The main legal point established in the judgment is the entitlement of the plaintiff to claim compensation as per the agreement and the lawfulness of the contract termination.

1. Heard Mr. Usgaonkar, learned Counsel appearing on behalf of the appellants and Mr. Rodrigues, learned Additional Government Advocate appearing on behalf of respondent no. 1.

2. This appeal is directed against the judgment and decree dated 30/12/2002 passed by the learned Civil Judge, Senior Division, Bicholim (trial Judge) in Special Civil Suit No. 4/1993/A.

3. The appellants and respondents no. 2 to 6 were the defendants and respondent no. 1 was the plaintiff in the said suit. Parties shall, hereinafter, be referred to as per their status in the said suit.

4. The plaintiff had filed the said suit against the defendants for recovery of a sum of Rs.1,32,781/- together with interest at the rate of 12.5 % from the date of filing of the suit till final payment. Case of the plaintiffs was as follows:- The defendants no. 2 to 8 are the partners of the defendant no. 1. On 01/12/1983, the plaintiff had invited item rate tender and contract for construction of right bank main canal of Anjunem Irrigation Project. The defendants submitted their tender on 31/12/1983 which was accepted by the plaintiff and an agreement for construction of the works was entered into on 31/01/1984 and order was issued on the same day directing the defendants to start the work within 15 days of the issue of order and the date of completion was fixed as 05/12/1985. The said date of completion was extended upto 05/06/1986. A show cause notice dated 26/02/1986 was issued to the defendants followed by final notice dated 16/04/1986 thereby rescinding the contract. After terminating the contract, the balance work was re-tendered and was completed by independent agency. Subsequently, final bill was intimated to the defendants claiming the said amount of Rs.1,32,781/-.

5. The defendants no. 1 and 3 to 8 filed written statement-cum-counterclaim. The case of the defendants was as follows:

The termination was illegal and in abuse of the power and authority vested in the plaintiff. The work could not be completed due to fault of the plaintiff on account of hindrances and delays caused by the plaintiff by giving them small extra job in between without recognizing the same as extra work and without fixing the rate for the same and not issuing work drawings in time. Even the entire site was not handed over before the date of commencement of the work. After the termination, the defendant no. 1 had to incur considerable extra expenditure due to prolongation of work by way of overheads, establishment and other supervisory expenditure and that the extra expenditure was to be recovered from the plaintiff with interest from 16/04/1986.

6. By way of counter claim, the said defendants claimed an amount of Rs. 16,31,715.67/- with interest at the rate of 21 % p.a. from the date of counterclaim till payment. The plaintiff filed written statement to the counterclaim thereby resisting the same.

7. The learned trial Judge framed the following issues:

“1. Whether the plaintiff proves that they are entitled to claim a sum of Rs. 1,32,781/- towards the total dues recovered from the defendants ?

2. Whether the defendant nos. 1, 3 to 8 proves that termination of the contract dated 31/10/1984, on 16/04/1986 was in misuse and abuse of the Power of Attorney and authority vested in the plaintiff under the contract and the law?

3. Whether the defendant no. 1 proves that on account of unlawful termination of the contract by the plaintiff he suffered a loss of Rs.13,14,877.67 p. with interest at the rate of 27 % interest per annum and he is entitled to recover the same from the plaintiff?

4. Whether the plaintiff proves that this Court has no jurisdiction to grant the reliefs prayed in the counter claim?

5. Whether the plaintiff proves that counter claim is non-tenable in law?

6. Whether the plaintiff proves that counter claim is barred by law of limitation?

7. What orders ? What reliefs? ”

8. The plaintiff examined Shri K. A. Sadanand, Assistant Engineer of Irrigation Department, Work