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RFA No.100097/2018

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IN THE HIGH COURT OF KARNATAKA, AT DHARWAD

DATED THIS THE 27

TH

DAY OF MARCH, 2026

PRESENT

THE HON'BLE MR. JUSTICE H.P.SANDESH

AND

THE HON'BLE MR. JUSTICE B. MURALIDHARA PAI

REGULAR FIRST APPEAL NO.100097 OF 2018

C/W

REGULAR FIRST APPEAL NO.100038 OF 2018

IN RFA NO.100097/2018:

BETWEEN:

UNIVERSITY OF AGRICULTURAL SCIENCES

R/BY ITS REGISTRAR,

KRISHI NAGAR, DHARWAD-580005.

… APPELLANT

(BY SRI S.A. SANDOOR, ADVOCATE FOR SRI K.L. PATIL, ADVOCATE)

AND:

1 . M/S SHANKAR CONSTRUCTION CO.

BY PARTNER SRI SUNIL M. SHETTY,

AGE: MAJOR (AGE NOT KNOWN),

OCC: CONTRACTOR,

R/O: SHREE BUILDING,

POLICE HEAD CROSS,

QUARTERS ROAD, DHARWAD-580007.

2 .

SHREE KEMPAYYA

AGE: MAJOR, (AGE NOT KNOWN)

OCC: ESTATE OFFICER,

NOW WORKING AS

EXECUTIVE ENGINEER,

ESTATE BRANCH CVKV HEBBAL,

BENGALURU-560024.

… RESPONDENTS

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(BY SRI PRAKASH K. JAWALKAR, ADVOCATE FOR R1;

NOTICE SERVED TO R2 DISPENSED WITH)

THIS RFA IS FILED UNDER SECTION 96 OF CPC., PRAYIN G TO,

SET ASIDE THE JUDGMENT AND DECREE PASSED BY THE 2

ND

ADDITIONAL SENIOR CIVIL JUDGE DHARWAD IN O.S.NO.211 /1998

DATED 30.10.2017 IN THE INTEREST OF JUSTICE AND EQU ITY AND

ETC.,.

IN RFA NO.100038/2018:

BETWEEN:

M/S SHANKAR CONSTRUCTIN CO.

BY PARTNER SRI SUNIL M. SHETTY,

AGE: 50 YEARS, OCC: CONTRACTOR,

R/O: "SHREE BUILDING",

POLICE HEAD QUARTERS ROAD,

DHARWAD-580008.

… APPELLANT

(BY SRI PRAKASH K. JAWALKAR, ADVOCATE)

AND:

1 . UNIVERSITY OF AGRICULTURAL SCIENCES

R/BY ITS REGISTRAR,

KRISHI NAGAR, DHARWAD-580008.

2 . SHREE KEMPAYYA

AGE: MAJOR, OCC: ESTATE OFFICER,

NOW WORKING AS EXECUTIVE ENGINEER,

ESTATE BRANCH, C V K V HEBBAL,

BENGALURU-01.

… RESPONDENTS

(BY SRI S.A. SANDOOR, ADVOCATE FOR SRI K.L. PATIL, ADVOCATE)

THIS RFA IS FILED UNDER SECTION 96 OF CPC., PRAYIN G TO,

SET ASIDE THE JUDGMENT AND DECREE PASSED BY THE 2

ND

ADDITIONAL SENIOR CIVIL JUDGE DHARWAD IN O.S.NO.211 /1998 BY

PARTLY DECREEING THE SUIT OF THE PLAINTIFF BY ITS J UDGMENT

AND DECREE DATED 30.10.2017 AND DECREE THE ENTIRE C LAIM OF

THE PLAINTIFF/APPELLANT AS PRAYED FOR IN THE SUIT A ND ETC.,.

THESE APPEALS ARE COMING ON PRONOUNCEMENT AND THE

SAME HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON

10.03.2026, THIS DAY, B. MURALIDHARA PAI J., DELIVERED THE

FOLLOWING:

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CORAM: THE HON’BLE MR. JUSTICE H.P.SANDESH

AND

THE HON'BLE MR. JUSTICE B. MURALIDHARA PAI

CAV JUDGMENT

(PER: THE HON'BLE MR. JUSTICE B. MURALIDHARA PAI)

Defendant No.1 namely University of Agricultural Sciences,

and the Plaintiff namely M/s Shankar Construction Company in

O.S. No.211/1998 have maintained these appeals, bei ng

aggrieved by the judgment and decree dated 30.10.20 17 passed

therein by learned II Additional Senior Civil Judge, Dharwad

(hereinafter referred to as “Trial Court”).

2.

The parties to these appeals are hereinafter referred

to by their respective rankings as arrayed before the Trial Court.

3.

Brief facts leading to these appeals are as under:

i) In the year 1992, Defendant No.1 invited tenders for

construction works at their four campuses including construction

of Main Administrative Building in Dharwad Campus a t the

estimated cost of Rs.1,57,00,000/-. Defendant No.1 received

two tenders, one from the plaintiff and another of Mr. Bhosle, in

respect of the work in Dharwad Campus. The plainti ff was the

lowest tenderer. After some deliberations, the plaintiff’s tender

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was accepted and work order was placed with them on

6.8.1992, to carry out the work at total value of

Rs.1,94,89,161/-, to be completed within 24 months excluding

rainy season. Pursuant to the same, the plaintiff executed an

agreement with Defendant No.1 and commenced the wor k.

Subsequently, Defendant No.1 rescinded the contract on

22.09.1994 by citing various reasons including stop page of

construction work and that the plaintiff has no int ention of

honouring the agreed terms of the contract. The pla intiff

challenged the said action of Defendant No.1 before this Court in

W.P. No.30585/1994. The said writ petition came to be

dismissed on 25.01.1995 with an observation that “… Whether

there has been any breach of the contract on the pa rt of the

petitioner or the respondents or at what stage the breach

occurred and in what terms; whether the appendix fo rmed part

of the contract or not particularly in the light of the

correspondence between the parties, are all matters which

cannot be decided in this Court. …” and that the ap propriate

course for the plaintiff is to work out his remedies in the civil

court in that regard.

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ii) Afterwards, the plaintiff maintained the suit in O.S.

No.211/1998 on 19.09.1997, seeking relief of – (i) declaration

that the determination of contract on 22.9.1994 is illegal, null

and void; (ii) direction to the defendants to pay a sum of

Rs.42,22,105 to the plaintiff; (iii) interest at the rate of 18.5%

from the date of suit till the date of realisation; and for court

cost and other reliefs as the court deems fit, in t he

circumstances of the case.

iii) The case of the plaintiff is that they agreed to

undertake construction work with a specific understanding and

agreement that the cost of the materials if increased are to be

reimbursed by the defendants and that they commence d the

work only on the defendants agreeing to their such terms and

conditions. The plaintiff alleges that the defendants did not keep

up their words and did not act as promised by them in spite of

several oral and written requests of the plaintiffs. It is further

alleged that because of inaction of the defendants, the plaintiff

suffered financially and progress of the work hampe red. It is

contended that immediately after acceptance of tend er, there

was abnormal increase in the price of the steel and cement and

in spite of repeated request, and the defendants did not place

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the request of the plaintiff before the Board of Re gents for

suitable decision and till date no decision has been taken by the

defendants in that behalf. It is contended that after vehement

protest, finally a meeting was held in the office of Defendant

No.1 on 25.07.1994, wherein the commitment of the U niversity

to the conditions of the contract, clauses of agreement, appendix

to the agreement etc. were considered and thereafte r it was

decided that the demand of the plaintiff was to be placed before

the ensuing Board Meeting in view of urgency and ti me factor

involved. Even then, the matter was not placed bef ore the

Board of Regents and no decision was taken by the s aid Board

till rescinding of the contract. In this background, the plaintiff

maintained the suit claiming his right to recover e scalation

amount, difference in cost of cement, encashed bank guarantee

amount, profit out of balance work and cost of materials in the

site at the time of stoppage of work together with interest

thereon apart from the relief of declaration.

iv) Initially the plaintiff had maintained the suit against

University of Agricultural Sciences and one Sri Kempayya, the

Estate Officer. The suit against Sri Kempayya, i.e, Defendant

No.2, came to be dismissed on 27.01.2001 as the pla intiff failed

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to take necessary steps for service of summons on h im. In the

said circumstances, the suit was continued only aga inst

Defendant No.1 i.e., University of Agricultural Sciences.

v) On service of summons, Defendant No.1 appeared

before the Trial Court through their counsel and contested the

suit by filing their written statement. According to them the

plaintiff did not perform the contract in full as per the agreed

terms and conditions. They contended that the plaintiff tried to

impose the conditions not agreed to between the par ties and

that the plaintiff tried to incorporate conditions beyond the scope

of the contract to his own advantage and to the detriment of the

University. They alleged that when the plaintiff wa s not

successful, adopted unwarranted delaying tactics and ultimately

illegally stopped the work and even started moving materials

from the site. They submitted that the University was compelled

to terminate the contract as the plaintiff committed breach of

the contract. They also contended that they have p aid all the

running bills of the plaintiff to a tune of Rs.86,00,000/- and

justified the termination of contract with the plaintiff.

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vi) Based on the pleadings of the parties and the

documents available on record, the Trial Court fram ed the

following issues:

1.

Whether the plaintiff proves that it is a

registered partnership firm?

2.

Whether the plaintiff proves that the validity

of the tender dated 10.4.1992 was extended

by plaintiff as per advise of defendant Nos. 1

and 2?

3.

Whether the plaintiff proves that the

defendants have agreed to escalation of

prices of cement, steel and pay the other

building materials during the construction

period as per terms?

4.

Whether the Plaintiff proves that the

progress of the construction work was

hampered because of the in action of

Defendants and thereby progress of the

work was hampered and he was put to loss?

5.

Whether the Plaintiff proves that, because of

the in action of the defendants and at their

request the work was slowed down?

6.

Whether the Plaintiff proves that, the

defendants have illegally rescinded the

contract on 22.9.1994?

7.

Whether the Plaintiff proves that, the

imposition of penalty by the Defendants

affected the progress of the work of the was

illegal and that had adversely affected the

progress of the work of the Plaintiff?

8.

Whether the Plaintiff proves that,

Defendants did not allow him to take his

belongings and building materials from the

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construction spot and has not taken

measurements of the works undertaken by

Plaintiff and thereby did not settle the

accounts as alleged?

9.

Whether Plaintiff proves that he has

completed 80% of the construction work and

he is entitled to recover thereon the

accounts to be recovered by him?

10.

Whether the Plaintiff is entitled to price

escalation and interest of Rs.9,67,546-22

Ps. from Defendants?

11.

Whether Defendant proves that they are not

liable to pay escalation charges for the

completion of work beyond 2 years as per

clause 44 of contract?

12.

Whether Plaintiff is entitled to claim

Rs.1,39,456/- as pleaded in Schedule 'B' of

the plaint?

13.

Whether Defendants prove that Plaintiff

created deadlock in the matter and hence

they could not take early decision?

14.

Whether Defendant proves that they have

supplied building materials to them after

4.8.1992 and hence they are not liable to

pay difference in materials?

15.

Whether Plaintiff proves that defendants

encashed bank guarantee illegally and high

handedly?

16.

Whether Defendants prove that they are

liable to recover a sum of Rs.24.18 lakhs

from Plaintiff?

17.

Whether Defendants prove that Plaintiff

committed illegal breach of contract and

thereby caused loss to Defendants?

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18. Whether the Defendants prove that the

Plaintiff caused loss to defendants to the

tune of Rs.94,10,437/-?

19.

Whether the Plaintiff proves that he is

entitled to recover a sum of Rs.42,22,105.00

Ps. from Defendants?

20.

Whether the suit is barred by limitation?

21.

Whether the Plaintiff is entitled for the relief

of declaration as prayed for?

22.

What order or decree?

vii) In support of their case, the plaintiff examined three

witnesses including its partner as PW-1 and got mar ked

documents at Ex.P1 to P42. On behalf of Defendant N o.1, its

Estate Officer was examined as DW-1 and got marked at Exs.D1

to D45.

viii) Subsequently, the trial Court heard the arguments of

both sides, considered the materials on record and proceeded to

decree the suit in part with cost of Rs.10,000/- an d directed

Defendant No.1 to pay a sum of Rs.85,000/- to the p laintiff

together with interest at the rate of 6% p.a. from 15.03.1994 to

31.03.1997 and interest at the rate of 8% p.a. on t he said

amount of Rupees 85,000/- from the date of filing of this suit till

its realization, within one month from the date of the order.

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Being dissatisfied with the impugned judgment and decree, both

the plaintiff and Defendant No.1 have preferred these appeals.

4.

Sri Prakash K. Jawalkar, learned Counsel for Plaintiff

submitted that the crux of the dispute is whether the plaintiff

entitled to claim escalation of prices of cement, steel and other

building materials during the construction period as per terms

agreed between the parties and whether Defendant No .1

justified in rescinding the contract. He vehemently submitted

that the plaintiff had agreed to undertake construction work and

commenced the work only on the defendants agreeing to pay

cost of the materials if increased and as such Defendant No.1 is

liable to reimburse the plaintiff in terms of such understanding.

He contended that the delay in the work was on acco unt of

inaction on the part of Defendant No.1 and that the plaintiffs

have not committed breach of contract as alleged by the

defendants. He further contended that the trial Court has failed

to properly appreciate the contentions of the parties and the

evidence placed on record and thereby arrived at wr ong

conclusion.

5.

Per contra, Sri K.L. Patil, learned Counsel for

Defendant No.1, vigorously submitted that the plain tiff had

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quoted low rates in the tender so as to appear that he was

lowest tenderer and it was a deceitful attempt. He submitted

that as per Clause 44, the plaintiff was not entitled to claim

escalation of prices and as such, the claim of the plaintiff is not

permissible. He contended that the plaintiff was not at all ready

and willing to perform their part of contract and complete the

construction work within stipulated time, on accoun t of which

the contract was terminated. He contended that in the facts and

circumstances of the case, the plaintiff was not entitled for any

relief and that the trial Court committed error in decreeing the

suit in part.

6.

Having heard the arguments addressed by both

counsels and on considering the materials available on record,

the following points arise for the consideration of this Court:

1) Whether Defendant No.1 had agreed for

escalation of prices as contended by the

plaintiff?

2) Whether the trial court committed error in

properly appreciating the contentions of the

parties and the evidence placed on record in

support of their case?

7.

Before proceeding further, it would be appropriate to

refer to the Order dated 25.01.1995 passed in

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W.P.No.30585/1994 produced at Ex.P3. It was a proce eding

initiated by the plaintiff being aggrieved by rescission of the

contract. In the said proceeding, the plaintiff had sought to

declare the action of Defendant No.1 in rescinding the contract

as illegal, without jurisdiction, void and non-est and

unenforceable in law. The writ petition came to be dismissed

with following observations:

“6. Although lengthy arguments have been

addressed before this Court, the matter confines

itself to a narrow compass. The question for

consideration is whether, as contended for the

petitioner, the doctrine of promissory estoppel is

attracted to the present case or not. In GODFREY

PHILIPS INDIA's case, the Supreme Court examined

the whole gamut of the doctrine. It was explained

that this principle is evolved in the administrative law

and is styled as promissory estoppel but it is neither

in the realm of contract nor in the realm of estoppel.

The basis of the doctrine is one based on equity true

to its form stepped into mitigate the rigours of strict

law. The requirements for application of the said

principle is that (1) where one party has by his word

or conduct made to the other a clear and unequivocal

promise or representation which is intended to create

legal relations or affect the relationship arising in

future; (2) knowing or intending that it would be

acted upon by the other party to whom the promise

or representation is made; (3) it is in fact acted upon

by another party; (4) the promise or the

representation will be binding on the party making it

and he will not be entitled to go back or turn upon it.

Now, I have to examine whether the claim made by

the petitioner in this case is one that falls within the

scope of this principle. Learned counsel for the

petitioner principally based his arguments on the

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construction of the letters dated 8.8.1992 and

2.2.1994 in the context of his letter sent on

18.7.1992. When the respondents sent a letter on

17.7.1992 stating that the request or the conditions

mentioned in the letters of the petitioner dated

9.4.1992, 19.5.1992 and 15.7.1992 cannot be

considered as there is no provision in the conditions

of the tender, the petitioner wrote a letter the very

next day to indicate that, in the event the same is

not acceptable, the respondents should refund the

earnest money deposit made by him at the earliest.

While the petitioner is categorical in stating that he is

not interested in continuing the contract in the event

of the respondents not accepting or considering the

request made by him or the conditions offered by

him, the respondents are not so categorical. On the

other hand, they are equivocal in their statements.

What they state is that, so far as the hike in cement

is concerned, they accept the same in principle and

would pay the same. But so far as the escalation in

regard to other items mentioned in the appendix, it

will be confirmed to him after obtaining the approval

of the Board of Regents. The same position is

reiterated two years later also in their letter dated

2.2.1994. If this is the state of affairs, can it be laid

that there is an unequivocal, clear and unambiguous

act on the part of the respondents to accept the offer

made by the petitioner as to the conditions

mentioned the appendix? The answer is obvious. It

cannot be said that there has been an unequivocal

promise on the part of the respondents to accept the

same. All that is stated is that the matter would be

placed before the Board of Regents and thereafter

decision will be taken. The decision being taken

either then or later was all that promise was made.

Therefore, the question of the petitioner having been

given any promise in that regard may not be well

founded. (emphasis supplied)”.

8.

The aforesaid extract unequivocally records a

definitive finding by the learned Single Judge of this Court that

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Defendant No.1 had not accepted the plaintiff's req uests for

price escalation or adjustment, as advanced through multiple

letters, correspondences, or the appendix to the ag reement.

Consequently, the writ petition challenging Defenda nt No.1's

rescission of the contract was dismissed vide Order dated

25.01.1995. The plaintiff neither preferred an appe al nor

otherwise assailed this order, which thus attained finality and

remains binding upon them. In light thereof, the p laintiff is

precluded from seeking a declaration that the contr act's

determination on 22.09.1994 was either illegal or null and void.

9.

The other relief sought by the plaintiff against

Defendant No.1 is for recovery of Rs.42,22,105/- together with

interest at 18.5% from the date of suit till its realization. The

plaintiff quantified the amount under the heads of (i) escalation

amount with interest, (ii) difference in cost of cement with

interest, (iii) enchased bank guarantee amount with interest,

(iv) profit out of balance work with interest, and (v) difference

amount payable towards cost of materials at the sit e after

deducting balance amount payable towards secured ad vance

amount.

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10. In W.P.No.30585/1994 it is unambiguously held that

there was no promise on the side of Defendant No.1 to pay

escalation price of steel and other materials except the price of

cement. Added to the above, it is the definite case of the plaintiff

that from the date of their first request letter dated 09.04.1992

till date, Defendant No.1 did not take any action t o place it

before Board of Regents for a decision on such request. Thereby,

it becomes clear that the University or the tender accepting

authority had not agreed for modification of the clauses relating

to price adjustment/escalation as requested by the plaintiff. In

view of the same, it is to be held that the plaintiff was not

entitled to claim price escalation in respect of steel and other

materials from Defendant No.1.

11.

Even otherwise, the claim of price escalation and

interest thereon needs to be considered in the light of the terms

of the contract. Admittedly, the plaintiff submitted the tender

subject to conditions of the contract produced at Ex.D2. Clause

44 of the contract relates to change in costs and p rice

adjustment. The said clause makes it clear that it is applicable

only to contracts where the stipulated period of completion of

the work is more than two years. Clause 44 further makes it

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clear that the price adjustment shall not be applicable on the

value of work carried out during the initial 12 mon ths of the

contract period. In this case, the tender of the plaintiff was

accepted on 06.08.1992 and the work order was issue d to them

on the same date subject to their executing an agre ement.

Pursuant to it, the plaintiff executed an agreement on

06.08.1992 itself. Thereby, it becomes clear that as per Clause

44, the plaintiff was not entitled to seek for price adjustment

during initial 12 months from 06.08.1992.

12.

The case put forth by the plaintiff and the

documents available on record including the request letter/

representation dated 09.04.1992 of the plaintiff clearly indicate

that the plaintiff was fully aware of the condition in Clause 44, at

the time of submitting their tender and in the said

circumstances, they had submitted their tender alon g with the

letter dated 09.04.1992, requesting the defendants to modify

such condition and allow the price adjustment from the date of

commencement of the contract work. In view thereof, the

burden squarely lies upon the plaintiff to establish that the

defendants had agreed for price adjustment or escal ation from

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the date of commencement of the contract works, a b urden

which they have wholly failed to discharge.

13.

It is contended that in 1992, when the plaintiff

sought to withdraw his tender, the defendants induc ed him to

proceed by assuring payment of escalation charges f or steel,

cement, and other materials, enabling completion of the

construction works within the stipulated two-year p eriod and

thereafter the defendants did not act as per their words. The

materials on record do not support the above conten tion of the

plaintiff. It is because the document at Ex.D4, the letter dated

17.07.1992 addressed by the Estate Officer to the p laintiff,

contains information about rejection of the request in an

unambiguous terms that “… the requests/conditions m entioned

in your letter dated 09.04.1992, 19.05.1992 and 15. 07.1992

cannot be considered as there is no provision in the conditions of

tender, …”. Thereafter, the plaintiff executed the work

agreement marked at Ex.D5 on 06.08.1992, undertakin g to

execute the work in accordance with the conditions and

stipulation of the tender.

14.

Undisputedly, the plaintiff had enclosed an appendix

to the agreement incorporating certain conditions like provision

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for escalation of prices of the materials based on the prices

prevailing at the time of opening the tender. It is not the case

of the plaintiff that the defendants had agreed for such

escalation as on the date of agreement. For aforesaid reasons, it

is held that the trial court justified in holding that the plaintiff

was disentitled to claim escalation, price adjustme nt, or

consequent payment thereunder.

15.

Undisputedly, the plaintiff was required to complete

the tender work within a period of 24 months from t he date of

work order excluding the rainy season. The work ord er was

issued on 06.08.1992 and the said contract was term inated on

22.09.1994. It is the definite case of Defendant No.1 that the

plaintiff had no intention to complete the work by the stipulated

time i.e., 31.03.1995 and they had practically stopped the work

by 11.06.1994. It is further contended by Defendant No.1 that

the progress assessment as on 21.09.1994 revealed t he

financial performance of the plaintiff was 46% during the period

of about 18 months and balance 54% was required to be

completed within a span of about six months. On the other

hand, the case of the plaintiff is that during the meeting held on

25.07.1994 they had expressed their inability to carry on the

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work if the escalation price is not paid to them as per their

appendix and at that time, the committee had reques ted them

to slow down the work. It is further case of the p laintiff that

from September 1994 they were constrained to stop t heir work

on account of rescind of the contract. In the averments of the

plaint, it is contended that the plaintiff had completed 80% of

the work and 20% of the work was remaining. But, ac cording to

PW-2 Sri Rajkumar Bilgi, the Engineer working with the plaintiff

stated that when the work was stopped, they had com pleted

only 70% of the work assigned to them. It is to be noted that

the plaintiff has not adduced any reliable evidence to show the

extent of the work turned out by them as on the dat e of

termination of contract or that there was any instruction from

the side of the defendants to slow down the work. In fact, the

documents available on record indicate otherwise.

16.

It is the definite case of Defendant No.1 that

University was hard pressed for accommodation and a nxious to

get the main administrative building completed as e arly as

possible. The plaintiff adopted tricky and misleading approach

by quoting low rates in tender forms and then started claiming

higher rates to suit his own convenience though he was not

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entitled to make such claim. They stated that unde r the

circumstances, they could not straight away rejected the tender

of the plaintiff, invited the plaintiff for discussion to resolve the

issue and agreed to give difference in cost of cement only. The

materials on record probabilise the above contentio n of

Defendant No.1. The tender notice contains a specific clause that

“Conditional tenders will not be accepted”. In spite of the same,

the plaintiff chose to submit their tender on 10.4.1992 along

with a letter dated 09.04.1992 containing conditions styled as

request. Even thereafter, the plaintiff kept on putting forth such

conditions regularly in spite of clear indication on the side of

Defendant No.1 that such requests are not permissib le. Thus,

there are sufficient materials on record to establish that the

failure on the part of the plaintiff to adhere to the terms of

contract and breach committed by them, forced Defen dant No.1

to rescind the contract, which is perfectly justified in the facts

and circumstances of the case.

17.

The action on the part of Defendant No.1 of

encashing the bank guarantee offered by the plaintiff is in terms

of the contract. Defendant No.1 has proved their co ntention

about breach of contract committed by the plaintiff as well as

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encashment of the bank guarantee offered by the pla intiff

towards their dues. Similarly, the question of the plaintiff

claiming compensation or damages towards anticipate d profit

would arise when they succeed in proving breach of contract on

the side of Defendant No.1. The plaintiff has also claimed certain

amount from Defendant No.1 under the head of cost o f the

materials in the site. Admittedly, while rescinding the contract,

Defendant No.1 had requested the Plaintiff to attend the closing

measurements vide letter dated 22.09.1994 marked at Ex.P1.

The Plaintiff has not produced any letter or reply sent to

Defendant No.1 in response to Ex.P1, particularly giving details

of their materials left at the site or calling upon Defendant No.1

to allow for its removal. Therefore, it is held that the trial court

has rightly rejected the claim of the plaintiff under these heads.

18.

The plaintiff has claimed a sum of Rs.85,000/- from

Defendant No.1 under the head of difference in cost of cement.

Admittedly, Defendant No.1 agreed to pay escalation of cement

price and claimed that as per resolution dated 21.8.1993 they

have paid a sum of Rs.1,41,476/- to the plaintiff t owards

difference in cost of cement through RA Bill No.12 and

subsequently they have supplied required cement to the

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plaintiff. In support of this contention, Defendan t No.1 has

produced concerned bill at Ex.D39. The said bill p ertains to

cement consumed from 07.09.1992 to 13.06.1993. Eve n the

plaintiff admits Defendant No.1 having paid a sum o f

Rs.1,40,000/- towards cost of cement. However, the plaintiff

has not come up with the details or basis on which they are

claiming a sum of Rs.2,25,000/- towards difference in cost of

cement. The reasons assigned by the trial court indicate that it

accepted the claim of the plaintiff mainly on the ground that

before or after rescinding the contract vide letter dated

22.09.1994, no final settlement of account has taken place. The

said reasoning of the trial court cannot be accepte d. It is

because, the initial burden is on the plaintiff to prove the dues

on the part of Defendant No.1 towards difference in cost of the

cement. The plaintiff has not placed any reliable evidence on

record to support their contention. Further, it is the specific

case of Defendant No.1 that they have paid difference in cost of

the cement much before termination of contract through RA Bill

No.12. The materials on record go to show that thereafter they

have made payments to the plaintiff through few mor e bills i.e,

RA Bill Nos.13 to 18. In the above circumstances, this Court

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holds that the trial court has committed an error in holding that

Defendant No.1 was still due a sum of Rs.85,000/- t o the

plaintiff towards difference in cost of the cement.

19.

Learned Counsel for the Plaintiff has placed reliance

on M/s J.G.Engineers Pvt. Ltd. Vs Union of India an d another

[Civil Appeal No.3349 of 2005, DD 28.4.2011] render ed by

Hon’ble Apex Court to contend that Defendant No. 1 lacked

authority to unilaterally adjudicate the alleged br each and

rescind the contract. As pointed earlier, this Court has already

upheld the legality of the rescission vide Order dated 25.01.1995

passed in W.P. No.30585/1994. Further, competent c ivil court

has adjudicated the dispute relating to the claim arising out of

such rescission. As such, it is held the cited deci sion is,

therefore, inapposite and affords no assistance to the plaintiff's

case.

20.

Learned Counsel for the Plaintiff has relied on one

more decision in M/s A.T. Brij Paul Singh and others Vs State of

Gujarat reported in (1984) 4 SCC 59 and contended t hat where

in a works contract, the party entrusting the work commits

breach of the contract, the contractor would be entitled to claim

damages for loss of profit which he expected to ear n by

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undertaking the works contract. In the present case , the

materials on record clearly establish breach of the contract by

the contractor i.e, the plaintiff and as such there is no question

of the plaintiff claiming damages for loss of profi t from

Defendant No.1. It may be relevant to note that in Puran Lal

Sah Vs The State of UP, reported in AIR 1971 SC 712 , Hon’ble

Apex Court has held that where work is done under a contract

pursuant to the terms thereof, remedy by way of qua ntum

meruit is not available to the party who breaks the contract even

though he may have partially performed part of his obligation.

For the foregoing reasons, Point No.(i) is answered in the

negative and Point No.(ii) is answered partly in the affirmative.

21.

In the result, this Court proceeds to pass the

following :

ORDER

i)

The appeal in RFA No.100097/2018 is allowed

and the appeal in RFA No.100038/2018 is

dismissed.

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ii) In the facts and circumstances of the case, the

parties are directed to bear their respective

cost.

iii)

Consequently, the judgment and decree dated

30.10.2017 passed in O.S. No.211/1998 by

learned II Additional Senior Civil Judge,

Dharwad is set aside and suit is dismissed in

entirety.

iv)

Draw a decree accordingly.

Sd/-

(H.P.SANDESH)

JUDGE

Sd/-

(B. MURALIDHARA PAI)

JUDGE

YAN/RKM

Ct-CMU