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rpa

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURSIDICTION

FIRST APPEAL NO. 1145 OF 1992

ALONGWITH

FIRST APPEAL NO. 1146 OF 1992

Maharashtra State Electricity

.. Appellant in

Board, Kalwa

both Appeals

V/s.

M/s. Gurukrupa Builders,

.. Respondent

Ulhasangar – 2, Dist.- Thane

both Appeals

.....

Ms. A.R. S. Baxi for the Appellant in both Appellant.

None for the Respondent.

.....

CORAM : A.S.OKA, J.

DATE : SEPTEMBER 12, 2011.

ORAL JUDGMENT :

Heard the learned Counsel appearing for the

Appellant in support of the Appeal. There were two suits

filed by the Respondent being Special Civil Suit No.46 of

1985 and Special Civil Suit No.226 of 1986. The Appellant

MSEB had invited tenders for work of construction of

permanent rail track in 400/200 KV-Sub-Station at Kalwa,

District Thane. The tender was filled in by the

Respondent-plaintiff. The tender of the Respondent was

accepted. Work order was issued to the Respondent on

14^th May, 1979. The cost of work was Rs.7,25,257.65 and

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the work was to be completed within a period of two

months from the date of handing over the site. Further

work of pile foundation was given to another contractor.

In Special Civil Suit No. 46 of 1985, it was contended that

there was delay on the part of the Appellant in handing

over the site and, therefore, the Respondent could not

commence the work. It was alleged that day to day work

drawings were not provided to the Respondent. It was

alleged that the Appellant did not hand over the mild steel,

cement, and other material to the Respondent in time.

Reliance is placed on the correspondence made by the

parties. It is alleged that by the letters dated 8^th April,

1990 and 22^nd April, 1990, the contract was terminated by

the Appellant. It is alleged that without offering a

reasonable opportunity to explain, the contract was

terminated. Under the terms of the contract, the

Respondent has furnished a bank guarantee in the sum of

Rs.52,266/-. It is alleged that the Appellant tried to invoke

the Bank guarantee of Rs.52,266/-. A reference is made to

the letter dated 11^th February, 1985 issued by the Appellant

for invoking the Bank Guarantee. The prayer in the first

suit i.e. Special Civil Suit No.46 of 1985 is that the letter

dated 11^th February, 1985 issued by the Executive Engineer

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of the Appellant be declared as ineffective, illegal and

contrary to the terms of contract. The second prayer is of

perpetual injunction restraining the Appellant from

recovering the amount covered by the Bank Guarantee of

Rs.56,266/-. The suit was contested by filing written

statement. It was contended that there was no default on

the part of the Appellant. It was contended that by letter

dated 4^th August, 1980, the Appellant called upon the

Respondent to remit a sum of Rs.74,500/- towards risk

and costs. It was contended that as the Respondent has

committed breach of contract, the Appellant was entitled to

invoke the Bank Guarantee.

2.

During the pendency of the said earlier suit, the

Respondent filed a suit for recovery of a sum of

Rs.2,55,783.30 against the Appellant. The said claim was

made on account of balance amount of third running bill,

the work done after the third running bill, extra work

done, increase in costs of materials, costs of overheads and

establishment expenses. Interest was prayed for at the rate

of 18% per annum from the date of the notice till the filing

of the suit. The said amounts were claimed on the ground

of alleged illegal termination of the contract by the

Appellant. The prayer in the second suit is for declaration

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that letter dated 22^nd April, 1980 issued by the Appellant of

termination of the co