J U D G M E N T

The appellants are defendants 1 to 3 in O.S.No.115/2006 before Ist Additional Sub Judge, Thiruvananthapuram. They are Kerala State Industrial Development Corporation Limited represented by the Chief Engineer (hereinafter called as, 'the Corporation') and the Managing Director thereof. The respondent is an Amalgamated Public Limited Construction Company in Chennai (hereinafter called as, 'the Company').

2. The respondent obtained a decree for recovery of money towards cost of work done, materials and security deposit from the appellants after declaring the order of the Corporation terminating the work contract executed between parties as illegal. Being aggrieved, the decree and judgment are challenged in this appeal.

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3. The respondent executed Ext.A2 work contract on 2.3.1998 in favour of the Corporation undertaking to construct a water treatment plant of 5 MLD at Koothuparambu in Kannur for a probable estimate amount of Rs.1,36,29,295/- within a term of 15 months. Security amount of Rs.2 lakhs was also deposited.

4. Ext.A2 contract agreement was, however, cancelled on 13.1.1999 by the Chief Engineer as per Ext.A23 proceedings passed by him on certain grounds. The m