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2025 Supreme(Online)(Mad) 64413
IN THE HIGH COURT OF JUDICATURE AT MADRAS
MR. SENTHILKUMAR RAMAMOORTHY, J
M/s.Simplex Infrastructure Limited – Appellant
Versus
Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) – Respondent
C.S. No.435 of 2000
For the Appellants/Petitioners: Mr.Thriyambak J.Kannan, Ms.Oviya Nila Muralidharan, Ms.Varsha K.Sukumar
For the Respondents: Ms. M.Sneha
In contractual disputes, claims for additional payment or escalation must be clearly provided for in the contract to be enforceable, and inadequately substantiated counterclaims are not sustainable.
Headnote:(A) Civil Procedure Code, 1908 - Order VII Rule 1 - Contracts - Plaintiff claimed recovery of Rs.3,81,72,555.01/- with interest & mandatory injunctions for completion certificates and bank guarantees from Defendant - Plaintiff completed various works for Government projects, facing various delays attributed to Defendant; Defendant counter-claimed, alleging excess payments and delays caused by Plaintiff. (Paras 1-80)
(B) Contracts - Claims for additional work - Escalation claims and idle time claims were held not maintainable as per contract terms, as various causes of delay were attributable to Defendant and counterclaims were inadequately substantiated. (Paras 24, 62)
Facts of the case:
The Plaintiff, Simplex Infrastructure, entered into multiple contracts with the Defendant, TANGEDCO, for civil and structural works at specific projects but faced various delays, which the Plaintiff attributed to the Defendant's lapses. The Plaintiff sought recovery for unpaid bills and mandatory injunctions to obtain completion certificates and return of bank guarantees.
Findings of Court:
The Plaintiff was entitled to recovery of Rs.39,69,964/- with interest at 9%. The Defendant was directed to issue completion certificates and return the bank guarantees.
Issues: The main issues revolved around the Plaintiff's claims for monetary recovery, completion certificates & return of bank guarantees against the Defendant's counterclaims.
Ratio Decidendi: The court ruled on the inadequacy of the Defendant's substantiation for counterclaims and the Plaintiff's entitlement to compensation and completion certificates based on contract terms and the extent of delays attributable to either party.
Result: The suit was decreed in favor of the Plaintiff for monetary recovery and injunctions.
| Table of Content |
|---|
| 1. contracts awarded for various construction works. (Para 1 , 2) |
| 2. claims and counterclaims arising from contracts. (Para 3 , 4 , 5 , 6 , 7) |
| 3. arguments regarding specific project delays. (Para 9 , 10 , 12 , 13) |
| 4. further contentions regarding delays in contract execution. (Para 14 , 15 , 16) |
| 5. overview of arguments presented by counsel. (Para 17 , 18) |
| 6. discussion on issues of delay and counterclaims. (Para 19 , 20 , 21) |
| 7. findings on claims and counterclaims. (Para 22 , 23 , 24 , 25) |
| 8. rejection of counterclaims based on lack of proof. (Para 26 , 27 , 28) |
| 9. claims for escalation and damages analyzed. (Para 29 , 30 , 31) |
| 10. final determination regarding monetary claims. (Para 32 , 33 , 34) |
| 11. conclusions about return of guarantees and completion certificates. (Para 35 , 36) |
| 12. determination of costs and final order. (Para 37 , 38 , 39) |
| 13. overall judgement summation and order. (Para 40) |
JUDGMENT
Background
Simplex Concrete Piles (India) Limited, the plaintiff, was awarded three contracts by the Tamil Nadu Electricity Board, the defendant. Both these entities underwent a name change later. The former was renamed as Simplex Infrastructure Limited and the latter as the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO). Amendments to this effect were allowed by order dated 04.11.2013 in Application No. 5053 of 2013. The first contract was in respect of civil work for the coal handling system for the Tuticorin Thermal Power Project. The second contract related to piling work for the Basin Bridge Gas Turbine Power Project and the third contract related to civil and structural works for the Basin Bridge Gas Turbine Power Project. Claims and counter claims arising out of the above mentioned three contracts form the subject of the suit.
2. The plaintiff has sought recovery of an aggregate sum of Rs.3,81,72,555.01/- with interest at 20% per annum on Rs. 2,29,87,159.01/- from the date of the suit till the date of realisation. In addition, mandatory injunctions directing the defendant to issue completion certificates in respect of the above mentioned projects and in relation to bank guarantees issued for and on behalf of the plaintiff have also been sought. Pursuant to order dated 03.08.2000 in O.A. No.567 of 2000, the bank guarantees provided to TANGEDCO at the instance of the plaintiff for an aggregate sum of Rs.72,00,000/- were cancelled subject to the provision of a bank guarantee for Rs. 24,00,000/-. Consequently, the relief claimed in respect of the bank guarantees remains valid only to that limited extent. In the written statement first filed, the defendant made a counter claim for Rs.1,21,98,250/-. By order dated 01.07.2009 in Application No.655 of 2003, the defendant was permitted to amend the written statement albeit with effect from the date of order. In the amended written statement, the defendant made a counter claim for Rs. 1,34,07,627/-.
Pleadings, issues and evidence
3. With regard to the civil work contract for the coal handling system, in the plaint, the plaintiff states as follows:
3.1. The letter of acceptance dated 03.03.1989 fixed the contract value at Rs.2,90,99,275/-. A Schedule of Rates (SOR) was appended to the letter of acceptance and such rates were intended to be firm up to a variation of ± 25% of the contract value. A formula was fixed for payment of compensation in case the contract value fell below or exceeded the stipulated value by more than 25%. The time for completion was 18 months from the date of letter of acceptance or date of handing over of the site, whichever is later. About 2 ½ years after the contract was awarded, the plaintiff was called upon to undertake the additional work of construction of reclaiming hopper and conveyor tunnel on 11.09.1991. The time for completion of this work was 12 months from the date of handing over on 27.09.1991. The execution of work was delayed for multiple reasons attributable to TANGEDCO, including failure to supply power; failure to
