JUDGEMENT :

The unsuccessful plaintiff is the appellant before this Court, challenging the Judgment and Decree passed by the III Additional City Civil Judge, Chennai in O.S.No.8999 of 2010. The parties for the ease of understanding are referred to in the same litigative status as before the Trial Court.

2. The facts in brief which are necessary for considering the dispute on hand is herein below extracted.

Plaintiff's Case:

3. The plaintiff has filed this suit for recovery of a sum of Rs.23,44,879/- together with the interest at 12% per annum from the date of the plaint till the date of realization. It is the case of the plaintiff that he had been awarded the contract for constructing a new emergency operation theater for the ante natal ward at the Government Women and Children Hospital (IOG) Egmore. The value of the contract was a sum of Rs.1,57,24,982/- and the contractor was given nine months time for completing the work and handing over the site. The agreement dated 27.01.2004 was entered into between the parties encapsulating the terms of the agreement. In compliance with the terms of the agreement, the plaintiff had deposited a sum of Rs.5,98,000/- towards the Earnest Money Deposit (EMD) and Security Deposit (SD). The site was handed over on 10.03.2004 and therefore as per the terms of the agreement the plaintiff was to complete the construction on or before 09.12.2004.

4. It is the case of the plaintiff that when he had tendered, the cost of steel was in the range of Rs.19,000/- per metric tonne and consequently, he had quoted for the tender. Thereafter, the price of steel had increased to a sum of Rs.28,000/- per metric tonne which further escalated to a sum of Rs.29,300/- which in effect increased the cost by 47%. He would submit that as per clause 5(3) of additional condition 1 and 14(vii) of the agreement where materials are supplied by the Department and price escalates then additional cost would be added. He would therefore submit that the reverse should be applied even in the case of the contractors.

5. It is his specific case that the demand for being compensated for the rise in price did not amount to an escalation of price but only a variation on account of the rising cost which was beyond the control of the plaintiff. The plaintiff would therefore submit that as per the agreement the quantity of steel that was to be supplied was 109 metric tonnes, which was concluded at the rate of Rs.19,000/- per metric tonne. The cost of steel fabrication was Rs.27,23,150/- for 109 metric tonnes. However, on account of the increase in price of steel to a sum of Rs.29,300/- per metric tonne, the differential cost (the increase) for 109 metric tonnes worked out to a sum of Rs.12,79,879/- and adding the cost of fabrication the differential value worked out to a sum of Rs.16,99,879/. This factor was brought to the notice of the defendants vide the plaintiff's letter dated 10.09.2004.

6. However, the defendants by their reply dated 01.10.2004 cited chapter IV of the Transparency of Tender Act, 2000, to state that the price escalation would apply only to the contract which exceeded a period of eighteen months. In the instant case, the period was only nine months. This prompted the plaintiff to issue a legal notice dated 19.05.2006 stating that the Act would not apply to the facts of the instant case as admittedly the price of the steel has increased and the terms could not have been incorporated into the original contract.

7. He would also submit that there was about a three month gap between the date of acceptance of the tender, its communication, the signing of the agreement and the handing over of the site. Therefore, he would contend that the defendants are liable to pay a sum of Rs.16,99,879/- towards the differential cost and they were also liable to refund a sum of Rs.5,85,000/- towards deposit and a sum of Rs.1,60,000/- towards the final bill together with the interest at 12% on the said amount. Since the payments were not made,