Calcutta High Court
Rahee – Gpt (Jv) & Ors vs The Union Of India & Ors on 10 March, 2026
IN THE HIGH COURT AT CALCUTTA
ORIGINAL SIDE
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Krishna Rao
C.S. (COM) No. 56 of 2024
[Old No. C.S. 97 of 2014]
With
GA No. 13 of 2022
Rahee - GPT (JV) & Ors.
Versus
The Union of India & Ors.
Mr. Nirmalya Dasgupta
Mr. R.L. Mitra
Ms. Priyanka Dhar
... For the plaintiffs.
Mr. Pramod Kumar Drolia
Mr. Santosh Kumar Pandey
... For the defendant nos. 2 & 3.
Hearing Concluded On : 12.12.2025
Judgment on : 10.03.2026
2
Krishna Rao, J.:
1. The plaintiffs have initially prayed for declaration that the purported
notices dated 3rd July, 2013; 30th January, 2014 and 19th /21st
February, 2014, are illegal, wrongful, null and void and is of no effect or
further effect and also not binding upon the parties along with the
declaration that the purported invocation and/or attempt to invoke the
performance bank guarantee bearing No. 01154101IPG000277 dated
19th August, 2010, for a sum of Rs.61,53,350/- is illegal, wrongful,
fraudulent, null and void and is of no effect and/or further effects and
also not binding upon the plaintiffs and the perpetual injunction
restraining the defendants and/or their men, agents, servants, officials,
assigns from giving any effect or further effects to the purported notices
dated 3rd July, 2013, 30th January, 2014 and 19th/21st February, 2014
in any manner whatsoever and/or to invoke the subject performance
bank guarantee being No. 01154101IPG000277 dated 19th August,
2010.
2. Subsequently, the plaintiffs have amended the plaint on three
occasions that is in the year 2017, 2020 and 2022 and also
incorporated prayers in the plaint in the year 2017 which reads as
follows:
“c1) Declaration that the subject contract had stood
discharged by reason of supervening impossibility
and that the plaintiffs had accordingly stood
absolved from any further performance of their
reciprocal promises under the contract.
3
c2) Declaration that the purported communication
issued by the defendant No.4 dated January 9,
2020 be adjudged and/or declared as null and
void and invalid by this Hon’ble Court.
c3) Declaration that the purported invocation of the
said Performance Bank Guarantee being
No.01154101IPG000277 dated August 19, 2010 be
declared as null and void and invalid by this
Hon’ble Court.
e1) Decree in the sum of Rs.4,52,36,276.89 as
pleaded in paragraph 55 (s) hereof to be paid by
the defendant nos. 1 – 3 jointly and/or severally to
the plaintiffs.
e2) In the alternative, as enquiry be conducted by
this Hon’ble Court so as to ascertain the loss and
damage suffered by the plaintiffs and a decree be
passed for such sum or sums as maybe found due
and payable to the plaintiffs upon such enquiry.
e3) Interest.”
3. The present dispute revolves around the designing and construction of
foundation, substructure, approaches including allied and
miscellaneous works for Bridge No. 182 (9 x 45.7 Meters) between River
IB and Brajraj Nagar stations in connection with 3rd Line between
Chapma-Jharsuguda.
PLAINTIFF’S CASE:
(i) The plaintiff no.1 is a Joint Venture project formed by the
plaintiff nos. 2 and 3.
(ii) The plaintiff nos. 2 and 3 are flagship companies and renowned
names in the field of construction and engineering.
4
(iii) The plaintiff no.2 is engaged in the business of construction
engineering and the plaintiff no. 3 is also engaged in the similar
business to that of the plaintiff no.2
(iv) The plaintiff nos. 2 and 3 for the purpose of participating in the
tender process, by virtue of Memorandum of Understanding on
or around 20th February, 2010, formed the plaintiff no.1 as a
Joint Venture Company.
(v) The plaintiff nos. 2 and 3 pursuant to the Memorandum of
Understanding dated 20th February, 2010, entered into and
executed a joint venture agreement amongst the plaintiff nos.2
and 3, on 29th November, 2010.
(vi) The plaintiffs pursuant to the tender notice dated 23rd February,
2010, issued by the defendant nos.1 and 2, submitted its offer
letter on 20th February, 2010, to undertake the project for
designing and construction of foundation, substructure,
approaches including allied and miscellaneous works for bridge
No. 182 (9 x 45.7 Meters) between IB and Brajraj Nagar station
in connection with 3rd Line between Champa-Jharsuguda.
(vii) The defendant no.2 by its letter of acceptance dated 28th July,
2010, had duly accepted the offer of the plaintiff no.1 and thus,
a contract was entered between the plaintiff no. 1 and the
defendant nos. 2 and 3.
5
(viii) The plaintiffs thereafter deposited the earnest money of Rs.
7,28,300/-. The total value of the said project was a for a sum of
Rs.12,30,67,001/-. The plaintiff no.1 furnished Bank Guarantee
for a total sum of Rs. 61,53,350/- issued by the defendant no.4,
namely, Allahabad Bank now merged with Indian Bank, being
the Bank Guarantee No. 01154101IPG000277 dated 19th
August, 2010, which was valid upto 27th December, 2012.
Subsequently, from time to time the validity of Bank Guarantee
was extended and the same was lastly valid upto 29th
September, 2014.
(ix) The plaintiffs thereafter had duly honoured the contract by
deploying their men, agents, and representatives at the work
site.
(x) The plaintiffs submit that a sum of Rs.54,25,050/- is lying with
the Railway Authorities, on account of deduction of 10% of the
bill value deducted from the eight bills dated between 15th
September, 2011 and 13th July, 2012, payable to the plaintiff
no. 1, on account of security deposit.
(xi) The plaintiffs submit that even before such approval, the
plaintiffs had acquired materials, equipment and machineries
for commencement of necessary work.
(xii) The plaintiffs submit that from the very initial day of the
contract, the plaintiffs had suffered insurgency and hooliganism
6
at the site, therefore, on 6th January, 2011, the plaintiff no. 2
had duly lodged complaint with the local police authority and an
FIR had been registered on 7th January, 2011.
(xiii) Subsequently by a letter dated 15th January, 2011, the
plaintiffs had informed the defendant no.3 about such insurgent
activities carried out at the local site along with a copy of the
FIR dated 7th January, 2011.
(xiv) The plaintiffs were thereafter handed over with a sub-soil
investigation report and approved D.A.B, which was duly
conducted by the Railway Authorities, within the scope and
ambit of the contract.
(xv) In compliance with the said Purchase Order dated 28th July,
2010, issued by the defendant no.3, the plaintiffs had duly
prepared drawings and designs to execute the said project and
had submitted the same with the defendant no.2 for their
approval and accordingly the Railway Authorities, by its letter
dated 31st January, 2011, approved the same.
(xvi) The plaintiffs submit that thereafter from time to time on 23rd
November, 2011, 20th December, 2011 and 26th December,
2011, there had been series of letters exchanged between the
parties, with regard to the difficulties being faced by the
plaintiffs at the work site.
7
(xvii) The plaintiffs submit that under the aforementioned
circumstances by a letter dated 26th September, 2012, the
plaintiffs for the first time had applied before the Railway
Authorities for an extension of time for completion of the project
work till 31st July, 2013.
(xviii) The plaintiffs had further lodged a police complaint and FIR
on 29th September, 2012 with regard to the insurgency and local
hooliganism at the work site.
(xix) The plaintiffs while undertaking the job of construction of
substructure of the bridge over the river IB faced with scarcity of
cement of the brand insisted upon by the defendant no.2 and
the plaintiffs by a letter dated 29th September, 2012, requested
the defendant no.3 to permit the plaintiffs to procure requisite
quantity of cement from an alternative source.
(xx) The plaintiffs by a letter dated 1st October, 2012, provided the
defendant no.3 with a work progress report of the project and
requested the defendant no.2 to extend the time for completion
of the project.
(xxi) The plaintiffs submit that in course of execution of the work,
the plaintiffs found that the soil report provided by the
defendant nos. 1 to 3 was not correct as there was rocks strata
in the soil which was not suitable for Well Sinking and drilling
was not possible for construction of the Well, thereby requested
8
the Railway Authorities to re-investigate the soil in as much as
the rocky strata by a letter dated 9th October, 2012.
(xxii) The plaintiffs by a letter dated 27th November, 2012, duly
appraised the defendant no.2 regarding the stoppage of work
due to insurgent activities and accordingly lodged a complaint
with different authorities of the railways.
(xxiii) The plaintiffs thereafter had tried to conclude the job but were
suffering from not only local insurgency, insufficiency of supply
of cement, flood, hooliganism and lastly the rocky strata which
was not at all reflected in the geotechnical report whereas the
said land had reflected as soft coal, which is wholly contrary to
the actual scenario.
(xxiv) The plaintiffs submit that the defendants had further
extended the period for completion of the work by its letter dated
9th April, 2013 till 31st March, 2014, as per the request of the
plaintiffs.
(xxv) The plaintiffs thereafter were served with a “7 Days’ Notice” on
3rd July, 2013 by the defendant no.3, purported to be in terms
of Clause 62 of the General Conditions of Contract threatening
the plaintiffs to terminate the contract, to which the plaintiffs
had replied by its letter dated 11th July, 2013, stating that there
was no scope of issuance of a 7 days’ notice.
9
(xxvi) The defendants thereafter again on 30th January, 2014,
issued a 7 days’ notice on the plaintiffs and accordingly the
plaintiffs had sent their reply on 14th February, 2014, refuting
all the allegations.
(xxvii) The plaintiffs submit that the defendants had further issued
a 48 hours’ notice dated 19th/ 21st February, 2014, with the
threat to rescind the contract.
(xxviii) The contract was subsequently terminated by the defendants
on 5th March, 2014 and the present suit was filed by the
plaintiffs on 4th March, 2014.
(xxix) The plaintiffs on or around 28th April, 2014, invoked the
arbitration clause before the internal Arbitral Tribunal of the
Railways for a monetary claim on account of total eight claims
for a total sum of Rs.3,88,06,700/-. Thereafter on 21st
December, 2015, the Arbitration which was initially initiated by
the plaintiffs was not entertained as the claim of the plaintiffs
was in excess of 20% of the contract value and as a result, the
arbitral proceeding was terminated.
(xxx) Subsequent to the termination of arbitration proceeding filed
by the plaintiffs, the application filed by the defendants under
Section 8, was dismissed for non-prosecution by an order dated
28th January, 2016.
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(xxxi) Thereafter, the plaintiffs have issued notice under Section
80(2) of the Code of Civil Procedure as to the defendants on 19th
November, 2016, which was duly replied by the Railways on 10th
January, 2017.
(xxxii) After termination of Arbitration proceeding, the plaintiffs had
filed an amendment application before this Court for the
purpose of including the claims in the present suit, being G.A.
No. 4 of 2017 (Old G.A. No. 649 of 2017).
(xxxiii) The amendment application filed by the plaintiffs, was
allowed by this Court by an order dated 4th May, 2017. The
order of amendment allowed by this Court was challenged
before the Hon’ble Division Bench by the defendants but the
same was dismissed by an order dated 13th June, 2017.
(xxxiv) The plaintiffs have filed an application for interim order. By
an order dated 10th November, 2017, this Court granted interim
order.
(xxxv) The Railway authorities had challenged the said interim order
dated 10th November, 2017, and the Hon’ble Division Bench had
allowed the same by a judgment dated 30th September, 2019.
(xxxvi) Being aggrieved and dissatisfied by the order dated 30th
September, 2019, a Special Leave Petition was preferred before
the Hon’ble Apex Court which was dismissed on 13th December,
11
2019. However, the suit was directed to be decided expeditiously
within a period of six months from the date of such order.
(xxxvii) The plaintiffs had further amended the plaint on 12th
March, 2020, and incorporated the Bank Guarantee amount.
Being aggrieved and dissatisfied by the order dated 12th March,
2020, an appeal was preferred by the defendants before the
Hon’ble Division Bench of this Court which was subsequently
dismissed on 6th January, 2021.
DEFENDANT’S CASE:
(i) The defendant no.1 herein is the Union of India, the defendant
no.2 is the South East Central Railway, Bilaspur, the defendant
no.3 is the Deputy Chief Engineer (CON) working for gain at
South East Central Railway and the defendant no. 4 is the
Allahabad Bank now merged with Indian Bank.
(ii) The South East Central Railway at Bilaspur, intended to
construct a bridge between IB and Brajrajnagar Stations for a
third line in between Chapma-Jharsuguda and accordingly the
Chief Administrative Officer (Con/Bilaspur), South East Central
Railway in the State of Chhattisgarh initiated Tender Notice in
the year 2010 for an estimated cost of Rs. 11,56,53,000/-.
(iii) The plaintiff no.1 had participated in the said tender process
and the tender offer of the plaintiff no.1 was accepted by the
12defendant no.2 vide a Letter of Acceptance dated 28th July,
2010.
(iv) The defendants as per requirement of the Railway Board had
assigned the work of Soil Investigation to Vision Labs,
Hyderabad.
(v) The defendants submit that the defendant no.3 had handed over
the Sub-Soil Exploration Report dated 25th March, 2010 to the
representative of the plaintiff no.1 on 27th August, 2010.
(vi) The defendants submit that in terms of the Letter of Acceptance
dated 28th July, 2010, the construction of the bridge was to be
completed within 27 months from the date of the Letter of
Acceptance.
(vii) The defendants submit that the plaintiff no.1 had submitted its
drawings and designs to execute the said work and the same
was approved by the defendant no.2 by its letter dated 31st
January, 2011.
(viii) The defendants state that the plaintiff no.1 had alleged that
after receiving the approval letter dated 31st January, 2011, it
had commenced its works and, in the process, have incurred
substantial expenses. It is further alleged by the plaintiff no.1 in
the process of construction, submitted necessary bar chart to
13the defendant no.3 showing the progress of the construction
works.
(ix) The defendants further submit that the plaintiff no.1 by its letter
dated 1st October, 2012, that is just 27 days prior to expiry of
the completion period of the project, had applied for extension of
time for a further period of eight months i.e. upto 30th June,
2013 for completion of the said bridge without raising any
grievance about the sub-soil investigation report of the Vision
Labs, Hyderabad.
(x) The defendant no.3 in reply to the request of the plaintiff no.1
duly extended the time of contract upto 31st March, 2013 but in
spite of such extension of time for completion of the project work
on various pretexts had failed to complete the said work.
(xi) The defendant no.3 as per request of the plaintiffs, further
extended the time from 28th October, 2012 to 31st August, 2013
under Clause 17A (with PVC) and the remaining period upto 31st
March, 2014 under Clause 17B (without PVC) of the General
Conditions of Contract, 2001.
(xii) The defendants submit that since there was lack of progress
towards completion of the bridge, the defendant no.3 by a letter
dated 3rd July, 2013, addressed to the plaintiff no.1, issued a
seven days’ notice under Clause 62 of the General Terms and
Conditions of Contract, 2001 for completion of the project work,
14failing which the defendants will take necessary actions to
terminate the contract.
(xiii) The defendants state that despite service of seven days’ notice
dated 3rd July, 2013, the plaintiff no.1 failed and neglected to
make sufficient progress towards the completion of the project
work.
(xiv) The defendants submit that the plaintiff no.1 did not show any
progress to complete the project by 31st March, 2014, and as
such the defendant no.3 was compelled to issue a seven days’
notice dated 30th January, 2014, under Clause 62 of General
Conditions of Contract, 2001, and thereafter the defendant no.2
had issue 48 hours’ notice on 19th/21st February, 2014, stating
that on expiry of the said period of the instant contract for
construction of bridge will stand rescinded.
(xv) The defendant no.3 did not receive any reply to the 48 hours’
notice dated 19th/ 21st February, 2014, and as such the
defendant no.2 by its letter dated 5th March, 2014 in absence of
any action from the plaintiff no.1, rescinded the contract in
terms of Clause 62 of the General Conditions of Contract, 2001.
(xvi) The defendants submit that the plaintiff no.1 after receiving the
48 hours’ notice and prior to termination notice dated 5th
March, 2014, on or around 4th March, 2014, instituted the Civil
Suit being C.S. No. 97 of 2014 before this Court, praying for
15perpetual injunction restraining the defendants from giving any
effect to the notices dated 3rd July, 2013; 30th January, 2014
and 19th/21st February, 2014. Further restraining the
defendants to invoke the performance Bank Guarantee dated
19th August, 2010, as extended from time to time.
(xvii) The defendants submit that the plaintiffs have filed an
arbitration proceeding but the same was terminated and
thereafter, the plaintiffs have made several amendments in the
plaint and also amended the prayers in the suit.
(xviii) It is the case of the defendants that as the plaintiffs failed to
perform the contract of construction of bridge was entrusted to
another contractor as a request of which there was considerable
delay in construction of the bridge. The trains’ movement both
passengers as well as goods, trains are delayed due to non-
construction of bridge in the time by which the Railway had
suffered severe financial loss.
(xix) The defendants say that after termination of the contract of the
plaintiffs, the defendants have invited fresh tender for the same
bridge and miscellaneous job. The total job value of the said
tender was Rs. 22,29,22,866.93 though the contract value of the
plaintiffs in the year 2010 was Rs. 12,30,67,001/-, thus the
defendants have suffered financial loss of Rs. 9,98,55,865.93.
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(xx) The defendants have filed written statement along with counter
claims for an amount of Rs. 15,30,09,215.53 against the
plaintiffs.
4. On the basis of the pleadings of the parties by an order dated 18th
January, 2022, this Court had framed the following issues:
ISSUES:-
“1. Is the suit maintainable, as framed?
2. Whether the plaintiffs failed to perform any part of the
contract despite the same being achievable under the
contract conditions?
3. Whether the designs; drawings and work
methodology approved by the Defendant no.2 on the
basis of the Sub-Soil Exploration Report and GAD made
over by the defendant no.2 ultimately frustrate the
contract and render it impossible of performance?
4. If the answer to the previous issue be in the negative,
whether supervening and intervening circumstances,
including the work methodology approved by the
Defendant no.2, render the contract unworkable and
unfeasible in terms of the contract conditions?
5. Whether it was the plaintiffs who were alone
responsible for the delay in the performance of their
reciprocal promises under the contract or whether such
delay was attributable to reasons beyond the control of
the plaintiffs, including force majeure conditions?
6. Whether the issuance of the notices dated 3rd July,
2013; 30th January, 2014; 19th/21st February 2014 and
17the issuance of the notice of termination dated 5th
March, 2014 were justified, reasonable and warranted
in the facts and circumstances of the instant case?
7. Whether the subject contract stood discharged in the
facts of the case and the plaintiffs accordingly stood
absolved from any further performance of their
reciprocal promises under the subject contract?
8. Whether the invocation and encashment by the
defendant no.2 of the Bank Guarantee furnished by the
plaintiffs, being BG No.01154101IPG000277 dated 19th
August, 2010, for Rs. 61,53,350.00/- as extended from
time to time, was valid, proper, justified and warranted
in the facts and circumstances of the instant case?
9. In the event, the answer to the previous issue be in
the negative, to what sum or sums are the plaintiffs
entitled, towards and as compensation for the loss and
damage suffered by the plaintiffs as a result of the
invocation and encashment of the aforesaid bank
guarantee?
10. Whether the plaintiffs have become entitled to
compensation for the loss sustained by the plaintiffs in
the facts and circumstances of the instant case?
11. What sums, if any, are the plaintiffs entitled to in
the facts and circumstances of the instant case?
12. Whether the defendant no.2 is entitled to its
counterclaim and if so, to what extent?
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13. To what other or further reliefs are the parties
entitled, in the facts and circumstances of the instant
case?
14. Whether the suit is barred by the principles of
waiver, estoppel, and acquiescence?
15. Whether the suit is barred by limitation?
16. Whether the suit suffers from want of cause of
action?
17. Whether the plaintiffs are liable to pay costs and
compensation to the defendants for committing breach of
contract?”
5. The plaintiffs in order to prove its case has examined 3 witnesses,
namely:
(a) P.W.-1 – Pradip Khaitan, the Managing Director
of the plaintiff no.2.
(b) P.W.-2 – Pradip Kumar Mukherjee, consultant
and advisor in engineering technicalities for
construction works.
(c) P.W.-3 – Anil Kumar Singh, Joint General
Manager of the plaintiff no. 2.
6. During the evidence of the plaintiff’s witnesses, altogether “74”
documents, were marked and exhibited as “Exhibit – A to Exhibit –
VVV”.
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Exhibit – A: Certified copy of the Resolution
passed by the Board of Directors, dated 13th
February, 2020.
Exhibit – B: Certified and true copy of the
resolution dated 6th February, 2020, passed by the
Executive Committee of the Board of Directors of
GPT Infraprojects Ltd.
Exhibit – C: Copy of the Minutes of the Meeting
dated 13th February, 2020 of Rahee-GPT (JV).
Exhibit – D: Copy of the original agreement dated
7th September, 2011.
Exhibit – E: Copy of the Notice Inviting Tender No.
CES/BSP/0910/69, issued by the office of the
Chief Administrative Officer (Construction),
Bilaspur.
Exhibit – F: Copy of the offer letter dated 20th
February, 2010.
Exhibit – G: Copy of the letter dated 7th March,
2022.
Exhibit – H: Copy of the Letter of Acceptance
dated 28th July, 2010, issued by the defendants in
favour of the plaintiffs.
Exhibit – I: Copy of the Tender Notice dated 23rd
June, 2014.
Exhibit – J: Copy of the Completion Certificate
dated 14th July, 2015, issued by the Deputy Chief
Engineer (Construction), South Eastern Railway,
Jharsuguda.
Exhibit – K: Copy of the Bank Guarantee for a
sum of Rs.61,53,350/- dated 19th August, 2010,
furnished by the plaintiffs.
Exhibit – L: Copy of the extended Bank Guarantee
being the No.0115410IPG000277, for a sum of
Rs.61,53,350/-, dated 23rd March, 2013.
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Exhibit – M: Copy of the supplementary agreement
dated 9th April, 2013.
Exhibit – N: Copy of a 7 days’ notice dated 3rd
July, 2013 issued to the plaintiffs by the
defendants.
Exhibit – O: Copy of the letter dated 11th July,
2013 issued by the plaintiffs to the defendants that
there was no scope of issuance of a 7 days’ notice.
Exhibit – P: Copy of a 7 days’ notice dated 30th
January, 2014 issued by the defendants to the
plaintiffs.
Exhibit – Q: Copy of a 48 hours’ notice dated 19th
/ 21st February, 2014 issued by the defendants to
the plaintiffs.
Exhibit – R: Copy of the notice dated 5th March,
2014, issued by the defendants, addressing the
plaintiffs, for termination of the contract.
Exhibit – S: Copy of the notice dated 6th March,
2014, issued by the South East Central Railway,
addressing to the plaintiffs, terminating the work
contract.
Exhibit – T: Copy of the letter dated 10th January,
2017, issued by the South East Central Railway, in
reply to the letter dated 19th November, 2016,
issued by the plaintiffs.
Exhibit – U: Copies of several relevant bills issued
for the purpose of the work contract.
Exhibit – V: Copy of a Geo Technical Report/ Sub-
Soil Investigation Report, approved by D.A.B.,
conducted by the Railway, which was handed over
to the plaintiffs.
Exhibit – W: Copy of the letter dated 30th August,
2010, issued by Rahee-GPT (JV), addressing the
Chief Engineer of the South East Central Railway,
regarding the soil exploration report and GAD on
27th August, 2010.
21
Exhibit – X: Copy of notice dated 19th November,
2016, along with the original postal receipts.
Exhibit – Y: Copy of the Memorandum of
Understanding dated 20th February, 2010.
Exhibit – Z, Z/1, Z/2 and Z/3: Copy of the Joint
Venture Agreement dated 26th November, 2010
between M/s. Rahee Infratech Ltd. and M/s. GPT
Infraprojects Ltd.
Exhibit – AA: Copy of the letter dated 9th
December, 2010.
Exhibit – BB & BB/1: Copy of the letter dated 6th
January, 2011, issued by Rahee Infratech Ltd.
addressing to the Inspector-in-Charge, GRP, South
East Central Railway, Jharsuguda.
Exhibit – CC: Copy of the FIR dated 7th January,
2011, recording the loss of the files which had the
original documents.
Exhibit – DD and DD/1: Copy of the letter dated
15th January, 2011 along with the copy of FIR
lodged by the plaintiffs.
Exhibit – EE and EE/1: Copy of the letter dated
17th February, 2011.
Exhibit – FF and FF/1: Copy of the letter dated
23rd November, 2011.
Exhibit – GG and GG/1: Copy of a letter dated
20th December, 2011.
Exhibit – HH and HH/1: Copy of a letter dated
26th December, 2011.
Exhibit – II and II/1: Copy of the complaint letter
dated 29th September, 2012.
Exhibit – JJ, JJ/1, JJ/2 and JJ/3: Copy of the
FIR dated 29th September, 2012, Lodged by the
plaintiffs.
Exhibit – KK and KK/1: Copy of the letter dated
9th October, 2012.
22
Exhibit – LL: Copy of the letter dated 29th
September, 2012.
Exhibit – MM and MM/1: Copy of the letter dated
27th November, 2012.
Exhibit – NN and NN/1: Copy of the letter dated
14th February, 2014.
Exhibit – OO and OO/1: Copy of the letter dated
5th April, 2014.
Exhibit – PP: Copy of the General Conditions of
the Contract.
Exhibit – QQ and QQ/1: Certified true copy of the
Resolution passed at the meeting held on 12th
October, 2022.
Exhibit – RR and RR/1: Resolution dated 17th
July, 2023 of Rahee Infratech Limited.
Exhibit – SS (Collectively), SS/1, SS/2 and
SS/3: Copies of the original Invoices raised by
Prahlad Biswas in favour of the defendant no.2 for
Reinforcement & Shuttering work amounting to
Rs.96,159 and TDS Certificates.
Exhibit – TT (Collectively) and TT/1 to TT/4:
Copies of the Invoices raised by one Prahlad
Biswas.
Exhibit – UU (Collectively), UU/1, UU/2, UU/3
and UU/4 : Copies of the original Invoices raised
by Prahlad Biswas.
Exhibit – VV (Collectively) and VV/1: Copies of
the original Invoices raised by Prahlad Biswas in
favour of the defendant no.2 for Reinforcement &
Shuttering work amounting to Rs.96,159 and TDS
Certificates along with signatures appearing at the
documents.
Exhibit – WW: Copies of several TDS Certificates.
Exhibit – XX (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
23
Exhibit – YY (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – ZZ (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – AAA (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – BBB (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – CCC (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – DDD (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – EEE (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – FFF (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – GGG (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – HHH (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – III (Collectively) : Copies of original
bills issued by Rahee Infratech Limited.
Exhibit – JJJ and JJJ/1 to JJJ/33
(Collectively): Copies of Depositors Copies of
Employees State Insurance Corporation along with
signatures of Mr. Ravi Khaitan.
Exhibit – KKK: Copy of the Final Bill dated 25th
April, 2013, issued by Emak Consulting
Engineering Pvt. Ltd. in favour of the Plaintiffs,
amounting to Rs.1,100,00/-.
Exhibit – LLL: Copy of an invoice dated 26th April,
2013, issued by Jadavpur University for Mix of
M25 Grade Concrete, amounting to Rs.11,236/-
24
Exhibit – MMM (Collectively): Copies of the
original bills raised by M/s. Konark Filling Station,
in favour of the plaintiffs.
Exhibit – NNN (Collectively) : Copies of the
original bills raise by M/s. Santoshi Maa Security
Services, in favour of the plaintiffs.
Exhibit – OOO (Collectively) : Copies of challans
issued by the South East Central Railway, on
account of Contract Certificate.
X (Marked for identification): Copies of
Statement of Accounts of M/s. Rahee Infratech
Limited of ICICI Bank.
X1 (Marked for identification): Copies of
Statement of Accounts of M/s. Rahee Infratech
Limited of Allahabad Bank.
Exhibit – PPP (Collectively) : Copies of Paysheet
for Staff (Brijarajnagar) of the Plaintiffs.
Exhibit – QQQ (Collectively) : Copy of a
Debit/Credit Certificate dated 9th January, 2020
and a letter dated 20th January, 2020, issued by
the Allahabad Bank regarding the Bank
Guarantee.
Exhibit – RRR (Collectively): Copies of TDS
Certificate of Rahee Infratech Limited.
Exhibit – SSS (Collectively): Copies of TDS
Certificate of Rahee Infratech Limited.
Exhibit – TTT (Collectively): Copies of TDS
Certificate of Rahee Infratech Limited.
Exhibit – UUU (Collectively): Copies of TDS
Certificate of Rahee Infratech Limited.
Exhibit – VVV (Collectively): Copies of TDS
Certificate of Rahee Infratech Limited.
7. The defendants in order to prove their case, have examined two (2)
witnesses, namely:
25
(a) Mr. Arpit Khunteta, Executive Engineer,
Construction Division, South East Central
Railway,
(b) Mr. Teophil Ekka, authorized by the Deputy
Chief Engineer Construction – II, Bilaspur to
depose on behalf of the defendants.
8. To prove the case, the defendants have exhibited “22” documents and
are marked as “Exhibit – 1 to Exhibit – 22”:
Exhibit – 1: Copy of the letter 30th August, 2010,
sent by the plaintiffs to defendant no.3.
Exhibit – 2: Designs and detailed structured
drawings prepared by the plaintiffs on the basis of
the sub-soil exploration report.
Exhibit – 3: Copy of the letter dated 31st January,
2011, issued by the plaintiffs to the Chief Engineer
(Construction) – I.X3 (Marked for identification): Copy of the letter
dated 8th February, 2011, issued by the Deputy
Chief Engineer Construction, Raigarh, the
defendant no.3 herein.
X4 (Marked for identification): Copy of a letter
dated 16th June, 2011, issued by the defendant
no.3, addressing the plaintiffs.
X5 (Marked for identification): Copy of the letter
dated 24th August, 2011, issued by the defendant
no.3, addressing the plaintiffs, conveying the lack
of laboratory near worksite.
X6 (Marked for identification): Copy of the letter
dated 30th August, 2011, addressed to plaintiffs
issued by the defendant no.2, Chief Engineer.
26
X7 (Marked for identification): Copy of the letter
dated 11th October, 2011, issued by the defendant
no.3 to the plaintiff no.1.
X8 (Marked for identification): Copy of the letter
dated 21st October, 2011, which is a continuation
of the letter dated 11th October, 2011, issued by the
defendant no.3 to the plaintiffs.
X9 (Marked for identification): Copy of the letter
dated 30th November, 2011, issued by the
defendant no.3 to the plaintiff no.1, highlighting
that the work programme is unsatisfactory.
Exhibit – 4: Copy of the letter dated 20th
December, 2011, addressed to the Deputy Chief
Engineer from the plaintiffs in response to the
defendant no.3’s letter dated 30th November, 2011.
X10 (Marked for identification): Copy of the
letter dated 10th March, 2012, issued from the
defendant no.3 to the plaintiff no.1, highlighting
about the slow progress in work.
Exhibit – 5: Copy of the letter dated 4th May,
2012, issued by the plaintiffs to the Deputy Chief
Engineer (Construction) II.
X11 (Marked for identification): Copy of the
letter dated 5th May, 2012, from the Deputy Chief
Engineer to the plaintiff no.1.
Exhibit – 6: Copy of an application filed by the
plaintiffs to the Deputy Chief Engineer
(Construction) for extension of completion period for
the extend agreement.
Exhibit – 7 and 7/1: Copy of the letter dated 27th
May, 2013, issued by the Deputy Chief Engineer
(Construction) to the plaintiffs.
Exhibit – 8: Copy of the notice dated 3rd July,
2013, issued by the Deputy Chief Engineer
(Construction) to the plaintiffs due to unsatisfactory
progress in work.
27
Exhibit – 9: Copy of the letter dated 11th July,
2013, issued by the plaintiffs.
X12 (Marked for identification): Copy of the
letter dated 19th September, 2013, issued by the
South East Central Railway to the plaintiffs.
Exhibit – 10 and 10/1: Copy of the letter dated
29th October, 2013 issued by the Deputy Chief
Engineer (Construction) to the plaintiffs.
X13 (Marked for identification): Copy of the
letter dated 25th November, 2013, issued by the
South East Central Railway to the plaintiffs.
Exhibit – 11 and 11/1: Copy of the notice dated
30th January, 2014, issued by the Deputy Chief
Engineer (Construction) to the plaintiffs.
X14 (Marked for identification): Copy the
Railway’s 48 hours’ notice dated 19th / 21st
February, 2014, issued by the Deputy Chief
Engineer (Construction) to the plaintiffs.
X15 (Marked for identification): Copy of the
termination notice dated 5th March, 2014, issued
by the defendants to the plaintiffs.
Exhibit – 12: Copy of the Tender Notice No.
CEC/BSP/15-16/71 dated 16th September, 2015.
Exhibit- 13 : Copy of the letter of authorization,
issued by the Deputy Chief Engineer (Construction)
– II, Bilaspur, authorizing Mr. Teophil Ekka.
Exhibit – 14: Copy of the letter dated 16th June,
2011, issued by the Deputy Chief Engineer
Construction – II, Bilaspur, to the plaintiffs.
Exhibit – 15 (with objection) : Copy of the letter
dated 24th August, 2011, issued by the Deputy
Chief Engineer Construction- II, Bilaspur to the
plaintiffs.
Exhibit – 16 (with objection): Copy of the letter
dated 30th August, 2011, signed and issued by the
28Deputy Chief Engineer Construction-I, Bilaspur, Mr.
A.K. Singh, to the plaintiffs.
Exhibit – 17: Copy of the letter dated 11th October,
2011, signed and issued by the Deputy Chief
Engineer (Construction) – II, Raigarh, Shri M.B.
Satyanarayan, to the plaintiffs.
Exhibit – 18: Copy of the letter dated 21st October,
2011, signed and issued by the Deputy Chief
Engineer (Construction) – II, Raigarh, Shri M.B.
Satyanarayan, to the plaintiffs.
Exhibit – 19: Copy of the letter dated 30th
November, 2011, signed and issued by the Deputy
Chief Engineer Construction) – II, Raigarh, Shri M.B.
Satyanarayan, to the plaintiffs.
Exhibit – 20: Copy of the letter dated 5th May,
2012, signed and issued by the Deputy Chief
Engineer Construction) – II, Raigarh, Shri M.B.
Satyanarayan, to the plaintiffs.
Exhibit – 21: Copy of the letter dated 19th
September, 2013, signed and issued by the Deputy
Chief Engineer Construction) – II, Raigarh, Shri
Ashok Kumar Suryavanshi, to the plaintiffs.
Exhibit – 22: Copy of the letter dated 25th
November, 2013, signed and issued by the Deputy
Chief Engineer (Construction) – II, Raigarh, Shri
Ashok Kumar Suryavanshi, to the plaintiffs.
9. DECISIONS WITH REASONS:
Issue Nos. 1, 15 and 16 are taken up together:
a. The defendants have raised two questions in the Issue No. 1 i.e.
(i) No cause of action arose for filing of the suit within the
29jurisdiction of this Court and (ii) The defendant Railway is not
having any office within the jurisdiction of this Court.
b. Mr. Pramod Kumar Drolia, Learned Advocate representing the
defendant nos. 2 and 3, relied upon the judgement in the case of
Rekhab Chand Jain Vs. Paras Das Bhartiya reported in AIR
1970 Cal 394 and submits that it is settled law that for the
purposes of invoking jurisdiction of the Court the expression
“Case of Action” has a distinct connotation. Merely saying that
something has happened within the jurisdiction of this Court
would not be effective in conferring jurisdiction on the Court or
to ask for leave under Clause 12 of the Letters Patent. It must
first be a cause of action in the suit, secondly, such cause of
action must arise within the jurisdiction of this Court and
thirdly, that part cause of action on which jurisdiction is sought
for, must affect the defendants against whom relief is asked for.
c. Mr. Drolia relied upon the judgment in the case of Karam
Chand Thapar and Bros. (Coal Sales) Vs. Inder Mohan
Kapoor reported in AIR 1972 Cal 82 and submits that to
succeed in an application for revocation of leave on the ground
of balance of convenience, a strong case has to be made out. In
other words, a mere balance of convenience would not be
enough but it must be such that it would be overwhelmingly in
favour of the suit being heard by the Court other than the
Court granting the leave. The paramount consideration for the
30
Court in such a case would be to consider whether in acquiring
jurisdiction it would cause serious prejudice resulting in
injustice to the defendant if the suit would be permitted to be
proceeded within the Court where it has been instituted with
such leave.
d. Mr. Drolia further relied upon the judgment in the case of
Ultra Engineering Industries Pvt. Ltd. Vs. Spintex
Industries Pvt. Ltd. reported in AIR 1980 Cal 159 and
submits that admittedly the defendant has no office at Kolkata
and the transaction has been entered between the parties
outside Kolkata.
e. Mr. Nirmalya Dasgupta, Learned Advocate representing the
plaintiffs, has relied upon the judgment in the case of Om
Prakash Srivastava Vs. Union of India and Another
reported in (2006) 6 SCC 207 and submits that cause of
action consists of a bundle of facts, which give cause to enforce
the legal inquiry for redress in a Court of law.
f. Mr. Dasgupta submits that in the present case the plaintiffs
have submitted its offer from Kolkata and the after acceptance
of the offer of the plaintiffs, the defendants have communicated
the same to the plaintiffs. He submits that earnest money and
performance guarantee have been submitted at Allahabad Bank
now merged with Indian Bank at Kolkata, Park Street Branch,
31
all correspondences have been made between the plaintiffs and
defendants at the registered address of the plaintiffs at Kolkata
and the defendants have invoked the performance guarantee of
the plaintiffs from the Allahabad Bank now Indian Bank which
is within the Jurisdiction of this Court.
g. Pursuant to the notice issued by the defendant nos.1 and 2,
the plaintiff no.1 has submitted its offer from its office at
Kolkata to undertake the project for designing and construction
of foundation, substructure, approaches including allied and
miscellaneous works for Bridge No.182 (9 x 45.7 mtrs.) between
IB and Brajraj Nagar stations in connection with 3rd Line
between Champa-Jharsuguda.
By a letter dated 28th July, 2010, the defendant no. 3
informed the plaintiffs that the competent authority accepted
the offer of the plaintiffs for the abovementioned work. The
defendant no.3 addressed the said letter to the plaintiffs at
Kolkata address and the plaintiffs have accepted the same at
Kolkata. The offer of acceptance is marked as Exhibit -H.
h. The plaintiffs while submitting its offer letter to the defendants,
the plaintiffs have also deposited earnest money of Rs.
7,28,300/- in the form of fixed deposit Account No.
50026690741 issued by the Allahabad Bank now merged with
Indian Bank, Park Street Branch, Kolkata and after acceptance
32
of the offer of the plaintiffs, the earnest money deposit
converted to initial security deposit.
i. The total values of the work was Rs. 12,30,67,001/-. The
plaintiffs were required to furnish bank guarantee for a total
sum of Rs. 61,53,350/- by way of performance guarantee in the
format as prescribed in the contract. The plaintiffs furnished
bank guarantee for a sum of Rs. 61,53,350/- issued by the
Allahabad Bank now Indian Bank, Park Street Branch which is
within the jurisdiction of this Court being Bank Guarantee No.
01154101IPG000277 dated 19th August, 2010. The Bank
Guarantee furnished by the plaintiffs was extended from time
to time till 29th September, 2014.
j. On 3rd July, 2013 and 30th January, 2014, the defendants
issued notices upon the plaintiffs at Kolkata address directing
the plaintiffs to expedite the work failing which action will be
taken to terminate the contract The said communications were
marked as Exhibits-N and P. On 19th /21st February, 2014, the
defendants have again issued 48 hours’ notice to the plaintiffs
at Kolkata being Exhibit-Q informing the plaintiffs that on
expiry of the period, the contract of the plaintiffs will be
terminated and the security deposit and performance guarantee
shall be encashed. In prayer “c3” of the plaint, the plaintiffs
have prayed for declaration that the purported invocation of the
said performance bank guarantee as null and void and invalid.
33
k. In the case of A.B.C. Laminart (P) Ltd. Vs. A.P. Agencies,
Salem, reported in (1989) 2 SCC 163, the Hon’ble Supreme
Court held that:
“12. A cause of action means every fact,
which if traversed, it would be necessary for the
plaintiff to prove in order to support his right to a
judgment of the court. In other words, it is a bundle
of facts which taken with the law applicable to
them gives the plaintiff a right to relief against the
defendant. It must include some act done by the
defendant since in the absence of such an act no
cause of action can possibly accrue. It is not limited
to the actual infringement of the right sued on but
includes all the material facts on which it is
founded. It does not comprise evidence necessary
to prove such facts, but every fact necessary for the
plaintiff to prove to enable him to obtain a decree.
Everything which if not proved would give the
defendant a right to immediate judgment must be
part of the cause of action. But it has no relation
whatever to the defence which may be set up by
the defendant nor does it depend upon the
character of the relief prayed for by the plaintiff.”
l. This Court finds that though the office of the defendants is
situated at Bilaspur outside the jurisdiction of this Court but
all the correspondences were made by the defendants with the
plaintiffs at Kolkata address and the plaintiffs have deposited
earnest money at Allahabad Bank, Park Street Branch,
Kolkata, now Indian Bank which subsequently converted as
security deposit and the plaintiffs have deposited performance
guarantee with the Allahabad Bank, Park Street Branch,
Kolkata now Indian Bank and the defendants have accepted
34
the same and also invoked the said bank guarantee which the
plaintiffs have challenged in the present suit.
m. This Court finds that part cause of action for filing the suit
arose within the jurisdiction of this Court, no part of the claim
is barred by limitation and the suit filed by the plaintiffs, is in
proper form. Thus the suit filed by the plaintiffs, is
maintainable. Issue nos. 15 and 16 are decided in favour of the
plaintiffs and against the defendants.
10. Issue Nos. 2 to 14 and 17 are taken up together for consideration as
all the issues are interconnected.
a. Tender of the plaintiffs was accepted by the defendants on 28th
July, 2010, which is marked as Exhibit-H. As per the
acceptance letter, construction of bridge was to be completed
within 27 months from the date of acceptance. After issuance of
letter of acceptance, a contract was entered between the
plaintiffs and the defendants, which is marked as Exhibit-D.
b. The defendants have relied upon Clauses 5.1 and 7.1 of
Chapter XII, Special Conditions of Contract and submit that for
use of explosive in process of sinking of wells, it is clearly
mentioned that no claim due to any obstruction met with
during sinking or due to any other difficulties experience in the
process shall be entertained. As per the case of the defendants,
35
on 4th May, 2012 being Exhibit-5, the plaintiffs have requested
for permission to use explosive for the purpose of sinking the
wells in hard strata and in response to the request of the
plaintiffs, the defendants by a letter dated 5th May, 2012, being
Exhibit-20 permitted the plaintiffs to use necessary controlled
blasting for sinking of wells as per the relevant guidelines and
IS Code.
Clauses 5.1 and 7.1 of the Special Conditions of Contracts:
“5.1 The curbs shall be places and cast truly
in position. The steining shall be constructed in
stages and the well sunk vertical within
permissible limit (as detailed in clause 6.1) to reach
the final founding levels as required. Suitable
method of sinking other than pneumatic sinking
may include open dredging with contractors
construction plant, employment drivers, and use of
explosive required in the process of normal sinking,
however no claim due to any obstructions such as
isolated boulders, log of trees, sunken boats etc.
met with during sinking or due to any other
difficulties experienced in this process shall be
entertained. No claim in respect of difficulties due
to sand blowing met with during sinking of wells,
on account of heavy Kent ledge required. Either for
sinking of wells or for any other reasons shall be
entertained by the railways.
7.1 Explosives shall generally not be used as
an aided for well sinking. However, in cases where
explosives are to be used prior approval of the
Engineer shall be obtained. All prevalent laws
concerning handling, storing and using of
explosives shall be strictly followed. If blasting has
been used for setting the well after it has reached
the designed foundation level, normally 24 hours
shall be allowed to lapses before the bottom plug is
laid. All safety precautions shall be taken as per
IS:4081 “safety Code for Blasting and related
Drilling Operations”, to the extent applicable
whoever blasting is restored to.”
36
c. After issuance of letter of acceptance on 27th August, 2010, the
defendant no. 3 handed over Sub-Soil Exploration Report to the
plaintiffs with the instruction not to carry out any its own
independent soil investigation. The Sub-Soil Exploration Report
did not indicate the existence of any hard rock and only
mentioned soft coal/ stand stone in the geotechnical investigation
report. The Schedule of Quantities and Rates forming the part of
the contract provided for sinking of 8.0 mtr. to 10.0 mtr. dia
circular type wells. The plaintiffs had not anticipated or
apprehend the existence of any hard rock strata on an average of
10 mtrs below the ground level. The plaintiffs had agreed to the
price schedule and rates in the contract on the believe that the
work of construction would be over soft subsoil and not over hard
subsoil including coal and accordingly quoted the rates. During
execution of the work, the plaintiffs find that the rock strata does
not match with the soil report provided by the defendants. The
wells had reached the hard rock strata after sinking the wells
through the soil bed and to sink the wells further into the thick
hard rock blasting of the rock was adopted as it was become
necessary and emergent.
d. For carrying out blasting activity with the help of explosives
necessary licence was required and the same had to be done
through a licenced agency having the requisite licence for carrying
37
out blasting activities. The Bill of Quantities did not provide for
the rates to undertake well foundation under rocky strata.
Different rates for undertaking well foundation under the rocky
strata were not agreed by the defendants. There is no mention of
any hard rock in description of Item No. 2 in Schedule-C of the
tender document, which reads as follows:
SCHEDULE-C (Well Sinking Works)
Sl Item Unit Rate in Rate Qty Amount
No. Figures in
Words (Rs.)
2. Sinking of 8.0m RM 96000/- Rupees 100 96,00,000/-
to 10.0 m dia Ninety
circular type six
well through all thousa
kinds of soils nd only
including
diverting flow of
water, clearing
all obstructions
like boulder,
timbers etc.,
dewatering if
required with
contractor's
pump and fuel,
benching soft
rock if any and
dredging with
use of divers
where
necessary
(complete
dredging plants
with derricks or
cranes grabs
pumping sets
air compressor
consumable
stores including
explosives for
controlled
basting to
facilitate placing
removing
38
kentleges and
seating the
wells and
specialized staff
such as divers
and other
labour with
necessary
equipment to be
supplied and
worked by the
contractor at his
own cost) in all
types of strata
till the cutting
edge reaches
the required
level as
approved by the
Engineer-in-
Charge. and
including
loading,
unloading of
kent-ledger,
sand bags etc.
on well,
rectification of
tilts and shifts,
erection and
removal of all
derrick
platform,
painting of
gauges on outer
surface of well
steining and
disposal of the
dredged muck
from within the
well as directed
by the engineer
or his
representative
with all lifts,
descents and
leads and
including all
labour and
materials etc.
complete.
Note The depts.
of sinking will
39
be measured
from the level at
which cutting
edges placed
initially.
e. As per request of the plaintiffs, the defendants have allowed the
plaintiffs to use necessary controlled blasting for sinking of wells
as per the relevant guidelines and IS Code. The plaintiffs could
not continue with the blasting for sinking of wells as the
defendants have not provided different rates for undertaking well
foundation under rocky strata. Immediately after the termination
of contract, the defendants have published a tender for the
balance work in which higher rates was offered to complete the
work and in the said tender BoQ items was introduced for
undertaking the well foundation under rocky strata. Item no.2 of
Schedule-C of the tender in which the plaintiffs have participated
and work order was issued, in the said tender document, there is
no mentioning of any hard soil, hard rock or coal and an amount
for per running metre was Rs. 96,000/- but for the same balance
work, in the new tender, the defendants have fixed the rate of Rs.
2,50,000/- per running meter for hard soil, coal and hard rock
which is marked as Exhibit-I. This act of the defendants proves
that instead of considering the request of the plaintiffs for
enhancement of rate for hard soil, hard rock and coal from Rs.
96,000/-, the defendants have forced the plaintiffs to terminate
the tender and thereafter the defendants have published a
40
separate tender and have provided rate of Rs. 2,50,000/-. In the
second tender, the defendants have further fixed the rate of other
kind of soil except in hard soil and coal of Rs. 1,20,500/- though
in the tender of the plaintiffs for the same work, the amount was
fixed at Rs. 96,000/-.
f. The design, drawing and work methodology (GAD) based on Sub-
Soil Exploration Report was handed over to the plaintiffs which is
marked as Exhibit-2. In the said report, a bar chart has been
appended wherein hard rock has been clearly shown. The
plaintiffs by a letter dated 4th May, 2012, being Exhibit-5 sought
for permission for use of explosive for blasting in sinking of wells
in hard strata. The plaintiffs prepared the design and drawing
based on the Sub-Soil Exploration Report. The defendants by a
letter dated 31st January, 2011, being Exhibt-3 provided two
instructions to the plaintiffs for execution of the project namely:
(i) All necessary arrangement to penetrate the wells in hard
rock should be made prior to fabrication of well curb.
(ii) Initially only one well should be lowered completely in the
ground so after the success of the sinking of one well
completely, the task of sinking of other wells will be
easier.
During the argument, the defendants have taken stand
that by a letter dated 31st January, 2011, the defendants have
provided two instructions to the plaintiffs for execution of the
41
project but the plaintiffs did not followed the said instructions
due to which the defendants have suffered severe loss. The said
stand is contrary to further correspondences made between the
parties. After the letter dated 31st January, 2011, the
defendants have issued several letters to the plaintiffs to
expedite the work. In none of the correspondences, the
defendants have restrained the plaintiffs not to proceed with
sinking of other wells till one well is completed. In the other
hand, the defendants requested the plaintiffs to complete the
work.
g. At the time of examination of the plaintiffs, witness no.2,
namely, Pradip Kumar Mukherjee, who is having degree from
Kharagpur IIT in the year 1978 in cell mechanics and
foundation engineering has deposed that whenever a rocky
strata is encountering the option to sink the well has to be
based on the other devices other than the normal sinking
process through a grab and which one has to take recourse to
control blasting and even if that does not work then it has to be
pneumatic sinking. He has further stated that narrative of soil
report is completely different from what has been actually
encountered during sinking. It is also stated that the narrative
was available in the Bills of Quantities (BoQ) items. There was
no other reference of any other specification in the contract.
The narrative of the BoQ is to be taken as actual soil report.
42
The basic difference is that in the narrative BoQ item, it was
expressly specified that the well has to be sunk through all
kinds of soil. Generally all kinds of soil is considered as clay,
sand or silt. When actually went on to sink the wells and
encountered rock which was not under the category of all kinds
of soil. Sinking through soil and sinking through rock are
completely different and the methodology is also different.
Exhibit-1 is the Bill of Quantities which includes the item
for sinking of the well under Schedule-C. Item-2 of Schedule-C
of BoQ proposed sinking is mainly through winch and gravy
method. It is a common condition for sinking through such soil.
The moment it is to be sunk through rock which means that the
well cutting edge has to penetrate rock and the method of
sinking completely changes, the sinking then becomes very slow
process and an expensive one and it has to be accomplished
through blasting, chiselling and removal of debris in very small
quantities.
As per the evidence of P.W.2 sink through all types of soil as
mentioned in the BoQ, the sinking can be one feet to three feet
per day and one has to penetrate rock through blasting,
chiselling, the total sinking cannot exceed beyond four inches
and the expenditure becomes much more, at least three fold of
the given rate.
43
Exhibit-1 is the First Tender document and Exhibit-D is the
Second Tender document. The First Tender document had only
one item under item no.2 in Schedule -C for sinking of the wells.
In the Second Tender document, another item under item no.
2(a) was added with a separate rate stating that the well is to
sink through hard rock having greater value. This itself proved
that the rock did exist under the riverbed and the rock does not
fall under the category of all kinds of soil. The defendants have
proposed additional rate for the portion which has to be
penetrate rock.
During the cross-examination of P.W.2, the learned counsel
for the defendants had put the specific question that “Did you
find any fault in the report?” and the P.W.2 has given a specific
answer to the said question that “Fault as such is that the
narrative of the soil mentioned there does not really match with
the existing soil”.
Another question was put to P.W.2 “that according to you,
the report is not perfect?” and the answer was “I agree”.
From the trend of the cross-examination by the defendants
to the P.W.2, it is admitted by the defendants that the report is
faulty and is not perfect.
Section 56 of the Indian Contract Act, 1872, reads as follows:
44
“56. Agreement to do impossible
act.–An agreement to do an act impossible in
itself is void.
Contract to do an act afterwards
becoming impossible or unlawful.–A
contract to do an act which, after the contract
is made, becomes impossible, or, by reason of
some event which the promisor could not
prevent, unlawful, becomes void when the act
becomes impossible or unlawful.
Compensation for loss through non-
performance of act known to be
impossible or unlawful.– Where one person
has promised to do something which he knew,
or, with reasonable diligence, might have
known, and which the promisee did not know,
to be impossible or unlawful, such promisor
must make compensation to such promisee for
any loss which such promisee sustains
through the nonperformance of the promise.”
In the present case, the defendants in the first tender
document had only one item under item no.2 in Schedule -C for
sinking of the wells. In the second tender another item under
item no. 2(a) was added with a separate rate stating that the well
is to sink through hard rock having greater value. This itself
proved that the rock did exist under the riverbed and the rock
does not fall under the category of all kinds of soil. The
defendants have proposed additional rate for the portion which
has to be penetrate rock. The defendants have not denied with
regard to availability of rock while sinking the well. The
defendants have also allowed the plaintiffs for use of blasting. It
is also admitted that the procedure for sinking by blasting is
costlier than the normal sinking. There is no provision in the
45
tender document for Bill of Quantities. The defendants were not
ready to enhance the rate other than the rate quoted by the
plaintiffs in spite of having knowledge and admission about the
presence of hard rock. In the second tender for the balance
work, the defendants have proposed addition rate which has to
be penetrate rock. Thus it was not possible for the plaintiffs to
complete the awarded work.
h. The defendants have issued notices dated 3rd July, 2013
(Exhibit-8), 30th January, 2014 (Exhibit-P), 19th/21st February,
2014 (Exhibit-Q) and 5th March, 2014 (Exhibit -R) wherein the
defendants have issued 7 days and 48 hours’ notices to the
plaintiffs and lastly terminated the contract of the plaintiffs.
On 27th August, 2010, the defendants have handed over sub-
soil exploration report to the plaintiffs. The work methodology
detailed in the tender document was well foundation and the
sub-soil exploration report also confirmed the same
methodology. The plaintiffs initiated the work in terms of the
said methodology. The plaintiffs could not complete the project
on the basis of the methodology provided by the defendants.
While executing the work beyond certain depth, the plaintiffs
encountered hard rock which was impossible to penetrate given
the diameter of the well and the requirement of the depth as
per the instructions of the defendants. The report did not
envisage and provide for the work methodology to penetrate
46
into hard rock. Schedule-C, item no.2, suggests soft coal and
not hard rock. The plaintiffs have brought to the notice of the
defendants that it is not possible for the plaintiffs to penetrate
the rocky strata adopting foundation methodology and to allow
plugging of well at a lower depth. The defendants instructed the
plaintiffs to undertake the well foundation in one of the piers
but it was not possible for the plaintiff to undertake plie
foundation at the same location. It became impossible for the
plaintiffs to continue with the work as BoQ did not provide for
the rates to undertake well foundation under rocky strata. The
request of the plaintiffs to the defendants for providing different
rates for undertaking well foundation under the rocky strata
was not agreed by the defendants.
i. By a letter dated 6th January, 2011, the plaintiffs have made a
written report to the Inspector-In-charge, Government Railway
Police, SECR Railway, Brajrajnagar, Jharssuguda informing
that on 4th January, 2011 at 11 pm. in the night around 12 to
14 persons wearing monkey cap riding motorcycle came to the
construction site and have misbehaved with the watchman of
the plaintiffs and demanding phone number of the in-charge of
the said work and on denial they open the padlock of the
godown and other rooms and burnt the materials of the site.
The said complaint is marked as Exhibit-BB. On the basis of
the said complaint, the police registered an FIR on 7th January,
47
2011 and the same is marked as Exhibit-CC. The said incident
was also informed by the plaintiffs to the defendants by a letter
dated 15th January, 2011 which is marked as Exhibit-DD.
j. On 17th February, 2011, the plaintiffs have sent a letter to the
defendants informing the defendants that the plaintiffs are
facing severe law and order problem even though the plaintiffs
have taken steps for procurement of required steel for
fabrication of cutting edge and well curb for one well,
accordingly a part of its has already reached to fabrication
workshop near bridge side. It was also informed to the
defendants that the plaintiffs have set up a testing laboratory in
their fabrication workshop across the River IB, near NH on
Janshugura site and they intend to use the same for requires
field lab test. The said letter is marked as Exhibit-EE.
k. The plaintiff by a letter dated 23rd November, 2011, informed the
defendants that there is shortage of Ultratech cement in the
market but the concrete design mix had been finalized using
the said cement and requested the defendants to allow the
plaintiffs to use Konark Cement to avoid delay in execution of
work. The said letter is marked as Exhibit-FF. On 20th
December, 2011 and 26th December, 2011, the plaintiffs have
informed the defendants about the work condition and
impediments in execution of the work. The said documents are
marked as Exhibit-GG and HH.
48
l. On 26th September, 2012, the plaintiffs have submitted a written
complaint to the Inspector-in-charge, Brajranagar Police
Station, Jharsuguda about the forceful entry of antisocial
elements in the work site and camp and caused damaged to the
property at the work site. On the basis of the said complaint,
the police registered a FIR on 29th September, 2012 and the
same are marked as Exhibit-II and JJ. By a letter dated 9th
October, 2012, the plaintiffs submitted a request to the
defendants informing the difficulties faced by the plaintiffs in
bringing down the well foundation and requeted to Re-Soil
Investigation. In the said letter, it was informed by the plaintiffs
that while sinking the well found rocky strata instead of soil
which was provided in the soil investigation report. In the said
letter, it was also informed that after a lapse of two years, the
plaintiffs are facing consistent obstacles in executing the well
foundation and the plaintiffs were of the opinion to undertake
an independent soil investigation and requested the defendants
to allow the plaintiffs to carry out investigation. The soil
condition faced by the plaintiffs during well foundation
indicated rocky strata and the tender terms and conditions and
BoQ did not provide any scope of payment for undertaking the
work under rocky strata and accordingly the plaintiffs
requested for separate rate or alternate foundation method to
complete the work. The said request is marked as Exhibit-KK.
49
m. On 1st October, 2012, the plaintiffs have made a detailed
request to the defendants for extension of time to complete the
work wherein it is also mentioned that the work was hampered
due to heavy rain and increase of water level in the river. The
said letter is marked as Exhibit -6.
n. On 20th November, 2012 to 22nd November, 2012, the violent
mob threatened the site worker of the plaintiffs and forced to
stop the work and the said incident was duly informed to the
defendants by a letter dated 27th November, 2012 and the same
is marked as Exhibit-MM. By a letter dated 14th February,
2014, the plaintiffs informed the defendants that the plaintiffs
have not able to complete the work due to law and order
problem at the work site. The plaintiffs submitted detailed
design with note that in case hard rock is encountered then the
well should be allowed to be plugged at higher level while
ensuring adequate socket depth in the rock. The same was not
deleted by the Railways while approving the design and
railways stipulated a minimum grip length of 6 meters below
the rock. It was also informed that even after several
representations and consistent work undertaken by the
plaintiffs, spending huge amount of money and efforts, the
plaintiffs could not achieve the penetration in rock of the wells.
Without considering the request of the plaintiffs, the defendant
by a letter dated 19th/ 21st February, 2014, issued 48 hours’
50
notice to rescind the contract and further action against the
plaintiffs.
o. The defendants have issued several notices to the plaintiffs
directing the plaintiff to expedite the work. On 5th March, 2014,
the defendants have issued notice to the plaintiffs intimating
that since period of 48 hours has expired, the contract stand
rescinded in terms of Clause 62 of the General Conditions of
Contract and the balance work under the contract will be
carried out independently, without the participation of the
plaintiffs. The defendants have debarred the plaintiffs and its
partner for participation in the tender for executing the balance
work. It was also informed to the plaintiffs that the security
deposit shall be forfeited and performance guarantee shall be
encashed.
p. The work methodology detailed in the tender document was well
foundation and the soil exploration report also confirmed the
same methodology. The plaintiffs initiated the work in terms of
the said methodology. The plaintiffs could not complete the
project on the basis of the methodology provided by the
defendants. While executing the work beyond certain depth, the
plaintiffs encountered hard rock which was impossible to
penetrate given the diameter of the well and the requirement of
the depth as per the instructions of the defendants. The report
did not envisage and provide for the work methodology to
51
penetrate into hard rock. Schedule-C item no. 2 suggests soft
coal and not hard rock. The plaintiffs have brought to the notice
of the defendants that it is not possible for the plaintiffs to
penetrate the rocky strata adopting foundation methodology and
to allow plugging of well at a lower depth. The defendants
instructed the plaintiffs to undertake the well foundation in one
of the piers but it was not possible for the plaintiffs to undertake
pile foundation at the same location. It became impossible for
the plaintiffs to continue with the work as BoQ did not provide
for the rates to undertake well foundation under rocky strata.
The request of the plaintiffs to the defendants for providing
different rates for undertaking well foundation under the rocky
strata was not agreed by the defendants.
q. It is established from the evidence of the plaintiffs which has not
been challenged by the defendants during cross examination of
the plaintiffs witness that whenever a rocky strata is
encountering the option to sink the well has to be based on the
other devices other than the normal sinking process through
grab and which one has to take recourse to control blasting and
even if that does not work then it has to be pneumatic sinking.
He has further stated that narrative of soil report is completely
different from what has been actually encountered during
sinking. It is also stated that the narrative was available in the
Bills of Quantities (BoQ) items. There was no other reference
52
specification in the contract. The narrative of the BoQ is to be
taken as actual soil report.
The basic difference is that in the narrative BoQ item, it was
expressly specified that the well has to be sunk through all kind
of soil. Generally all kinds of soil are considered as clay, sand or
silt. When actually went on to sink the wells and encountered
rock which was not under the category of all kind of soil. Sinking
through the soil and sinking through rock are completely
different and the methodology is also different.
As per the evidence on record, sink through all types of soil
as mentioned in the BoQ, the sinking can be one feet to three
feet per day and one has to penetrate rock through blasting,
chiselling, the total sinking cannot exceed beyond four inches
and the expenditure becomes much more, at least three fold of
the given rate.
During cross-examination of the plaintiffs’ witness a specific
question was put to the P.W.1 by the defendants:
“Can you specify that which part of the agreement of the
railway did not abide by the terms and conditions as specified in
the agreement?
“253. Can you specify that which part of
the agreement the railway did not abide by the
terms and conditions as specified in the
agreement?
53
Ans. To start with the railways failed to
inform us about the hostile law and order
situation which prevailed at the bridge side
which was a territory under the jurisdiction of
the railways. Further the tender document and
the agreement obliged us to make soil
investigation before we submit our design for the
foundations and other structures. The agreement
document also specified the foundation to be
undertaken by well foundation methodology.
Subsequent to our signing of the agreement and
before we could mobilize independent agency,
the railways handed over soil investigation
report from their chosen agency and instructed
us to follow the same and prepare our design
based on the said soil investigation report. The
railways who had framed the tender document
and had specified the execution methodology for
the foundations were aware that the well
foundation may not be the correct method of
making the foundation. Immediately after
signing of the agreement the railways handed
over soil investigation report done by their own
agency and denied us the opportunity to prepare
the design or to bring forward to the railways the
incorrect and erroneous choice of stipulating well
foundations. The railways being fully aware that
the strata at the river bed is rocky had denied us
the opportunity to make our own investigation
and in a fraudulent manner also deleted the
BOQ item under which we were to carry out our
independent soil investigation and ascertain the
strata of the river bed. During the execution
stage at various occasions we had brought to the
attention of the railways that we are unable to
progress due to the rocky strata as the well is
not sinking but the railways completely
overlooked our submissions. After repeated
difficulty and observing the impossibility the
railways themselves suggested that we
undertake one foundation so that the progress
can be reviewed. However, just to push us
further into impossible work situation the
railway instructed us to carry out other well
foundation also. After almost working for 3 years
the impossibility of the work became known to
both the parties. All our request and submissions
to railway authorities to find a solution were
ignored. Finally, the railways terminated the
54contract and called for another tender in which
the method of work was changed from well
foundation to pile foundation. The value of the
new tender was almost double to the value of
our contract agreement. The change of work
methodology proves that the railway were well
aware that the methodology as provided in our
contract was not correct and in a fraudulent
manner knowing well of the technical
impossibilities the railways forced us to pursue
on a faulty methodology causing financial loss to
us.”
Exhibit-1 is the First Tender document and Exhibit-D is
the Second Tender document. The first tender document had
only one item under item no.2 in Schedule-C for sinking of the
wells. In the second tender another item under item no. 2(a) was
added with a separate rate stating that the well is to sink
through hard rock having greater value. This itself proved that
the rock did exist under the riverbed and the rock does not fall
under the category of all kinds of soil. The defendants have
proposed additional rate for the portion which has to be
penetrate rock but the defendants failed to provide extra rate to
the plaintiffs even having the knowledge that sinking through
the soil and sinking through rock are completely different and
the methodology is also different. Thus there is no doubt that
the termination of contract is illegal.
r. After termination of contract of the plaintiffs, the defendants by
invoking Clause 1.57 of Chapter VI of the Special Conditions of
Contract had encashed the performance guarantee of Rs.
55
61,53,350/-. Clause 1.57 provides that “Whenever the contract is
rescinded the Security Deposit shall be forfeited and the
performance guarantee shall be enchased and balance work shall
do independently without risk and cost of failed contractor”.
Initially when the plaintiffs have filed the suit, the plaintiffs have
also filed an application for grant of interim order with respect to
the encashment of security deposit and performance guarantee.
This Court has passed an interim order directing the defendants
to maintain status quo with regard to the transfer of funds and
the same was extended from time to time and by an order dated
10th November, 2017, this Court passed an order restraining the
defendants to encash the bank guarantee and shall continue
subject to renewal of the performance guarantee by the plaintiffs
till disposal of the suit. The plaintiff was directed to keep the
bank guarantee renewed from time to time at least 15 days prior
to the date of expiry failing which the defendants shall have the
liberty to invoke the same.
The said order was challenged by the defendants in an
appeal and the appellate Court by an order dated 30th
September, 2019, set aside the interim order dated 10th
November, 2017. Subsequent to the order of the Hon’ble
Appellate Court, the plaintiffs have filed an application in the
present suit for amendment of the plaint for bringing certain
subsequent events on record. This Court by an order dated 12th
56
March, 2020, allowed the amendment as sought for by the
plaintiffs by passing the following order:
“This Court is of the view that the
amendments sought for are necessary since the
orders culminating in the order of the Supreme
Court on 13th December, 2019 were passed in the
interlocutory proceedings where the plaintiffs had
sought for an injunction on the invocation of the
bank guarantee. Since the bank guarantee has
been finally invoked in January, 2020, this is a
case where this subsequent event has a real nexus
to the original cause of action as pleaded in the un-
amended plaint. If the plaintiff is forced to go to
trial on the basis of the un-amended plaint, the suit
will be decided on an incomplete cause of action
and one where the Court will not have an
opportunity to try and determine the real questions
in controversy, including whether the invocation
and encashment of the bank guarantee was illegal
and should be declared as such.
This is a fit case where the amendments
sought for should be allowed.”
The defendants have challenged the said order in an appeal
but the appellate Court by an order dated 6th January, 2021,
dismissed the appeal filed by the defendants.
s. The defendants have forfeited security deposit and revoked the
performance guarantee of the plaintiffs on the pretext that the
plaintiffs have not executed the work inspite of several notices
served upon the plaintiffs. The specific case of the plaintiffs that
the plaintiffs tried to conclude the contract work in accordance
with the General Conditions of Contract but due to local
insurgency, insufficiency of supply of cement, flood, hooliganism
and rocky strata which was not reflected in the geotechnical
57
report and the said land had reflected soft coal which was wholly
contrary to the actual site position. The plaintiffs have made
written complaint to the Inspector-in-charge GRP, South East
Central Railway and the said document is marked Exhibit-BB
and on the basis of the complaint made by the plaintiffs, an FIR
is also registered which is marked as Exhibit-CC. There are
several correspondences made by the plaintiffs with the
defendants with respect to the work informing about the
difficulties faced by the plaintiffs during the execution of the
work and the said correspondences including the FIR are
marked as Exhibits-DD to MM.
u. The plaintiffs have examined witness no.3, Shri Anil Kumar
Singh who was working as Joint General Manager (Contract)
with the plaintiffs. In his evidence, he has stated that the
plaintiffs used to raise bills month by month against the
executed work. During his evidence, the plaintiffs have exhibited
documents being Exhibits-SS to VVV, the said documents were
marked as exhibits without any objection. From the Exhibits- SS
to VVV, it is proved that the plaintiffs have submitted bills along
with all documents. It was also the evidence that till the
termination of contract, the plaintiffs have submitted their bills
whichever the works executed by the plaintiffs. The defendants
during their cross-examination with respect to the said
documents, it is suggested that the said documents are inflated
58
and not genuine. It is not the case of the defendants that
without executing work bill is submitted. The defendants even
receipt of the said bill neither returned the same to the plaintiffs
nor have made any communication that the said bill is not
connected with the work executed by the plaintiffs. From the
trend of cross-examination, this Court finds that the defence of
the defendants was that the plaintiffs have not completed the
project, thus the plaintiffs are not entitled to get payment.
v. The defendants have also set up counterclaim along with written
statement for recovery of an amount of Rs. 15,30,09,215.93. Out
of the said amount, the defendants have claimed an amount of
Rs. 9,98,55,865.93 as the defendants have made more
expenditure due to increased 2nd contract value. An amount of
Rs. 20,00,000/- is claimed being proportionate share of Railway
personnel expenditure for organizing and other works for 2nd
tender. An amount of Rs. 3,50,00,000/- is claimed being the
loss of revenue due to slow train movement both goods and
passenger. Further an amount of Rs. 1,00,00,000/- is claimed
due to loss of image.
w. The defendants have examined two witnesses none of the said
two witnesses were connected with the said work. The
defendants have neither exhibited the 2nd contract in which the
defendants have made expenditure of Rs. 9,98,55,865.93. The
defendants have not exhibited any documents to show that for
59
the same work the defendants have invested the above amount.
After termination of contract of the plaintiffs, the defendants
have published another tender for completion of remaining work
but even after publication of the fresh tender for completion of
the remaining work, none of the contractors have come forward
to participate in the said tender.
y. As regard to the proportionate share of the Railway personnel
expenditure including the expenditure for organizing and other
works for 2nd tender, the plaintiffs have not examined any
witness or produced any evidence to show that for the purpose
of 2nd render how the defendants have made expenditure of Rs.
20,00,000/-. With regard to loss of revenue as the movement of
goods and passenger trains were slow for which the Railway
sustained revenue loss of Rs. 3,50,00.000/-, the defendants
have not bring any document which good trains and which
passenger trains were moved slow. No documents of any official
of railway authorities come forward to say that due to non-
completion of work trains were moved slow and the railways
have sustained financial loss.
z. The defendants have claimed Rs. 1,00,00,000/- being the loss of
image but no one has come forward that due to non-completion
of work, the image of the railway has lowered down due to which
the defendants have sustained loss of image. D.W.1, Mr. Arpit
Khunteta who is the Executive Engineer, Construction Division,
60
South East Central Railway. He has deposed in the instant case
as authorised representative of the defendants. As per his
evidence, he has completed his graduation in the year 2015 and
joined Railways on 30th July, 2018. Admittedly, when the tender
was awarded and the tender was terminated, he was not in
service of Railway, has admitted that he has no personal
knowledge of the work but after consulting his Headquarter and
file, he has come to this Court for giving evidence being the
representative of the defendants. He further admitted that he
was posted at Jharsugada in the month of October 2023 i.e.
much after the termination of contract of the plaintiffs. He has
also admitted that no bidder has come forward for the balance
work. In his cross-examination, he has also admitted that the
Railway has published another tender with respect to all works
and all official expenditures in relation to the new tender were
incurred. He also admitted that in Exhibit-KK in the last
paragraph, it is mentioned that re-soil investigation for the
extend contract will be redone.
aa. Maximum documents of the defendants have not proved as the
same were marked as Exhibits X3 to X15. Neither the author of
the documents nor any of the officials who were conversant with
the said documents were examined. Neither the Chief Engineer
nor the Deputy Chief Engineers who were posted or connected
with the said work were examined as witness in the case. A
61
specific question was put to the witness by this Court whether
the two officials, namely, Ashok Kumar Suryavanshi and Mr.
M.B. Satyanarayan are still in service and in answer, the D.W.2
stated that still they are in service. Both the said two officials are
the Deputy Chief Engineers but failed to come to adduce
evidence in the present case.
bb. Written statement along with counter claim is filed and verified
by Mahesh Kumar Agarwal, Deputy Chief Engineer
(Construction), the defendant no. 3. The D.W.1 has deposed as
representative of the defendants, that is the Railway Authorities.
Admittedly, the D.W.1 was not in service of the railway authority
when the cause of action for filing of the suit arose. He has no
personal knowledge of the case. Only on the consultation with
the Headquarter and file, the D.W.1 has deposed in the said
case. D.W.2 also not the witness of the work he has only
identified some of the signatures of the officials but the fact
remains that the officials are in service but shy to appear before
this Court to prove the case of the Railway. In the case of
Manisha Mahendra Gala and Ors. Vs. Shalini Bhagwan
Avatramani and Ors. reported in (2024) 6 SCC 130 wherein
the Hon’ble Supreme Court held that:
“28. The law as understood earlier was that a
general power-of-attorney holder though can
appear, plead and act on behalf of a party he
represents but he cannot become a witness on
behalf of the party represented by him as no one
can delegate his power to appear in the witness
62box to another party. However, subsequently
in Janki Vashdeo Bhojwani v. Indusind Bank Ltd.,
this Court held that the power-of-attorney holder
can maintain a plaint on behalf of the person he
represents provided he has personal knowledge of
the transaction in question. It was opined that the
power-of-attorney holder or the legal representative
should have knowledge about the transaction in
question so as to bring on record the truth in
relation to the grievance or the offence. However, to
resolve the controversy with regard to the powers
of the general power-of-attorney holder to depose
on behalf of the person he represents, this Court
upon consideration of all previous relevant
decisions on the aspect including that of Janki
Vashdeo Bhojwani in A.C. Narayanan v. State of
Maharashtra concluded by upholding the principle
of law laid down in Janki Vashdeo Bhojwani and
clarified that power-of-attorney holder can depose
and verify on oath before the court but he must
have witnessed the transaction as an agent and
must have due knowledge about it. The power-of-
attorney holder who has no knowledge regarding
the transaction cannot be examined as a witness.
The functions of the general power-of-attorney
holder cannot be delegated to any other person
without there being a specific clause permitting
such delegation in the power of attorney; meaning
thereby ordinarily there cannot be any sub-
delegation.
29. It is, therefore, settled in law that power-
of-attorney holder can only depose about the facts
within his personal knowledge and not about those
facts which are not within his knowledge or are
within the personal knowledge of the person who
he represents or about the facts that may have
transpired much before he entered the scene. The
aforesaid power-of-attorney holder PW 1 had
clearly deposed that he is giving evidence on behalf
of Plaintiffs 2 to 4 i.e. the Galas. He was not having
any authority to act as the power of attorney of the
Galas at the time his statement was recorded. He
was granted power of attorney subsequently as
submitted and accepted by the parties. Therefore,
his evidence is completely meaningless to establish
that Galas have acquired or perfected any
easementary right over the disputed rasta in 1994
when the suit was instituted.
63
30. The only proper and valuable evidence in
this regard could have been that of Joki Woler
Ruzer who had instituted the suit but he failed to
depose before the court. His pleadings are also
vague and do not specifically state that he had
been in use of the rasta in dispute for over 20 years
or that he had acquired and perfected easementary
right over the said rasta by prescription or
necessity.”
cc. In the case of Chowdamma (Dead) By Lrs. and Another Vs.
Venkatappa (Dead) By Lrs. and Another reported in AIR
OnLine 2025 SC 792 wherein the Hon’ble Supreme Court held
that:
“50. The failure of the defendants to
substantiate their claims through documentary
evidence is eclipsed by a more consequential
omission. In a case where the principal controversy
turns on matters lying within her exclusive
personal knowledge, the silence of defendant No. 1,
her absence from the witness box, is not a
procedural lapse but a calculated withdrawal from
scrutiny.
51. The conspicuous silence of defendant no.
1 strikes not merely as omission but as deliberate
evasion. Defendant No. 1, who lies at the heart of
the controversy, chose not to step into the witness
box and depose regarding the relationship between
the plaintiffs’ mother and her husband. Her
testimony bore direct relevance not only to the
status of plaintiffs’ mother but also her own
position. The only justification advanced was that
defendant No. 1, being an octogenarian and
suffering from arthritis, was unable to attend the
Court proceedings.
52. However, this defence is conclusively
dismantled by the record itself. The deposition of
D.W.1 (Balachandrappa) clearly indicates that
64defendant No. 1 was physically present in the
Court during the examination of D.W.2 (G.V.
Venkatappa), D.W.3 (Thimmappa) and D.W.4 (V.
Thimmappa). It further emerges that defendant No.
1 was also present in the Court when the evidence
of P.W.1 (Venkatappa) was being recorded. If
defendant No. 1 was capable of attending the
Court on multiple occasions, no explanation
remains for her failure to offer her own testimony,
except for calculated restraint.
53. This inference is inescapable. This is not a
case of medical inability but of deliberate silence.
In civil proceedings, particularly where the facts lie
exclusively within the personal knowledge of the
party, the refusal to enter the witness box carries
grave evidentiary consequences.
54. This principle is neither novel nor
uncertain. This Court
in Vidhyadhar v. Manikrao held thus:
“17. Where a party to the suit does not
appear in the witness-box and states his own
case on oath and does not offer himself to be
cross-examined by the other side, a
presumption would arise that the case set up
by him is not correct ….”
55. The present case is a compelling
invocation of the above principle. Defendant No. 1,
though physically present in the Court during the
trial, abstained from stepping into the witness box
to rebut the plaintiffs’ assertions — assertions that
strike at the very core of the dispute. In the
absence of cogent medical evidence to support her
alleged incapacity, her abstention from the witness
box constitutes deliberate circumvention of the
evidentiary burden resting upon her.
56. In the present factual matrix, the adverse
presumption under Section 114(g) of the Evidence
Act is inevitable.
57. This Court cannot overlook that defendant
No. 1, while central to the controversy, chose not
65
only to abstain from entering the witness box but
also wilfully bypassed the statutory remedy
available to those pleading physical incapacity.”
In the present case also all the documents issued by the
officials who were the author of the documents and were the
part of the work awarded to the plaintiffs are in service and
connected with the said work but failed to appear before this
Court and to depose the case of the defendants. The defendants
failed to prove their case made out either in the written
statement or in the Counter Claim.
dd. Considering the facts and circumstances above, Issue Nos. 2 to
9, 11 to 14 are decided in favour of the plaintiffs and against
the defendants. Issue No. 10 and part of Issue No. 17 as regard
to the compensation are against the plaintiffs and in favour of
the defendants.
11. Conclusion:
a. The plaintiff is entitled to get an amount of Rs. 7,28,300/- being
the earnest money adjusted through the security deposit. An
amount of Rs. 54,25,050/- being the security deposit deducted
from the running accounts bill of the plaintiffs. An amount of Rs.
61,53,350/- being the amount of Bank Guarantee and an
amount of Rs. 70,66,950/- being the bills raised by the plaintiffs
and are pending before the defendants on different heads. The
plaintiffs are also entitled to get interest at the rate of 9% per
66annum from the date of termination of contract i.e. 5th March,
2014 till the realisation of the total decretal amount. The
defendants are also liable to pay cost of the suit assessed at Rs.
1,00,000/-.
b. The defendants are directed to pay the amount of Rs.
1,93,73,650/- along with interest at the rate of 9% per annum
from 5th March, 2014, till the realisation of the total amount to
the plaintiff within a period of 60 days from date. The defendants
are also directed to pay Rs. 1,00,000/- being the cost of the suit.
c. The suit filed by the plaintiffs being C.S. (Com) No. 56 of 2024
(Old No. CS 97 of 2014) is decreed. Counterclaim filed by the
defendants is dismissed. GA No. 13 of 2022 is dismissed.
Decree be drawn accordingly.
(Krishna Rao, J.)