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High Court of Judicature at Madras
R. BANUMATHI & M.M. SUNDRESH
M/s. Karpara Project Engineering Represented by its Managing Partner P.V. Nair
Versus
Bellarpur Industries Ltd., Rep. by its Managing Director, New Delhi & Others
O.S.A. NO.113 OF 2004
Decided on : 28-02-2011
Privity of Contract - Erection of Boilers - C.S.No.623 of 1997 - The Indian Contract Act, 1872, Section 2(h); The Specific Relief Act, 1963, Section 16(c); The Arbitration and Conciliation Act, 1996, Section 7 - The court held that there was no privity of contract between the appellant and the third defendant, who was only a certifying agent for the bills claimed by the appellant against the first defendant. The claim against the third defendant was dismissed due to the absence of evidence of a contract and the lack of liability on the part of the third defendant.
Fact of the Case:
The appellant, a partnership firm, entered into a contract with the first defendant for the supply, erection, and commission of boiler units. The third defendant, a certifying agent, was not found to have a privity of contract with the appellant. The appellant claimed a sum of Rs.62,66,790/- from the defendants for the work done.
Finding of the Court:
The court found that there was no privity of contract between the appellant and the third defendant, who was only a certifying agent for the bills claimed by the appellant against the first defendant. The claim against the third defendant was dismissed due to the absence of evidence of a contract and the lack of liability on the part of the third defendant.
Issues: 1. Privity of contract between the appellant and the third defendant. 2. Entitlement of the plaintiff to claim any amount from the third defendant. 3. Relief entitled to the parties.
Ratio Decidendi: The court held that the appellant failed to prove the existence of a contract with the third defendant and the liability of the third defendant for the claimed amount. The absence of evidence and contradictory legal notices led to the dismissal of the claim against the third defendant.
Final Decision: The appeal was dismissed, and the judgment and decree in C.S.No.623 of 1997 dated 17.07.2001 were confirmed. No order as to costs was made.
M.M. SUNDRESH, J
1. This Appeal has been preferred by the unsuccessful plaintiff in so far as the dismissal of the Suit against the 3rd defendant/ 3rd respondent is concerned in C.S.No.623 of 1997 dated 17.07.2001.
The case of the appellant/plaintiff is as follows:
2. The appellant is a partnership firm doing business in the erection of boilers, power plants, etc. The first defendant / first respondent was in requirement of a substitution for its boiler. The third defendant entered into a contract with the first defendant for the supply, erection and commission of boiler units on a turnkey basis. The appellant did the dismantling of the then existing boiler, apart from unloading, erection and commissioning of new boiler at the first defendant's Unit, on the basis of the contract given by the first defendant at the instance of the third defendant. The appellant also executed other works such as fabrication of main boiler components and works, which are incidental to the main erection work. The appellant was directed to postpone the work which commenced only in the month of December, 1992.
3. The third defendant has requested the first defendant to release the work order to the appellant. The draft copy of the work order was received by the appellant on 11.01.1993. The appellant found that the scope of the work detailed therein was not limited to those in the earlier enquiry of the third defendant and also beyond those offered in the quotation of the appellant. The appellant brought to the notice of the third defendant of the letter dated 11.01.1993. However, without any rectification, a work order was issued by the first defendant to the appellant on 19.01.1993. In the work order dated 19.01.1993, the consideration was fixed at Rs.50,00,000/-. The scope of the work detailed in Annexure-I to the said work order dated 19.01.1993, is beyond those specified in the offer dated 03.08.1992 given by the appellant. The issue was discussed with the defendants by the appellant and it was assured orally that the appellant is limited to those quoted by them i.e. of a total value of Rs.40,80,000/-. The assurance was also kept by the defendants, in so far as the works outside the quotation given by the appellant was entrusted and got done by the first defendant through other agencies and the said lumpsum payment of Rs.40,80,000/- alone was made to the appellant.
4. While executing the works, extra work had to be carried out by the appellant on a man hour basis on the following categories:
"a) Modification, rectification in consequence of design and fabrication faults.
b) Making good the short supplied small and miscellaneous items and
c) Creation of additional facilities as per requirements of the owners. The details in this regard are the following. The supplier of the boiler viz. the 3rd defendant was to supply the components in a readily fit condition for erection, but due to variation in dimensions, specification or design faults etc. the products supplied were not in harmony with those erected or to be erected. In such events, further progress in erection or completion of boiler was possible only after the defects or deficiencies were rectified. Besides, the short supply of small items found or arisen during erection, had to be made good by the erection contractor (Plaintiff). The plaintiff also had to comply with the requirement of the customer to create additional & better facilities suggested / demanded by the 1st defendant from time to time. These works are of sporadic occurrence and the input varies from one to the other. These works are not also susceptible of measurements and the only way of ascertaining the reasonable cost of such works is to ascertain the man hours of efforts put in for such work. It is therefore the standard Engineering practice prevalent in such contracts to ask the contractors to do these works on man hours basis. The man hour rate quoted should include normal & over time wages, the cost of consumables,
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