IMPORTANT POINT
The court established that contracts signed under economic duress are void, emphasizing the importance of equal bargaining power in contractual agreements.

JUDGMENT :

JOHNSON JOHN, J

The appellants are the defendants in O.S. No. 35 of 2005 on the file of the Sub Court, Muvattupuzha.

2. The suit is for declaration and realization of unpaid value of works conducted by the plaintiff. The plaintiff is a Contractor who entered into an agreement with the defendants on 27.11.1995 for the construction of Mulakulam Branch canal from CH.4400 metres to 5650 metres, including cut and cover and cross drainage works. The agreement was executed after the acceptance of the tender on 25.11.1995. The agreement incorporated MDSS as the main part of the contract with the PWD Schedule of Rates of 1992.

3. As per the agreement, Rs.3,69,72,007/- was the probable amount of contract and the time fixed for performance was 12 months. Even though, the plaintiff made necessary arrangements for the execution of the work in time, the defendants failed to hand over the work site within two months as per the terms in the agreement. The time for handing over the work site expired on 27.01.1996 and the time fixed for performance expired on 27.01.1997. The defendants handed over possession of the work site to the plaintiff only on 17.10.1997 and the second defendant approved the initial level measurement of earth work excavation only on 23.12.1997.

4. Though, the defendants handed over possession of the work site on 17.10.1997, the standing trees, electric and telephone posts in the alignment of the canal were removed by the defendants only after 23.04.1998. The design, drawings and structural particulars were supplied to the plaintiff only during the last week of June, 1998. The initial measurements for blasting and removal of hard rock were approved by the second defendant only on 27.09.1998. The defendants failed to supply cement and steel items as agreed. The defendants also delayed payment of part bills and effected unauthorized and illegal recoveries from the bills.

5. As per clause 59 of MDSS, the plaintiff is entitled to claim damages for the delay caused by the defendants and for payment at market rates. Since the Government banned excavation of sands from the source of supply specified in the contract during 2001, the work was delayed and the plaintiff had to procure sand from distant places by incurring huge transportation expenses, and the same was not reimbursed by the defendants. The work was completed on 30.12.2002, after 3 1/2 years from the coming into force of 1999 PWD Schedule of Rates. The defendants were withholding the payments due to the plaintiff and they exerted undue influence and coercion on the plaintiff to sign supplemental slips for extension of time.

6. It is stated that the supplemental slips are vitiated by undue influence, coercion and duress and were for unjust enrichment of the defendants and are unauthorized and illegal. It is stated that the plaintiff carried out the works beyond 27.01.1997 and therefore, the plaintiff is entitled for market rates as per 1996 and 1999 PWD Schedule of Rates.

7. The main contentions in the written statement of the defendants are that, the defendants are not responsible for the delay in completion of the work. Even though, the site was handed over to the plaintiff only after 23 months from the date of execution of the agreement, the plaintiff was ready to do the work as per the conditions in the original agreement and he did not raise any objection when the site was handed over on 17.10.1997. The measurements for earth work were taken and approved by the Department as per rules, and the Department was also prompt in supplying materials to the plaintiff. As per the agreement, the plaintiff is not entitled to claim any extra costs for purchasing materials from the open market. The payments were made to the plaintiff subject to the availability of letter of credit and funds considering seniority of bills. There was no illegal or unauthorized recovery as alleged by the plaintiff. It is stated that the plaintiff signed the supplemental agreements without any c