Judgement

Consolidated Appeals (No. 65 of 1936) from a judgment and decree of the High Court (May 23 and July 3, 1934) varying a judgment and decree of the Additional Subordinate Judge at Alipore, 24 Parganas, Bengal (March 14, 1931).

The main questions for consideration in this consolidated appeal were whether or not certain contracts,

Law. Rep. 65 Ind. App. 66 ( 1937- 1938) Bengal Nagpur Railway C ompany, Limited V. Ruttanji Ramji 215

dated March 31, 1920, entered into by the predecessor in interest of the plaintiffs and relating to the construction of a portion of a railway for the appellant railway company, and containing (inter alia) the rates of payment, were abandoned by mutual consent of the parties, and, if abandoned, what were fair and reasonable rates to be paid for the items of work done, and whether any and what rate of interest, and for what period, should be paid on any balance found to be due for the work done, after crediting part payments. The suit was instituted on November 29, 1927, the work having been completed early in 1925. In particular the question in this appeal was whether the Court had authority to allow interest for the period prior to the institution of the suit in respect of any sum found to be due to the plaintiffs.

The facts appear from the judgment of the Judicial Committee.

The Subordinate Judge held that the original rates scheduled to the contracts were abandoned by the mutual consent of the parties, and he assessed the price of the work done, on the basis of fair and reasonable rates, at Rs.87, 839.

On appeal, the High Court (Mitter and Patterson JJ.) also held that there had been an abandonment of the original contractual rates by mutual consent after the date of the contracts, but they reduced the sum recoverable by the plaintiffs, which the defendant railway company were liable to pay them on July 26, 1925, to Rs.66,980-10-6, and in addition to awarding interest from the date of the institution of the suit allowed interest by way of damages caused to the plaintiffs for the wrongful detention of their money by the railway company for the period before the institution of the suit. The appeal is reported at ( 1935) I. L. R. 62, C. 175.

1937. May 28, 31, June 1, 3, 4, Charles Bagram and L. M. Jopling for the Bengal Nagpur Railway Co., Ld.

Dunne K.C., J. M. Parikh and P. N. Mitra for the respondents in the first appeal and the appellants in the second appeal.

1937. Dec. 20. The judgment of their Lordships was delivered by Sir Shadi Lal. These consolidated appeals arise out of an action brought by the plaintiffs to recover from the Bengal Nagpur Railway Company, Ld. (hereinafter referred to as “the railway "), a certain sum of money on account of the price of the work done by them for the railway. The circumstances which have led to the litigation may be shortly stated. On March 31, 1920, one Ramji Madhoji (described hereinafter as the contractor), the predecessor in interest of the plaintiffs, entered into three contracts with the railway for doing earth work, bridge work and miscellaneous work respectively, in the construction of a branch railway line known as Amda Jamda branch. The terms of each contract, which were embodied in a document variously described as schedule of works or schedule of rates, prescribed (inter alia) the rates at which payments were to be made to the contractor for various items of work to be done by him.

In May, 1920, the contractor commenced work in the section of the line allotted to him, but he soon found that, owing to the wild and uninhabited nature of the locality through which the line had to pass, and to other local disadvantages, it was difficult to induce labourers from distant places to come and work there; and he encountered many other difficulties. He did not take long to realise that the rates specified in the schedules were wholly inadequate, and asked for their enhancement. The railway recognised the reasonableness of the claim, and enhanced the ra