FAILURE TO PERFORM WITHIN THE STIPULATED TIME

SPECIFIED IN A CONTRACT

This is reference petition by the petitioner firm under Section 7 of the M.P.
Madhyastham Adhikaran Adhiniyam, 1983 for recovery of Rs.690,159/- from the
respondents in the matter of disputes having arisen out of item rate contract No.12/DL
of 87-88 entered between the parties.

2. Facts stated hereinafter are not in dispute before us:

Item rate agreement No.12/DL of 87-88 was executed between the parties to this petition
on 19.11.87 for work of second stage concreting in spill way of Thanwar Project,
Division Nainpur, Distt. Mandla. The estimated cost of work put to tender was 2.87 lacs.
Time specified for completion of work was 6 months excluding 3 months rainy season
from 1st July to 30th September. Work order was issued on 14.12.87 and the due date of
completion of contract was to expire on 13.06.88. The work was to be executed in
accordance with the specifications and drawings and instructions issued by the Engineer-
in-Charge from time to time in accordance with the terms of the agreement. Metal and
sand were to be supplied at the rate specified in the agreement. Petitioner did about 25%
of a contractual work till 13.06.88 and left the work incomplete. For completion of
balance concreting work, fresh tenders were called. Under Clause 4.3.2 of the
agreement, penalty of 8% was imposed on the petitioner and security deposit and earnest
money were forfeited. Petitioner preferred claim before the S.E. under Clause 4.3.29.1
of the agreement.

3. According to the petitioner, M/s Ramla Constructions the contractual work was
to be executed in accordance with the specifications, designs, drawings and instructions
referred in Rule 4.1.1. of M.P. Madhyastham Adhikaran Adhiniyam, 1983 and Clause
4.1.12 of the agreement and so also materials were to be provided as per the contractual
agreement. The rates quoted in the tenders were complete rate for execution of the work
as per nomenclature of item put to tender including all operations leads and lifts as per
designs, drawings and specification of the work. It was, therefore, necessary that
aforesaid record should have been made available along with tender as they formed part
of the contractual agreement.

3.1 Petitioner’s case is that respondent State of Madhya Pradesh and Others
committed the following breaches of the contract, therefore, he could not complete
contractual work within the stipulated period of contract and could hardly complete 25%
of the contractual work. The breaches committed were firstly copy of the agreement
alongwith work order was not supplied despite repeated demand from the petitioner
without any justification. Secondly, detailed working drawing and specifications were
not attached to tender documents which were pre-requisite for commencement of
contractual work. Consequently, the petitioner could not frame construction programme
according to the contract. He could also not manufacture shuttering plates for want of
lay out and instructions. Thirdly, respondents also failed to hand over whole of the site
soon after the issuance of work order and if that was not possible immediately at least

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sufficient working area should have been made available to enable to contractor to do
proportionate work as per programme thus committed fundamental breach. Fourthly,
Department also failed to supply cement for starting second stage concreting after
completion of chiseling/molding and trimming work. No cement was made available till
31.03.88. It was not issued till 25.04.88. Fifthly, respondents also failed to supply metal
and sand from Bijegaon stock-yard thereby petitioner was forced to bring these materials
from longer reaches involving extra time and expenditure against the terms of the
contract and without written permission from S.E. and extra rates. Lastly, S.D.O. had no
authority or power under the agreement to give any instruction which involved financial
commitments or interpretation of conditions of agreement regarding any matter in
disputes as these powers lay with S.E. or E.E.

3.2 Thus, according to the petitioner, under the aforesaid circumstances he could
complete only 25% of the work till the date of expiry of the stipulated date of work i.e.
13.06.88. According to the petitioner, time was not essence of the contract and since
respondents committed breaches and no time was extended therefore petitioner by letter
dated 11.07.88 intimated his unwillingness to carry further work at the contractual rates
considering heavy fluctuations in prices of the materials, sand, transportation and labour
rates and also for finalization of the agreement. Respondents for the balance of work
received pooled tenders at a very high rate than the contractual rates.

3.3 According to the petitioner, he however, had further requested for finalization of
work, therefore, there was no reason for S.E. to impose 8% penalty or forfeiture of
security deposit, and earnest money without show-cause-notice and that too after expiry
of stipulated period of contract. Under the Indian Contract Act Jurisdiction to decide the
amount of liquidated damages/penalty due to breaches of contract lies with Civil Court
and not with this Tribunal.

3.4 Petitioner, referred instant claims to S.E. as per Clause 4.3.29.1 of the agreement
which remained without decision so far. The petitioner, therefore, had to file present
reference petition under Section 7 of the M.P. Madhyastham Adhikaran Adhiniyam,
1983 claiming (i) waiver of penalty of the tune of Rs.23,832/-, (ii) refund of security
deposit- Rs.2,900/-, (iii) refund of earnest money - Rs.2,870/-, (iv) payment of final bill
Rs.1,351/-; (v) payment of extra lead for metal Rs.2,226/-; (vi) loss of profit -
Rs.34,134/- and (vii) loss of infructuous overhead expenses Rs.22,756/-; totaling to
Rs.90,159/-.

4. In reply it was contended by the respondents that they did not commit any of breaches
of the contract as have been alleged by the petitioner. The drawings given in the tender
document were the part of the agreement. The nature of work, under the agreement was
such which did not call for any special specification because the language of ‘G’
Schedule attached to the agreement giving details of items of work had sufficient
specification. Regarding chiselling and concreting work is sufficiently specified in the
agreement. The petitioner had applied for copy of the agreement on 20.04.88 which was
supplied to him. Hence petitioner cannot be heard to say that details of working drawings
and specifications were not attached to the tender document or were not supplied to him.

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4.1 It was further contended by the respondents that all information required for
submitting, full and complete tender was made available to the contractor regarding
supply of metal, sand and cement. Accordingly, metal and sand were to be supplied by
the department from Bijegaon stock-yard in case available. Respondents, therefore,
supplied metal and sand to the petitioner from Jaltara stock-yard as and when it was not
available from Bijegaon stock-yard. Hence the petitioner cannot claim any extra lead on
this count. So also cement was also made available to the petitioner.

4.2 It was further denied by the respondents that lay out was not given or instructions
to the petitioner’s shuttering man were not given. According to the respondents
shuttering is not a separate item but it was a part of the concreting work. Respondents
further denied that site was not made available to the petitioner after issuance of work
order. Statement showing month-wise site available for quantity of chiselling and
concreting work done against the site made available to the petitioner is shown in
Annexure ‘A’ to written reply along with detailed calculations which would contradict
the petitioner that site was not made available to the petitioner. Though site for chiselling
was always made available to the petitioner yet petitioner did little work.

4.3 As per the facts given above, it was further contended by the respondents that
they did not commit any breach of the contract. On the other hand case of the respondents
is that petitioner did not submit construction – programme, therefore, committed
fundamental breach of the contract. In the absence of such programme, respondents were
not able to organize its supervisory staff, supply of material and other necessary
materials in keeping with the construction-programme. Respondents were also
hampered to pre-estimate the material including cement. Petitioner also failed to employ
Engineer and also failed to submit labour report as per agreement.

4.4 Thus, according to the respondents, it was evident from the foregoing facts that
contractor had no intention to proceed with the work but wanted to increase rates as the
contractual work was not profitable to him. The contractor, therefore, failed to carry out
the work and the work done by him was at a very slow pace. It was for this reason,
contractor did not apply for extension of time in spite of the advice of the E.E. Petitioner
had abandoned the work and time was the essence of the contract, therefore petitioner is
not entitled to raise the claims.

Decide: Whether or not time is the essence of this contract?

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