Summary
The High Court reduced a contractor’s money decree by treating his refusal to continue altered water-supply work as abandonment. The Court found that the employer had suspended work, changed specifications and required additional work without settling revised rates, while later extending time rather than rescinding. It restored the trial decree, including the disputed security-deposit, overhead and lost-profit heads, and discharged the bank guarantee furnished for withdrawn decretal money.
Issues
- Whether the contractor abandoned the work when the employer altered performance requirements and failed to provide the agreed conditions for execution.
- Whether the High Court correctly disallowed the three disputed monetary heads on that basis.
Provisions considered
- Section 67, Indian Contract Act, 1872The employer’s failure to afford reasonable facilities excused non-performance caused by that failure. (¶ 17-18)
Held
- The documentary sequence showed that the employer first held the work in abeyance, then changed pipe specifications and required modified work without finalising revised rates. On these facts it could not attribute the resulting non-performance to abandonment by the contractor. (¶ 15-18)
- A refusal to continue because the other side has not performed reciprocal obligations is not appropriately treated as abandonment. The employer had not exercised the contractual rescission remedy and instead extended the completion period, contradicting its claim that the work had earlier been abandoned. (¶¶ 16, 19-22)
- The High Court’s rejection of the security deposit, overheads and loss-of-profit heads rested on that erroneous abandonment finding. Those parts of the trial decree should be restored; the Court did not announce automatic entitlement to such damages in every delayed contract. (¶¶ 13-14, 23)
- Restoration of the original decree removed the basis for retaining the bank guarantee securing money already withdrawn by the contractor. The guarantee stood discharged. (¶ 23)
Result
Appeal allowed without costs; the High Court’s judgment and decree were set aside and the trial decree restored: Rs.24,97,077 with 10% annual interest from suit until realisation. The bank guarantee securing the withdrawn decretal amount stood discharged.