2016 PLP 2 (CLCN)

SADIQ HUSSAIN BHATTI, J.

The appellant is aggrieved to the judgment dated 20.05.2009 and decree dated 04.07.2009 passed by a learned Single Judge of this Court on the original side in Suit No. 898 of 2001, whereby the suit was partially decreed.

2. Brief facts of the Case are that the appellant was awarded a contract by respondents for construction of four buildings/barracks. Accordingly, work orders were issued from time to time and construction work was carried out by the appellant. According to the appellant, the construction work was completed on 16.12.1998 and the buildings/barracks were handed over to the respondents. The appellant received the last cheque from the respondents on 13.12.1998 but, thereafter, neither any payment was made to the appellant towards the balance amount of Rs.8,842,082 despite several representations made to the respondents nor the security amount of Rs.411,651/- was released to him. The appellant, therefore, filed Suit No.898 of 2001 for recovery of the following amounts:-‑ i) Balance payment of work: Rs.41,83,139/- ii) Balance security deposit: Rs. 4,11,651/- iii) Cost of Escalation for difference Rs.31,91,396/- in cost of cement: iv) Cost Escalation for difference Rs.14,67,547/- in cost of steel. _______________________ _________ Total Rs. 92,53,733/-

3. In addition to the above, damages in the sum of Rs.5,000,000/- were also claimed in the suit on the ground that breach and delay has been committed by the respondents.

4. Summons was issued to the respondents/defendants who filed their written statements and on the basis of the pleadings of the parties, the following issues were framed on 30.05.2002.

1. Whether the suit, as framed, is maintainable?

2. Whether the plaintiff was awarded contract for construction of buildings as detailed in para 2 of the plaint?

3. Whether the work orders were issued in accordance with the agreed terms and condition of the contract?

4. Whether the plaintiff completed the construction of the contract work and handed over the buildings to the defendant in accordance with terms of the contract, if so, on what date and to what effect?

5. Whether the plaintiff is entitled and defendants are liable to pay as per revised rates due to escalation in the price of the construction materials, if so, to what extent?

6. Whether the defendants deliberately and collectively failed, neglected in payment of the amount due to the plaintiff, if so, to what effect?

7. What amount, if any, the defendants are liable to pay?

8. What should the judgment be?

5. Thereafter, two additional issues were framed on 21.11.2005 as under:

9. Whether the alleged annexures G to G-2 of the plaint were not issued by the competent authority in terms of the contract?

10. Whether the plaintiff has left the work incomplete and abandoned the same?

6. Evidence in the case was recorded by the Commissioner appointed by the Court with the consent of the parties. The plaintiff examined himself as a witness and produced documents which were exhibited as Exhs.P-1 to P-56 while the defendants examined one S.M. Fida Hussain, Executive Engineer, Works and Services Department, Government of Sindh, who also produced documents which were marked as Exhibits D-1 to D-89 and Exh. X to X-28. The learned single Judge, after hearing the arguments of the parties, decreed the suit as above.

7. Learned counsel for the appellant submitted that the learned single judge has ignored the evidence produced by the plaintiff as well as the admissions made by the witness of the defendants. Learned counsel further submitted that the evidence on record with regard to new and ongoing works was misread by the learned single Judge. It was also argued by the learned counsel that the Bachelor Barracks Nos. 9 and B-10 were complete in all respects but the learned Judge ignored Exhibits P/36 to P/38 and thus discarded material evidence without any cogent reason. He also argued that the finding of the learned single Judge on issue No.5 was given without taking into consideration Exh.P/34 and Exhs.X to X-28. The learned counsel submitted that the findings of the learned single Judge discarding the remaining claim of the appellant are not based on proper appreciation of the facts, law and the evidence on record. In support of his contention regarding damages, the learned counsel relied on the case reported as Syed Altaf Hussain through LRs v. Province of Sindh and another (2013 CLC 824). He, therefore, prayed that escalation in prices as well as damages, as claimed by the appellant in the suit may also be granted to him.

8. On the other hand, the learned counsel appearing for the respondents supported the impugned judgment and stated that the impugned judgment is proper and legal and requires no interference from this Court. She also submitted that the learned single Judge has considered the entire evidence and the law before giving findings on each and every issue framed in the suit. She submitted that the appellant himself was responsible for delay in the work and, therefore, he was not entitled to any damages. She also submitted that the appellant was not entitled to any escalation as the work was entrusted to him on the basis of new rates under the Schedule of Rates, 1994 and not old Schedule of Rates of 1989.

9. The grievance of the appellant, which compelled him to file the present appeal, is that the learned single Judge was not justified in refusing his claim in respect of escalation in price of cement and steel and damages as well as mark up on the decretal amount. Since there is no dispute regarding the other claims, therefore, we deem it appropriate to take up only, those issues which relate to the above claims of the appellant.

10. First, we would take up the issue whether the appellant was entitled to escalation in prices of cement and steel. As per the learned counsel, since the contract was given to the appellant on the basis of the Schedule of Rates of 1989, the appellant was entitled to escalation in prices of cement and steel and in this regard referred to letter dated 24.11.1997 wherein the defendant No.3 has written to the defendant No.2 for payment of escalation price to the appellant. In this regard he referred to various documents on record to argue that there was increase in the prices of cement and steel due to which the department granted escalation to other contracts for the cement actually consumed after 1st July, 1994, therefore, the appellant was also entitled to the same benefit.

11. In the impugned judgment issue No. 5 related to the demand of escalation of price of cement and steel and was decided in the following terms by the learned single Judge: "I have noted from the work orders that against each and every work order an amount has been mentioned, for example, Bachelor Barrack No.9-A starts with first work order No. 1205 dated 01.02.1995 and its tender amount was Rs.19,73,010/-. This was the cost which was estimated by the department while bidding by the plaintiff was at Rs.29,59,303/- with the addition of its own premium at the rate of 49.90 per cent which shows that the plaintiff has bid for the contract keeping in view the expenses and profit involved. I have not found any work order with the condition of escalation while these work orders were started issuing in 1995 and that cannot be considered as "work going on" nor there was any other term and condition to show that plaintiff was also entitled to the price of escalation nor contention of the plaintiff can be accepted for the reason that had that condition been applicable, then quantum of its premium i.e. 49.90 [per cent] on the tender cost of Rs.19,73,010/- would have been different. The defendants have taken the stand that since the work was awarded in 1995 and the rates were fixed keeping in view the escalation in prices hence plaintiff is not entitled to that. The plaintiff did not bring any material on record that either there was any condition in his work orders or the costs in the work orders were on the basis of old schedule. Keeping in view that the exhibits in respect to the escalation do not specifically entitle the plaintiff for escalated price nor there is any other document to show that the defendants ever accepted, hence the plaintiff is not entitled to any escalation in price of any construction material. This issue is answered accordingly.

12. The learned single Judge, on page 69, also referred to the evidence of the witness of the respondents wherein he was asked some general questions to which he answered in general terms but since those questions and answers were not specific to the point in issue, therefore, the same were not taken into consideration. In our opinion, the learned single Judge was justified in ignoring such part of the evidence, more so, when the said witness has categorically denied that the plaintiff was entitled to any escalation in the price of cement and steel.

13. It was argued by the learned counsel for the appellant that the letter dated 31.08.1994 (Exh. P/39) specifically refers to new and ongoing works but the learned single Judge did not take into consideration the fact the escalation would be applicable to the "ongoing works" also. He, therefore, argued that the appellant was entitled to escalation in price of cement and steel to the extent of the quantity which was actually consumed after 1st July, 1994.

14. A perusal of the "Schedule of Rates, Volume III, Part III, 1989 shows that the Standing Rates Committee Sindh has fixed prices of materials on the basis of which works were awarded by the departments of the Provincial Government to different contractors in force from 15th August, 1989. We have gone through the letter dated 31.08.1994 which shows that there was abnormal increase in the price of cement which necessitated increase in the rates. Accordingly, escalation in price of cement was allowed for the actual quantity of cement consumed after 1st July, 1994 for new and ongoing works. The appellant is seeking benefit on the basis of this upward revision in the rate of cement for the said works.

15. It may be noted that the rates mentioned in Schedule of 1989 were based on the rates of materials existing at that time. However, when there was abnormal increase in the rates of cement, the department approved escalation in price of cement actually consumed after 1st July, 1994 and, thereafter, the Standing Rates Committee Sindh, issued the revised Schedule of Rates incorporating the increases therein which was to be effective from 15th September, 1994. The escalation was granted to only those contractors who were given works on the basis of rates mentioned in the Schedule of 1989. This was completely justified as the earlier works were entrusted to workers on the basis of the rates fixed in the Schedule of Rates in force from 15th August, 1989 (Annexure P/33). However, the works entrusted to the appellant were not on the basis of the above Schedule of Rates for 1989 (Annexure P/33) but were on the basis of the rates mentioned in the Schedule of Rates in force from 15th September, 1994 (Annexure P/34). It is not comprehendible that in the year 1995 the works would be entrusted granted on the basis of rates as per Schedule of Rates for 1989 (Annexure P/33) as by that time the Schedule of Rates effective from 15th September, 1994 was already in force. In the Schedule of Rates for 1989 the rate of cement (ordinary Portland) is Rs.69.45 per CWT/Bag while in the Schedule of Rates for 1994 the rate, of cement (ordinary Portland) is Rs.159.60 per CWT/Bag. Thus, it transpires that while for the new and ongoing works granted/entrusted to various contractors on the basis of old rates fixed under the Schedule of Rates for 1989 (Annexure P/33), an escalation was granted to contractors in order to offset the abnormal increase in the prices of cement. However since the rates of materials were revised in the Schedule of rates effective from 15th September, 1994, keeping in view the increase in the prices of cement etc., therefore, the benefit of escalation awarded to the contractors who were granted works on the basis of old rates i.e. Schedule of 1989 would not be available to those contractors who were awarded works after the coming into force of the new and revised rates. The learned counsel for the appellant was unable to show to us from the evidence on record that the works awarded to the appellant in the year 1995 were on the basis of the 1989, and not on the basis of 1994, rates and thus was entitled to the benefit of escalation in the price of cement and steel.

16. In this regard reference may also be made to letter dated 15.5.1995 (Exhibit P/13) wherein the reference to the tender of the appellant is mentioned as "Your tender dated 8.5.1995" which clearly means that the appellant submitted his tender on 8.5.1995 and since the Schedule of Rates 1994 was effective from 15th September, 1994, therefore, it can safely be said that the tender was submitted on the revised rates and not on the rates of the Schedule of 1989.

17. So far as the controversy regarding "new" and "ongoing works" is concerned, the 'same is in the context of the works awarded under the Schedule of Rates for 1989 only and not for those works which were awarded on the basis of the revised Schedule of Rates for 1994. In case some works were awarded to contractors in 1994, before coming into force of the revised Schedule of Rates for 1994 as "new work" or were granted earlier but were on going , then, naturally, such contractors would be entitled to escalation in the rates. Both the terms i.e. "new" and "on going" works refers to only those works which were awarded on the rates prescribed under Schedule of 1989 and not under the Schedule of 1994.

18. The learned counsel also referred to letter dated 24.11.1997, written by defendant No.3 to defendant No.2. This letter does not show that, the competent authority has approved the escalation in price of cement and steel in respect of the works assigned to the appellant. The penultimate para of this letter states that "In the past...", however, it is not clear whether the escalation approved in the past was in respect of works granted under the Schedule of 1989 or the Schedule of 1994. In case the appellant was of the view that the works were entrusted to him under the Schedule of 1989 it was his duty to draw the attention of the concerned authority to this mistake. It appears that the appellant did not raise any objection as to rates on which the works were entrusted to him. Since the appellant was an approved contract of the respondents, therefore, it can safely be presumed that he was aware of revision in the sales and was satisfied that the works were granted to him under the revised rates.

19. In view of the above, we are of the opinion that the appellant was not entitled to the benefit of escalation in the price of cement and steel. Accordingly, we uphold the finding of the learned single Judge on this issue.

20. The next issue which requires consideration is with regard to grant of damages. The case of the appellant is that due to delay in payment of the bills the appellant was entitled to damages on account of breach and delay committed by the respondents.

21. The learned single Judge, while discussing issue No.6, has categorically held that it cannot be established that the defendant delayed the payment. It would be beneficial if entire discussion on issue No.6 is reproduced, which reads as under: Issue No.6 pertains to the responsibility of the defendant as to whether he has neglected any payment of the amount due. There is nothing on record to show as to by what time the bill was submitted towards payment and when it was certified by the concerned engineer of the defendant and what was the expected date of payment. Admittedly, huge amount has been paid towards contracts as I have quoted for the purpose of example, contract No.1205 and out of total amount of Rs. 29,59,303/- as amount of Rs. 23,00,410/- has been paid. This shows that the defendant was paying the amount but since no performance has been brought on record to show that at the relevant and required time, the construction was complete, therefore, it cannot be established that the defendant delayed the payment. According to the plaintiff himself, there were deficiencies and he himself wanted to withdraw the contract in respect to the incomplete work. The Nazir has also reported deficiencies in the buildings, therefore, this issue is decided without any effect on either of the parties.

22. A perusal of the record shows that the appellant also filed a complaint with the Ombudsman whereafter the Director of the Ombudsman s office visited the construction site and pointed out some deficiencies in the construction work carried out by the appellant, pursuant whereto the appellant withdrew the complaint.

23. Furthermore, the appellant relied on Exhibits P/36 to P/38 to establish that possession of the constructed buildings was handed over to the respondents. However, the learned single Judge has rightly observed that on none of these documents any date is mentioned nor any competent person has signed it to confirm taking over of the buildings. Rather these are only signed at the place marked for handing over and not at the place marked for taking over. Even the Nazir s report, which is not disposed, shows that some work was still to be completed.

24. We have perused a number of work orders and have noted that each work order, apart from other entries, mentions the period within which the work under the each work order is to be completed. Nothing was brought on record to show that the work was completed within the stipulated time to the satisfaction of the respondents and that bills submitted by the appellant in respect of such complete work were delayed unreasonably.

25. Learned counsel for the appellant, in respect of his claim for damages, relied on the judgment in the case of Altaf Hussain (supra), authored by one of us, namely, Nadeem Akhtar, J. In the cited case, the facts were that the plaintiff completed a project and informed the defendant No.2 in the suit to take over the same. The defendant No.2 wrote to the Commissioner Sukkur Division to give clarification or confirmation regarding completion of the project. It was held that in the agreement executed between the parties i.e. the plaintiff and the defendants in the suit, no role was assigned to the Commissioner, Sukkur Division to give clarification and that only the Engineer was appointed by the defendants vide Letter of Award dated 20.9.1990. Therefore, it was held by the learned single Judge, that the defendants had no right to refuse the taking over of possession of the project or delaying it on the ground that clarification was sought from Commissioner, Sukkur Division. In view of the delay in taking over the project by the defendants the plaintiff was compelled to bear the maintenance and security expenses and claimed the same in the suit as overhead expenses. He also sought damages due to delay in payment of his bills. Thus, in the cited case it was an admitted position that there was delay on the part of the defendants in taking over the possession as well as in payment of the outstanding bills of the plaintiff. Therefore, under issue No.7, which related to payment of damages, the learned single Judge, while holding that the money rightfully belonged to the plaintiff and was lying blocked with the defendants since June, 1996 due to the deliberate and willful breach of contract committed by the defendants, granted Rs. 2,500,000/- as damages to the plaintiff. In the present case, there is no such admitted delay on the part of the respondents. On the contrary, as stated above, the plaintiff/appellant was unable to show that the works were completed within the stipulated time or that the bills submitted by the plaintiff/appellant were delayed unreasonably. It is also evident from the complaint filed by the appellant before the Provincial Ombudsman, which was later on withdrawn by him, as well as from the Nazir s report, that there was some delay in completion of the works on the part of the appellant himself. Therefore, in our view, the cited case is distinguishable and is of no help to the appellant.

26. In view of the above discussion, we are of the view that the learned single Judge was justified in refusing to grant damages to the appellant. We uphold the findings of the learned single Judge on this issue.

27. The upshot of the above discussion is that we find no merit in this appeal which is dismissed and the impugned judgment is maintained. MH/G-32/Sindh Appeal dismissed.