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HIGH COURT OF TRIPURA
_A_G_A_R_T_A_L_A_
RFA No.03 of 2016
Along With
RFA No.04 of 2020
RFA No.03 of 2016
1. The Chairman cum Managing Director, Food Corporation of India, H.Q. 16-20
Bara Khamba Lane, New Delhi-110001.
2. The General Manager (Region), Food Corporation of India, NEF Region,
Shillong-33.
3. The Executive Director (Zone), FCI Zonal Office, Guwahati-7 (Sl. No.1 to 3
are represented by Sl. No.4).
4. The Area Manager, Food Corporation of India, District Office-Colonel
Chowmuhani, Agartala, West Tripura.
...... Appellant(s)
V E R S U S
Sri Ratan Bardhan, son of late Chandranath Bardhan, resident of Shibbari Road,
Tarapur, Silchar, District- Cachar, Assam. (Proprietor) Ratan Bardhan,
Transport Contractor of F.C.I., Churaibari, P.S. Churaibari, District- North
Tripura.
..…. Respondent(s)
RFA No.04 of 2020
1. The Food Corporation of India having its registered office (Headquarter) at
Khadya Sadan, 16-20, Barakhamba lane, New Delhi, Pin-110001 being
registered by the General Manager (R), Food Corporation of India, N.E.F.
Region, Mawlai-Mawroh, Golf link, Shillong-3, Meghalaya.
2. The Area Manager (now Divisional Manager), Food Corporation of India,
Office- Colonel Chowmuhani, P.O.- Agartala, P.S.- West Agartala, District-
West Tripura.
...... Appellant(s)
V E R S U S
Sri Ratan Bardhan, son of late Chandranath Bardhan, resident of Shibbari Road,
P.O.- Silchar, P.S.- Tarapur, District- Cachar, Silchar, Assam, 788008.
..…. Respondent(s)
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For Appellant(s) : Mr. Ratan Datta, Advocate,
For Respondent(s) : Mr. Indrajit Chakraborty, Advocate.
HON’BLE THE CHIEF JUSTICE MR. APARESH KUMAR SINGH
ARINDAM LODH
HON’BLE MR JUSTICE
st
Date of Argument : 21 February, 2024.
th
Date of Judgment & Order : 27 March, 2024.
Whether Fit for Reporting : YES.
JUDGMENT & ORDER
I=N=D=E=X
PART-A (RFA No.03 of 2016)
Introduction
Impugned judgment dated 28.11.2015 and
decree dated 08.12.2015 arising out of T.S.
No.15 of 2012
Written statement of the FCI-Corporation
Issues framed by the learned Trial Court
Materials exhibited by both sides
Findings of the learned Trial Court
Grounds assailed by the appellant-Corporation
Invocation of Clause-X(c) of the tender
agreement vide letter dated 24.11.2010
Letter issued by the Area Manager, FCI,
Agartala dated 19.10.2010
Findings rendered by this Court
Conclusion
PART-A (RFA No.03 of 2016)
Aparesh Kumar Singh, CJ
Heard Mr. Ratan Datta, learned counsel appearing for the
appellants-Corporation and also heard Mr. Indrajit Chakraborty, learned
counsel appearing for the respondent.
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[2] [RFA No.03 of 2016] arises out of the impugned judgment dated
28.11.2015 and decree dated 08.12.2015 passed in T.S No.15 of 2012 by the
Court of learned Civil Judge (Sr. Division), North Tripura, Dharmanagar. [RFA
No.04 of 2020] arises out of the impugned judgment and decree dated
30.09.2019 passed in Commercial Suit No.01 of 2016 by the court of learned
District Judge (Commercial Disputes), North Tripura, Dharmanagar. Both the
appeals are by the appellant-Corporation. T.S. No.15 of 2012 has been allowed
in favour of the plaintiff-contractor/respondent herein holding him entitled to
get the earnest money and security deposit of Rs.79,55,241/ along with interest
@ 9% per annum calculated from the date of contract with effect from
11.11.2009 till its realization; further entitled to balance security deposit of
Rs.13,82,557/- with similar interest with effect from the same date till its
realization; further entitled to Rs.22,30,036/- along with 9% interest calculated
from January, 2011 till its realization towards the difference of the value of
remaining work @ 49.49% and the actual work done @ 159% as referred in
schedule(C) of the plaint; further entitled to get refund of the railway
demurrage charges to the tune of Rs.39,474/- along with 9% interest per annum
calculated from May, 2010 till its realization; all the dues with respective
interest have been directed to be paid within a period of 60 days from the date
of the judgment. Commercial Suit No.01 of 2016 instituted by the plaintiff-
FCI/appellant herein has been dismissed.
[3] Both the appeals have been tagged together as they arise out of the
same agreement executed between the parties dated 15.09.2009 as per the letter
of acceptance and appointment of the contractor Ratan Bardhan, defendant-
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respondent herein and work order dated 11.11.2009. The contractor was
appointed under the tender No.NEFR/TC/CBZ-NGR/11915. Therefore, they
have been heard together and are being decided by the instant judgment.
[4] T.S. No.15 of 2012 was instituted by the contractor for declaration
that the defendant-FCI have illegally and arbitrarily imposed Clause-X(c) of the
agreement of the work against the plaintiff and for realization of a sum of
Rs.2,03,21,634/- along with interest @ 13% per annum on the principal amount
being instituted by plaintiff against the defendants. The plaintiff-contractor
‘s
case, as pleaded, has been succinctly recorded in the impugned judgment dated
28.11.2015 and decree dated 08.12.2015 which reads as under:
―The factual background of the plaintiff‘s case, in a nutshell, is that
plaintiff-respondent has been engaged as transport contractor for a period
of two years vide letter No.CONT.9/NEFR/TC/CBZ-HGR/09/11915 dated
11-11-2009 issued by the Assistant General Manager on behalf of General
Manager (NEFR) of the Food Corporation of India (in short, FCI) for the
purpose of transportation of food grains, sugar and alied materials from
railway siding, Churaibari to F.S.D, Nandannagar and from railway siding,
Churaibari to F.S.D, Churaibari and the plaintiff was advised to start the
work with effect from 16.11.2009. As per adopted procedure indents are
issued by the authority of FCI to be followed by supply of empty trucks by
the contractor for transport and carrying of food grains and the work
continued from 01.12.2009 to 30.12.2010. It is also pleaded that the
plaintiff had requested the Area Manager of FCI, District Office, Agartala
by a Fax dated 09.07.2010 to increase the numbers of trucks to be indented
considering the placement of wagons by the Railway for smooth running
of the transport and carrying work. According to plaintiff, in spite of
supply of sufficient numbers of empty trucks at Nandannagar the loaded
trucks were detained for several days together with load at Agartala on
several occasions for which the arrival of empty trucks at Churaibari was
disturbed without any fault of plaintiff-contractor and this situation was
intimated to the Area Manager of FCI by plaintiff in time vide Fax dated
07.12.2009, 03.03.2010, 10.03.2010, 14.10.2010, 27.10.2010, 30.10.2010
& 02.11.2010. But no remedial measure was taken by defendants while
.
plaintiff performed the work to the entire satisfaction of the FCI authority
The next plea of plaintiff is that defendants suddenly minimized the
loading of food grain bags to the empty trucks reducing the quantum of
load in October 2010. Then one joint representation dated 26-11-2010
signed by 8 Nos carrying contractors was given to the Area Manager, FCI
defendant No.4 with a request for escalation of the rate of work to at least
60% from the existing rate of 49.49 % which was made due to changed
situation and to avoid financial loss of contractors but the defendants
declined their representation and without any reason Deputy General
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Manager of FCI by Fax dated 24-11-2010 imposed the Clause -X(c) of the
tender contract on the plaintiff at his risk and cost and engaged one Sreema
Stone Crusher on 27-12-2010 vide appointment letter No.Cont.9/DO-
AGT/TC/CBZ-NDN/FSD/CBZ/Adhoc/2010 dated 27-12-2010 @ 159%
for the work of rest contract period. It is also asserted by plaintiff that
subsequently defendant No.2 vide his letter dated 25-06-2011 enhanced
the rate of work at 156% ASOR by misusing his power to the detriment of
the interest of plaintiff and also misused the exchequer of FCI. It is further
alleged that this enhancement of rate of work showed the vindictive steps
of the defendants against plaintiff and due to such escalation of the rate of
work in favour of the new contractor namely Sreema Stone Crusher, there
was difference of Rs.56,99,182/- as the excess amount in comparison to
the existing rate of work of 49.49%.
According to plaintiff, the defendants also did not release his security
deposit and earnest money paid by him but they sent demand notices to
plaintiff constantly for payment of extra expenses incurred due to
transportation of stocks at his risk and cost. It is also submitted that the
defendants disqualified plaintiff to compete fresh tender of FCI and in
reply plaintiff also sent letters dated 02.06.2011 & 15.11.2011 claiming to
release and refund his security money and earnest money at the tune of
79,55,241/- and for withdrawal of the tender clause X(C). Plaintiff also
claimed interest @ 13% per annum for blockage of his security money. It
is further submitted that 65790/- was deducted from the admitted bills of
the plaintiff w.e.f the month of May, 2010 to December, 2010 on the
ground of making payment towards demurrage charges of the Railway
authority though it has waved 60% demurrage charges and for this plaintiff
is entitled to get back said 60% amount out of the total deducted
demurrage charges from defendant along with interest @ 13%. Plaintiff
served one advocate notice dated 06.02.2012 through registered post to
defendants claiming his dues but no response was made by defendants.
According to plaintiff, the cause of action for the suit arose firstly in the
month of October, 2010 and subsequently on 27.12.2010 when work was
assigned to another agency at the risk and cost of plaintiff. Plaintiff also
categorically mentioned his claim amount under different heads in
schedule 'A' 'B' 'C' & 'D' at the tune of total 2,03,21,634/- for realisation
from defendants along with interest @ 13% per annum with declaration
that defendants illegally and arbitrarily imposed clause X(C) of the tender
agreement dated 11.11.2009 upon plaintiff. Plaintiff valued the suit at
Rs.2,04,21,634/- and paid the court fees as per section 7(iv)(c) & 7(vi) of
the Court Fees Act.
‖
[5] The defendant-FCI in T.S. No.15 of 2012 appeared and contested
the suit by filing written statement. The stand of the FCI, as described in brief,
is also being extracted hereunder to avoid prolixity in the verbatim narration of
pleadings of both the parties.
In response to the summons issued upon the defendants, all the
―
defendants appeared and contested the suit by filing written statement
wherein they categorically denied the claim of plaintiff questioning the
maintainability of the suit on the ground that plaintiff failed to comply
with the mandatory provision of section 80 CPC to serve upon the
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defendants before instituting the suit. The plea of defendants is that the
performance of plaintiff was not up to the standard and satisfactory as per
physical assessment made by defendant No.4 at the work site and
defendant No.4 vide his certificate dated 01-12-2010 opined that the
performance of plaintiff as contractor under defendants at the route
entrusted to him for transportation of food grains, sugar and the allied
materials were found unsatisfactory beyond 18-10-2010 while the grounds
mentioned by plaintiff have no merit. It is further contended by defendants
that plaintiff was well aware about quoting of the rate for transportation of
FCI goods which was settled after negotiation in terms of metric tons and
not in terms of bags and so the overloading made earlier by plaintiff was
illegal resulting to wrongful gain for which defendants cannot be made
responsible to reduce or restrict the load capacity of the trucks engaged for
the contractual works by the plaintiff and as such the escalation of 60%
against the existing rate of 49.49% ASOR was not feasible under the terms
and conditions of the contract agreement.
The next plea of defendants is that the defendants were under compulsion
to impose Clause-X(C) of the contractual agreement in view of the poor
performance of plaintiff beyond 18-10-2010 and for this work was given
to M/S Sreema Stone Crusher at the risk and cost of plaintiff as per terms
and conditions of the contract which was made after giving sufficient
scope to obey the contract while the imposition of Clause-X(C) of
agreement was inevitable. It is also submitted that several notices were
sent to plaintiff for reimbursing the extra cost and expenditures of
transportation paid to the adhoc contractor to complete the remaining
works at the risk and cost of plaintiff but plaintiff neither made any
response nor paid any money as per the demand notice and for this
defendants were unable to release the security money of plaintiff.
Defendants also denied and disputed the claim of plaintiff for waiver part
of demurrage charges on the reason that such waived demurrage will be
released after final fixation of responsibility of demurrage charges upon
plaintiff subject to the settlement of relevant dues between the parties.
It is also pleaded that as per the terms of the contract the competent
authority of defendants reserved the right to appoint contractor on ad hoc
basis to complete the carrying of rest part of defendants goods for the route
at the risk and cost of the subsisting contractor in case he failed to perform
the work efficiently while plaintiff having miserably failed to perform his
part of contract particularly beyond 18-10-2010 resulting to the suffering
to public distribution system in the State of Tripura adversely, defendants
imposed the Clause-X(c) of the agreement after giving repeated warnings
for acceleration of the transportation. On this ground defendants also
denied to pay any compensation to the plaintiff as his calculation is
baseless, imaginary and hypothetical while the original agreement was
extended for further 3 months without terminating the contract for
successful completion of the defendants work. With these grounds the
defendants submitted that though the cause of action shown is relevant to
institute the suit but as per the spirit of the contractual agreement no
equitable consideration or relief can be given to the plaintiff as the rights
and duties under contract are reciprocal and so the claim of plaintiff has no
basis and the suit is liable to be dismissed.
It is worth to note here that earlier learned predecessor has decreed the suit
vide its judgment dated 01-03-2014 and decree dated 05-03-2014
afterwhich the defendants preferred appeal vide No.RFA.03 of 2014
before the Hon'ble High Court of Tripura against that judgment and
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decree. Then the Hon'ble High Court vide its judgment and order dated 02-
12-2014 set aside the previous judgment and decree of this court and
remanded the case to this court for fresh decision in accordance with given
direction and to dispose of the suit not later than 30-11-2015. Then after
hearing the both parties and considering the pleadings of parties and
documents two additional issues have been framed which are recast with
the previous issues and thereafter evidence of both parties has been
recorded afresh as per direction of the Hon'ble High Court.
‖
[6] The learned trial Court framed the following issues and two
additional issues based on the pleadings and the documents relied upon by both
the parties.
(i) Is the suit maintainable in its present form?
(ii) Is there any cause of action in the suit?
(iii) Whether the public distribution system was disturbed in Tripura State
for want of delivery of food grains from FCI to State food go-down?
(iv) Whether the imposition of Clause X(c) with penalty of 159% risk and
cost of the tender agreement in respect of work order No. NEER/TC/
CBZ/NGR/11915, dated, 11-11-2009 was illegal, arbitrary and against
natural justice?
(v) Whether the plaintiff is entitled to get the decree to realize the sum of
rupees 2,03,21,634/- from the defendants and decree of declaration that
clause-X(c) of the tender agreement was illegal?
Additional Issues
(vi) Whether there was any failure on the part of plaintiff in the placement
of vehicle for carrying of food grains as per the indent and requisition?
(vii) Whether any prior notice was given by the defendants to the plaintiff
to regularize the placement of vehicle as per indent and terms of contract
before imposing clause-X(c) of the tender agreement?
[7] Before the learned trial Court also the following exhibits were
relied upon by the parties.
:
“(A) Plaintiff’s Exhibits
Ext.-1 : Appointment letter dated 11.01.2009 issued by defendant (on
admission).
Ext.2 : Statement of Indent and supply of trucks with effect from
01.12.2009 till 30.12.2010 (on admission).
Ext.3 : Letter of certificate dated 01.12.2010 issued by defendant No.4.
Ext.3/1 : Signature of defendant No.4 on the letter of certificate. (On
admission)
Ext.4 : Appointment letter dated 27.12.2010 in favour of Srimaa Stone
Crusher issued by defendant No.4. (On admission)
Ext.4/1 : Signature of defendant No.4 on the letter dated 27.12.2010 (on
admission).
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Ext.5 : Letter dated 07.02.2012 issued by the Assistant General Manager
(Cont) to plaintiff (On admission).
Ext.5/1 : Signature of author of letter dated 07.02.2012
Ext.6 : Advocate notice dated 06.02.2012 along with original Postal
receipts sent by plaintiff. (On admission).
Ext.7 : Letter dated 09.07.2010.
Ext.7/1 : Signature of plaintiff on the letter dated 09.07.2010;
Ext.8 : Letter dated 02.06.2011 along with postal receipt;
Ext.8/1 : Signature of plaintiff on the letter dated 02.06.2011;
Ext.9 : Original letter dated 20.02.2012;
Ext.9/1 : Signature of plaintiff on the letter dated 20.02.2012;
Ext.10 : Original accounts statement of loan;
Ext.10/1 : Signature of plaintiff on the accounts statement of loan;
Ext.11 : Original news paper dated 17.02.2015;
Ext.12 : Original letter dated 21.04.2011 along with postal receipts;
Ext.12/1 : Signature of plaintiff on the letter dated 21.04.2011.
(B) :
Defendant’s Exhibit
Exbt.A : Self certified copy of indent and supply of vehicle under vehicle
(on admission).
Exbt.B : Copy of price Bid.
Exbt.C : Copy of accepted tender.
Exbt.D : Signature of Area Manager Sr. S.C. Sarkar on the letter dated
20.10.2010.
Exbt.E : Letter dated 01.12.2010 of Director, Food & Civil Supplies,
Government of Tripura.
(C) :
Plaintiff’s Witness
PW.1 Ratan Bardhan
(D) :
Defendant’s Witness
D.W.1 Ranjit Kr. Ghosh
(E) Court Witness : NIL
(F) Material Exhibit : NIL
‖
[8] The learned trial Court first took up the issue No.(vi) and decided
it in the negative against the defendants after discussion of the pleadings and
the evidence adduced by the parties. The learned trial Court though found that
there was no doubt that on 19.10.2010 there was irregularity in supplying the
indented trucks at Nandannagar but this could not be regarded as total failure
on the part of plaintiff to comply the indent.
[9] Issue No.(iii) was also decided in negative. The learned trial Court
upon consideration of the pleadings and evidence on record came to a
conclusion that the allegation of public distribution system was disturbed in the
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State of Tripura for want of delivery of food grains from FCI to the State food
go-down could not be convincingly proved. Plaintiff was under no obligation to
carry the food grains to the food go-downs of Government of Tripura. Clause-
X(c) of the agreement was imposed on 24.11.2010 whereas the letter of
Director, Food Department, Government of Tripura dated 01.12.2010, Exbt.[E]
was issued after imposition of Clause-X(c) of the agreement. The learned court
also took note of the statement of D.W.1 that there were 5/6 contractors
working under the FCI and plaintiff was not the only contractor to deliver the
food grains from the go-down of FCI to the go-down of State of Tripura.
Therefore, it could not be said with absoluteness that due to irregular or short
supply of vehicle by plaintiff, the crisis in stock position of PDS goods at
Nandannagar FSD arose and the whole responsibility of such crisis throughout
the State of Tripura could not be shifted upon the plaintiff when other
contractors were also involved in the work of supply of vehicles at the go-
downs of FCI.
[10] The learned trial Court then proceeded to decide issue No.(iv) and
(vii) together. Learned trial Court referred to Clause-X(c) of the tender
agreement and held that even though it did not contemplate any prior notice to
be given to the contractors before invocation but considering the nature of the
work it was prudent to give prior notice to the contractor to regularize the
supply of trucks in case of any deficiency found in the work before invoking
Clause-X(c). The learned court referred to the exhibits adduced by the FCI for
supporting the invocation of Clause-X(c). It also referred to the findings on
additional issue No.(vi) where it was found that the defendants could not
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discharge the burden of proof that there was absolute failure on part of plaintiff
to supply the trucks as per indent. Therefore, it held that the defendants have
invoked Clause-X(c) on 24.11.2010 without giving sufficient opportunity to the
plaintiff about his unsatisfactory performance, if any, after 18.10.2010. The
learned court also took into consideration that the performance report of
plaintiff since the inception of contract on 16.09.2009 till 18.10.2010 i.e. for
more than one year was satisfactory. It could not be believed that in the next
one month after 18.10.2010 the performance of plaintiff became alarmingly so
adverse and unsatisfactory that the defendants had no other option but to invoke
the risk and cost clause of agreement upon plaintiff. The defendants were found
to have engaged one Sreema Stone Crusher at an enhanced rate of 159% to
complete the remaining part of work of original contract on ad hoc basis for the
next 6 months. It felt that since there were other contractors working under the
defendants at the same time they could have been engaged to complete the
remaining or the deficient work, if any, under the original contract so as to
avoid the provision of risk and cost of the original contractor. They instead
chose to engage fresh contractor at the rate of 159% which was 110% more
than the original rate of contract made with the plaintiff. They were unable to
explain through their pleadings and oral evidence the reason about awarding
such huge quantum of rate of 159% ASOR to complete the remaining work in
favour of the ad hoc contractor. Thus, the FCI opted to accept excessive and
unusual rate of 159% to the Sreema Stone Crusher though the original rate of
work was only 49.49%. Evidence also revealed that plaintiff and other
contractors had requested the defendant-FCI for enhancement of the rate of
work at least 60% from the existing rate of 49.49% as referred to in the Exbt.6
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notice but their representation was not accepted and instead work was awarded
to an ad hoc contractor at a very high rate of 159%. The learned Court therefore
held that it was unjust, irrational, and not in consonance with the terms of the
tender agreement and moreover detrimental to the rights and interest of plaintiff
under the contract. Therefore, issue No.(iv) was decided in favour of the
plaintiff and additional issue No.(vii) was decided in the negative in favour of
plaintiff.
[11] The learned trial Court thereafter took up issue No.(i) and (ii)
which relate to the maintainability of the suit and the cause of action. The
learned Court drew upon the findings in relation to issue No.(iv) and additional
issue Nos.(vi) and (vii) and held that the defendant-FCI had arbitrarily and
illegally imposed Clause-X(c) of the tender agreement. The learned Court held
that cause of action in the suit arose firstly on 24.11.2010 when Clause-X(c)
was unjustifiably invoked by FCI and subsequently on several dates when
defendants made demand to plaintiff to make good the extra expenditure
incurred due to engagement of ad hoc contractor at the risk and cost of plaintiff
as well as on those dates when plaintiff requested the defendants-FCI for
immediate withdrawal of the tender Clause-X(c) and stoppage of transportation
work at the risk and cost of plaintiff. The learned Court held that giving of
advocate notice on 06.02.2012 through registered post along with postal receipt
Exbt.6 on admission amounted to sufficient compliance with the provisions of
Section 80(1) of CPC as the suit was filed on 19.04.2012 after lapse of two
months of this notice. Hence, issue No.(i) and (ii) were decided in favour of the
plaintiff.
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[12] Lastly, the learned trial Court proceeded to examine issue No.(v)
which relates to the claim of plaintiff for realization of Rs.2,03,21,634/- from
the defendant. The Court found that the plaintiff had claimed the total earnest
money and security deposit of Rs.79,55,241/- along with 13% interest i.e.
Rs.35,78,439/-. The security money was deposited between 2006 to 2011.
th
Plaintiff also claimed loss during the period of January, 2011 up to 15
February, 2012 to the tune of Rs.70,26,211/- and further claimed Rs.97,687/- as
per Schedule-D of the plaint. In total, Rs.2,03,21,634/- was claimed from the
defendant-FCI.
[13] The learned Court arrived at the findings that the difference
between the rates of 159% from January, 2011 to June, 2011 and from July,
th
2011 to 15 February, 2012 at the rate of 156% allocated to the ad hoc
contractors compared to the original rate of 49.49% to the original contractor
should be awarded to the plaintiff. As such, plaintiff was held entitled to get the
sum of Rs.22,30,036/- along with interest at the rate of 9% per annum to be
calculated with effect from January, 2011 till its realization.
[14] As regards the demurrage charges, the learned Court found that
Rs.65,790/- was deducted from the admitted bill of the plaintiff with effect from
May, 2010 to December, 2010 towards demurrage charges paid to the railway
authority but the railway authority had waived 60% of the demurrage charges
and refunded the same to the FCI which the plaintiff was also entitled to get
back as deducted from his earlier admitted bills.
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[15] As regards the claim of Rs.97,687/- with interest @ 30% as
described in Schedule-D of the plaint, the Court was however not convinced as
- along with interest based upon the letters
to the plaintiff‘s claim for Rs.97,687/
dated 14.07.2010 and 18.08.2011 as the contents of these letters were neither
described in the plaint nor relevant for the purposes of the claim nor the oral
evidence of P.W.1 could substantiate it. The learned Court proceeded to award
interest @ 6% instead of 13% as claimed by the plaintiff taking into account the
rate of interest on which loans are advanced by Nationalized Bank in relation to
commercial transaction since there was no contractual rate of interest specified
in the tender agreement in view of the proviso to Section 34 of CPC. The
learned Court, however, proceeded to hold that plaintiff is entitled to get 9%
interest on the principal money which he is entitled to recover from defendants
as above. Accordingly, issue No.5 was decided in favour of the plaintiff. The
suit was accordingly decreed in the manner indicated in the opening paragraph.
[16] Let it be indicated here that the impugned judgment and decree
was delivered after remand by this Court vide judgment dated 02.12.2014
passed in RFA No.03 of 2014 directed against the earlier judgment rendered in
the same T.S. No.15 of 2012 on 01.03.2014 by the learned trial Court.
[17] The appellant-FCI being aggrieved has preferred this appeal. The
appellant has inter alia raised the following grounds to assail the impugned
findings.
(a) That the learned trial Court not only failed to appreciate the
evidence in its entirety but also committed a serious error in
rendering the findings in favour of the plaintiff-contractor even
though he had not been able to discharge the burden of proof;
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(b) The learned Court also committed a serious error while
granting relief in absence of any primary or secondary proof on the
part of the plaintiff to substantiate the cause of action and the
separate claims under different heads made by it;
(c) There has been complete misreading of the evidence placed by
the respondents relating to the statement of indent and supply of
trucks adduced by the respondent-FCI. The learned Court also
failed to appreciate whether rate can be enhanced other than the
contractual rate in an existing contract as per the provisions of
Contract Act;
(d) It also failed to appreciate as to how the respondent violated the
indent issued to him from time to time and has indulged in
suppression of material facts while deciding the issue in favour of
the plaintiff;
(e) The learned Court miserably failed to appreciate that the ad hoc
contractor was selected after due tender;
(f) The learned Court has not properly appreciated that imposition
of Clause-X(c) was proper in view of the irregular supply of trucks
by the contractor;
(g) The award of interest beyond the prevailing rate by the
Nationalized Bank is also illegal and arbitrary;
(h) The findings as to waiver of railway demurrage are untenable
in absence of final statement;
(i) The learned Court failed to declare that appointment of second
contractor for performance of remaining part of the job under the
contract was illegal though it held that imposition of Clause-X(c)
was illegal;
(j) The learned Court has also arrived at an erroneous finding that
no restrictions are imposed by the FCI-appellant as they are
enforced by the local State Government authority on the load
capacity of the trucks used for transporting the food grains;
(k) The learned Court did not properly appreciate the grounds for
detention of security deposit of the respondent-contractor;
(l) It has failed to appreciate the negligence intentionally
committed by the respondent for his narrow gains and thereby
caused wrongful loss to the appellants, a public sector undertaking;
(m) Learned trial Court failed to appreciate that Clause-X(c)
permits FCI to appoint ad hoc contractors without terminating the
original contract. The original contract continues to subsist even
though ad hoc contractors are appointed on emergency situation
where the original contractor fails to perform his contractual
obligations.
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[18] Based on these grounds, Mr. Ratan Datta, learned counsel for the
appellants-FCI has assailed the impugned judgment and decree.
[19] We have heard learned counsel for the parties and perused the
impugned judgment of the learned trial Court. We have also taken note of the
pleadings of the parties and the material evidence adduced both oral and
documentary during trial. The case at hand set up by the plaintiff-contractor is
regarding the wrongful invocation of Clause-X(c) of the agreement by the
appellant-corporation and consequent loss of profit and forfeiture of earnest
money and security deposit by the appellant corporation. The NIT and the
consequent agreement between the parties related to transportation of food
grains/sugar/allied materials from railway siding/FSD, Churaibari to FSD,
Nandannagar, Agartala and railway siding, Churaibari to FSD, Churaibari on
regular basis for a period of 2(two) years from the date of commencement of
work i.e. 16.11.2009. The agreement was executed between the parties on
15.09.2009. The work was awarded in favour of the plaintiff-contractor at the
rate of 49.49%. The transportation of food grains on the part of the plaintiff
remained satisfactory between November, 2009 till October, 2010.
[20] The appellant-Corporation invoked Clause-X(c) of the agreement
th
for appointment of an ad hoc contractor vide letter dated 24 November, 2010
on being dissatisfied with the performance of the contractor Exbt.[D] series
which is extracted hereunder:
16 57
Page of
Food Corporation of India
―
Regional Office, NEF Region,
Shillong 793003
–
No. Cont.9/NEFR/TC/CBZ-NGR/09 Dated 24.11.2010
To
Sri Ratan Bordhan
Tarapur, Shib Bari Road,
Silchar 788 008
–
Sub: Transport contract on regular basis for two years for transportation of food
grain/sugar/allied materials from Railway Siding Churaibari FSD Nandannagar
–
and Rly. Siding Churaibari to FSD Churaibari
Ref : This office letter No.F9/NEFR/HTC/Misc-Corres/2008-09 dated 18.10.2010,
19.10.2010, 4/6.11.10 issued by Area Manager, Agartala.
Sir,
Kindly refer to this office letter of even no. dtd. 11.11.09 appointing you as
transport contractor on regular basis for two years for transportation of food
grain/sugar/allied materials from Railway siding Churaibari to FSD Nandannagar
and Rly siding Churaibari to FSD Churaibari and you had joined the work on
16.11.2009.
2. Whereas your performance being not to the satisfaction of the Corporation you
were repeatedly requested/advised to improve your performance. In this connection
the communication cited above may be referred. As your performance in executing
the work entrusted to you has not be satisfactory. You were repeatedly requested to
improve performance by placing trucks to clear the wagons indented to you and to
transport stocks to the destination depots. Despite repeated requests to you from
Area Manager, Agartala you have not paid any heed and the placement of trucks at
Churaibari in the month of October & November 2010 has drastically come thus
causing depletion of stock position food grains in the depots at Agartala. FCI has
been faced with extreme difficulty to meet the PDS & other requirements of the
State Govt. The position has now reached an alarming level and may lead to food
crisis in the State of Tripura.
3. In spite of repeated notices and letters you cared a little to improve your
performance on behaved in a most un-workmanlike manner and thus putting the
Corporation to continuous loss and injustice whereas because of your un-
workmanlike performance and as you have not responded to the repeated requests
to improve performance, the undersigned has no other option but to take action as
per tender clause.
4. Whereas the FCI is of the opinion that you have failed to carry out the contract
work as per agreement and also there is no chance of any further improvement in
your performance and suffer due to lack of supply of food grains at the depots in
Agartala.
5. Now, in exercise of the powers vested upon the undersigned under Clause-X,
hereby invoked upon you Clause X‘C of the contract agreement entered between
you and the Corporation transportation of food grains, sugar, allied materials from
Railway Siding Churaibari to FSD Nandannagar Rly siding Churaibari to FSD
Churaibari and to get the work done at your risk and cost for the remaining period
of the contract with you and you shall be liable to make good to the Corporation all,
the additional charges/expenses, cost or losses that the Corporation may incur or
suffer thereby.
Yours faithfully
S/d
(B.B. Singh)
Dy General Manager
‖
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[21] This letter refers to the previous letters dated 19.10.2010,
20.10.2010, 4/6.11.2010 issued by the Area Manager, Agartala which are
notices and letters to improve performance by the plaintiff. These letters are
addressed to 6(six) such transporters including the plaintiff on the subject of
failure in supply of trucks at FCI Rail sidings at Churaibari and Dharmanagar.
These letters have been adduced as Annexure-D series by the respondent. For
the purposes of appreciation of the findings of the learned trial Court on issue
Nos.(vi), (vii) and (iv) decided in favour of the plaintiff-contractor, letter dated
19.10.2010 is quoted hereunder as a specimen:
Food Corporation of India
“
District Office,
Agartala
No.F.9/NEFR/HTC/MISC-CORRES/2008-09/ Dated, the 19th October, 2010
To
(1) M/s. Namita Paul, (2) M/s. R.K. Saha & Sons (3) M/s. Saikia Trade
HTC, Agartala HTC, Agartala &Transport,HTC, Guwahati
(4) M/s. S.C. Dey & partner (5) Sri A.K. Dey (6) Ratan Bardhan
HTC, Dharmanagar HTC, Dharmanagar HTC, Silchar
(7) M/s. Purbanchal Banikya Vikash (8) Sri Bimlendu Roy
HTC, Guwahati T.C. Silchar
Sub : Non placement of empty trucks till 2.00 pm at Rail siding Churaibari/
Dharmanagar
Ref: This office letter of even no dtd. 18.10.2010
Sir/Madam
Consequent upon serious shortage of food grains at FCI Agartala
and as well as within the State of Tripura, you have been pre informed about
placement of wagon on date vide this office letter as above.
Accordingly 22 Rice wagons at Churaibari and 18 wagons Rice at
Dharmanagar have been placed. But it has been reported by concern Depot in-
charges that no trucks has yet been placed in any of the depot by you against
indents placed for supply of 24 trucks at Churaibari and 23 trucks at Dharmanagar
resulting detention of wagons and accrual of demurrage which becomes a serious
lapse on your part as per contract agreement and as well as to maintain the P.D.S.
of the State.
In this juncture, you are once again advised to take immediate
action for placement of empty trucks as per indent to the Rail head depots
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without fail, failing which the present food shortage with FCI and State
Government could not be tackled.
In this connection, it may be noted that if your performance is not
improved in response to this office advise immediately, such failure would be
dealt with as per contractual agreement and the matter will be referred to the
appropriate authority of FCI for taking action under the purview of clause No.X(C)
of the contractual agreement for the interest of movement of food grains for
maintenance of the P.D.S of the State.
Please treat the matter most urgent.
Yours faithfully
Sd/
(S.C. SARKAR)
AREA MANAGER
”
[22] In order to properly appreciate the issues raised, it is apposite to
also reproduce the relevant Clause-X and XI of the agreement hereunder:
X. Summary Termination
(a) In the event of contractors having adjudged insolvent or going into
liquidation or winding up their business or making arrangements with their
creditors or failing to observe any of the provisions of this contract or any
of the terms and conditions governing the contract, the General Manager
shall be at liberty to terminate the contract forthwith without prejudice or
any other rights or remedies under the contract and to get the work done
for the unexpired period of the contract at the risk and cost of the
contractors and to claim from contractors any resultant loss sustained or
costs incurred.
(b) The General Manager shall also have without prejudice to other rights and
remedies the right, in the event of breach by the contractors of any of the
terms and conditions of the contract to terminate the contract forthwith and
to get the work done for the unexpired period of the contract at the risk and
cost of the contractors and/or forfeit the security deposit or any part thereof
for the sum or sums due for any damages, losses, charges, expenses or
costs that may be suffered or incurred by the Corporation due to the
-workman like performance of any of the
contractor‘s negligence or un
services under the contract.
(c) The contractors shall be responsible to supply adequate and sufficient
labour, scales/trucks/carts/any other transport vehicle for
loading/unloading, transport & carrying out any other services under the
contract in accordance with the instructions issued by the General Manager
or an officer acting on his behalf. If the contractors fail to supply the
requisite number of labour, scales and trucks/carts, the General Manager
shall at his entire discretion without terminating the contract, be at liberty
to engage other labour, scales, trucks/carts, etc. at the risk and cost of the
contractors, who shall be liable to make good to the Corporation all
additional charges, expenses, cost or losses that the Corporation may incur
or suffer thereby. The contractors shall not, however, be entitled to any
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gain resulting from entrustment of the work to another party. The decision
of the General Manager shall be final and binding on the contractors.
XI. Security Deposit
(a) The contractor shall furnish within a week of the acceptance of their tender,
security deposit as prescribed in the invitation to tender failing which the
contract shall be liable to cancellation at the risk and cost of the contractors
and subject to such other remedies as may be open to the General Manager
under the terms of the contract. The contractors at their option may deposit
fifty percent of the prescribed security in any of the prescribed forms at the
time of award of the contract while the balance fifty percent may be paid by
the contractors by deductions at the rate of five percent from the admitted
bills of the contractors.
(b) The security deposit will be refunded to the contractors on due and
satisfactory performance of the services and on completion of all
obligations by the contractors under the terms of the contract and on
submission of a No Demand Certificate, subject to such deduction from the
security as may be necessary for making up of the Corporation claims
against the contractor.
(c) In the event of termination of the contract envisaged in Clause-X, the
General Manager, shall have the rights to forfeit the entire or part of the
amount of security deposit lodged by the contractors or to appropriate the
security deposit or any part, thereof in or towards the satisfaction of any
sum due to the claimed for any damages, losses charges, expenses or costs
that may be suffered or incurred by the Corporation.
(d) The decision of the General Manager in respect of such damages, losses,
charges, costs or expenses shall be final and binding on the contractors.
(e) In the event of the security being insufficient or if the security has been
wholly forfeited, the balance of the total sum recoverable as the case may
be shall be deducted from any sum then due or which at any time thereafter
may become due to the contractors under this or any other contract with the
Corporation, should that sum also be not sufficient to cover the full amount
recoverable the contractors shall pay to the corporation on demand the
remaining balance due.
(f) Whenever the security deposited falls short of the specified amount the
contractors shall make good the deficit so that the total amount of security
deposit shall not at any time be less than the specified amount.
[23] The learned trial Court has in answer to the issue No.(vi) held that
the subsequent irregularity in supplying the vehicles after 18.10.2010 cannot be
reasonably treated as failure on part of the plaintiff to supply the vehicles as per
indent. Further, in answer to issue Nos.(iv) & (vii) it has held that imposition of
Clause-X(c) vide letter dated 24.11.2010 was illegal, arbitrary and against
20 57
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natural justice as no prior notice was given to the contractor. Clause-X(c) as
quoted above, contemplates that the employer shall at his entire discretion
without terminating the contract, be at liberty to engage other labour, scales,
trucks/carts, etc. at the risk and cost of the contractors, who shall be liable to
make good to the Corporation all additional charges, expenses, cost or losses
that the Corporation may incur or suffer thereby in case the contractor has
failed to supply the requisite number of labour, scales and trucks/carts for
loading/unloading, transport & carrying out any other services under the
contract, in accordance with the instructions issued by the General Manager or
an officer acting on his behalf.
[24] Clause-X(b) on the other hand contemplates the right of the
employer to terminate the contract in the event of breach by the contractors of
any of the terms and conditions of the contract and get the work done for the
unexpired period of the contract at the risk and cost of the contractors and/or
forfeit the security deposit or any part thereof for the sum due for any damages,
losses, charges, expenses or costs that may be suffered or incurred by the
-workman like
Corporation due to the contractor‘s negligence or un
performance of any of the services under the contract.
[25] Clause-XI(c) contemplates the right of the employer to forfeit the
entire or part of the amount of security deposit lodged by the contractors or to
appropriate the security deposit or any part thereof towards satisfaction of any
sum due to be claimed for any damages, losses, charges, expenses etc. that may
21 57
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be suffered or incurred by the Corporation in the event of termination of the
contract envisaged in Clause-X.
[26] The aforesaid vital terms of the contract confers the right of either
termination of the contract or without termination of the contract, liberty to
engage other contractor under the agreement to meet exigencies which may
arise due to failure on part of the contractor on two different situations (i) the
event of breach by the contractor of any of the terms and conditions of the
contract leading to its termination (ii) failure to supply the requisite number of
labour/trucks/carts by the contractor leading to engagement of ad hoc
contractor without terminating the contract at the discretion of the
employer/General Manager.
th
[27] The events between commencement of work on 16 November,
th
2009 till 18 December, 2010 regarding transportation of food grains by the
plaintiff-contractor to the satisfaction of the appellant-Corporation is not
disputed. For example, Exibit-3 series contains the statement of indent and
supply of trucks between Page 141 to 146 of the Paper Book for the period of
st th
1 December, 2009 till 30 December, 2010. This document has been exhibited
th th
on admission. The statement from 24 September, 2010 till 30 December,
th
2010 i.e. even after appointment of the ad hoc contractor on 27 December,
2010 shows that the plaintiff-contractor had been supplying the trucks on a
regular and consistent basis throughout this period except on certain dates, such
th th th
as, 13 November, 2010, 15 November, 2010, 20 November, 2010. In fact,
the supply of trucks during the period in question when the appellant-
22 57
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th
Corporation started issuing notices i.e. 19 October, 2010 indicates that against
the indented number of trucks, 8 and 9 in number, the plaintiff had supplied 17
th
trucks for local movement. Prior to 19 October, 2010, 4 and 7 numbers of
trucks were indented for NDN and local supply and equal number of trucks
th th
were supplied by the contractor. Between 9 October, 2010 to 19 October,
2010 this statement exhibited on admission does not show any indent being
th
placed for supply of trucks. Further, on 20 October, 2010, 7 numbers of trucks
st
were indented for local supply and 6 were supplied. On 21 October, 2010, 4
th
trucks were indented for NDN and 4 were supplied. On 25 October, 2010, 7
and 9 numbers of trucks were indented for NDN and local supply in which 9
and 9 were placed by the transporter. The figures available from the statement
th th th st
for 27 October, 2010, 29 October, 2010, 30 October, 2010, 31 October,
st nd rd th
2010, 1 November, 2010, 2 November, 2010, 3 November, 2010, 4
th th th
November, 2010, 6 November, 2010, 7 November, 2010, 8 November,
th th th
2010, 9 November, 2010 and similarly on 13 November, 2010, 15
th nd rd
November, 2010, 20 November, 2010, 22 November, 2010 and 23
November, 2010 i.e. the date just prior to the invocation of Clause-X(c) show
that the transporter had been supplying the number of trucks indented both for
NDN and local supply almost on a regular and consistent basis.
[28] In this background, we may look to Exbt.3 which is a certificate
st
dated 1 December, 2010 issued by the respondent No.4 to the following effect:
Food Corporation of India
―
TO WHOM IT MAY CONCERN
This is to clarify that Sri Ratan Bardhan, Shib Bari Road, Tarapur, Silchar, is the
existing Transport contractor of FCI in the route of Rly. Siding Churaibari to FSD,
Nandannagar & Rly siding Churaibari to FSD, Churaibari vide work order
No.Cont.9/NEFR/TC//CBZ-NGR/09 dtd. 11.11.09. His performance was satisfactory
although w.e.f. 16.11.09 to 18.10.2010. But due to unsatisfactory performance beyond
23 57
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18.10.2010, the clause-xc of contract agreement has been imposed upon Sri Ratan
Bardhan vide Regional Office, Shillong letter No.Cont.9/NEFR/TC/CBZ-NGR/09 dtd.
24.11.2010.‖
Sd/
(S.C. Sarkar)
AREA MANAGER‖
It indicates that the Area Manager, FCI had certified satisfactory
th th
performance of supply of trucks between 16 November, 2009 to 18 October,
th
2010 but the remarks that beyond 18 October, 2010 his performance was
unsatisfactory which led to invocation of Clause-X(c), is not in conformity with
the statement at Exbt.2 series relating to indent and supply of trucks by the
contractor for the period in question.
[29] The contention of the plaintiff that a joint representation was made
th
by 8 transporters on 26 November, 2010 to raise the margin of profit from
49.49% to 60% is not specifically denied by the appellant-Corporation in its
written statement. The demand for increase in profit ratio was made by the
th th
transporters upon whom these notices of 18 October, 2010, 19 October, 2010
and subsequent notices contained in Exbt.D series were issued by the FCI on
account of the changed situation wherein the FCI had suddenly imposed and
minimized the loading capacity of food grain bags on the empty trucks from
October, 2010 decreasing the quantum of load as was given since November,
2009. Instead of acceding to the demand of the transporters on account of a
valid reason in reduction of the load capacity of empty trucks in terms of profit
ratio from 49.49% to 60% which was only a request for marginal increase, the
officials of appellant-Corporation instead of negotiating with the transporters
for increase of reasonable amount of profit ratio in the changed circumstances
necessitated at the instance of the FCI, choose to go for appointment of an ad
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hoc contractor by invoking Clause-X(c) of the agreement at a much higher rate
of 159% at the risk and cost of the contractor. One Sreema Stone Crusher was
th
appointed as such on 27 December, 2010 at the rate of 159% for the rest
contract period as was with the plaintiff. For the period from June, 2011, the
rate was fixed at 156% till February, 2012.
[30] This action of the respondents was arbitrary, illegal and not in the
interest of the Corporation as rightly held by the learned trial Court in answer to
issue Nos.(iv) and (vi). In a subsisting agreement with 6 transporters including
the plaintiff, the appellant in the best interest of the Corporation could have
negotiated the genuine demands of the transporters and escalated the profit ratio
to a reasonable extent by novation of the terms of the agreement entered with
them due to the changed circumstances. Instead, they choose to invoke Clause-
X(c) by appointment of an ad hoc contractor at a much higher rate of 159%.
The remaining part of the work was executed by the ad hoc contractor from
December, 2010 till February, 2012. The statement of indent and supplies made
th
by the plaintiff-contractor vide Exbt.3 series up to 30 December, 2010 even
after the date of appointment of an ad hoc contractor goes to indicate that the
contractor continued to make supplies of trucks even after invocation of
th
Clause-X(c) by letter dated 24 November, 2010.
[31] The learned trial Court however has in answer to issue No.(vii)
wrongly held that prior notice for invocation of Clause-X(c) was not given as
th
the correspondences contained in Exbt.D series between 19 October, 2010 to
th
4 November, 2010 do indicate that several contractors including the plaintiff
were being given notice regarding placement of trucks as per indents. However,
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mere issuance of notice in the facts and circumstances of the changed situation
necessitated due to insistence of the appellant-Corporation to load lesser
quantity of load on the empty trucks staring from October, 2010 without
entering into any negotiation with the transporters including the plaintiff-
contractor and instead invoking Clause-X(c) to appoint an ad hoc contractor for
execution of the remaining part of the work under the agreement at a much
higher rate of 159% is ex facie, arbitrary, and unreasonable. Therefore, we find
that the findings on issue No.(vii) rendered by the learned trial Court are not
correct on facts.
[32] However, forfeiture of earnest money deposit and security deposit
by the appellant-Corporation is not justified as such consequential action flows
only from termination of the contract conceived under Clause-X(b) and Clause-
XI(c) referred to hereinabove. A conjoint construction of Clause-X(b) and
Clause-X(c) indicate that in the event of termination of the contract envisaged
under Clause-X(b), the employer/General Manager shall have the right to
forfeit the entire or part of the amount of security deposit towards the
satisfaction of any sum due to be claimed for any damages, losses etc. suffered
by the Corporation. Admittedly, the Corporation has not invoked Clause-X(b)
the consequences of which are provided for in Clause-XI(c).Therefore, upon
invocation of Clause-X(c) i.e. engagement of an ad hoc contractor without
terminating the original contract with the original contractor/plaintiff herein,
forfeiture of the earnest money and security deposit by the Corporation was not
proper in the eye of law and that too for a period when there was no complain
about proper discharge of transportation work. Plaintiff would be entitled to
26 57
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refund of the earnest money and security deposit as also allowed by the learned
trial Court with interest. However, plaintiff would not be entitled to loss of
profit on inability to execute the remaining part of the contract on appointment
of an ad hoc contractor for executing the remaining work in two parts i.e.
January, 2011 to June, 2011, July 2011 to January, 2012 as there is no tangible
proof of such loss of profit on the part of plaintiff-contractor for that period.
The learned trial Court had taken a hypothetical loss said to be sustained by
plaintiff at the rate of 156% allotted to the ad hoc contractor as compared to
49.49% as per agreement between the FCI and the plaintiff. We may in this
regard usefully rely upon the opinion expressed by this Court on invocation of
Clause-X(c) and the decision rendered by this Court in case of The Food
Corporation of India and another versus Smt. Namita Paul dated 19.10.2023
in RFA No.25 of 2022 and RFA No.26 of 2022. The Special Leave Petition
No.27419-27420/2023 preferred by the appellant-FCI against the above
judgment has been dismissed by the Apex Court on 04.01.2024.
[33] In view of the findings referred to hereinabove, the award of
difference of value of the remaining work at the rate of 49.49% and the actual
work done at the rate of 159% to the tune of Rs.22,30,036/- calculated from
January, 2011 along with interest at the rate of 9% per annum cannot be upheld.
On the other hand, retention of earnest money and security deposit cannot be
permissible even if invocation of Clause-X(c) of the agreement by the
Corporation is assumingly held to be justified though we have held it otherwise,
for the reason that retention of security deposit can only result upon termination
of the agreement in terms of Clause-X(b) read with Clause-XI(c). Therefore, as
27 57
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held in the foregoing paragraphs, plaintiff would be entitled to the following
amounts:
(i) Plaintiff would be entitled to refund of the earnest and security
money as per Schedule-A of the plaint i.e. Rs.79,55,241/- and balance
security deposit as per Schedule-B i.e. Rs.13,82,557/- along with
interest at the rate of 9% per annum as also awarded by the learned
trial Court with effect from 24-11-2010 i.e. the date of invocation of
Clause-X(c) of the agreement in respect of the work by the
Corporation till its realization. In this regard, we may observe here that
the direction to pay the aforesaid amount with effect from 11.11.2009
till its realization is not correct since these amount became due only
after invocation of Clause-X(c) by the Corporation by letter dated
24.11.2010 and appointment of an ad hoc contractor to execute the
remaining part of the work.
(ii) It is also held that if 60% of the demurrage charges have been
waived by the railways and reimbursed to the appellant-Corporation,
the plaintiff would also be entitled to get refund of the railway
demurrage charges to the tune of Rs.39,474/- along with interest at the
rate of 9% calculated from the date of the claim letter dated
18.08.2011 till its realization as per Schedule-D instead of the month
of May, 2010 as ordered by the learned trial Court.
[34] Plaintiff will not be entitled to get a sum of Rs.22,30,036/- along
with interest towards difference of the value of the remaining work at the rate
28 57
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of 49.49% and the actual work done at the rate of 159% as claimed under
schedule-C of the plaint.
[35] Therefore, the findings of the learned trial Court so far as it relates
to answer to issue No.(vii) is held to be incorrect. The award of claims under
paragraph 47 and 48 of the impugned judgment towards refund of earnest &
security money and balance security deposit for the periods in question shall
th
carry interest @ 9% with effect from 24 November, 2010. The award of
Rs.22,30,036/- towards difference of the value of remaining work under
paragraph 49 of the impugned judgment is set aside. Award of claim towards
demurrage charge under paragraph 50 of the impugned judgment to the tune of
th
Rs.39,474/- along with interest @ 9% shall be due from 18 August, 2011 i.e.
the date of claim letter instead of May, 2010 as ordered by the learned trial
Court.
[36] Thus, the appeal stands partly allowed and partly dismissed in the
manner and to the extent indicated hereinabove. Pending application(s), if any,
also stands disposed of. LCRs be sent to the Court concerned.
29 57
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I=N=D=E=X
PART-B (RFA No.04 of 2020)
Introduction
Impugned judgment dated 30.09.2019 and decree
dated 03.10.2019 arising out of Commercial Suit
No.01 of 2016
Written statement of the defendant-contractor
Materials exhibited by the plaintiff-Corporation
Issues framed by the learned Trial Court
Findings given by the learned Trial Court
Grounds assailed by the appellant-Corporation
Submission of learned counsel for the appellant
Sss
Submission of learned counsel for the respondent
s
Findings rendered by this Court
Conclusion
PART-B (RFA No.04 of 2020)
This appeal arises out of the impugned judgment dated 30.09.2019
and decree dated 03.10.2019 passed in Commercial Suit No.01 of 2016 by the
learned Commercial Court, North Tripura, Dharmanagar whereby the suit
preferred by the plaintiff/appellant-Corporation for recovery of cost for breach
of the same contract i.e. in RFA No.03 of 2016, (for transportation of food
grains from railway siding/FSD Churaibari to FSD Nandannagar & Railway
siding Churaibari to FSD Churaibari) and for realization of Rs.1,77,59,585/- as
loss suffered by the Corporation has been dismissed on contest.
[2] The instant Commercial Suit was first instituted on 08.07.2013 as
Money Suit No.03 of 2013 before the Court of learned Civil Judge, (Sr.
Division), West Tripura, Agartala, Court No.1. However, pursuant to the order
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dated 23.04.2015 passed in TRP(C) No.05 of 2015 by this Court, the case was
transferred to the Court of learned Judge (Sr. Division), Dharmanagar, North
Tripura. The case was transferred to the Commercial Court, Dharmanagar on
19.07.2016 and registered as Commercial Suit No.01 of 2016. That is how the
instant suit was tried and decided by the learned Commercial Court,
Dharmanagar.
[3] The plaintiff-Corporation pleaded through its plaint that pursuant
to the NIT dated 12.08.2009 (the same NIT as in RFA No.03 of 2016) arising
out of M.S. No.03 of 2013, the Corporation entered into an agreement with the
defendant-contractor at the quoted rate of 49.49% above the schedule rate
which worked to Rs.895.92 paisa per metric ton. Consequently, letter of
acceptance and appointment was conveyed on 10.11.2009 and contractor was
advised to start work from 16.11.2009. According to the plaintiff, contractor
agreed to deposit the security deposit of Rs.20,45,000/- out of which, he
deposited Rs.2,04,500/- by demand draft and Rs.8,18,000/- by conversion of
earnest money to security deposit. The balance amount of Rs.10,22,500/- being
50% of the total security deposit was to be recovered from the admitted bills of
the defendant-contractor. The plaintiff was allowed the defendant-contractor to
start the transportation work of carrying food grains from railway siding/FSD
Churaibari to FSD Nandannagar with effect from 16.11.2009. Accordingly, as
per work order dated 11.11.2009, it is alleged that the contractor suspended the
work after 26.12.2010 i.e. after 12 months. Since October, 2010, the contractor
had started violating the terms and conditions of the agreement though the
contract was for a period of two years. As a result of its unanticipated action,
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the supply of food grains stored in go-down complex of the plaintiff-
Corporation got sharply reduced resulting in disruption of public distribution
system. The defendant-contractor was repeatedly requested to restore the
transportation work and adhere to the contractual obligations but he failed to
respond despite persuasions. He was disinterested in continuing the contract
work and neither did he make any intimation to the Corporation for its callous
action.
[4] The Corporation issued letters dated 18.10.2010, 19.10.2010,
20.10.2010, 06.11.2010, 09.11.2010 and 12.11.2010 upon the contractor that on
his failure to perform the contract, he would be liable to make good the loss
caused to the plaintiff and pay the cost value for performance of the
unperformed work under the contract agreement. Thereafter, the Corporation
was constrained to invoke Clause-X(c) of the agreement vide letter dated
24.11.2010. It invited limited spot tender notice on 03.12.2010 and appointed
M/S Maa Stone Crusher, Tarapur, Shibbari Road, Silchar as ad hoc contractor
for transportation of food grains from railway siding/FSD Churaibari to FSD
Nandannagar and railway siding Churaibari to FSD, Churaibari for 6(six)
months with effect from 27.12.2010 vide letter of the same date. The rate quoted
by the ad hoc contractor was 153% above schedule rate which was a higher rate
than the existing regular contract but had to be accepted to save the public
distribution system and for lifting the accumulated food grains from FSD
Churaibari. The plaintiff asserted that the former regular contract with the
defendant was still in existence and he was free to continue with the work and
improve his performance. The plaintiff-Corporation extended the period of
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regular contract vide letter dated 02.11.2011 and intimated him to continue with
the work but he paid no heed to it. As a result, the ad hoc contractor transported
the food grains on their own approved rate till expiry of 6 months on
26.06.2011.
[5] Thereafter, another ad hoc contractor M/S Sreema Stone Crusher,
Tarapur, Silchar was appointed to carry on the transportation work at the risk
and cost of the regular contractor-defendant from 27.06.2011 to 26.12.2011
which was further extended by 3 (three) months on the same terms vide letter
dated 02.11.2011. The Corporation was constrained to appoint ad hoc
contractors to continue the work up to 26.03.2012 on account of the fact that
the defendant-contractor did not carry on the transportation work. The plaintiff
had to pay an amount of Rs.74,48,640/- to the ad hoc contractor engaged
between 28.06.2011 to 15.02.2012 and the total loss incurred by the corporation
as a result of breach of contract and also an amount of Rs.1,03,10,945/- totaling
Rs.1,77,59,585/- for the period in which the ad hoc contractors transported the
goods from 27.12.2010 to 27.06.2011 and from 28.06.2011 to 15.02.2012 at the
enhanced rate. Therefore, the Corporation is entitled to realization of the loss of
Rs.1,77,59,585/- from the defendant-contractor which remained unpaid despite
several demand notices upon the defendant-contractor.
[6] Under the contract agreement, the defendant was obliged to pay
the cost of the risk undertaken by the plaintiff by appointment of ad hoc
contractor upon invocation of Clause-X(c) of the agreement against the
defendant. The cause of action for institution of the plaint arose on 18.10.2010,
19.10.2010, 20.10.2010, 06.11.2010, 09.11.2010 and 12.11.2010 when the
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plaintiff informed the defendant that for his failure to perform the contract, he
was liable to make good the loss caused to the plaintiff for breach of contractual
obligations under the contract agreement. The cause of action also arose on
24.11.2010 when Clause-X(c) of the agreement was imposed for non-
performance and violation of the tender agreement and on the dates on which
the demand notices were sent to the defendant and finally the cause of action
arose on 11.05.2012 when the last demand notice was sent to the contractor.
[7] The defendant upon notice appeared and filed their written
statement. The execution of the agreement for transportation of work, the date
of commencement of work i.e. 16.11.2009 was not disputed. However, the
defendant denied that he had suspended the work after 26.12.2010 and thereby
violated the terms and conditions of the agreement. As per the defendant, he
was the regular transport contractor appointed for a period of 2(two) years and
as per the prevailing procedure and indent issued by the FCI, he had been
supplying empty trucks for transportation and carrying of food grains to the
Corporation. For carrying smooth transportation, he had made request to the
Area Manager, FCI, Agartala to issue more number of indents to increase the
number of trucks considering the placement of wagons by the railway and at
the same time also stated that sufficient number of empty trucks were waiting
for loading but could not be engaged for want of indents. The trucks waiting for
unloading at Nandannagar were unnecessarily detained by the Corporation for
several days sometimes in empty condition sometimes with loads which was
not the fault of the defendant.
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[8] These matters were intimated to the Corporation vide letters dated
07.12.2009, 03.03.2010 and 02.11.2010 but no steps were not taken by the FCI
authority. The defendant performed his work satisfactorily as per terms of the
agreement. FCI also appreciated the work of the defendant by issuing certificate
dated 01.12.2010. But suddenly it imposed a restriction over the quantum of
load in empty trucks on and from October, 2010 in respect of which a joint
representation was made by the defendant and other transporters to the Area
Manager, FCI, Agartala with a copy to the General Manager FCI, North East
Frontier Region, Shillong for acceleration of rate to 60% from the existing rate
of 49.49% due to changed circumstances and inevitable financial losses.
However, instead of considering its representation, the plaintiff by letter dated
24.11.2010 imposed Clause-X(c) and appointed ad hoc contractor at the rate of
159% above the scheduled rate for undertaking the same work. This was
detrimental to the interest and rights of the defendant-contractor and a misuse
upon the exchequer of the Corporation.
[9] The Corporation allowed execution of the remaining part of the
contract work to the ad hoc contractor at the rate of 159% ASOR from January,
2011 to June, 2011 and subsequently from July, 2011 to November, 2011 at the
rate of 156% and thereby paid an excess amount of Rs.56,99,182/-. It also took
the plea that the security money and earnest deposit of the defendant were lying
with the Corporation which despite demand were not being paid whereas the
contractor was asked to make the payment of extra expenses incurred for
transportation of cost by the new contractor. Further, the Corporation
disqualified the defendant from contesting the fresh tender called where the ad
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hoc contractors were appointed. The defendant claimed realization of security
money and earnest money amounting to Rs.79,55,241/- and also to remove
invocation of Clause-X(c).
[10] The defendant also took the plea of wrongful deduction of
Rs.65,790/- from the bill of the defendant from May, 2010 to December, 2010
on the ground of demurrage charges paid to the railway whereas the railway
authority had waived 60% of the demurrage which was not reimbursed to the
contractor. The defendant also contended that he suffered huge financial loss
and for recovery thereof he filed a Title Suit No.15 of 2012 in which the
learned Civil Judge (Sr. Division), Dharmanagar, North Tripura had allowed
relief vide judgment dated 01.03.2014. However, it was pointed out that the
Corporation had preferred an appeal [RFA No.03 of 2014] before the High
Court of Tripura and the matter related in this case are same, parties are the
same and as such instant suit is barred by principles of res judicata and also
under Order-II Rule 2 of CPC.
[11] On behalf of the plaintiff-Corporation, one Shishir Lakra was
examined as P.W.1 who exhibited several documents which were marked as
exhibit M.O.1 and are extracted hereunder:
-in-chief of
―To prove the case the plaintiffs adduced the examination
himself as PW1 (Shishir Lakra) and PW.1 proved Exhibit MO.1
(payment register in respect of work order No. Contd.9/NEFR/TC/CBZ-
NDN/Ad-hoc/11 and it contains page No.01 to 66 and prior to that three
other sheets without having any certificate of the opening authority
(subject to objection by defendant),
Exhibit-MO. II (certified true copy made by Manager, FCI, District
Officer, Agartala in respect of contract price bid agreement relating to
FCI and Sreema Stone Crusher), Exhibit-A (From Exhibit-MO.1 the
contents incorporated in page No.2 to 15 which were not entered by
PW.1 and he has no signature on these pages) (subject to objection by
defendants),
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Exhibit-B (contents of the agreement),
Exhibit-C (copy of the tender inviting form dated 07.12.2010),
Exhibit-D (another certified copy in respect of a letter addressed to one
Sri Ratan Bardha, Transport Contractor, Tarapur, Shibbari Road,
Silchar, dated 06.02.2011 written by B. Prakashan, General Manager (R)
(subject to objection by the defendant)
Exhibit-E, Exhibit-E/I, Exhibit-E/II Exhibit/III, Exhibit-E/IV
Exhibit-E/V (documents dated 18-10-2010, 19.10.2010, 20.10.2010,
12.11.2010, 24.11.2010 and 03.12.2010 respectively) (subject to
objection by defendant) and defendant has adduced the examination-in-
chief of himself as DW1. DW.1 proved Exhibit-1 to 5 (firisti Sl. No.01
to 5) and Exhibit 6 to 14 (first Sl. No.7 to 15),
Exhibit-15 to 20 (firisti dated 26.02.2018 Sl. No.15 to 20) (subject to
objection of the plaintiff).
‖
[12] Based upon the pleadings of both the parties and relevant
documents, the following issues were framed for consideration by the learned
Commercial Court in Commercial Suit No.01 of 2016 from which RFA No.04
of 2020 arises:
(1) Whether the suit is maintainable?
―
(2) Whether the suit is barred by law of Limitation and Rule of res-
judicata?
(3) Whether the Clause X(C) of the tender agreement was imposed upon
defendant by plaintiffs after giving him adequate scope for improvement
of the work?
(4) Whether the appointment of the ad-hoc contractor by the plaintiffs at
the cost and risk of defendant was illegal and void?
(5) Whether plaintiffs made payment to the ad-hoc contractors for
completing the works of tender? If so, what quantum of money was paid
by the plaintiff?
(6) Whether plaintiffs sustained any loss at the tune of Rs.1,77,59,585/-
(one crore seventy seven lakhs fifty nine thousand and five hundred and
eighty five) for breach of obligation of defendant to bear the risk and
cost of work?
(7) Whether there is any cause of action in this suit?
(8) Whether the plaintiffs are entitled to get the recovery of
Rs.1,77,59,585/- along with interest @ 12% of p.a from defendant
?
including the cost of the suit ‖
[13] The learned trial Court took up issue No.3 first and came to the
finding that the plaintiff is not entitled to get the decree in respect of the suit
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against the defendant as it has failed to prove breach of contract by the
defendant.
[14] Issue No.4 was answered in the following manner :
nt contractor was 49.49% above the
―The rate quoted by the defenda
schedule rate prescribed by the plaintiffs Corporation and which worked
to Rs.895.92 per MT for the entire distance and the said rate having been
accepted by plaintiff No.1. Thereafter, one joint representation dated 26-
11-2010 signed by carrying contractors to the Area Manager, FCI with a
request for escalation of the rate of work to at least 60% from the
existing rate of 49.49% due to change situation and to avoid financial
loss of contractors but the plaintiffs declined their representation and
without any reason Deputy General Manager, FCI by Fax dated 24-11-
2010 imposed the clause X(C) of the tender contract on the defendant at
his risk and cost and engaged one Sreema Stone Crusher on 27-12-2010
vide appointment letter No. Cont.9/DO-AGT/TC/CBZ-
NDN/FSD/CBZ/ad-hoc/2010 dated 27-12-2010 @159% for the work of
rest contract period and also that subsequently plaintiff No.2 vide his
letter dated 25-06-2011 enhanced the rate of work at 156% ASOR by
exercising his discretion power to the detriment of the interest of
defendant and also exercised the exchequer of FCI such steps of the
plaintiffs against the defendant and that this enhancement of rate of
work was not allowed by the plaintiffs against defendant and due to such
escalation of the rate of work in favour of the new contractor namely
Sreema Stone Crusher, there was difference of Rs.56,99,182/- as the
excess amount in comparison to the existing rate of work of 49.49% in
respect of defendant. The relevant clause speaks about the engagement
of trucks/ scales/ carts but not of any fresh tender agreement. Since there
was also other contractors working under the defendants at the same
time they could have been engaged to complete the remaining or the
deficient work, if any under the original contract so as to avoid the
provision of risk and cost of original contractor but instead of that
plaintiffs had chosen to engage fresh contractor at a rate of 159% which
was 110% more than the original rate of contract made with the
defendant. Plaintiffs also did not clearly explain in their plaint or oral
evidence the reason about awarding such huge quantum of rate of 159%
ASOR to complete the remaining work under the contract which was
excessively higher and unreasonable rate of work. So, it is also not
clearly justified in the evidence by plaintiffs as to why they opted to
accept excessive and unusual rate of 159% to the Sreema Stone Crusher
though the original rate of the work was only 49.49%. It is also revealed
in the evidence that defendant and other contractors applied to the
plaintiffs for enhancement of the rate of work at least 60% from the
existing rate of 49.49% which is also referred in the evidence of
defendant but was not accepted by plaintiffs and in spite of that the
approach of plaintiffs in awarding the rate of 159% for the same type of
work and under the circumstances of the suit was in view of this Court is
unjust, irrational and not inconsonance with the terms of the tender
agreement and detrimental to the rights and interest of defendant under
the contract. Therefore, this court is of the considered opinion that it was
necessary for the plaintiffs to give prior notice to the defendant before
imposing the clause X(C) of the tender agreement to regularize the
placement of the vehicle as per indent and terms of contract. It is
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therefore, concluded that the invoking of clause X(C) imposing the risk
and cost upon defendant by issuing the letter dated 24-11-2010 was
arbitrary, illegal and violative of the principle of natural justice. Hence,
issue No.4 is answered in negative and decided against plaintiffs.
It is also come to the notice of this Court during argument
advanced by both the Ld. Counsels of this suit that plaintiffs did not
issue indent for carrying the goods and the defendant suffered a huge
financial loss and for recovery of the said loss the defendant filed a
money suit and got a decree against the plaintiffs vide case
No.TS.15/2012 in the Court of Civil Judge (Sr. Division), Dharmanager,
North Tripura, by a judgment dated 01-03-2014 and the plaintiffs made
an appeal vide No. R.F.A.
3/2014 before the Hon‘ble High Court of
Tripura against the said judgment dated 01-03-2014 and the matters
related in this case are same, parties are same as was in case No. TS
15/2012 of Civil Judge (Sr. Div), Dharmanagar and the case R.F.A.3 of
2014 of the Hon‘ble High Court of Tripura and as such barred by
principles of Res-judicata and also under Order 2, Rule-2 of civil
Procedure Code. For ready reference Ld. Counsel for the defendant Mr.
Das filed copy of judgment of TS 15 of 2012. Perused the said judgment
and it also came to notice that the subject matter of this suit and the suit
T.S.15 of 2012 it is filed as a counter of former T.S.15 of 2012 and as an
appeal was filed against the judgment and decree of T.S. 15 of 2012 the
plaintiffs filed the instant suit seeking relief from the defendant of the
instant case.
I would like to observe the Section 11 of Civil Procedure of
Code as follows:
-judicata No court shall try any suit or issue in which the matter
―Res –
directly and substantially in issue has been directly and substantially in
issue in a former suit between the same parties, or between parties
under whom they or any of them claim, litigating under the same title, in
a Court competent to try such subsequent suit or the suit in which such
issue has been subsequently raised, and has been heard and finally
decided by such Court.
”
In view of that it is found that the former case was filed by
defendant of instant suit as plaintiff which was registered as T.S. 15 of
2012 and subsequently decreed in favour of plaintiff of that case which
was appeal by the defendant (FCI) for that case i.e. FCI before the
Hon‘ble High Court of Tripura and registered as RFA No.03 of 2014
and subsequently this suit was filed by the FCI for redress. It is observed
that the instant case is nothing but the counter of the fact of the former
case T.S. 15 of 2012.
Hence, in view of this if it is not considered as barred by res-
judicata, it should be treated as counter case of the former suit of T.S.
No.15 of 2012
.‖
The learned Court treated the instant suit as a counter of the former
T.S. No.15 of 2012 instituted by the contractor against the plaintiffs arising out
of the same contract and invocation of Clause-X(c) vide letter dated
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24.11.2010. The Court was of the opinion that the plaintiffs had failed to give
prior notice to the defendant before imposing Clause-X(c) and appointment of
an ad hoc contractor. Therefore, letter dated 24.11.2010 was arbitrary, illegal
and violative of the principles of natural justice. The learned trial Court referred
to Section 11 of CPC and found that the former case was filed by the defendant
of the instant suit as plaintiff i.e. T.S. 15 of 2012 which was decreed in favour
of the plaintiff-contractor of that case against which an appeal was preferred by
the FCI bearing RFA No.03 of 2014. Subsequently, this suit was filed by the
FCI for redress. It went on to observe that the instant case is nothing but
counter of the fact of the former case T.S. 15 of 2012. Hence, in view of this, if
it is not considered as barred by res judicata, it should be treated as counter
―
case of the former suit of T.S. No.15 of 2012 . This is how the learned
‖
Commercial Court proceeded to answer Issue No.4.
[15] Issue Nos. 5 and 6 were also answered against the plaintiff-
Corporation. It was held that the plaintiffs could not clearly explain the basis
for awarding such high rate of 159% ASOR to the ad hoc contractor to
complete the remaining work whereas there were other contractors working
under the defendant at the same time who could have been engaged to complete
the remaining or deficient work.
[16] While deciding issue Nos.1 and 2 together, the learned trial Court
held that the plaintiffs had arbitrarily and illegally imposed Clause-X(c) of the
tender agreement which was not exhibited. Therefore, its contents were also not
in force. The learned Court also held that the cause of action arose firstly on
24.11.2010 when Clause-X(c) of the tender agreement was unjustifiably
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invoked by the plaintiffs and subsequently on several dates when plaintiffs
made demand to the defendant to make good the extra expenditure incurred due
to engagement of ad hoc contractor at the risk and cost of defendant as well as
on those dates when defendant requested the plaintiff for immediate withdrawal
of the Clause-X(c) and stoppage of transportation work at the risk and cost of
defendant. It also observed that defendant had expressed his grievance about
imposition of Clause-X(c) and escalation of rate to the ad hoc contractor and
had claimed release of his security and earnest money and other dues but the
plaintiff-Corporation did not pay any heed to it. Thus, the suit was
maintainable. However, issue Nos.1 and 2 were decided in negative against the
plaintiff.
[17] Further, the learned Court also answered the issue Nos.7 and 8
against the plaintiff in view of the discussion made earlier in answer to the
other issues.
[18] Being aggrieved, the Corporation approached this Court in RFA
No.04 of 2020 under Section 13(1A) of the Commercial Courts Act, 2015 and
inter alia raised the following grounds:
(a) That the impugned judgment and decree suffer from the vice of error
of law as well as on facts and deserved to be set aside.
(b) The learned Court failed to appreciate the facts and evidence
adduced by the plaintiff in proper perspective. It failed to appreciate the
th
respondent-contractor had suspended its work after 26 December, 2010
for unknown reasons though the agreement was not terminated. This
resulted in breach of terms and conditions of the contract and disrupted
the public distribution system resulting into public loss.
th
(c) The appellant-Corporation had also issued letters from 18 October,
th
2010 till 12 November, 2010 intimating the respondent-contractor that
it would be liable for breach of contractual obligation on failure to
supply the trucks. Therefore, the Corporation was constrained to impose
41 57
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th
Clause-X(c) of the agreement vide letter dated 24 November, 2010 and
appointed an ad hoc contractor through limited spot tender notice in the
interest of public distribution system of food grains.
(d) The learned Commercial Court, however, failed to appreciate that
the engagement of ad hoc contractor on account of failure of the
defendant-contractor to supply the indented trucks resulted in
performance of the remaining work at a much higher rate than the
schedule rate due to the emergency for ensuring smooth transportation
of food grains to the go-downs.
(e) The learned trial Court failed to examine this issue in the correct
perspective. It wrongly held that invocation of Clause-X(c) of the
agreement was illegal and arbitrary and without proper notice.
(f) The learned trial Court also failed to consider that the Xerox copy of
the agreement was placed on record and therefore the learned trial Court
had been able to discuss about Clause-X(c) of the agreement which is
pivotal for adjudication of the case. Entering of the agreement was not
disputed by the contractor and therefore exhibiting original agreement
was only a mere formality. The original copy of the agreement dated
15th September, 2009 was exhibited in T.S.15 of 2012.
(g) The claim for enhancement of agreed rate to 60% from existing rate
of 49.49% was impermissible under the terms of the concluded contract
between the parties. As such, the findings of the learned trial Court that
the Corporation ought to have allotted the remaining part of the work to
other contractor instead of appointing ad hoc contractor at a higher rate
is not correct. Appellant denied that the suit is barred by principle of res
judicata.
(h) The appellant denies that he suit is barred by principles of res
judicata. The onus to prove that was on the defendant-respondents
which they failed to discharge. Only a copy of the judgment passed in
T.S. No.15 of 2012 was placed before the learned trial Court but the
said judgment was not exhibited. The party raising such plea had to
exhibit the former judgment and prove that the issues in the subsequent
suit were directly and subsequently the same as the issue in the former
suit and had been adjudicated by the Court in the former suit.
(i) That the issue involved in the earlier suit was whether the
respondent-contractor was entitled to get a decree of refund of his
security deposit, earnest money etc. It was never an issue that in view of
Clause-X(c) of the agreement, the appellant-Corporation was entitled to
engage ad hoc contractors when the original contractor had failed to
discharge his duties and that the original contractor had to bear the cost
for such engagement to the Corporation.
(j) The appellant took a plea at ground No. P that learned trial Court
most erroneously came to the finding that the present suit is not barred
by principles of res judicata or operation of Order-II Rule, 2 of CPC.
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[19] On these grounds the appellant has questioned the impugned
judgment and decree as being unsustainable on facts and in law in view of the
evidence on record. The suit is required to be decreed by directing the
respondent-contractor to pay the loss suffered by the Corporation to the tune of
Rs.1,77,59,585/-.
[20] Mr. Ratan Datta, learned counsel for the appellant-Corporation
submits that the findings of the learned trial Court are erroneous on facts and in
law. The instant suit was not barred by the principles of res judicata or
constructive res judicata. Since the respondent-contractor despite sufficient
notice failed to carry out the contracted work, invocation of Clause-X(c) and
appointment of ad hoc contractor at the risk and cost of the defendant-
contractor was proper and legal. Therefore, the losses suffered by the
Corporation due to engagement of ad hoc contractor at a much higher rate is
required to be compensated by the contractor by payment of Rs.1,77,59,585/-
along with interest @ 12% per annum.
[21] Mr. Indrajit Chakraborty, learned counsel for the respondent-
contractor has strongly objected to the maintainability of the suit. He submitted
that the subsequent suit of the same cause of action was hit both by res judicata
and constructive res judicata. The respondents have participated in the
proceedings of T.S. No.15 of 2012 and filed its written statement where neither
the agreement nor execution of the work by the contractor was in dispute. The
Corporation had defended its invocation of Clause-X(c) of the agreement for
appointment of an ad hoc contractor on the same grounds. The plaintiff
Corporation herein instead of filing a counter claim in T.S. No.15 of 2012
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th
suffered the adjudication of the suit against it vide judgment dated 28
November, 2015. Since on the same subject matter and cause of action a
judgment had already been delivered in favour of the contractor by the same
Commercial Court earlier, the proceedings of the instant commercial suit were
not maintainable as barred by res judicata. Though the learned trial Court did
hold that the instant case is nothing but the counter of the facts of the former
case T.S. 15 of 2012 but it erroneously held that it was not barred by res
judicata and should be treated as counter case of the former suit of T.S. No.15
of 2012. It is the case of the respondent-contractor that in such circumstances
the instant suit should be held to be barred by principles of res judicata
otherwise such a course may lead to conflicting judgments.
[22] We have considered the submissions of learned counsel for the
parties. We have also taken note of the pleadings and the materials placed by
the parties before the learned trial Court and we have also perused the
impugned judgment. We may observe herein that both the appeals being RFA
No.03 of 2016 and RFA No.04 of 2020 have been tagged together for the only
reason that they both arise out of the same agreement between the parties dated
th
15 September, 2009 relating to transportation of work from railway
siding/FSD Churaibari to FSD Nandannagar and railway siding Churaibari to
FSD, Churaibari. The date of issuance of work order, commencement of work
th
from 16 November, 2009 and its alleged disruption since October, 2010 are
also the same in both the suits. The cause of action is based upon the invocation
of Clause-X(c) of the agreement by the Corporation on 24.11.2010. The
contractor as plaintiff in T.S. No.15 of 2012 also relied upon the same bundle
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of facts for raising the cause of action to maintain the suit for refund of earnest
money and security deposit and also for realization of business loss due to
engagement of an ad hoc contractor upon invocation of Clause-X(c) of the
agreement.
[23] The defendant corporation/appellant filed written statement and
th
defended the invocation of Clause-X(c) vide letter dated 24 November, 2010
as a result of which it had to appoint ad hoc contractor at the risk and cost of
the existing contractor i.e. the plaintiff therein. It also stated that award of
contract to M/S Sreema Stone Crusher was at the risk and cost of the plaintiff
as per the terms and conditions of the agreement after providing sufficient
scope to accelerate contractual agreement in view of imposition of Clause-X(c)
of the agreement. It also stated that several notices were sent to the contractor to
reimburse the extra cost and expenditure for transportation paid to the
contractor appointed on ad hoc basis for getting the remaining works done at
the risk and cost of the original contractor i.e. the plaintiff therein but he failed
to pay any heed and paid no amount even after receipt of demand notices which
are the dues or outstanding dues receivable by the answering defendant-
Corporation empowered to set up the claim under the common law in vogue. It
therefore, objected to release of the security money in favour of the plaintiff. It
also objected to release the waiver part of money in the form of demurrage
waived by the railway authority as it would be released after final fixation of
responsibility of demurrage charges upon the plaintiff and subject to settlement
of relevant dues between the parties. At paragraph 17 of the written statement,
it also submitted that the cause of action shown in the plaint is relevant for
45 57
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institution of any suit against the answering defendant. Based on these rival
pleadings, the learned trial Court had framed the following issues which have
been elaborately discussed in the first part of the judgment under RFA No.03 of
2016 arising out of T.S. No.15 of 2012.
(i) Is the suit maintainable in its present form?
―
(ii) Is there any cause of action in the suit?
(iii) Whether the public distribution system was disturbed in Tripura State
for want of delivery of food grains from FCI to State food go-down?
(iv) Whether the imposition of Clause X(c) with penalty of 159% risk and
cost of the tender agreement in respect of work order No. NEER/TC/
CBZ/NGR/11915, dated, 11-11-2009 was illegal, arbitrary and against
natural justice?
(v) Whether the plaintiff is entitled to get the decree to realize the sum of
rupees 2,03,21,634/- from the defendants and decree of declaration that
clause-X(c) of the tender agreement was illegal?
Additional Issues
(vi) Whether there was any failure on the part of plaintiff in the placement
of vehicle for carrying of food grains as per the indent and requisition?
(vii) Whether any prior notice was given by the defendants to the plaintiff
to regularize the placement of vehicle as per indent and terms of contract
before imposing clause-X(c) of the tender agreement?
‖
[24] The said suit was allowed on contest in favour of the plaintiff
contractor therein/respondent herein by directing refund of security deposit and
earnest money with interest; payment of losses alleged by the contractor and
certain other demurrage charges. Upon analysis of the case of the parties and
after close scrutiny of the findings rendered by the learned trial Court in T.S.
No.15 of 2012, this Court has upheld the impugned judgment so far as it relates
to refund of security money and refund of demurrage part to the extent of 60%
as was waived by the railways but this Court has held that the plaintiff-
contractor was not entitled to claim payment of losses as alleged as no work
th
was executed by him after 26 December, 2010 since the remaining part of the
work was completed by the ad hoc contractors. We have copiously referred to
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the pleadings of the instant Commercial Suit No.01 of 2016 from which RFA
No.04 of 2020 arises. We have also extracted the issues framed by the learned
Commercial Court on the basis of the pleadings from record in the foregoing
paragraphs under Part-B of the judgment. The instant suit, the plaintiff-
Corporation/appellant herein has based his cause of action upon the same letter
th
dated 24 November, 2010 whereby it had invoked Clause-X(c) against the
contractor on failure to supply the required number of trucks for transportation
th
of goods as per the original agreement dated 15 September, 2009. Paragraph-
18 of the plaint which refers to the cause of action for the plaintiff-corporation
is being extracted hereunder:
―That, the cause of action for the suit first arose on letter nos.
18.10.2010, 19.10.2010, 20.10.2010, 06.11.2010, 09.11.2010 and
12.11.2010 under reference letter Nos.F.9/NEFR/HTC/Misc-
corres/2008-09 when the plaintiffs informed the defendant that for his
failure to perform the contract, he was liable to make good the loss
caused by the plaintiffs for breach of the contractual obligations pay the
risk and cost value for performance of the unperformed work under the
contract agreement, and on 24.11.2010 when Clause-X(c) of the tender
agreement was imposed for non-performance and violation of the tender
agreement, and on the dates on which the demand notices were sent to
the defendant and finally the cause of action arose on 11.05.2012 when
the last demand notice was sent to the defendant vide letter reference
No.F.9/DO-AGT/R&C/Demand Notice/2012 and the said amount still
remains unpaid.
‖
[25] Plaintiff-Corporation instituted the instant suit on the same cause
of action for realization of loss of Rs.1,77,59,585/- due to non-performance of
the work by the contractor/respondent herein in violation of the terms of the
th
agreement on 15 September, 2009. Though the instant suit was instituted at
Agartala but by virtue of the order passed by this Court in TRP(C) No.05 of
2015 it was transferred to the competent court of learned Civil Judge (Sr.
Division), Dharmanagar for trial where the earlier suit (T.S. No.15 of 2012)
was being tried. Later on, the instant suit was transferred to the court of
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Commercial Court in view of coming into force of the Commercial Courts Act,
th
2015. The judgment in T.S. No.15 of 2012 was delivered on 28 November,
2015 during pendency of the instant suit whereas the judgment in the instant
th
suit (Commercial Suit No.01 of 2016) was delivered on 30 September, 2019.
[26] It is not in dispute that though the cause of action in both the suits
were the same for seeking the rival reliefs i.e. imposition of Clause-X(c) of the
agreement by the Corporation upon the contractor and that the Corporation in
its written statement had duly defended the invocation of Clause-X(c) in T.S.
No.15 of 2012 and also taken the plea that the plaintiff-contractor was liable to
reimburse the extra cost incurred in appointment of ad hoc contractor for
completion of the remaining work but surprisingly no counter claim was filed
by the defendant in the same suit. Instead, the Corporation chose to institute a
separate suit i.e. M.S. No.03 of 2013 before the learned Civil Judge (Sr.
Division), West Tripura, Agartala for realization of the loss of Rs.1,77,59,585/-
from the contractor on account of the extra cost incurred by the Corporation
towards payment to the ad hoc contractor upon invocation of Clause-X(c) of
the agreement due to failure of the defendant-contractor herein to supply the
th
trucks as per the agreement. All the relevant letters starting from 18 October,
th
2010 till invocation of Clause-X(c) by letter dated 24 November, 2010 have
also been relied upon by the Corporation in the instant suit to justify the
invocation of Clause-X(c) of the agreement and appointment of ad hoc
contractor to complete the remaining part of the work which led to extra cost
realizable from the original contractor/defendant/respondent herein. The
learned trial Court proceeded to frame 8(eight) issues including the issue No.1
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relating to maintainability of the suit and issue No.2 as to whether the suit was
barred by law of limitation and Rule of res judicata.
[27] The learned trial Court has answered the issues against the
plaintiff-Corporation/appellant herein and while answering issue No.4 it has
also held that the instant case is nothing but a counter of the former T.S. No.15
of 2012 but it is not barred by res judicata and should be treated as counter case
of the former suit. The issue Nos.1 and 2, however, when answered in negative
against the plaintiff means that the suit was not maintainable and is barred by
Rule of res judicata. Thus, there are conflicting findings by the learned trial
Court in answer to issue No.4 and issue Nos.1 and 2.
[28] The appellant-Corporation is in appeal against the impugned
judgment and decree. The appeal is a continuation of the suit. As per Section
107(2) of CPC conditions enumerated in sub-section (1), the Appellate Court
shall have the same powers and shall perform as nearly as may be the same
duties as are conferred and imposed by the Code on Courts of original
jurisdiction in respect of suits instituted therein. Issue Nos.1 and 2 in the instant
suit have been decided against the plaintiff. The appellant-Corporation has in its
ground number N on the one hand denied that the present suit is barred by
principles of res judicata but in ground number P it has also taken a plea that in
the earlier suit such an issue whether the appellant-Corporation was entitled to
engage ad hoc contractors, was never the subject matter of the earlier T.S.
No.15 of 2012 and as such, the learned trial Court most erroneously came to a
finding that the present suit is not barred by principles of res judicata or
operation of Order II, Rule 2 of CPC. Apparently, both the grounds taken at
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ground number N and P are contradictory to each other. However, since the
question of maintainability of the suit and whether it was hit by res judicata
goes to the root of the entire adjudication proceedings, we deem it proper to test
the findings of the learned trial Court since they have been assailed by the
appellant-Corporation.
[29] In this regard, we may refer to Section 10 of CPC which is
extracted hereunder:
10. Stay of suit.- No Court shall proceed with the trial of any suit in
―
which the matter in issue is also directly and substantially in issue in
a previously instituted suit between the same parties or between
parties under whom they or any of them claim litigating under the
same title where such suit is pending in the same or any other Court
in [India] having jurisdiction to grant the relief claimed, or in any
Court beyond the limits of [India] established or continued by the
[Central Government] and having like jurisdiction, or before the
[Supreme Court].
‖
[30] Having regard to the fact that the matter in issue in the instant suit
is also directly and substantially in issue in the previously instituted suit
between the same parties and that such suit was pending in the same Court of
learned Civil Judge (Sr. Division), Dharmanagar when it received the case
th
records on 6 May, 2015 from the Court of learned Civil Judge (Sr. Division),
West Tripura, Agartala upon directions by this Court passed in TRP(C) No.05
rd
of 2015 vide order dated 23 April, 2015, either of the learned Court should
have kept in abeyance the proceedings of the instant suit on the principles of res
sub-judice. It needs to be indicated herein that the judgment in T.S. No.15 of
2012 was delivered by the same Court of Civil Judge (Sr. Division),
th
Dharmanagar on 28 November, 2015. The object underlying Section 10 of
CPC is to avoid two parallel trials on the same issue by two Courts of
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concurrent jurisdiction and to avoid recording of conflicting findings on issues
which are directly and substantially in issue in a previously instituted suit. The
instant suit could have been tried together with T.S. No.15 of 2012 since the
parties were the same, the cause of action was also the same and the issues were
directly and substantially in issue as in the previously instituted suit. Both the
parties and the learned Court failed to take resort to this provision to either club
both the suits for being decided together in order to avoid conflicting judgments
or to keep this proceeding of the instant suit in abeyance in view of the
pendency of the previous suit on issues which were directly and substantially
the same.
[31] Though the reliefs sought by the plaintiff-contractor in T.S. No.15
of 2012 and the plaintiff-FCI in M.S. No.03 of 2013 were different but the
proceedings of both the suits were not of different nature or instituted under
different statutes. The Court of learned Civil Judge (Sr. Division), West
Tripura, Agartala was competent to grant the relief framed in both the suits.
The use of negative expression
in Section 10 of CPC ―no court shall proceed
ion mandatory and the court in which
with the trial of any suit‖ makes the provis
the subsequent suit has been filed is prohibited from proceedings with the trial
of that suit if the conditions laid down in Section 10 of CPC are satisfied. [See
Aspi Jal and another versus Khushroo Rustom Dadyburjor, (2013) 4 SCC 333].
Paragraph 9 of the judgment is extracted hereunder :
9. Section 10 of the Code which is relevant for the purpose reads as
―
follows:
10. Stay of suit.- No court shall proceed with the trial of any suit in which
―
the matter in issue is also directly and substantially in issue in a previously
instituted suit between the same parties, or between parties under whom
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they or any of them claim litigating under the same title where such suit is
pending in the same or any other court in India having jurisdiction to grant
the relief claimed, or in any court beyond the limits of India established or
continued by the Central Government and having like jurisdiction, or before
the Supreme Court.
Explanation.- The pendency of a suit in a foreign court does not preclude
the courts in India from trying a suit founded on the same cause of action.‖
From a plaint reading of the aforesaid provision, it is evident that where a
suit is instituted in a court to which provisions of the Code apply, it shall not
proceed with the trial of another suit in which the matter in issue is also
directly and substantially in issue in a previously instituted suit between the
same parties. For application of the provisions of Section 10 of the Code, it
is further required that the Court in which the previous suit is pending is
competent to grant the relief claimed. The use of negative expression in
Section 10 i.e. ―no Court shall proceed with the trial of any suit‖ makes the
provision mandatory and the court in which the subsequent suit has been
filed is prohibited from proceeding with the trial of that suit if the
conditions laid down in Section 10 of the Code are satisfied. The basic
purpose and the underlying object of Section 10 of the Code is to prevent
the courts of concurrent jurisdiction from simultaneously entertaining and
adjudicating upon two parallel litigations in respect of same cause of action,
same subject-matter and the same relief. This is to pin down the plaintiff to
one litigation so as to avoid the possibility of contradictory verdicts by two
courts in respect of the same relief and is aimed to protect the defendant
from multiplicity of proceeding.‖
[32] The key is
words in Section 10 of CPC are ―the matter in issue
directly and substantially in issue in the
previously instituted suit‖. The test for
applicability of Section 10 of the Code is whether on a final decision being
reached in the previously instituted suit, such decision would operate as res
judicata in the subsequent suit. Though Section 10 of CPC is merely a rule of
procedure and a decree passed in contravention thereof is not a nullity but if the
issues have been decided by the Court in the previously instituted suit and are
directly and substantially the same in the second suit, the principles of res
judicata or constructive res judicata come into play while deciding the
subsequent suit. This has been the position in the instant case.
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[33] In order to appreciate whether the instant suit suffered on grounds
of res judicata, we may also extract Section 11 of CPC which reads as under :
Res judicata.- No Court shall try any suit or issue in which the
―
matter directly and substantially in issue has been directly and
substantially in issue in a former suit between the same parties, or
between parties under whom they or any of them claim, litigating
under the same title, in a Court competent to try such subsequent suit
or the suit in which such issue has been subsequently raised, and has
been heard and finally decided by such Court.
‖
The object of the principles of res judicata as contained in Section
11 of CPC is to uphold the rule of conclusiveness of judgment, as to the points
decided earlier of fact, or of law, or of fact and law, in every subsequent suit
between the same parties. The doctrine of res judicata is conceived not only in
larger public interest which requires that all litigation must, sooner than later
come to an end but is also founded on equity, justice and good conscience [See
Swamy Atmananda versus Sri Ramakrishna Tapovanam, (2005) 10 SCC 51].
Paragraphs 26 to 28 of the said judgment are extracted hereunder:
The object and purport of the principle of res judicata as
―26.
contended in Section 11 of the Code of Civil Procedure is to uphold
the rule of conclusiveness of judgment, as to the points decided
earlier of fact, or of law, or of fact and law, in every subsequent suit
between the same parties. Once the matter which was the subject-
matter of lis stood determined by a competent court, no party
thereafter can be permitted to reopen it in a subsequent litigation.
Such a rule was brought into the statute-book with a view to bring
the litigation to an end so that the other side may not be put to
harassment.
27. The principle of res judicata envisages that a judgment of a court
of concurrent jurisdiction directly upon a point would create a bar as
regards a plea, between the same parties in some other matter in
another court, where the said plea seeks to raise afresh the very point
that was determined in the earlier judgment.
28. The doctrine of res judicata is conceived not only in larger public
interest which requires that all litigation must, sooner than later,
come to an end but is also founded on equity justice and good
conscience.‖
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[34] The principles of res judicata envisages that a judgment of court of
concurrent jurisdiction directly upon a point would create a bar as regards a
plea, between the same parties in some other matter in another court, where the
said plea seeks to raise afresh the very point that was determined in the earlier
judgment. Issues of fact finally determined between the parties by a court of
competent jurisdiction operate as res judicata when the same issue comes
directly in question in subsequent proceedings between the same parties.
Principles of res judicata apply in different stages of the same proceedings as
between two stages in the same litigation so that if an issue has been decided at
an earlier stage against a party, it cannot be allowed to be re-agitated by him at
a subsequent stage in the same suit or proceeding. [See Bhanu Kumar Jain
versus Archana Kumar, (2005) 1 SCC 787] Paragraphs 18, 19, 30 to 32 of the
same are extracted hereunder:
18. It is now well settled that principles of res judicata apply in different
―
stages of the same proceedings. (See Satyadhyan Ghosal v. Deorajin
Debi [AIR 1960 SC 941 : (1960) 3 SCR 590] and Prahlad Singh v. Col.
Sukhdev Singh [(1987) 1 SCC 727] .)
19. In Y.B. Patil [(1976) 4 SCC 66] it was held: (SCC p. 68, para 4)
s of res judicata can be invoked not
―4. … It is well settled that principle
only in separate subsequent proceedings, they also get attracted in
subsequent stage of the same proceedings. Once an order made in the
course of a proceeding becomes final, it would be binding at the
subsequent stage of that proceeding.
30. Res judicata debars a court from exercising its jurisdiction to determine
the lis if it has attained finality between the parties whereas the doctrine
issue estoppel is invoked against the party. If such an issue is decided
against him, he would be estopped from raising the same in the latter
proceeding. The doctrine of res judicata creates a different kind of estoppel
viz. estoppel by accord.
31. In a case of this nature, however, the doctrine of ―issue estoppel‖ as
also ―cause of action estoppel‖ may arise. In Thoday Lord Diplock held:
(All ER p. 352 B-D)
―…….. ‗cause of action estoppel‘, is that which prevents a party to an
action from asserting or denying, as against the other party, the existence
of a particular cause of action, the non-existence or existence of which has
been determined by a court of competent jurisdiction in previous litigation
between the same parties. If the cause of action was determined to exist i.e.
judgment was given on it, it is said to be merged in the
judgment…….. If it
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was determined not to exist, the unsuccessful plaintiff can no longer assert
that it does; he is estopped per rem judicatam.‖
32. The said dicta was followed in Barber v. Staffordshire County Council
(1996) 2 All ER 748 (CA). A cause of action estoppel arises where in two
different proceedings identical issues are raised, in which event, the latter
proceedings between the same parties shall be dealt with similarly as was
done in the previous proceedings. In such an event the bar is absolute in
relation to all points decided save and except allegation of fraud and
collusion. [See C.(A Minor) v. Hackney London Borough Council, (1996)
1 All ER 973 : (1996) 1 WLR 789 (CA)
.‖
[35] The doctrine of res judicata differs from the principle underlying
Order 2, Rule 2 in that the former places
emphasis on the plaintiff‘s duty to
exhaust all available grounds in support of his claim, while the latter requires
the plaintiff to claim all reliefs emanating from the same cause of action. [See
Kunjan Nair Sivaraman Nair versus Narayanan Nair, (2004) 3 SCC 277].
Paragraphs 10 to 13 of the judgment are extracted
hereunder‖
10. Order 2 Rule 2 sub-rule (3) requires that the cause of action in the earlier suit
―
must be the same on which the subsequent suit is based. Therefore, there must be
identical cause of action in both the suits, to attract the bar of Order 2 sub-rule (3).
The illustrations given under the rule clearly brings out this position. Above is the
ambit and scope of the provision as highlighted in Gurbux Singh case [AIR 1964
SC 1810 : (1964) 7 SCR 831] by the Constitution Bench and in Bengal Waterproof
Ltd. [(1997) 1 SCC 99] The salutary principle behind Order 2 Rule 2 is that a
defendant or defendants should not be vexed time and again for the same cause by
splitting the claim and the reliefs for being indicted in successive litigations. It is,
therefore, provided that the plaintiff must not abandon any part of the claim
without the leave of the court and must claim the whole relief or entire bundle of
reliefs available to him in respect of that very same cause of action. He will
thereafter be precluded from so doing in any subsequent litigation that he may
commence if he has not obtained the prior permission of the court.
11. Rule of res judicata is contained in Section 11 of the Code. Bereft of all its
explanations, namely, Explanations I to VIII, Section 11 is quoted below:
Res judicata. No court shall try any suit or issue in which the matter directly
―11. —
and substantially in issue has been directly and substantially in issue in a former
suit between the same parties, or between parties under whom they or any of them
claim, litigating under the same title, in a court competent to try such subsequent
suit or the suit in which such issue has been subsequently raised, and has been
heard and finally decided by such court.‖
12. ―Res judicata pro veritate accipitur‖ is the full maxim which has, over the
years, shrunk to mere ―res judicata‖.
13. Section 11 contains the rule of conclusiveness of the judgment which is based
partly on the maxim of Roman jurisprudence interest reipublicae ut sit finis
―
litium
‖ (it concerns the State that there be an end to law suits) and partly on the
nemo debet bis vexari pro una et eadem causa man should be vexed
maxim ― ‖ (no
twice over for the same cause). The section does not affect the jurisdiction of the
55 57
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court but operates as a bar to the trial of the suit or issue, if the matter in the suit
was directly and substantially in issue (and finally decided) in the previous suit
between the same parties litigating under the same title in a court, competent to try
the subsequent suit in which
such issue has been raised.‖
[36] Therefore, Section 11 of CPC provides that no Court shall try any
suit or issue in which the matter directly and substantially in issue has been
directly and substantially in issue in a former suit between the same parties, or
between parties under whom they or any of them claim, litigating under the
same title, in a Court competent to try such subsequent suit or the suit in which
such issue has been subsequently raised, and has been heard and finally decided
by such Court. Explanation-IV of Section 11 is relevant for the purposes of
testing whether the subsequent suit by the plaintiff-FCI in M.S. No.03 of 2013
was hit by the principles of res judicata or constructive res judicata.
Explanation-IV provides that any matter which might and ought to have been
made grounds of defence or attack in such former suit shall be deemed to have
been a matter directly and substantially in issue in such suit. Explanation-III
also provides that the matter referred to in Section 11 must be in the former suit
alleged by one party and either denied or admitted, expressly or impliedly by
the other. Constructive res judicata which flows out of this explanation deals
with grounds of attack and defence which ought to have been raised but not
raised.
[37] In the instant case, we find that the Corporation had in its written
statement defended the imposition of Clause-X(c) to deny the claim of the
plaintiff in T.S. No.15 of 2012. It had also contended that the plaintiff-
contractor in T.S. No.15 of 2012 was required to pay the extra cost incurred by
the Corporation on appointment of ad hoc contractor. However, no counter
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claim was filed by the Corporation for realization of the extra cost incurred by
it by appointment of ad hoc contractor for completion of the remaining part of
the work upon failure of the plaintiff-contractor to undertake the transportation
th
work in terms of the original agreement for the period after 26 December,
2010. The learned trial Court in T.S. No.15 of 2012 had framed issue No.(iv)
regarding whether the imposition of Clause-X(c) was illegal, arbitrary and
against natural justice and answered it against the Corporation. In the instant
suit also, based on the rival pleadings of the parties, the learned trial Court had
proceeded to frame issue Nos.(iii) and (iv) to the effect that whether Clause-
X(c) of the agreement was imposed upon the defendant after giving him
adequate scope for improvement of work and whether the appointment of ad
hoc contractor by the plaintiff at the risk and cost of defendant was illegal and
void. Further issues on merits in the instant suit related to the claim of the
plaintiff-Corporation for compensation of the loss caused to the tune of
Rs.1,77,59,585/- incurred by it for breach of obligation of defendant i.e. the
contractor to bear the risk and cost of the remaining work executed by the ad
hoc contractor. As such, the issues were directly and substantially the same in
th
the subsequent suit which came to be decided after about 4 years on 30
September, 2019 by the learned Commercial Court, North Tripura,
th
Dharmanagar where M.S. No.03 of 2013 was transferred on 19 July, 2016 and
nd
received on 22 July, 2016 upon coming into force of the Commercial Courts
Act, 2015.
[38] Having regard to the discussion made hereinabove, we are of the
firm view that the subsequent suit i.e. M.S. No.03 of 2013/Commercial Suit
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No.01 of 2016 was hit by the principles of res judicata and constructive res
judicata. Though the learned Court has also answered the issue Nos.1 and 2 in
the negative against the plaintiff-corporation but it has rendered conflicting
findings in regard to the application of doctrine of res judicata in answer to
issue No.4 which is not proper in the eye of law. As such, we hold and declare
that the subsequent suit instituted by the Corporation being hit by principles of
res judicata and constructive res judicata in view of a authoritative judgment
th
by the competent Court in T.S. No.15 of 2012 on 28 November, 2015 on
issues which were directly and substantially the same, the relief claimed for by
the plaintiff-Corporation in the instant suit could not have been granted. We are
unable to understand as to why the Corporation failed to file a counter claim in
T.S. No.15 of 2012 whereby it had not only defended the invocation of Clause-
X(c) of the agreement against the plaintiff-contractor but also raised the plea of
payment of extra cost incurred by the defendant-Corporation in engaging ad
hoc contractor for completion of the remaining part of the work in terms of
Clause-X(c) of the agreement in question. Be that as it may, on account of the
reasons recorded hereinabove, the instant appeal deserves to be dismissed
which is accordingly dismissed.
[39] Pending application(s), if any, also stands disposed of. Lower
court records be sent to the court concerned.
(ARINDAM LODH), J (APARESH KUMAR SINGH), CJ
Dipesh
Digitally signed by SIDDHARTHA
SIDDHARTHA LODH
LODH
Date: 2024.04.05 16:07:41 +05'30'