Judgment

KOSHAL, J.:- The facts giving rise to this appeal by the two defendants (who are the State of Maharashtra and one of its Executive Engineers) on certificate granted by the High Court of Bombay against its judgment dated 11th July 1968 may be briefly stated. In the year 1955, defendant No. 1 decided to construct an aqueduct over Kulthi Nala situated in Malegaon Sub-Division of Nasik district. The Executive Engineer, Nasik Irrigation Division, invited tenders for the work which was entrusted to the plaintiff in acceptance of his tender on conditions reduced to writing in the from of exhibit 66. The estimated cost of the work was Rs. 1, 55,854-00 and it was to be completed within 12 months from the date of the written order to commence it which happened to be the 16th of May 1955. The plaintiff paid a sum of Rs. 1.558 as earnest-money and another of Rs. 3,896 as security deposit to defendant No. 1. Clauses (2) and (3) of the contract in accordance with which the work was to be executed provided as follows:-

"(2) The time allowed for carrying out the work as entered in the tender shall be strictly observed by the contractor xx xx The work shall throughout the stipulated period of the contract be proceeded with all due diligence (time being deemed to be of the essence of the contract on the part of the contractor) and the contractor shall pay as compensation an amount equal to one per cent or such smaller amount as the Superintending Engineer xx xx xx may decide xx for every day that the work remains uncommenced, or unfinished after the proper dates. And further to ensure good progress during the execution of the work, the contractor shall be bound, in all cases in which the time allowed for any work exceeds one month, to complete

in 1/4 of time 1/10 of the work,

" 1/2 of time 4/10 of the work,

" 3/4 of time 8/10 of the work

xx xx xx"

"(3) In any case in which under any clause or clauses of this contract the contractor shall have rendered himself liable to pay compensation amounting to the whole of his security deposit xx xx or in the case of abandonment of the work owing to serious illness or death of the contractor or any other cause, the Executive Engineer xx xx xx shall have power to adopt any of the following courses:-

(a) to rescind the contract (of which rescission notice in writing to the contractor under the head of the Executive Engineer shall be conclusive evidence) and in that case the security deposit of the contractor shall stand forfeited and be absolutely at the disposal of the Government.

(b) xx xx xx

(c) xx xx xx

In the event of any of the above courses being adopted by the Executive Engineer, the contractor shall have no claim to compensation for any loss sustained by him."

Clauses (4) and (5) of the contract related to action to be taken when the progress of any particular portion of the work was found unsatisfactory. Provision was made in the contract for interim payments of running bills submitted by the plaintiff and for final payment to him agaisnt a certificate of completion of the work. Clause (6) of the contract provided for extension of time during which the work was to be completed, in pursuance of applications to be made by the plaintiff. A provision was made in clause (14) of the contract for extension of time as a consequence of additions to or alterations in the work.

The plaintiff started executing the work and by December 1955, running payments amounting to Rs. 13,967 in all had been made to him against bill submitted by him. In the month of March 1956, Shri Y. A. Shinde, defendant No. 2, came to occupy the post of Executive Engineer in Nasik Irrigation Division and called upon the plaintiff to speed up the execution of the work as the progress thereof was not satisfactory. However, the work continued to be executed at a snails pace and on May 9, 1956, the plaintiff made an application (exhibit 54) for extension of the time fixed for completion of the work by a period of six months. That applica