PETITIONER:
STATE OF GUJARAT
Vs.
RESPONDENT:
DAHYABHAI ZAVERBHAI
DATE OF JUDGMENT: 24/02/1997
BENCH:
K. RAMASWAMY, G.T. NANAVATI
ACT
HEADNOTE
JUDGMENT
ORDER
Delay condoned.
Leave granted. We have heard learned counsel on both sides.
This appeal by special leave arises from the judgment of the Gujarat High Court, dated August 21, 1995 passed in First Appeal No.3875/95.
Admittedly the respondent-contractor had entered into an agreement No.B-1/17 of 1981-82 to complete the work of protective measures for the road bridge across river Ambica. The appellant had issued the work order on June 3, 1981. It is true that there was a delay in handing over the work sheet and the specifications. But the trial Court after considering the entire evidence had noted its finding thus:
"In the present case the land on
which the construction work was
required to be made was a land of
the Government and not of private
party or private owner, so there
was no hurdle in the construction
work of the plaintiff but the
plaintiff himself has left the
construction and hence, in the
present case, only the plaintiff
can be held a person who has
revoked the contract. Before
revoking the contract, the
plaintiff was given sufficient time
and reasonable opportunity to
complete the work but the plaintiff
has not done anything to complete
the work and left the work and the
sit so we have no option, the
deft/Department to take the
decision for revocation of the
contract."
In view of the above finding, the inevitable conclusion is that the respondent had abandoned the execution of the work in spite of the opportunity having been given to him to complete the work. Clause 3 of the Contract reads as under:
"Clause-3: In any case, in which
under any clause or clauses of this
contract the contractor shall have
rendered himself liable to pay
compensation amounting to the whole
of his security deposit (whether
paid in the sum or deduction by
instalments) or in the case of
abandonment of the work owing to
serious illness or death of the
contractor or any other cause,
Executive Engineer, on behalf of
the Government of Gujarat shall
have power:-
(a) to rescind the contract(of
which recession notice in writing
to the Contractor under the hand of
the Executive Engineer shall be
conclusive evidence) and in that
case the security deposit of the
Contractor shall stand forfeited
and be absolutely at the disposal
of Government.
That in view of this express
provision the Hon’ble High Court
erred in holding that the
petitioner/State is not entitled to
forfeiture the deposit."
A reading thereof would clearly indicate that in any case, under any clause or clauses of the contract, the contractor would have rendred himself liable to pay compensation amounting to the whole of his security whether paid in the sum or deducted by instalments; in the case of abandonment of the work owing to serious illness or death of the contractor or any other cause, the Executive Engineer is empowered to have the contract rescinded; in that case the security deposit of the contractor shall stand forfeited and be absolutely at the disposal of the Government. In consequence, forefeiture of the security deposit, on account of abandonment of the work by the appellant, was perfectly valid. The High Court, therefore, was not right in directing the appellant to refund the security deposit. Learned counsel for the respondents contends that time was not the essence of the contract and therefore, the recession of the contract was not for valid reason. We are, however, not on the validity of the recession of the contract but on the question whether the respondent had abandoned the contract or not. The question in that backdrop arises: whether the recession of the contract was correct in law? In view of the above facts, the action was legal. In that perspective, the ratio in M/s Hind Construction Contractors v. State of Maharashtra [A.I.R. 1979 SC 720] has no relevance. Therein , the contract was not rescinded. Work was executed after the extended time and the claims were made before the Arbitrator for the work done during the extended time. Therein, the contention was raised that time was essence of the contract. Respondent and the contractor having not complete the work within the schedule time, he was not entitled to the amount under the award. In that contract, this Court had held that time was not essence of the contract. That question, however, does not arise in this case for the reason that the respondent had abandoned the contract.
The appeal is accordingly allowed. No costs.