BOMBAY HOUSING BOARD (NOW THE MAHARASHTRA HOUSING BOARD) versus KARBHASE NAIK & CO., SHOLAPUR

, . MATHEW, J.~This is an appeal by the defandant on the basis of a certificate r.galnst a decree passed by the High Court of Bombay in nppcal from a dceree in a suit for recovery 'Of balance of amount due on account of extrn construetion work carried out by the plaintiff· respondent. .

p. 409, margin C

The State of Bombay prepared a scheme for construction of blocks in 'Sholapur and invited tenders for the same. The respondent, a firm, submitted it,s. tender on 29-7-1948. The tender was in B-1 form. otherwise known as percentage ti:~ader. The tender was accepted on 6-12-1948 by the Labour Department on behalf of the State of Bombay. The Bombay Housing Board came into being with the passing of the Bombay Act 69 of 1948 and under s. 54 of, that Act, the above contract shall bie deemed to have been entered ir,Jto with the Board.

p. 409, margin D

The order to carry out the work was issued to the respondent by the Housing Commissioner on 15-8-1948. The construction was: to be completed within one year from the date nf the order. The time was extended and the work was actually completed in March, 1950 and possession was taken by the 1appel!allt some time between 5-5-1950 and 30-5-1950. The amount paid to the respondent on 30-3-1951 under the final bill was accepted bv it under protest. As the disputes between the parties in respect of the claims made by the resp'Ondent could not be settled by agreement, the respondent filed the suit. -claiming under 4 items, namely, A to D, a Sll'm of Rs. 38,000-8-0. ·

p. 409, margin E

. As we are concerned in this appeal only with the claims specified in A-3, A-4, C-1 and C-2, it is not necessary to refer to the contentions of the appellant in respect •of the other ite:ns. In regard to the claims in items A-3 and A-4, the appellant contended that they were for extra works carried out· by the resoondent without any agreement as to the rate to be charged and therefore the resoondent was entitled to have the claim settled on the basis of the provision in clause 14 of · the contract for rnch works and that claims in item C-1 and C-2 were not maintainable by virtne of clause 15 in the contract and that the suit was barred by limitation. ·

p. 409, margin G

The trial court decreed the suit for a sum of Rs. 2,865-0-0 with proportionate cost and future interest. It dismissed the claims made under items A-3, A-4, C-1 and C-2.

p. 410, margin A

The respondent filed an appeal before the High Court for balance of its claim and the appellant filed if cross appeal.

p. 410, margin A

The High Court dec:reed the claims in items A-3, A-4, C-1 C-2 and the sole question in this appeal is whether the claims in these items were sustainable in view of clauses 14 and 15 of the contract between the parties and whether there was evidence to establish th~m.

p. 410, margin B

The amount. claimed in item A-4 was Rs. 8,239 and that mainly in respect of, the work of filling 11p of ditches, etc., which done by the respondent under the order of the appellant. The· order to carry out this extra work was given on 7-11-1949. The respondent intimated by notice in writing, as required by clause 14, the' rate for carrying out th1~ work. The Engineer-in-charge did not exercise his liberty to cancel the order, or give the contract for the edra work to any other contractor. The respondent's case was that the amount due to it for the extra work under item A-4 was to be calculated on the basis of the rate specified in the notice. The appellant contended that in view of clause 14 'Of the contract, the respondent entitled only -to the rate as fixed by the Engineer-in-charge.

p. 410, margin B

So, the quesiion for consideration in respect of item A-4 is whether, in view of clause 14 of the contract, it was open to the respondent to make the claim on the basis 0£ the rate quoted by it in the notice. Clause 14 provides : ·

p. 410, margin D

Alterations in specifications and designs not to invalidate contracts--

p. 410, margin E

The Engineer-in-charge shall have power to make any alterations in, or additions to, the original specifications, drawings, designs and instructions that may appear to him to be necessary or advisable during the progress of the work, and the contractor shall be bound to carry out the work in accordance with any instructions in this connection which may be given to him in writing signed by the Engincer-incharge and such alteration shall not invalidate the contract; and any additional work which the contractor may be directed t'O do in the manner above specified as part of the work shall be carried out by the contractor on the same conditions in all respects on which he agreed ·to do the main work, and at the same rates as are specified in the tender for the main work. And if the additional or altered work include any class of work for which n'O rate is specified in this contract, then such class of work shall be carried out at the rates entered in the Schedule of Rates of the Division or at the rates mutually agreed upon between the Engineer-incharge and the contractor; whichever are lower. If the additional or alter1ed work, fur which no rate is entered in the Schedule of Rates of the Division, is ordt.ed to be carried out before the rates are agreed upon the the contractor shall, within seven days of the date of re ipt by him of · the order to carry out the work, infvPm the Engineer-in- . charge of the rate which it is his intention to charge for. such class of work, and if the Engineer-in-Charge does not agree to this rate he shall by notice in writing be at liberty to cancel his order to carry out such class of work, and arrange to carry it out in such manner as he may consider advisable, provided always that if the contractor shall commence work or incur any expenditure in regard thereto before the rates shall have been determined as lastly hereinbefore menti'oned, then in such case he shall only be entitled to be paid in respect of the work carried out or expenditure incurred by him provide (previous ?) to the date of the determination of the rate as aforesaid according to such rate or rates as shall be fixed by the Engineer-in-charge. In the event of a dispute, · the decisi·on of the Superintending Engineer of the Circle will be final."

pp. 410–411, margin E

It is clear from the clause that where any additional or altered work is directed to be carried out and no rates are entered in the Schedule of Rates in the Division or agreed to, then, the CO'atractor may, within seven days of the order, give notice of the rate he intends to charge. Jn such •a case, the Engineer-in-charge would be at liberty to cancel the order if he does not •; gree to the rate stated by the contractor and get the work done by any other agency. Where, however, the Engi- \1eer-in-charge has not cancelled the order for additional or altered work and the contractor has commenced work and incurred expenditure, the contractor shall only be entitled to be. paid at such rate or rates as may be fixed by the Engineer-in-charge. In any such case if the contractor is dissatisfied, he may raise a dispute about the rate or rates so fixed by the Engineer-in-charge. Where such dispute is raised, the Superinteading Engineer will decide the same and his decision will be fin•al.

p. 411, margin C

We do not think that the respondent was boµnd to carry out the additions' and alterations as there was no reply to the notice stating the rates it intended to charge. But it was free to commence and complete the work on the basis that .since the rates quoted by it were ~1ot accepted, it would be paid at such rates to be fixed by the Engineer-in-charge and that if it was dissatisfied with the rate or rates fixed by the Engineer-iri-charge, if could raise a dispute before the Superintending Engineer and that the time limit for completion would be extended in all cases of additions or alteratio•as as stated in the fast sub-para of clause 14.

p. 411, margin F

The High Court was of the view that clause 14 had no application because it thought that the respondent was bound to carry out the work as directed by the Engineer-in-charge even when there was no •agreement as regards the rate to be charged for the extra work, as the nature of work in some cases would be such that if the work was not completed at the time when the work was to be completed, the contractor would have to do much extra work over and above work imolved. The Court also said that clause 14 gave the Engineerin-charge oan absolute power to fix the rate and that would and therefore the Court decreed in fulrthe amount claimetl items A-3 and A-4.

pp. 411–412, margin F

We think that until the rates were settled by agreement the dent was under no obligation to carry out the additional work. The responde',1t could legitimately have said that in the of scheduled rates in the division for the type of work in question an agreement in regard to the ra_tes, it was not bound to carry out additional or altered work. We are not satisfied that since neer-in-charge did not exercise his liberty to cancel the order, there was a concluded contract between the parties. The failure the order for additional or aHered work on receipt of the notice fying the rate would Mt result in an agreement as to the rate charged. The clause only gave the Engineer-in-charge the cancel the order and g(:t the work done by •another contractor. fact that an express power was giw.1 to the Engineer-in-charge clause to cancel the order if he did not agree to the rate would mean that the failure to cancel the order would result in an as to the rate or rates. The proviso in clause 14 was intended cases where the notice specifying the rate was not given by. ractor, or where, even though the notice was give',1, the Engineer-incharge did not cancel the order in the event of his not agreeing rate specified in the notice. We are of the view that in the of some positive act on the part of the Engineer-in-charge agre.::ing the rate. there i,vas no agreement as to the rate a'ad that the respondent was not bound to carry out the work.

p. 412, margin A

In this view of the matter. we think that the High Court wrong in allowing the claim in item A-4. ~

p. 412, margin E

The claim under Item A-3 stands on the same footing as under item A-4 and, therefore, that claim has also to be~rejected.

p. 412, margin E

The next question is whether the High Court was justifi.::d decreeing the claims in items C-1 and C-2.

p. 412, margin F

Item C-1 was a claim for Rs. 9,0001-. The respondent's that there was assurance by the appellant that the work was to pleted in accordance with the specifications in the agreement no alteration W?uld _be n~ade therein. According to the respondent, as per the specificat10n. 1t was to do the work with 5" thick slab over B and B-1 type of blocks to cover an area of about sq. ft. and the mte at which the respondent agreed to do the J.3.s. 2-15-6 per sq. ft. The further 'case of the respondent was agreed to. do the construction work after estimating the cost of construction as a w~ol~ a~cl after. makbg a calculation of and loss on that basis different items of work and it had loss because it had to do a different type of work for which make no estimate in a•aticipation. The-order to carry out the the altered form was communicated to the respondent on 27-1-1949.

p. 412, margin F

It protested against it saying that it will hav.:: to use extra quantity of iron and claimed 6 annas extra per sq. ft. over the rate for 4t" slab which it had given for 'A' type block. The appellant turned dowa the demand and the respondent had to do the work with 4t" R.C.C. stabs over the area of 24,000 sq. ft. According to the re~?ondent, if it were to do the work with 5" slab according to the origina specification over the area of 24,000 sq. ft., it would have used 27,00~':lbs. of iron as re.inforcement and would have got Rs. 71,250 for the work, but, because of the reduction in the size of the slab, it was required to put fa 44,000 lbs. of reinforcement and was to be paid Rs. 60,000 only .. On the other hand, the appellant contended that the Engineer-in-charge was entitled to change the specification under the contract and the respondent was not entitled to claim any damage arising from the change in the nature of the work and relied upon clause 15 for this purpose. The High Coui't held that clause 15 had 110 application.

p. 413, margin A

We do not think that the High Court was hi. error. Clause 15 empowers the Engitteer-in·charge to step or to reduce the whole 0£ the work specified in the tender if he thinks it necessary to do so and the contractor has no right to claim any compensation whatsoever on account of such stoppage or reduction in the work. The clause also provides that the watractor shall have no right to claim any payment or compensation on account of any profit or advantage which he might have derived from the execution of the work in full but which he did not derive in consequence of the full amount of the work not having been carried out or on account of any loss that he may be put to o'.1 account of materials purchased or agreeld to be purchased or for unemployment of labour recruited by him. The clause further provides that the contractor shall not also have any claim for compensation by rc·ason of any alteration having been made in the original spccificatim1s, drawings, design or in8truction which may involve curtailment of work as originally contemplated.

p. 413, margin C

Jn its evidence, the respondent staled that it put slabs of 41'' thick- ',1CS'> in an. area mcasi;ring 24.000 so. fl. oat of a:1 area of 61.000 sq. ft. and that it hml w put ~·4,000 ivs. ~f rcinf,_;rcc:nc::nt instead of 27 000 lbs. and so it must be paid for the extra 17,000 lbs. a sum of Rs. 9,000/-. The High Court took the view that this involved no reduction or curt2ili;1ent in thC' wNk and as the alteration involwi a.dditional cost to the respondent. it c2nnot be said that there was reduction or curtailn1cnt.of work. h othc-l' words, the H'r:h Court was of the view that the n-ature of the work was such that there was not only no crniailment of work but an increase of work involving additional cost. We think the High Court was right in its conclusion that clause 15 h:ls no application and that the c12.im was well fouaded.

p. 413, margin E

The respondent had claimed Rs. 9,097 /- from the appellant in respect of item C-2. ~n the plaint the respondent stated that the appellant represented to 1t that the appellant would entrust the respondent with the pipeline work menti011ed therein but that the appellant, contrary to representation, got the work done by another contractor and,

p. 413, margin G

therefore, the respondent was entitled to compensation for it. 12-423SCil75

p. 413, margin H

The High Court found that as it was provided in clause 15 that before the Engineer-in-charge could stop the work and get the work dm1e by another contractor, he should give the respondent a written notice and as such a notice was not given, the respondent was entitled to damage.

p. 414

We see no reason to think that observance of the condition as regards the written notke was not mandatory. We see no force i·a the argument that the written notice was not necessary as that was i;pecifically provided for in the clause.

p. 414

The last point for consideration is whether the suit was barred by limitation •as it was not brought within six months of the act complained of.

p. 414

The High Court was of the view that s. 64 of the Bombay Houshlg c Board Act, 1948 has no application as the claims were for damages for breach of contract. . ' Section 64 provides :

p. 414

"No person shall commence any suit against the Board. or against any oflicer or servant of the Board or any person. acting under the orders of the Board, for anything done or

p. 414

purporting to have been done in pursuance of this Act, with-· •.

p. 414

out giving the Board, officer, or servant or person two months' previous notice in writing of the intended suit and of thf:

p. 414

cause therMf, nor after six months from the date of the act Complained of.''

p. 414

"Anld in the case of any such suit for damages, if tender of sufficient amends shall have been made before the action E was brought, the plaintiff shall not recover more than the amounts so tendered and shall pay all costs incurred by the defendant after such tender."

p. 414

The appellant submitted that the act of C'11tering into the contract was an act done or purporting to have been done in pursuance of the Act and therefore. any claim for money as damages for breach of the contract by the respondent would come within the purview olf the F section.

p. 414

The Preamble of the Act provides :

p. 414

"Whe:reas it is expendient to take such measures, to make such schemes and to carry out such works as are 'necessary for the purpose of dealing with and satisfying the need of housing accommodation and with that object in view it is necessary to establish a Board and to make certain other provisions hereinafter appearing; It is hereby enacted as

p. 414

follows." Section 19 provides tliat the Board ma:; enter into all such coi1tracts as it may consider necessary for carrying out the purposes of the Act. Section 23 ( 1) states that the Board may incur expenditure and undertake works for framing and execution of housing schemes. Section 23 ( 2) says that the government may entrust to the Board the framing and execution of any housing scheme. Therefore, the Board has statutory duty to frame schemes for construction of houses and execute them. Section 24 (f) would also indioate that the purpose of a scheme is construction of houses. In these circumstances, we think that the contract entered rato by the Board for construction of buildings might be an act done in pursuance to the provisions of the Act. We will also assume that it makes no difference whether the contract was enten::d into with the Board or whether it was deemed to be entered. into with the Board under s. 54 of the Act. But the question is whether the act complained of, n•amely, the no'a-payment of a claim for money based on breach of contract, was an act done or purporting to have been done in pursuance of the Act.

pp. 414–415

There can be no doubt- that the act complained of by the respondent was the no•a-payment of money . as damages or compens•ation resulting from an alleged breach of contract.

p. 415

ln The Municipal Borough of Ahmedabad v. Jayantilal Chhotalal Patel (1) the Court held that when a municipality has power to, enter into a contract under the Municipal Boroughs Act and the municipality purports to exercise its power to enforce such contract, any act done in the exercise of its power to e'aforce the contract is not in pursuance of the Act but in pursuance to the contract and, therefore, a suit brought against the municipality for return of deposit under a contract to clean the streets was not a suit of the type described in s. 206 of the Bomboay Municipal Boroughs Act, 1925 which is in pari materia with s. 64 of the Act. In the course of the judgment, Chagla, J. (as he the,1 was) observed that what the plaintiff sought to enforce was, the right which came into existence as a result of the contract entered into between the plaintiff and the municipality and not a public duty cast upon the municipality by the st•atute, that in forfeiting the deposit, the municipality was not acting in purslia',1ce to the power given to it under statute but was doing so in pursuance of a power given to it undi:r the contract and, therefore, the suit to enforce rights under the contract entered into with the municipality which the municipality was 'L10t under any obligation to enter into, cannot fall with the ambit of the section. We think that the decision lays down the law correctly and that the principle deducible from it is applicable to the facts here.

p. 415

Mr. S. T. Desai referre'd to the decision of the Madras High Court . in Athimannil Muhammad v. The Malabar Di!iitrict Board(2) and said that the decision therein would govern the instant case. That was a

p. 415

case where a suit was filed against the District Board more than six months after the date of the •accrual of the cause of actim, claiming damages on the ground that its P1esident improperly cancelled a contract of lease for one year of the tolls in certain places. which was stated to have been entered into by the plaintiff with the Board through its "'.ice President. The President in performance of what he thought was !us duty under the Madras Local Boards Act accepted a higher offer by another persm1 and the necessary consequence of it was cancellation o.f !he .acceptance of t?e plaintiff's offer. It was held that though the d1stmct1on between act10ns on contract a'i1d actions independent of con- (!) (I.L.R.) 1947 Born. 841 (2) J.L.R. 58 Madras 746. tract mav be convenient enough as a working applied was whether what -was complained pursuance of a statute. Varadachariar, J. the Court saitl that the cancellation of the necessoary result of what the President thought accordance with the terms of the Act as accept the highest tender and that he did Vice President's acceptance of the plaintiff's pliance with the Act. He further said that a special privilege conferred upon local were authoriz~'d. either to manage the collection or through their own agency or to lease what the President as representing the the leasing out of the right to levy tolls in execution of his powers or duties under

pp. 415–416

We need ,10t consider the correctness the &ssumption that it is correct, it has no There the· Court found that the act connection with the discharge of his statutory duty at any rate, he thought that it was his accept the highest bid. The distinction semblance of authority or show of right in this context has been clearly pointed Borough Municipality v. The Khandesh Mills Co. Ltd.( where the question was of the Bombay Municipal Boroughs Act, filing a suit to recover a sum of money on Court held that an act which is Prima category of acts done or purported to of that Act, and that it is only an act do of authority or with some show of a right category. Bhagwati, J. in the course acts which would fall within the category to have been done in pursuance of the were done under a vestige or sembhmcc of a right and that the distinction between on the one hand and wrongful acts on that they purport to have b~en done in they arc intended to have been done in done with a vestige or semblance of authority in the party doing those acts.

p. 416, margin C

In The Tmstees of Port of Bombay Ltd.e) section 87 of the Bombay Port Trust pari materia with s.64 .of the Act fell for was wheth~r short del!very by a statutory or purportmg to have been done under the course of the judgment, Krishna Jy~r., (l) l.L.R. (1953) Bombay 590 (2) A.LR. said that a suit for damages for breach of contract would not attract the sectior. (see para 46 of the judgment).

pp. 416–417, margin G

As we said, the act complained of in this case was the n0\1-payment of the amount alleged to be due to the respondent on the basis of the breach of the contract between the parties. We do not think that the act complained of could be said to h•ave been done or purported to have been done in pursmrace of the Act. 1 By no stretch of imagination could it be said that the breach complained of had any reasonable connection with any duty cast upon the appell•ant or its agents by the Act.

p. 417

In the result, we disallow the clainis of the respondent in items A-3 and A-4 set aside the decree of the High Court to that extent. We affirm the decree of the High Court in respect of the claims in items C-1 and C-2.. The appeal is allowed to the extent indicated but is dismissed in other respects. We direct the parties to bear their cost in this Court. V.P.S. Appeal allowed in part.

p. 417