TaxTMI 
TaxTMI 
1979 (1) TMI 229
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.... 5, 1955. The formal regular Contract in prescribed From B-2/1 of 1955-56 (Ex. 34) containing the terms and conditions as well as the Schedules, specifications etc. was executed by the parties on July 12, 1955. A security deposit of Rs. 4,936/- was kept by the appellant plaintiff with the respondent-defendant. The period for completion of work was fixed as 12 months from the date stipulated for commencement of the work, that is to say, it was expected to be completed on or before July 4, 1956. It appears that on the ground that the appellant- plaintiff had not completed the work as expected within the stipulated time the Executive Engineer by his letter dated August 27, 1956 (Ex. 78) rescinded the said contract with effect from August 16, 1956. After serving a notice under s. 80 of the Civil Procedure Code the appellant-plaintiff filed a suit (being Special Civil Suit No. 23 of 1959) on August 28, 1959 in the Court of the Joint Civil Judge, Senior Division, Nasik making a claim for Rs. 65,000/- in the aggregate against the respondent-defendant alleging wrongful and illegal recision of the contract on the part of the respondent-defendant. The appellant-plaintiff's case was that ....
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....er, that the appellant-plaintiff failed to carry out the proportionate work during the periods fixed in the contract and that since the appellant-plaintiff had rendered himself incompetent to complete the work in proper time it had to rescind the contract and the recision was proper and for adequate reasons; it was further contended that the State was entitled to forfeit the security deposit which it did on the date when the contract was rescinded. The several items claimed by the appellant plaintiff were denied by the State. It was denied that the material of the value of Rs. 7,375/- remained on the site or that it was responsible for its non- removal from the site. Regarding items 4 and 5 the State denied its liability to pay the same as it was the appellant-plaintiff who had committed the breach of the contract. As regards the amount due under Bill No. 1253 dated September 20, 1956 for the actual work done, it was contended that the State had to deduct the amount of penalty leviable under the contract and for the actual cement supplied to the appellant-plaintiff and after making deductions in that behalf only a sum of Rs. 700/- would be due to the appellant-plaintiff. On a cons....
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....n- consideration whereof by the respondent-defendant rendered the recision of the contract arbitrary, unreasonable and, therefore, unjustified. After discussing each one of those five or six factors the High Court held that some of them had not been proved by the appellant-plaintiff while others did not head to the inference that the recision of the contract was arbitrary, unreasonable or unjustified. It found that by about July 21, 1956 (vide Ex. Engineer's letter Ex. 74) the appellant-plaintiff had done only 1/3rd of the contract work and that in the circumstances the appellant-plaintiff could not have completed the work even within the next three months and, therefore, the respondent's officers had rightly rescinded the contract and, therefore, it was the appellant-plaintiff and not the respondent-defendant who had committed a breach of the contract. However, the High Court took the view that for such breach on the part of the appellant- plaintiff, the respondent-defendant, on a reading of the cls. 2 and 3 of the Conditions of Contract, was not entitled both to levy compensation and also to forfeit the security deposit. Accordingly, the High Court upheld the forfeiture o....
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....e, unjustified but whether the respondent-defendant was entitled in law to rescind the contract in the manner done when time was not of the essence of the contract. He further urged that the High Court had clearly erred in assuming that the appellant-plaintiff could not have completed the work even within the next three months and, therefore, the contract was rightly rescinded by the respondent defendant. He, however, fairly stated that even if this Court held in his favour that the recision was wrongful and, therefore, the respondent-defendant had committed a breach he would merely press for the restoration of the decree passed by the trial Court and not press any other item forming the subject-matter of the original claim in the suit. On the other hand, counsel for the respondant- defendant sought to support the judgment and decree of the High Court on both the grounds first that time was of the essence of the contract having regard to the express provision contained in cl. (2) of the "Conditions of Contract" and, therefore, on appellant-plaintiff's failure to complete the same within the stipulated time the recision of the contract was legal and justified and secondly, that ....
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....Contract" where not only time was stated to be of the essence of the contract on the part of the contractor but even for completion of proportionate works specific periods had been specified and, therefore, the appellant-plaintiff's failure to complete the work within the stipulated period entitled the respondent-defendant to rescind it. In the latest 4th edn. of Halsbury's Laws of England in regard to building and engineering contracts the statement of law is to be found in Vol. 4, Para 1179, which runs thus:- "1179. Where time is of the essence of the contract. The expression time is of the essence means that a breach of the condition as to the time for performance will entitle the innocent party to consider the breach as a repudiation of the contract. Exceptionally, the completion of the work by a specified date may be a condition precedent to the contractor's right to claim payment. The parties may expressly provide that time is of the essence of the contract and where there is power to determine the contract on a failure to complete by the specified date, the stipulation as to time will be fundamental. Other provisions of the contract may, on the construction of th....
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....of the estimated cost of the whole work as shown by the tender for every day that the work remains uncommenced, or unfinished, after the proper dates. And further to ensure good progress during the execution of the work, the contractor shall be bound, in all cases in which the time allowed for any work exceeds one month, to complete. 1/4 of the work in 1/4 of the time 1/2 of the work in 1/2 of the time 3/4 of the work in 3/4 of the time". "Clause 6:-If the contractor shall desire an extension of the time for completion of the work on the ground of his having been unavoidably hindered in its execution or on any other ground, he shall apply in writing to the Executive Engineer before the expiry of period stipulated in the tender or before expiry of 30 days from the date on which he was hindered as aforesaid or on which the cause for asking for extension occurred, whichever is earlier and the Executive Engineer, may if in his opinion there are reasonable grounds for granting an extension, grant such extension as he thinks necessary or proper. The decision of the Executive Engineer in this matter shall be final." Two aspects emerge very clearly from the aforesaid two clause. In th....
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....work after the expiry of the period, albeit at his risk, by making the recision effective from August 16, 1956. Once either of the aforesaid conclusions is reached it would be difficult to accept the High Court's finding that the recision of the contract on the part of the respondent- defendant was proper and justified on the basis that the same was neither shown to be mala fide nor unreasonable. It must be observed that it was never the case of the appellant-plaintiff that the recision of the contract on the part of the respondent-defendant was mala fide. Counsel for the appellant-plaintiff further pointed out and, in our view, rightly that the five or six factors, namely, (1) the contract having been given at the thresh old of monsoon, the period of monsoon (4 months) ought not to have been reckoned, (2) absence of proper road and approach to the work site during the rainy season and a couple of months thereafter, (3) unreasonable rejection by the Government Officers of material brought on the site, which material was later on allowed to be used, (4) difficulty in procuring labour due to malarious climate at the site, (5) delay in issuing quarry permit and (6) extra time tak....