HIGH COURT OF SINDH AT KARACHI
Suit. No.898 of 2001
Dates of hearing:18.05.2009, 19.05.2009 & 25.05.2009
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Plaintiff: Ghulam Nabi through Mr. Ali Bin Adam Jaferi, Advocate.
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Defendants: Government of Sindh & others through Ms Humaira Nadeem, Advocate
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JUDGMENT
MUNIB AHMED KHAN,J.:- The issue involved in the Suit is in respect to contract between the plaintiff and defendants for construction of four buildings/ barracks. It has been admitted that there are settled general rules for awarding work orders/ contracts and conditions to be followed and keeping in view those rules work orders were issued for specified work. The case in hand discloses that the plaintiff is an approved registered contractor of police department and was awarded construction of following four barracks after being successful in the tender:-
Bachelor Barracks No.9-A Ground plus 2
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For it, total eight work orders were issued for entire construction during the period from 01.02.1995 to 10.09.1997.
Bachelor Barracks No.10-B Ground plus 2
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For it, seven work orders were issued during the period from 01.02.1995 to 10.10.1996.
Women Barracks Ground plus 2
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For it, six work orders were issued spreading over for a period from 20.06.1995 to 11.02.1996.
Mess & Kitchen
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For it, seven work orders were issued spreading over for a period from 20.06.1995 to 24.10.1997.
As per contention of the plaintiff, these work orders were issued from time to time in piecemeal as the department was arranging funds for construction as the total cost of the work involved was Rs.25,675,568/- and that the continuity of work sometime was restrained by the defendants due to non-availability of funds at relevant time and that the plaintiff, according to the Government revised schedule, was entitled to enhance rates, which were applicable from 15.09.1994 in respect to all Government contracts and that despite all these restraints, plaintiff continued the work which was got checked by the engineers of defendant by taking requisite measurements for the purpose of verification to prepare the bill and that on 16.12.1998 construction work was completed and buildings were handed over to the defendants against issuance of certificate, and the last cheque, plaintiff received from the defendants is dated 13.12.1998 but thereafter no payment has been made despite representation to the defendant No.3. He also wrote several letters to the defendants but neither security amounting to Rs.411,651/- was released nor the balance amount of Rs.8,842,082/- was released therefore, a complaint was filed on 03.06.1999 with the Provincial Ombudsman for recovery of above balance amount wherein no valid explanation was given by the defendants. Towards the procedure, the plaintiff has submitted that at the time of award of work, 2 per cent advance is deposited by the contractor and after completion of the construction, 3 per cent is deducted towards security while 5 per cent is deducted towards the income tax and in such a way, the defendants have deducted a sum of Rs.411,651/- towards the security notwithstanding the fact that the plaintiff completed entire work according to the satisfaction of the department and in terms of the general rules for which certificate was issued by the defendants. The security amount was to be returned alongwith other dues. The defendant No.3 promised to release the amount but despite promises, no amount has been paid, hence several representations were made and since no heed was paid, therefore, the Suit has been filed for the recovery, of which details are as follows:-
i) Balance payment for work Rs.41,83,139.00
ii) Balance security deposit
refundable but blocked Rs. 4,11,651.00
iii) Cost Escalation for
difference in cost of
cement Rs.31,91,396.00
iv) Cost Escalation for
difference in cost of
steel. Rs.14,67,547.00
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Rs.92,53,733.00
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Besides the above, damages in the sum of Rs.50,00,000/- have also been asked for on the ground that breach and delay has been committed by the defendants.
Initially, defendant No.4 filed Written Statement but later on defendants No.2 and 3 were also permitted to file Written Statement. The defence taken by all the defendants is almost same. According to the defendants, the work orders in respect to all four buildings have not been denied while it has been denied that there was any delay on the part of the defendants towards release of funds or any advice in respect to stoppage of work. The completion of building has also been denied and that the work has been delayed by the plaintiff while it is not according to specification and that no building was handed over to the defendants and certificates presented by the plaintiff in this respect are also not correct on the ground that neither the Assistant Engineer was competent to issue such certificates not has properly signed on the place “taken over” but “handing over” and that the plaintiff has wrongly relied on the Government Circular of 1994 as no escalation is being allowed in steel items but difference in the cost of cement is allowed only on the quantity of cement, which is being used after 1st July 1994 and moreover such applicability is not being provided on the contract of plaintiff and that the work and payment in respect to the work, which has been completed, has already been made and that the security is refundable after completion of the work while no amount, as claimed, is payable. The filing of the complaint before the Ombudsman has not been denied whereafter the Director of the Ombudsman’s Office was pleased to visit the construction and pointed out deficiencies for rectification but still the defects have not been removed and that the plaintiff has withdrawn his complaint before the Ombudsman and that no amount is being withheld by the defendants nor anything is payable. It has further been stated that alleged inventory was obtained by the plaintiff unlawfully alongwith other documents from the office of Assistant Engineer and moreover the department was not satisfied with the construction carried on by the plaintiff and that the plaintiff after receiving last payment stopped work in incomplete condition while defects pointed out have also not been removed and the work is not satisfactory in terms of the general rules. In para 19 of Written Statement, the defence has further been summarized by stating that plaintiff has been paid for entire work he has carried on. The security amount to some extent has not been released as the work was not satisfactory and that no escalation, as claimed, was payable as the work was awarded after 1995 and that the escalation in current prices was applicable to the work already in progress at that time and that the plaintiff is not entitled to any escalation. The defendants after denying all the contentions of the plaintiff have made a counter claim, but since this counter claim has not been submitted in proper way, therefore, it does not deserve any consideration.
On the basis of above contentions, the Court framed issues firstly on 30.05.2002 but thereafter reframed the issues subsequently on 21.11.2005 after defendants No.2 and 3 were allowed to file Written Statement. The issues are as follows:-
ISSUES FRAMED ON 30.05.2002.
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1. Whether the suit as framed is maintainable?
2. Whether the plaintiff was awarded contract for construction of buildings as detailed in para 2 of the plaint?
3. Whether the work orders were issued in accordance with the agreed terms and condition of the contract?
4. Whether the plaintiff completed the construction of the contract work and handed over the buildings to the defendant in accordance with terms of contract if so, on what date and to what effect?
5. Whether the plaintiffs are entitled and defendant liable to pay as per revised rates due to escalation in the price of the construction materials if so to what extent?
6. Whether the defendant deliberately and collectively failed, neglected in payment of the amount due to the plaintiff, if so to what effect?
7. What amount if any the defendants are liable to pay?
8. What should the judgment be?
ISSUES FRAMED ON 21.11.2005.
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9. Whether the alleged annexures G to G-2 of the plaintiff were not issued by the competent authority in terms of the contract?
10. Whether the plaintiff has left the work incomplete and abandoned the same?
It will be pertinent to mention that by order dated 13.05.2002, defendants were directed to deposit security amount of Rs.411,651/- with the Nazir, which was to be invested in profit bearing scheme and on the application of the plaintiff, he was allowed to withdraw a sum of Rs.3,90,558/- by order dated 21.10.2002 after furnishing an indemnity bond.
Evidence was recorded by the Commissioner appointed by the Court with the consent of the parties. The plaintiff examined himself as a witness and exhibited several documents from Exh.P-1 to P-56. The defendants examined one S.M. Fida Hussain, Executive Engineer, Works and Services Department, Government of Sindh posted at Provincial Building Division No.II, Karachi. He exhibited several documents from D-1 to D-89 and Ex.X to X-28
The plaintiff, in the affidavits-in-evidence has reiterated the contentions of the plaint by giving the detail of work orders of all the four buildings, their rates, which is as follows:-
The annexures with the affidavit-in-evidence exhibited as P-1 to P-30 are the photo copies of the work orders carrying details of construction. In these work orders, duration of work is also mentioned spreading from two months to one and a half year. These work orders have been issued for different work, for example, construction of ground floor, then some part of first floor or first floor then second floor while work orders have also been issued towards fittings etc. In such a situation, several work orders in respect to one building have been issued. Plaintiff by way of Ex.P-31 to P-33 has pointed out the correspondence between the parties while Ex.P-33 is a schedule of rates. The total work amount, as per plaintiff, is Rs.25,675,566/- while duration of the work was from 1995 to 1997. The plaintiff has asserted that sometime he was forced to stop the work as the funds were not available with the defendants therefore he also wrote letters to the defendants. He has further agitated that the contract was awarded on the old scheduled rates of 1989, which were on much lower side and that the Government of Sindh issued a revised schedule enforceable from 15.09.1994. In this respect, he has submitted scheduled rates of 1989 as Ex.P-33 while previous schedule of 1994 has been annexed as annexure P-34. General rules governing the work orders and the working of the contractors have also been exhibited as Ex.P-35. He submits that the defendant No.3 with mala fide and ulterior motive issued work orders under the above schedule without any revision but the plaintiff even continued to work in order to fulfill contractual obligation and to protect his position and even in those circumstances, all the construction work was completed in December 1998 and entire constructed buildings were handed over to the defendants against a certificate of possession, copy in proof whereof he has submitted as Ex.P-36 to P-38. He has further stated that in 1994, Government of Sindh vide its Notification dated 31.08.1994, revised the price pertaining to cost escalation of construction material. The said prices were revised from 1st July 1994 on all “ongoing works”. The said document has been exhibited as Ex.39, with this exhibit other letters have also been attached including letter of 10.07.1994 on the above subject as well as other letters which show that payment of escalation of cement was agreed by the Government in some cases. He states that finally a cheque of Rs.45,944/- was issued by the defendants on 23.12.1998 but thereafter, despite several letters, no payment has been made and that even the security amount of Rs.4,11,651/- has not been released while balance amount, which include escalated price of cement and steel of Rs.88,42,082/- has also not been released and that the defendants never objected to the quality of construction and same was accepted by the defendants on 12.12.1998 without objection by issuing a certificate and that despite repeated request and representation, neither security amount, which has been deducted from the bills, has been paid nor other outstanding amount has been released, hence a total amount of Rs.92,53,733/- is outstanding. He has further submitted that he also approached the Ombudsman wherein a statement was submitted by defendant No.3. The said statement supports the claim of the plaintiff. These statements have been presented as Ex.P-41 to P-44, other statements prepared by him to show the outstanding dues have also been exhibited as Ex.P-45 and P-46 while the entire details regarding his claim has been exhibited as P-47 to P-54. He has also stated that after handing over of possession, he posted a Chowkidar just to avoid any theft of the fittings and fixtures/ articles and since there was some report about missing of certain articles, therefore, report was lodged while a letter dated 19.11.1999 was also sent to defendant, same have been exhibited as Ex.P-55 to P-56. The plaintiff was cross examined.
In rebuttal, the defendant’s witness has totally denied the contentions of the plaintiff. He has stated that the plaintiff has been paid for all his work he carried out at the relevant time rather he has been overpaid on some items and that he has committed several breaches during the continuity of work and violated the contract. In this respect, he has submitted some letters of 2nd March 1998 as Ex.D-1 to D-6 issued against different work orders to show that plaintiff was directed to resume the work as he has stopped the same and that the work was assigned to M/s Lucky Construction Company, therefore, plaintiff Ghulam Nabi is not entitled to pursue the matter and that the work during the period from 01.02.1995 to 24.09.1997 carried out by the plaintiff was not satisfactory or according to the contracts and that the plaintiff was never forced to stop the work on the ground of non-availability of the funds. He has exhibited details of work orders in respect to each and every part of the work, Ex.D-7 pertaining to the Bachelor Barrack No.9, Ex.D-8 for Mess/Kitchen, D-9 in respect to Bachelor Barrack No.10-B and Ex.D-10 for Women Barrack and that the defendants had never issued any certificate towards taking over of the building while plaintiff was bound to go by the rates, which were given in the work orders and that the work is still incomplete and certain defects have been pointed out, therefore, even the security amount cannot be returned until the plaintiff completes the required work. He has claimed a sum of Rs.36,28,755/- due to default on the part of the plaintiff. He has further stated that the false complaint was submitted before the Ombudsman while no truth was found in the allegations and that the defects pointed out have not been corrected so far and that the defendant is not liable to pay any amount. He has submitted that no escalation is allowable except cement after February 1995 as per Government orders vide its Circular. He has referred Ex.D-70 and D-71 to show that no escalation was allowed until there is a clause in the contract/work orders hence plaintiff is not entitled to any escalation. The witness during cross examination has also produced Ex.X to X-28 containing the detail of work. Defendant’s witness was also cross examined.
The Commissioner while recording evidence recorded that in Work Orders No.1149 and 1150, there is cutting in the photocopies and work order number has been changed while there was no cutting in the original work orders produced by the plaintiff at the time of evidence. It is also worth mentioning that during the proceedings, this Court passed an order on 28.01.2002 on the request of the plaintiff and Nazir was appointed to carryout the inspection of all the four buildings. The Nazir, in compliance to that order, has submitted his report dated 11.04.2001 alongwith photographs of the buildings, giving therein the details of the construction of all the four buildings and since both the parties are disputing construction, its stage as well as non-completion, this report is relevant and is reproduced as follows:-
Against the above Nazir’s report, none has filed any objection which shows that the nature and stage of the construction, as explained by the Nazir, has been admitted. The arguments of learned counsel have been heard in detail.
Mr. Ali Adam Jaferi has taken this Court to all the annexues submitted by the plaintiff and the defendant to point out that both the parties are not disputing the work orders and the terms and conditions of the general rules governing work orders but the completion of the building and delay in construction is being agitated between them. He submits that plaintiff has completed entire building on the date and time and any default, even if committed by him, was not on his account but due to non-availability of funds. He has specifically referred Ex.P-36 to P-38 to show that these are the certificates towards handing over and since the buildings were handed over, therefore question of non-completion or any defect in the buildings does not arise. When his attention towards Nazir’s report was drawn, then he stated that the incomplete construction pointed out by the Nazir can be carried out by the plaintiff immediately after the funds are provided and that minor construction could not be carried out due to the fact that huge amount was withheld by the defendants. He has also pointed out some other exhibits especially Ex.P-41 to 44 to show that these exhibits bear signatures of the Executive Engineer, Provincial Division No.II as well as Assistant Engineer Provincial Division No.II and, according to these exhibits, some amount is outstanding towards payment of security as well as amount paid and total amount agreed for the contract. He has submitted that, according to that admitted document, a sum of Rs.14,87,465/- was outstanding in respect to Bachelor Barrack No.9(A) while sum of Rs.14,55,377/- was outstanding against building No.10-B, sum of Rs.7,51,989/- against Women Barrack while Rs.3,83,153/- were outstanding against Mess and Kitchen. He has further pointed out other exhibits from Ex.P-47 to P-50 and has stated that these contain the details in respect to the cement and steel escalation and if these are taken together alognwith security, then a total sum of Rs.92,53,733/- would be outstanding against the defendants. He submits that there was no reason to withhold the amount notwithstanding the fact that the construction was completed on time and Nazir has also reported nominal unfurnished work, therefore, outstanding amount alognwith escalation, which was allowed by Notification of 1994, be allowed while damages in the sum of Rs.50,00,000/- be also awarded. He has pointed out cross examination of the defendant’s witness and submits that the correspondence submitted by the defendant to show that the plaintiff was asked to resume the work is totally incorrect as the witness has failed to point out any record of these correspondence. He has further relied upon Ex.P-41 to P-44, P-47 to P-50 on the issue of escalation of prices and submits that the said witness has not denied escalation when these documents were pointed out and that Ex.P-36, 37, 38, which are handing over and taking over documents, and it is being admitted by the Assistant Engineer that the Executive Engineer is competent to issue such documents.
On the other hand, Ms Humera has refuted the claim of the plaintiff by stating that certain documents, which have come on record, have clearly established that the plaintiff failed to carryout work in terms of the direction contained in general terms and conditions of the contract and that 28 work orders contain specific dates of completion of the work but the plaintiff did not inform the defendant about the completion of work at every stage and that the exhibit, which has been shown as handing over and taking over, is a fake and bogus document as there is no signature on “taking over” while plaintiff has arranged some fake stamps and invisible signature on handing over. She submits that in the cross examination, which has been conducted, the witness of the defendant does not specifically say about the admission of the factual position but sometime he has generally admitted certain things, which as per rules were applicable or applied. She further submits that if there was handing over and taking over, then why two buildings are not complete, as pointed out by the Nazir, while all the buildings suffer from deficiencies in respect to electrical work and accessories in the toilets while some floors of the two buildings are also missing. She submits that the plaintiff has not come with clean hands and since he had stopped the work despite payment, therefore he was issued notices to resume and since he was not in a position to complete the work as evident from his own letter dated 16.12.1998 (Ex.P-32), therefore, further payments were not given to him and that the pending work is to be completed by him whereafter he is entitled to the amount to be paid. She has further submitted that the escalation of cement and steel was totally not available as the plaintiff has entered into contract in 1995 on the rates, which were applicable and that the plaintiff has participated in the tender after keeping in view the rates prevalent with a heavy premium towards his cost. She submits that during the entire construction period, plaintiff never raised any issue in respect to escalation of cement or steel prices but since the rates on which the plaintiff participated were current in time, therefore, neither he demanded nor any escalation was applicable. She submits that in the past the Government has given some instruction in 1994 for cement escalation on the “ongoing projects” while the project of the plaintiff does not fall within the meaning of “ongoing project” condition, therefore, he was neither entitled nor he ever claimed at the time of bidding or construction for the reason that the rates for 1995 have already been enhanced.
After hearing the learned counsel and perusing the documents, I take up the issue No.1 and have come to the conclusion that the suit has been filed by the plaintiff as a proprietor of M/s Lucky Construction Company while there is no record with the defendants to show that M/s Lucky Construction Company was a firm. It was duty of the defendant itself to scrutinize the title of the bidders at the time of tender but it has not been done. The plaintiff Ghulam Nabi has been paid certain amount in the name of M/s Lucky Construction Company therefore the ground and objection of the defendant in this respect to the Suit on that point is not maintainable, hence dismissed.
Issues No.2 and 3 have not been disputed by either of the parties as, according to both, the plaintiff was awarded contract for construction of four buildings through 28 work orders while general terms and conditions governing the said work orders and exhibited as Ex.P-35 has not been disputed by either of them, therefore, these issues are answered in the positive.
Issues No.4 is the crux of contentions and same is taken with issues No.9 and 10. According to the plaintiff, he has completed entire work according to the terms and conditions of the work orders while, according to the defendants, work has not been carried out properly. Both the parties have relied upon certain terms and conditions. The plaintiff himself has referred clause 15 of the general terms and conditions in his letter dated 16.12.1998 (Ex.P-32). The relevant para of said letter is reproduced as under:-
“Since the works are under suspension since long due to department so it is suggested that the remaining work may pleased be withdrawn under clause-15 of the agreement as it is not possible to carryout the work on the same rates which agreement were executed during 1994-1995 as the rates have been increased and work was not done due to department for which the contractor cannot be held responsible.”
The exhibits, which have mostly been relied upon by the plaintiff towards handing over of the possession are three documents (Ex.P-36 to P-38) but none of them have any date while they bear signatures at the place of handing over and not on taking over. These documents have been disputed. The said three documents show completion of two buildings i.e. 9-A and 10-B but they have wrongly been mentioned in these certificates as (B)(9) and (A)(10) in Ex.P-36 and 37 respectively while Ex.P-38 mentions barrack No.2 without any number. These three documents are contrary to the letter of the plaintiff himself (Ex.P-32) as said letter points out remaining work in all the four buildings, which have been mentioned as a subject in that letter. The Ex.P-41 to 43, containing the detail in respect to the payments, premium and amount paid are not disputed by either of the party, which shows that certain amount has been paid while some amount has been withheld. These documents show that a total amount of Rs.14,87,465/- was outstanding in respect to the Bachelor Barrack No.9-A, Rs.14,55,377/- in respect to Bachelor Barrack No.10-B, Rs.7,51,989/- in respect to Women Barrack and Rs.3,83,153/- towards Mess and Kitchen, which brings the total to Rs.41,83,139/- while balance security deposited as per these statements come to Rs.411,651/-. It appears that as per Nazir’s report, which has not been disputed, there remains certain work which is to be completed by the plaintiff, therefore, plaintiff is entitled to that amount i.e. 41,83,139/- after he completes the work of these buildings according to work orders. The observation in respect to completion of work is being given as defendant has not specifically pointed out as to what specific work remains outstanding in each building nor the plaintiff in his letter ibid has pointed out as to what work he wanted to be withdrawn by his letter ibid nor any cost of the work has been spelt out from the contention, which has been brought on record, therefore, in my opinion, it will be just and proper if plaintiff carries out the work and remove the deficiencies pointed out by the Nazir within a period of one month under the supervision of the Nazir of this Court while the defendant to relase a sum of Rs.5,00,000/- initially to the plaintiff through the Nazir so plaintiff may complete the work as according to the plaintiff’s counsel, he and his family is suffering from starvation. After completion of work and after report of the Nazir, the defendant to submit entire above amount with the Nazir within a period of one week. Nazir to deliver the said amount to the plaintiff.
I may point out that since the buildings have not been handed over, therefore, any deficiency which might have occurred during the pendency of the Suit may also be taken care of by the plaintiff.
Issue No.5 is in respect to demand in escalation of prices of cement and steel. I have noted from the work orders that against each and every work order an amount has been mentioned, for example, Bachelor Barrack No.9-A starts with first work order No.1205 dated 01.02.1995 and its tender amount was Rs.19,73,010/- This was the cost which was estimated by the department while bidding by the plaintiff was at Rs.29,59,303/- with the addition of its own premium at the rate of 49.90 per cent which shows that the plaintiff has bid for the contract keeping in view the expenses and profit involved. I have not found any work order with the condition of escalation while these work orders were started issuing in 1995 and that cannot be considered as “work going on” nor there was any other term and condition to show that plaintiff was also entitled to the price of escalation nor contention of the plaintiff can be accepted for the reason that had that condition been applicable, then quantum of its premium i.e. 49.90 on the tender cost of Rs.19,73,010/- would have been different. The defendants have taken the stand that since the work was awarded in 1995 and the rates were fixed keeping in view the escalation in prices hence plaintiff is not entitled to that. The plaintiff did not bring any material on record that either there was any condition in his work orders or the costs in the work orders were on the basis of old schedule. Keeping in view that the exhibits in respect to the escalation do not specifically entitle the plaintiff for escalated price nor there is any other document to show that the defendant ever accepted, hence the plaintiff is not entitled to any escalation in price of any construction material. This issue is answered accordingly.
It has further been mentioned that from the witness of the defendant some questions in sweeping way were asked to which he has replied without any specification towards plaintiff or his contract notwithstanding the fact that there were categorical contentions from the defendant in respect to non completion of work and non-applicability of the escalated price. The answer of the defendant’s witness does not help the plaintiff in presence of the position of tender and the bidding prices of the plaintiff.
Issue No.6 pertains to the responsibility of the defendant as to whether he has neglected any payment of the amount due. There is nothing on record to show as to by what time the bill was submitted towards payment and when was it certified by the concerned engineer of the defendant and what was the expected date of payment. Admittedly, huge amount has been paid towards contracts as I have quoted for the purpose of example, contract No.1205 and out of total amount of Rs.29,59,303/- an amount of Rs.23,00,410/- has been paid. This shows that the defendant was paying the amount but since no performance has been brought on record to show that at the relevant and required time, the construction was complete, therefore, it cannot be established that the defendant delayed the payment. According to the plaintiff himself, there were deficiencies and he himself wanted to withdraw the contract in respect to the incomplete work. The Nazir has also reported deficiencies in the buildings, therefore, this issue is decided without any effect on either of the parties.
Issues No.7 and 8. Keeping in view the observations, which have been given above, the plaintiff is entitled to payment, which has been determined in pursuance to issues No.4, 9 and 10. Accordingly, the Suit is decreed as per finding given above in the sum of Rs.41,83,139/- The defendant to deposit initially a sum of Rs.5,00,000/- within 15 days and thereafter plaintiff to carryout the work under the supervision of the Nazir of this Court and the Executive Engineer of defendant No.3 while plaintiff to complete the same expeditiously while Nazir to keep a watch on it. A sum of Rs.50,000/- towards Nazir’s fee is to be paid by the plaintiff and defendants jointly in half sharing. After completion of work report by the Nazir, the defendants to deposit remaining balance amount which is to be paid to the plaintiff. The balance of security amount, if any, lying with the Nazir may also be paid to the plaintiff
Karachi:
Dated:. 29.05.2009. JUDGE