues are decided against SSPL and in favour of AWHO. Issue No. 13 It has been found that the construction in respect of the units in phase I was started after obtaining the sanction for the plans from the Gram Pancha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se they were subsequently revalidated by the Municipality in sanctioning the revised plans. The issues are accordingly decided against SSPL and in favour of AWHO. Issue No. 21 There was no change in the height of the buildings in respect of Phase I inasmuch as the height of the blocks in Phase I were not above the heights as per the sanctioned plans. The heights of the blocks constructed in Phase II for which plans had not been approved were in excess of the height limitations prescribed in the building regulations. No objection Certificate has been granted by the Airport Authorities of India Ltd. and it was open to the State Government to relax the height limitation. The issue is accordingly decided against SSPL and in favour of AWHO. Issue No. 23 We have found that the title to the lands transferred in favour of AWHO under the various sale deeds passed in favour of AWHO independent of the turnkey project and failure of the turnkey project did not have any bearing on the transfer of title. The issue is accordingly decided in favour of AWHO and against SSPL. Issue No. 24 No submissions were made by SSPL with regard to this issue and the issue is decided against SS....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rest shall be payable from the date of the award till payment is made. 10.Claim No. 8 of AWHO regarding costs is allowed to the extent that SSPL will reimburse AWHO towards half share of the arbitrators' fee, ad-ministrative expenses and the other incidental expenses for the conduct of the arbitral proceedings. Each party shall bear the costs and expenses incurred by it for prosecuting the arbitral proceedings." SUBMISSIONS 29. Mr. K.N. Bhat, the learned senior counsel appearing on behalf of Sumangal would raise the following contentions : (i)A bare perusal of the award would show that the learned arbitrators ignored the terms of the agreement. (ii)In terms of clause 130 of the general conditions of contract, AWHO could maintain a claim as regard excess amount required for completion of the unfinished work only if the work was completed before a claim was raised or an estimate of the cost of completion is certified by the named architect. Despite the fact that none of the aforementioned conditions were fulfilled, the award was made allegedly on the ground that clause 130 will have no application while the completion was permitted by an order passed in a judicial/ arb....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Shyama Charan Agarwala & Sons v. Union of India [2002] 6 SCC 201, McGregor on Damages, 16th edition, pages 1142 and 1143 and Mertens v. Home Freeholds Co. Ltd. [1921] All E.R. Rep. 372. 31. Mr. Arvind Kumar Tiwari, the learned counsel appearing on behalf of the appellant, on the other hand, would submit that as the learned arbitrator passed an interim order with the consent of the parties, Sumangal at a later stage cannot be permitted to take a different stand. In view of the interim order passed by one of the learned arbitrators, a notice inviting tender was issued whereafter contract was awarded to a third party and, thus, the bid made pursuant thereto could validly be made the basis of determination of quantum of damages. The plea of frustration of contract raised by Sumangal has rightly been rejected by the learned arbitrators as the same was a self-induced one having regard to the fact that it itself got the ban orders issued by the municipal authorities. In any event Sumangal in terms of the contract being liable for obtaining sanction of the building plans, must be held to have failed to perform its part of contract and consequentially has rightly been held liable for d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officers, employees, agents and/or attorneys be also directed to hand over the keys of the stores, offices, and material lying at contract site which keys the Party No. 1 is illegally holding in its custody. The materials lying at site have already been paid for by Party No. 2. Party No. 1, its directors, employees, agents and/or attorneys be directed not to interfere in any manner in the development and construction of the unfinished housing project by Party No. 2 through such agencies as Party No.2 may deem fit and proper." Sumangal filed a detailed reply thereto. 34. Sumangal further stated that the AWHO was not the owner of the property and the real object for such an application was to dispossess Sumangal. 35. It was further pointed out that such undertaking of the contract job by a third party would frustrate the present arbitration agreement as a result whereof further disputes may arise. It was contended : "10. The adjudication of this application without a full-fledged examination of the issues which have been raised by the parties in these proceedings would render the entire arbitration proceedings infructuous. It is further stated that after such directio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 230 and Hakam Singh v. Gammon (India) Ltd. AIR 1971 SC 740. 37. In Hiscox v. Outhwaite [1991] 2 Lloyd's Law Reports 1, it is stated : "No act of the parties can create in the courts a jurisdiction which Parliament has said shall vest, not in the courts, but exclusively in some other body. Nor again can a party submit to, so as to make effective, a jurisdiction which does not exist: which is perhaps another way of saying the same thing. The argument we are here rejecting seems to be based on a confusion between two distinct kinds of jurisdiction: The Supreme Court may, by statute, lack jurisdiction to deal with a particular matter - in this case matters including superannuation claims under section 8 - but it has jurisdiction to decide whether or not it has jurisdiction to deal with such matters. By entering an unconditional appearance, a litigant submits to the second of these jurisdictions (which exists), but not to the first (which does not)." 38. An arbitrator in a situation of this nature had no jurisdiction to pass the interim order under the Arbitration Act, 1940 in absence of any specific agreement in relation thereto. The learned arbitrator by an interim order cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... jurisdiction of the Forum to grant relief is confined to the four clauses mentioned under section 14, it passes our comprehension as to how an interim injunction could ever be granted disregarding even the balance of convenience." 43. In absence of an agreement to the contrary, in terms of the provisions of Arbitration Act, 1940 an arbitrator can pass only an interim award or a final award. Such awards are enforceable in law. The award of an arbitrator whether interim or final are capable of being made a rule of Court, decree prepared and drawn up in terms thereof and put to execution. 44. It is well-settled that for the purpose of obtaining an interim order a party to the arbitration proceeding during pendency of an arbitral proceeding can only approach a court of law in terms of section 41(b) of the Arbitration Act,1940 and not otherwise. The said provision reads thus: "Procedure and powers of Court.-Subject to the provisions of this Act and of rules made thereunder- ****** (b)the Court shall have, for the purpose of, and in relation to arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r or to make any order of interim injunction or to make orders in respect of other matters set out in the Second Schedule in appropriate cases for the purpose of, and in relation to arbitration proceedings; but this power and jurisdiction of the Court cannot be exercised, if the exercise of any such power would prejudice any power which might be vested in an arbitrator or Umpire for making orders with respect to any of such matters. I am further of the opinion that in view of the provisions contained in section 41 of the Arbitration Act, the power and jurisdiction of the Court to appoint a receiver or to make any order of interim injunction or any order in respect of the other matters set out in the Second Schedule are now governed, controlled and regulated by the said section, and apart from the power and jurisdiction conferred by the said section, the Court has no power and jurisdiction independently of the provisions contained in the said section 41 to appoint a receiver, to make any order of interim injunction or any order in respect of the other matters set out in the Second Schedule." (p. 265) [Emphasis supplied] 49. It is useful to notice that such a power has been expres....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the date or extended date for completion makes defaults in proceeding with the work with due diligence and continues in that state after reasonable notice from the Architect and or Organisation, or 130. Whenever the Organisation exercises his authority to cancel the contract under clause 129, he may complete the works by any means at the contractor's risk and expense provided always that in event of cost of completion after alternative arrangements have been finalized by the Organisation to get the works completed or estimated cost of completion (as certified by the Architect) and approved by Organisation being less than the contract cost, the advantage shall accrue to the Organisation. If the cost of completion after the alternative arrangements have been finalised by the Organisation to get the work completed or estimated cost of completion (as certified by the Architect) and approved by the Organisation exceeds the money due to the contractor under this contract, the contractor shall either pay the excess amount assessed by the Architect or the same shall be recovered from the contractor by other means." 51. The learned arbitrators refused to enter into the questions as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... making the award. Thus, they failed to take into consideration a relevant fact. 54. In Steel Authority of India Ltd.'s case (supra), this Court categorically stated the law thus : ". . . It was not open to the arbitrator to ignore the said conditions which are binding on the contracting parties. By ignoring the same, he has acted beyond the jurisdiction conferred upon him. It is settled law that the arbitrator derives the authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be an arbitrary one. This deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part, but it may tantamount to mala fide action. . . ." (p. 130) [Emphasis supplied] It was stated : "16. Further, the Arbitration Act does not give any power to the arbitrator to act arbitrarily or capriciously. His existence depends upon the agreement and his function is to act within the limits of the said agreement. In Continental Construction Co. Ltd. v. State of M.P. [1988] 3 SCC 82 this Court considered the clauses of the contract which stipulated that the contractor had to complete the work in s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elevant provisions contained in the agreement as also the correspondences passed between the parties. The question as to whether the work could not be completed within the period of four months or the extension was sought for on one condition or the other was justifiable or not, which are relevant facts and were required to be taken into consideration by the arbitrator. It is now well-settled that the Arbitrator cannot act arbitrarily, irrationally, capriciously or independent of the contract." This Court further opined : "There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameter of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the records." 58. Referring to paragraph 577 of Halsbury's Laws of England, 4th edition, Commercial Arbitration by Mustill and Boyd at page 598, A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e arbitrator could not have arrived at a finding that both committed breaches of the terms of contract which was ex facie unsustainable being wholly inconsistent. Clause 54 of the contract could be invoked only when the first respondent committed breach of the terms of the contract. An action in terms thereof could be taken recourse to in its entirety or not at all. If one part of the award is inconsistent with the other and furthermore if in determining the disputes between the parties the arbitrator failed to take into consideration the relevant facts or based his decision on irrelevant factors not germane therefor; the arbitrator must be held to have committed a legal misconduct." This Court made a distinction between an award passed within jurisdiction and an award without jurisdiction stating : "In this case the District Judge as also the High Court of Madras clearly held that the award cannot be sustained having regard to the inherent inconsistency contained therein. The arbitrator, as has been correctly held by the District Judge and the High Court, committed a legal misconduct in arriving at an inconsistent finding as regard breach of the contract on the part of one p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nevitably not always be personally qualified. The employment of outside consultants or the less satisfactory (from the legal point of view if the employer's interest is to be properly protected) device of delegating important design functions to specialist and sub-contractors and suppliers, are therefore a frequent and inevitable accompaniment of many major building projects but, as will be seen, the architect is the "captain of the ship" and will be the person to whom the owner will normally look if a design failure occurs, though in some, but not all, cases he will adequately discharge his own overall responsibility if he exercises due professional care in referring matters outside his own expertise to a consultant or specialist supplier or contractor, particularly if these latter are engaged on behalf of the owner and not by the architect himself." 66. An Architect has, thus, various roles to play including independently ruling on disputes between the owner and the contractor. 67. In R. v. Architects' Registration Tribunal, ex. P. Jaggar [1945] 2 All ER 131, it is stated : "An architect is one who possesses, with due regard to aesthetic as well as practical consideratio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dia Rly. Co. Ltd. v. S.M. Bhashyam Naidu AIR 1935 Mad. 356. 73. These decisions were considered by a Division Bench of the Madhya Pradesh High Court in Heavy Electricals (India) Ltd. v. Pannalal Devchand Malviya AIR 1973 MP 7. 74. In this view of the matter, we are of the opinion that the arbitrator could not have ignored the role of the architect in terms of clause 130 of the agreement only on the ground that AWHO had been permitted to raise construction, pursuant to or in furtherance of an interim order. Non-consideration of the said clause in proper perspective by the Arbitrator would amount to a legal misconduct on their part. WHOSE DUTY IT WAS TO GET THE PLAN SANCTIONED : 75. Dulal Mukherjee & Associates had been the architect of Sumangal. By reason of the agreement, however, he became an architect of the employer. It was in the aforementioned situation, the following was agreed between the parties and the same was recorded in the contract agreement as under : "26. Company informed that they have negotiated with M/s. Dulal Mukherjee & Associates, 28-B, Shakespeare Sarani, Calcutta as Architects for providing all Architectural Services for this turnkey project. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion. 3. For the release of payment the amount of Rs. 5 lacs that is already been paid by M/s. Sumangal Services Pvt. Ltd. to you as on date will also be taken into account. Recoveries @ Rs. 6 per sq.ft. will be considered as overall payment and will be recovered from M/s. Sumangal Services Pvt. Ltd. during execution of project and paid to you on time to time through your bills. 4. It is also understood that prior to issue of this letter following works towards the project has already been undertaken by you. (a )Preparation of conceptual plan. (b)Interaction with local sanctioning authorities. (c )Preparation of Municipal drawings and obtaining sanction. 5. Based on the discussions between AWHO, M/s. Sumangal Services Pvt. Ltd. and you held in Delhi on 03 & 04 Jun. 1991 it is decided that till Project Manager and staff has been posted, you will monitor the progress on behalf of AWHO. You will also forward a weekly report on the same. 6. The contract documents between you and AWHO is under drafting and would come in effect when ready. 7. Please acknowledge." [Emphasis supplied] 76. Despite the fact, by reason of the contract agreement the services of the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons of the West Bengal Municipal Act, 1993 go to show that it was for AWHO to submit an application for sanction of the building plan together with requisite documents therefor. Ordinarily, the duty to pursue sanction of a plan is of the owner or its authorised representative. Such a job, it is common experience, is done by a qualified architect or the persons having regard to their duties to prepare a building plan in terms of the building laws so as to enable them to make clarifications as and when called upon by the statutory authorities or in a given case make modifications or alterations thereof. The building plans prepared by the architects only would be subject-matter of sanction by the municipal authorities. Furthermore, from the letter dated 8-12-1994 also it is evident that AWHO prayed for alterations of the Master Plan and in the said letter it has clearly been stated that M/s. Dulal Mukherjee & Associates had been appointed by them as consulting architect for the project. From a perusal of the letter dated 21-7-1995 issued by the Rajarhat Gopalpur Municipality to Shri Manohar Singh, Project Manager, AWHO, it would appear that the author thereof had discussed the matter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 17, p. 54) to the said letter of AWHO. In the said letter of AWHO dated October 25, 1994, it was stated : '7. Sanctioning of building plan and revised layout plan. Sanction of building plan and revised lay out plans has already been considerably delayed. This is effecting the progress of the work also. Though DMA is taking action but the follow up action as a part of the turnkey project is to be taken by you. Please ensure that the sanction is obtained without further delay.' (AWHO Vol. 3, p. 357, para 7) SSPL in their reply dated December 9, 1994 said : '(g )sanctioning of building plan - you have been informed during several discussions in your office in New Delhi that there had been structural change in the local authority system effecting the project area. For some considerable period vacuum existed in many standard local government functions. However, the new Municipality authority has recently been formed. We are following up with the new authority in respect of the sanctioning process'." [AWHO, Vol. 17, p. 56(g)] [Emphasis supplied] 86. The letter dated 25-10-1994 referred to in the award clearly shows that the architect was asked to take action but allegedly t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....espondent 1 argues that the proper maxim to apply is nemo allegans suam turpitudinum audiendum est, whoever has first to plead turpitudinum should fail; that party fails who first has to allege fraud in which he participated. In other words, the principle invoked by respondent 1 is that a man cannot plead his own fraud. In deciding the question as to which maxim should govern the present case it is necessary to recall what Lord Wright, M.R. observed about these maxims in Berg v. Sadler and Moore [1937] 2 K.B. 158, 162. Referring to the maxim ex turpi causa non oritur actio Lord Wright observed that "this maxim, though veiled in the dignity of learned language, is a statement of a principle of great importance; but like most maxims it is much too vague and much too general to admit of application without a careful consideration of the circumstances and of the various definite rules which have been laid down by the authorities." [Emphasis Supplied] 90. In Kuju Collieries Ltd. v. Jharkhand Mines Ltd. AIR 1974 SC 1892 this Court held that in relation to a contract which is hit by section 23 of the Contract Act section 65 and section 70 of the Contract Act shall not apply. Only in a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lawful.- Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promise did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise." Impossibility to fulfil the contractual obligation may arise in different fact situations. 96. Statutory injunction by a statutory authority may be one of such causes. A building bye-law must be scrupulously followed. Violation of section 204 of the West Bengal Municipal Act, 1993 attracts penal provisions contained in section 440. It is, therefore, mandatory in nature. The correspondences between AWHO and the Municipality clearly show that even infrastructural works were not permitted to be carried out. Sumangal, therefore, cannot be said to have committed any illegality in complying with the stop work notice. To what extent it committed breach of the terms of the contract, assuming that it could have carried out some job as pointed out by AWHO would depend upon the commercial viability as a large number of workmen were to be engaged although it cannot ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilder renouncing his obligations could not claim substantial performance. 102. In Hudson's Building and Engineering Contracts at page 484, the law is stated as: "A further overriding principal to be deduced from the cases, it is submitted, is that a party consciously in breach, a fortiori a party repudiating an obligation or abandoning work, should not be enabled to abuse the doctrine by maintaining that position while at the same time suing for remuneration under the contract. Thus in South Africa, there is long-standing authority that substantial performance is not available where work is abandoned, or the method of performance is inconsistent with an honest intention to carry out the work in accordance with the contract. Sumpter v. Hedges and Ibmac v. Marshall were clear cases of abandonment." 103. Such a case of abandonment was not made out. What was made out was a case of self-inducement frustration. We repeatedly asked Mr. Tiwari to show before us any pleading as regard self-induced frustration on the part of Sumangal. He failed to do so. No material far less any pleading has also been placed before us to show that there had been collusion by and between Sumangal and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rticular result can perhaps be justified by the difficulty of foreseeing the effect of conduct on one's health. But it is submitted that generally negligence should exclude frustration: for example, the plea should have failed in Taylor v. Caldwell if the fire had been due to the negligence of the defendants. In such a case it would be unjust to make the other party bear the loss. A negligent omission should likewise exclude frustration." 106. In Cheshire, Fifoot & Furmston's Law of Contract (14th Edition) at page 643, the law is stated, thus: "This rule, that a party cannot claim to be discharged by a frustrating event for which he is himself responsible, does not require him to prove affirmatively that the event occurred without his fault. The onus of proving that the frustration was self-induced rests upon the party raising this allegation. For instance : On the day before a chartered ship was due to load her cargo an explosion of such violence occurred in her auxiliary boiler that the performance of the Charterparty became impossible. The cause of the explosion could not be definitely ascertained, but only one of three possible reasons would have imputed negligence to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reasonable manner less the contract price, and possibly, in addition, the value of the use of the premises lost by reason of the delay. This measure of cost of completion less contract price is laid down by the Court of Appeal in Mertens v. Home Freeholds Co., [1921] 2 K.B. 526, CA., which must be regarded perforce as the leading case since it proves to be the only one dealing with this issue. The defendant contracted to build a house for the plaintiff and was to begin work immediately after possession of the site was given to him. The defendant worked well for a month, but then deliberately failed to proceed with due dispatch in the knowledge that a government embargo on building without licence was to be imposed. Had he worked according to contract, the roof could have been on to the house before the embargo descended. Two or three years later the plaintiff completed the work himself, when building was again permitted but when costs had risen. It was held that the proper measure of damages was the cost to the plaintiff of completion in a reasonable manner at the earliest moment that he was allowed to proceed with building, less the amount he would have had to pay the defendant ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f completing the work), the cost of repair would have been considerably less, due to rising prices, than it was when the owners finally discovered the defects. Held, by Melford Stevenson J., Distinguishing Phillips v. Ward [1956] 1 W.L.R. 471 that since the owners had been guilty of no unreasonable delay once they discovered the defects, they were entitled to the greater cost of the repairs at the time they carried them out. Held, by the House of Lords, affirming the judge, that the parties must have contemplated that the architect might fail to notice defective work. The cost of repair at the date of discovering the breach was "on the cards" or a "loss liable to result" from the breach within the test formulated by Asquith L.J. in the Victoria Laundry case. Per Lord Upjohn: "where the cost of reinstatement is the proper measure of damages it necessarily follows as a matter of common sense that in the ordinary case the cost must be assessed at the time when the defect is discovered and put right and it is not suggested here that the building owner unreasonably delayed the work of repair after discovery of the defect...I am at a loss to understand why the negligent builder should be....