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HIGH COURT OF ANDHRA PRADESH
UMAMAHESWARAM,KRISHNA RAO, JJ.
Dhulipudi Namayya
Versus
The Union of India
Appeal No. 820 of 1952 against decree of Sub-J., Visakhapatnam, in O. S. No. 84 of 1950.
Decided On : 09-11-1957
CONTRACT - Breach - Suit for damages - Tender - Acceptance - Completion of contract - Government of India Act, 1935, S. 175(3) - Mandatory - Contract to be embodied in writing - Correspondence and informal documents - Whether sufficient compliance - Measure of damages - Plaintiff's duty to mitigate damages.
Fact of the Case:
The plaintiff, the Union of India, represented by the Garrison Engineer (M.E.S.), Visakhapatnam, entered into a contract with the defendant for the work of packing, conveying, and loading into railway wagons certain generating sets and machinery belonging to the Government. The defendant submitted a tender, which was accepted by the Garrison Engineer. However, the defendant did not commence the work and, after some correspondence, stated that he would commence the work only if iron materials and cranes were supplied to him by the Garrison Engineer on a no-cost basis. The Garrison Engineer declined to supply them on the ground that under the terms of the contract no materials were to be supplied. The contract was subsequently cancelled, and the work was got executed through another contractor at an extra expenditure of Rs. 9,582-2-0 as compared with the defendant's tender. The plaintiff claimed this amount and an additional sum of Rs. 750-8-0 provided for in the conditions of the contract as compensation for delay in completing the work.
Finding of the Court:
The Court held that there was a completed contract between the parties and that the defendant was liable for breach of contract. The Court also held that the contract was valid and complied with the requirements of S. 175(3) of the Government of India Act, 1935, as it was expressed to be made by the Governor-General and was executed on his behalf by a person who had the necessary authorization. The Court further held that the defendant's contention that performance of the contract was rendered impossible by the plaintiff's refusal to supply a crane and the necessary iron materials was without merit, as the use of a crane was not essential for the work and the defendant had not asked for an extension of time to complete the work. The Court also held that the plaintiff was entitled to recover damages for the breach of contract, but that the amount of damages should be reduced to the difference in expenditure which would have been incurred at the rates offered by the next lowest tenderer, as the plaintiff had failed in his duty to mitigate damages by not making every possible effort to get the work done at intermediate rates.
Issues: 1. Whether there was a completed contract between the parties. 2. Whether the contract was valid and complied with the requirements of S. 175(3) of the Government of India Act, 1935. 3. Whether the defendant's contention that performance of the contract was rendered impossible by the plaintiff's refusal to supply a crane and the necessary iron materials was valid. 4. Whether the plaintiff was entitled to recover damages for the breach of contract. 5. Whether the amount of damages should be reduced due to the plaintiff's failure to mitigate damages.
Ratio Decidendi: 1. A contract is concluded when there is an unconditional acceptance of an offer, even if the acceptance is not communicated to the offeror. 2. A contract is valid and complies with the requirements of S. 175(3) of the Government of India Act, 1935, if it is expressed to be made by the Governor-General and is executed on his behalf by a person who has the necessary authorization. 3. A party cannot avoid a contract on the ground of impossibility of performance if the impossibility was caused by his own fault or neglect. 4. A party who has suffered loss or damage as a result of a breach of contract is entitled to recover damages from the party who committed the breach. 5. A party who has suffered loss or damage as a result of a breach of contract has a duty to mitigate the damages by taking reasonable steps to minimize the loss or damage.
Final Decision: The appeal was allowed to the extent that the amount of damages was reduced to the difference in expenditure which would have been incurred at the rates offered by the next lowest tenderer. The defendant was ordered to pay the plaintiff costs proportionate to the amount decreed to the plaintiff. The lower court's order as to costs was modified accordingly.
KRISHNA RAO, J. : -
This is a defendants appeal from the judgment and decree of the Court of the Subordinate Judge, Visakhpatnam, decreeing the plaintiffs suit to recover Rs. 10,332-10-0 as damages for breach of a contract. The plaintiff is the Union of India represented by the Garrison Engineer (M.E.S.), Visakhapatnam and the defendant is a contractor residing at Kakinada.
The suit contract was for the work of packing, conveying and loading into railway wagons certain generating sets and machinery, which belonged to the Government and were lying at the Floating Dock Area at Kakinada. In July, 1949, the Garrison Engineer, Visakhapatnam, issued a notice Ex. A-3 inviting lump-sum tenders from approved contractors for that work, to be completed within one month from the date of the order to commence, which was proposed to be placed on or about 29-7-1949.
He received tenders from five contractors by 28-7-1949, the last late fixed for the purpose. Out of them, the defendants tender for Rs. 7,155/-Ex. A-4 dated 27-7-1949, was the lowest. Ex. A-4 read with the amendments thereto set out in a list both of which have been signed by the defendant, is in the following terms :
"To the Governor-General of India-Having examined and perused the following documents :
1. Specifications signed by the G. E., Vizaga-patnam.
2. Drawing detailed in the specifications,
3. Schedules A. B. C and D attached thereto,
4. M. E. S. Schedule of prices for works and repairs to buildings, etc., 1817 (hereinafter and in I. A. F. W. 2249 referred to as the MES schedule) together with amendments Nos. 1 to 4 of May 1949,
5. General conditions of contracts I.A.F.W. 2249, together with amendments Nos. 1 to 13. I/We agree to execute all the work referred to in the said documents upon the terms and conditions contained or referred to therein and as detailed in the General Summary below, and to carry out such deviation as may be ordered, vide Condition 7 of I. A. P. W. 2249 up to a maximum of 50 per cent and further agree to refer all disputes as required by condition 58 to the sole arbitration of an M.E.S. Officer to be nominated by the S. E., Poona whose decisions shall be final, conclusive and binding.
GENERAL SUMMARY.
Net cost of buildings etc., (which means works etc., as per amendment)-form schedule A 5184-88. Add 38 per cent (thirty eight per cent only) Contractors percentage-1970 - 7154-88. For the lump sum of Rs. 7,155/- (Rupees seven thousand one hundred and fifty five only)".
2. On 2-8-1949, the Garrison Engineer accepted the tender by signing the following endorsement on it.
"The above tender has been accepted by me on behalf of the Governor-General of India for the lump sum of Rs. 7,155/- rupees seven thousand and one hundred and fifty five only". He also sent a letter, Ex. A-6, communicating the acceptance to the defendant. The defendant received Ex. A-6 on 5-8-1949 but did not commence the work in spite of reminders from the Garrison Engineer. After entering into some correspondence beginning with Ex. A-9 dated 11-8-1949 he stated in Ex. A-26 dated 20-10-1949, that he would commence the work only if iron materials and cranes were supplied to him by the Garrison Engineer on no cost basis. The Garrison Engineer declined to supply them on the ground that under the terms of the contract no materials were to be supplied.
On 26-10-1949, the Commander of the Royal Indian Engineers gave a notice Ex. A-10, to the defendant cancelling the contract with effect from 10-11-1949 for not performing it by the agreed date, as provided for in Cl. 53(c) and (d) of the conditions in I.A.F.W. 2249 governing the contract. Thereafter the work was got executed in November-December, 1949 through another contractor P.W. 2 at an extra expenditure of Rs. 9,582-2-0 as compared with the defendants tender.
The plaintiff claimed in the suit this amount and an additional sum of Rs. 750-8-0 provided for in Cl. 50 of the conditions in I.A.F.W. 2249 as compensation for delay in completing the
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