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2024 Supreme(Online)(Ker) 83197
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE SATHISH NINAN &
THE HONOURABLE MR. JUSTICE JOHNSON JOHN THURSDAY, THE 22ND DAY OF AUGUST 2024 / 31ST SRAVANA, 1946 RFA NO. 533 OF 2013 JUDGMENT AND DECREE DATED 08.02.2011 IN OS NO.35 OF 2005 OF SUB COURT, MUVATTUPUZHA APPELLANTS/DEFENDANTS IN O.S:
1 STATE OF KERALA REPRESENTED BY THE SECRETARY TO GOVERNMENT,WATER RESOURCES DEPARTMENT, SECRETARIAT,THIRUVANANTHAPURAM.
2 THE SUPERINTENDING ENGINEER PROJECT CIRCLE MUVATTUPUZHA.
BY ADVS.
SRI. SUJITH MATHEW, SPECIAL GOVERNMENT PLEADER FOR IRRIGATION ADVOCATE GENERAL OFFICE, KERALA RESPONDENT/PLAINTIFF:
1 P.P.THOMAS, GOVERNMENT CONTRACTOR, PALANNATTIL HOUSE, KUNNACKAL P.O., MUVATTUPUZHA – 682 316. (DIED)
2 ELIZABETH .P.V, PALANNATTIL (H), KUNNACKAL P.O,MUVATTUPUZHA ,ERNAKULAM DISTRICT ,KERALA -682 316.
3 PAUL.P.THOMAS PALANNATTIL,KUNNACKAL,P.O,MUVATTUPUZHA, ERNAKULAM DISTRICT, KERALA-682 316
4 ANNA ANUJI GEORGE .
CHIRAMUKATHU, KOIPURAM,P.O, PATHANAMTITTA DISTRICT, KERALA-689 531.
5 GEORGI PALANNATTIL THOMAS PALANNATTIL (H) ,KUNNACKAL P.O, MUVATTUPUZHA DISTRICT , KERALA-682316 (LEGAL HEIRS OF THE DECEASED SOLE RESPONDENT ARE IMPLEADED AS ADDL.R2 TO R5 VIDE ORDER DATED 18/09/2023 IN IA 1/2023.)
BY ADVS.
SRI.K.BABU THOMAS SMT. DRISYA DILEEP SMT. MARYKUTTY BABU THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 12.08.2024, THE COURT ON 22.08.2024 DELIVERED THE FOLLOWING:
‘C.R’
SATHISH NINAN & JOHNSON JOHN, JJ.
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RFA No. 533 of 2013 ---------------------------------------------------------
Dated this the 22nd day of August, 2024
Economic duress renders contracts void if signed under coercion, reinforcing the principle of fairness in contractual agreements.
Headnote:(A) Contract Law - Breach of Contract - The agreement dated 27.11.1995 is central, stipulating that defendants fail to hand over the work site timely, leading to delays and plaintiffs' claims for unpaid work - Clause 59 allows claims for damages due to delay - Time was the essence of the contract. (Paras 2, 3, 12, 28)
(B) Economic Duress - Supplemental agreements signed by the plaintiff under coercion are void as contravening public policy due to significant power imbalance, acknowledging that the weaker party should not be mitigated to signing unfair agreements. (Paras 23-24)
Facts of the case:
The suit was initiated by a contractor claiming payments for construction works executed under a contract with the defendants, who delayed site handover and lacked timely supply of materials, resulting in significant cost overruns.
Findings of Court:
The trial court affirmed defendants' breach of original contract and ruled supplemental agreements invalid, thus supporting plaintiff's claims based on PWD Schedule of Rates.
Issues: Whether there was a breach of contract by defendants; validity of supplemental agreements; sustainability of trial court's decree.
Ratio Decidendi: The court emphasized that economic duress invalidates contracts signed under unfair pressures, stressing the need for fairness in contractual dealings, referring to the principle that unequal power dynamics warrant judicial intervention to ensure justice.
Result: Appeal is disposed of with modification on interest awarded.
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 coe
