SUPREME COURT OF INDIA
D.A. DESAI, A.P. SEN AND V. BALAKRISHNA ERADI, JJ.
M/s. A.T. Brij Paul Singh and Bros., Appellant
Versus
State of Gujarat, Respondent. 1704
Civil Appeal No. 2054 of 1973
Decided on 25-7-1984.
Advocates appeared
Mr. S.L. Aneja, K. L. Taneja and P. Aneja, Advocates, for Appellant; Mr. T. U. Mehta, Sr. Advocate, M/s. R. N. Poddar and Girish Chander, Advocates, with him for Respondent.
* F. A. No. 599 of 1964, D/- 15-3-1972 (Guj).
Constitution of India,1950 - Article 133 (1) (a) - Invitation to tender - Contract - Breach of contract - An invitation to tender sought by erstwhile State for providing cement concrete surface to road for miles 18 to 40 measuring from Rajkot end, appellant submitted his tender quoting 712% lower than estimated cost of works in amount - Tender of appellant was accepted as per letter of Executive Engineer, Road Development Division - As agreed to between parties, appellant furnished security deposit in amount and contract documents were executed between parties - Appellant commenced work, and completed sub-grading of road in a distance of 5 miles and 5 furlongs and furnished cement concrete surface in length of 21 miles - Certain disputes arose between parties as a result of which respondent rescinded contract imputing that as time was of essence of contract and as appellant failed to execute work within stipulated time he was guilty of committing breach of contract - Final bill in respect of work done by appellant was prepared but payment thereunder was accepted by appellant under protest - Whether appellant-contractor was entitled to recover damages for loss of expected profits and rejected claim for want of proof - Whether adequate proof is tendered to sustain claim - Held, In Court opinion, while estimating loss of profit that can be claimed for breach of contract by other side, it would be unnecessary to go into minutest details of work executed in relation to value of work contract - A broad evaluation would be sufficient – Court in this connection, invited both learned counsel for appellant and learned counsel for respondent to give broad features of work as well as portion of work executed by appellant - High Court has examined claim under both heads - Items claimed under various sub-heads under each major head have been separately examined by High Court bringing to bear upon each sub-head detailed evaluation of evidence - In process High Court had allowed an amount under various sub-heads under major heads 2 and 3. While reaching this conclusion, High Court minutely examined, evidence and substantially rejected claim - Having read judgment Court are not disposed to take a different view of matter, claim under these two heads except to extent allowed by High Court have been rightly rejected and we agree with the reasoning and conclusion of High Court in this behalf - Appeal partly allowed.
Yes, the court in this case did establish a principle regarding the measure of damages for a contractor who is illegally deprived of executing a work. The court recognized that when a party breaches a contract, the injured party is entitled to damages, including loss of expected profit. Furthermore, the court indicated that in cases involving similar types of work, a standard measure for loss of profit can be taken as a percentage of the value of the remaining work, with 15% being considered a reasonable and acceptable estimate based on the circumstances of the case. This principle was applied to quantify damages for loss of profit in the context of breach of contract related to work execution (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) .
JUDGMENT
DESAI, J.—This appeal was heard along with C. A. No. 1998 of 1972 between the same parties and raising certain identical questions. In the course of hearing of both the appeals inevitably it was pointed out that with regard to identical questions the two Benches of the same High Court, though one learned Judge was common to both the Benches, arrived at irreconcilable conclusions which has to some extent resulted in denial of justice to the appellant. It would be our attempt to reconcile the approach of the Court in both the matters keeping in view the limitation oil account of the two suits having not been consolidated and evidence recorded separately in each matter.
2. On an invitation to tender sought by the erstwhile State of Saurashtra for providing cement concrete surface to Rajkot Jamnagar road for miles 18 to 40 measuring from the Rajkot end, the appellant submitted his tender quoting 712% lower than the estimated cost of the works in the amount of Rs. 16,59,900/- Only. The tender of the appellant was accepted on July 6, 1954 as per the letter of the Executive Engineer, Road Development Division, Rajkot. As agreed to between the parties, the appellant furnished security deposit in the amount of Rs. 24,885/- and the contract documents were executed between the parties. The only term of the contract which at present needs noting is that the work was to be executed within a period of 14 months from the date fixed by the written order to commence the work. Indisputably, the appellant commenced the work, and completed sub-grading of the road in a distance of 5 miles and 5 furlongs and furnished cement concrete surface in the length of 21 miles. Certain disputes arose between the parties as a result of which the respondent rescinded the contract imputing that as the time was of the essence of the contract and as the appellant failed to execute the work within the stipulated time he was guilty of committing breach of contract. The final bill in respect of the work done by the appellant was prepared but the payment thereunder was accepted by the appellant under protest. The appellant thereafter filed a suit claiming Rs. 7 lakhs by way of damages, goodwill, prestige and loss of expected profit, Rs. 3 lakhs by way of damages on account of loss sustained while executing the work and Rs. 1 lakh as damages for the extra work done by the appellant. The total claim was of Rs. 11 lakhs. The State of Bombay as the defendant resisted the suit on diverse grounds inter alia contending that the rescission of the contract consequent upon the breach of contract committed by the appellant was just, legal and valid. It was contended that as the time was of the essence of the contract and the commencement order was served on the appellant on July 26, 1954 and as the appellant failed to complete the work within the stipulated period of 14 months from the date of the commencement order the defendant was justified in rescinding the contract. All the claims as to damages and damages for extra work and damages by way of loss of profit were denied and the plaintiff was put to strict proof thereof.
3. The learned trial Judge framed as many as nine issues. Issue No. 4 was : whether the plaintiff proves that the work contract has been illegally rescinded by the defendant. The learned Judge held that the rescission of the contract by the defendant in the circumstances found proved by him was not illegal. With regard to the claim for damages the learned Judge, held that even though Swarnsingh, the witness on behalf of the plaintiff has given minutest details and measurement of the work executed by the contractor orally, no documentary evidence is produced to substantiate the claim and therefore, the plaintiff has failed to prove the damages as claimed in the plaint. Accordingly, plaintiffs suit was dismissed. As the suit was filed in forma pauperis, a direction was given that the court-fee be recovered from the plaintiff.
4. The Plaintiff preferred C
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