JUDGMENT

SABYASACHI MUKHARJI, J.:— This is an application for leave to appeal under Article 136 of the Constitution from the judgment and order of the High Court of Gujarat dated 29th April 1988 (reported in AIR 1988 Guj 233).

2. To appreciate the questions involved herein, a few facts have to be emphasized. In 1978, the State Government of Gujarat undertook a scheme known as Bhavnagar City Water Suppjy Scheme. The Scheme was divided into two parts : (1) Raising Main; and (ii) Gravity Main. Raising Main was divided into two sections, namely, 10.1kms. and 7.4 kms. steel welded pipeline. On or about 15/16th December, 1978, the State Government issued letter of approval to the bargain between the parties on certain terms.

3. On 12th January, 1979, two contracts were awarded to the respondent No. 1 for Rs. 1,29,39,691/- and Rs. 94,30,435/- which provided the date of completion as February 1979 and the 3rd week of September, 1980 respectively. On 29th March, 1981 the respondent No. 1 filed the Civil Suit No. 588 of 1981 in the City Civil Court with regard to measurements recorded by the Deputy Engineer and alleged underpayments. On 4th June, 1981, the respondent No. 1 gave notice to the S