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First Appeals Nos.55 of 1978 and 26 of 1979, decided on 1st January, 1987.

---Ss.2(h) & 73--Contract, breach of--Damages for pecuniary loss- Disentitlement of party responsible for breach of contract--Party to contract who had committed breach thereof, held, could never claim anything on principle of quantum merit--Claim arising from extra work which was never contemplated in terms of agreement could not be entertained.

---S.2(h)--Contract--Permissible percentage--Claim over and above permissive percentage--Entitlement to--Party to contract, held, would not be entitled to amount over and above the permissible percentage incorporated in terms of contract.

---S.2(h)--Contract--Entitlement to compensation for stoppage of work--Where party to contract claiming compensation for stoppage of work for a brief span, had led no evidence in proof of damage suffered for such stoppage of work and failed to produce vouchers and accounts for showing that he had incurred expenditure paying his labourers and permanent staff, no compensation, held, could be allowed therefor.

Hudson's Building and Engineering Contracts, 10th Edn., at p. 523 ref.

Suleman Kassam for Appellant.

Abdul Wali Makhdoom for Respondents.

Date of hearing: 29th September, 1986.

Both these First Appeals have arisen from a judgment and decree, dated 30-8-1978 of the learned IInd Senior Civil Judge, Hyderabad. The facts in both the appeals are identical in nature and they are accordingly disposed of together.

The facts leading to the filing of the above appeals are that the Chairman, Agricultural Development Corporation '(hereinafter referred to as the Corporation) invited tenders for construction of non-residential buildings (Office Blocks) Hyderabad, ground floor and first floor. The tender of Muslim Construction Works Company (hereinafter referred to as the Company) was accepted. Consequently an agreement was executed between the parties. The said Company claimed the following amounts from the Corporation:

(1) Claims for value of work done less paid through

last R/Bill i/c the agreement and extra item. Rs.56,346.31

(2) Claim on account of stoppage of work in

May/June, 1964. Rs.39,553.00

(3) Claim on account of enhanced expenses

on permanent establishment from 19-11-1964 Rs.13,726.46

to 17-6-1965.

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Rs.1,09,625.76

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The trial Court decreed Company's claim to the tune of Rs.15,367.18 out of Rs.56,346.31. The trial Court disallowed the other two claims of Rs.39,553 and Rs.13,726.46. The Company have filed their appeal limiting their claim to Rs.39,553 and Rs.13,726.46 and the remaining balance of first claim. The Corporation, on the other hand, has challenged the decree in appeal No.26 of 1979.-

The Company demanded 40% above the schedule rates admissible for the same in respect of additional and extra work of second floor. The first question which arises in these appeals is as to the proper construing of the suit contract between the parties is that the claim about the extra work for which the contract does not provide any rate and, therefore, it is a claim for extra work outside the contract. In order to resolve this controversy, the first thing which must keep in mind is that this is a works contract where the parties have fixed a price schedule for the work to be done under the contract, and also provides that the Company is entitled to certain percentage. It is a settled principle as pointed out in Hudson's Building and Engineering Contracts, tenth Edition at page 523, that in the case of contracts with bills of quantities, the basic presumption must be that the prices for described items of work include for all ancillary or contingent work which may be necessary for the completion of the described work. But the said rate could never cover something which calls for a totally different rate, looking to the nature of the work involved. In order to construe the contract between the parties I must consider the express stipulation, the subject matter of this contract keeping in mind the aforesaid presumption and the surrounding circumstances. The important fact which must be borne in mind is that this contract with the Company was arrived at on 8-4-1967 (Ex.61) where works order is Ext.50, dated 19-5-1964. The Company demanded claim for value of work done less paid through last R/bill i/c the agreement and extra work Rs.56,346.31. The Company also demanded 40% above the schedule rates by letter, dated 23-12-1964 (Ext.54 and Ext.151). The departmental endorsement shows that it recommended 3% in addition to premium already allowed. The Superintending Engineer rejected this claim vide letter, dated 23-1-1965.

Mr. Abdul Wali has vehemently argued that under Clause 14 of the tender agreement (Ext.61), it was provided as under:-

"The Engineer-in-charge shall have power 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 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 alterations- shall not invalidate the contract; and any altered or additional work which the contractor may be directed to do in the manner above specified subject to the limit laid down in clause 38 below 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. The time for the completion of the work shall be extended in the proportion that the additional work bears to the original contract work, and the certificate of the Engineer-in-charge as to such proportion shall be conclusive. And if the altered or additional work includes any class of work for which no rate is specified in this contract, then such class of work shall be paid for at 29 per cent above the rate shown for such work in the schedule of rates of the Division and if such last mentioned class of work is not entered in the schedule of rates of the Division, then the contractor shall, within seven days of the date of receipt by him of the order to carry out the work inform the Engineer-in-charge of the rate which it is his intention to charge for such class of work, and if the Engineer-in-charge is satisfied that the rate quoted is within the rate worked out by him on detailed rate analysis, then he shall allow him that rate, but if the Engineer-in-charge does not agree to this rate he shall by notice in writing be at liberty to cancel his order to carry out such class of work, and arrange to carry it out in such manner as he may consider advisable, provided always that if the contractor shall commence work or incur any expenditure in regard thereto before the rates shall have been determined as lastly hereinbefore mentioned, then in such case he shall only be entitled to be paid in respect of the work carried out for expenditure incurred by him prior to the date of the determination of the rate as aforesaid according to such rate or rates as shall be fixed by the Engineer-in-charge. In the event of a dispute, the decision of the Superintending Engineer of the circle will be final."

Relying on this Clause Mr. Abdul Wali argued that for this item there was no written order and in any event, the Company had not within seven days of the order given a notice of his intention to charge a particular percentage. The procedure under Clause 14 having not been. followed, the Company who had committed breach of this contract could never claim anything on the principle of quantum merit because he was a party who had committed breach of the contract. The claim in the present case is not for the price of work at the request 'of the Corporation's engineer. His whole claim arises because there is no price fixed for extra work which was never contemplated in these circumstances and for which contingency no percentage was prescribed in the agreement.

Mr. Suleman Kassam has relied upon the endorsement of the defendant on Ext.143 which states that the engineer recommended 3% above the permissible percentage. Merely because the engineer recommended 3% above the permissible percentage, the Company could not argue that this 3% above the permissible percentage was payable and the trial Court rightly allowed the claim to that extent on the basis of a true interpretation, of the contract. The engineer may have recommended the payment but when the Company now claims additional amount on this item, the Corporation is entitled to rely on the agreed percentage under the contract. In any event it could never be said to be a claim for work outside the contract so as to justify 40%. In that view of the matter, it is obvious that if the construction adopted by the trial Court is adopted, extra work of 2nd floor would carry a percentage of 40% contrary to the terms which are agreed upon so far as extra work on second floor is concerned. It seems that the Superintending Engineer of Corporation has rightly disallowed the claim. The claim of the Company is not justified in the present case. Therefore, the claim of the Company at 40% above the scheduled rates permissible for the same has been wrongly allowed as an extra item not covered by the contract. The trial Court was obviously in error in giving this three per cent above the permissible percentage.

Turning to the last two items in respect of work remained stopped for 19 days, the Company sustained a loss of Rs.39,553 and on account of continuation of his permanent establishment from 19-11-1964 to 17-6-1965 suffered a loss of Rs.13,726.69. The trial Court rejected both the claims. Mr. Abdul Wali has vehemently argued that the Company has produced no vouchers and no accounts for showing that he had incurred this expenditure paying his labour and his maintaining the permanent establishment. The Plaintiff /Company has not led any evidence. In these circumstances it seems that the finding of the trial Court is in consonance with law and, therefore, the finding must be upheld.

In. the result First Appeal No.55 of 1978 is dismissed and First Appeal No.26 of 1.979 is allowed. In the peculiar circumstances of the case the parties will bear their own costs.

A. A./M-116/K Order accordingly.

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