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PETITIONER: PURAN LAL SAH

       Vs.

RESPONDENT: STATE OF U.P.

DATE OF JUDGMENT21/01/1971

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN DUA, I.D.

CITATION:  1971 AIR  712            1971 SCR  (3) 469  1971 SCC  (1) 424

ACT: Contract-Claim on basis of quantum meruit-When sustainable.

HEADNOTE:  The  Public  Works Department of  the  respondent-State  had  issued a tender notice for the construction of a road.   The  appellant inspected the site, went to the place where  stone  for  the  construction was said to be available,  and  after  satisfying himself submitted a tender below the estimates in  the  tender  notice.   It was accepted and  a  contract  was  signed.  The estimates in the tender notice were prepared by  the  P.W.D.  on  the basis that stone  was  available  at  a  distance  of 26 chains from the work spot.  In  fact,  stone  was  available at that distance in the Cantonment  area  but  for its removal permission of the Cantonment authorities had  to  be  taken.   The appellant was not able  to  obtain  the  necessary permission and so, he bad to get the stone from  a  Much  longer distance.  He requested for a higher  rate  but  his  request was rejected.  Thereafter, he  commenced  work,  and  after  the work was completed  the  Executive  Engineer  recommended his case for a higher rate.  By a subsidiary contract the appellant undertook to  execute  some  additional work for the department.  The  quantity  of  work  which  the  appellant actually performed  was  far  in  excess of what was mentioned in the contract.  He claimed  a  higher ’rate of payment for such extra work also.  Since he did not get the higher rates he claimed, be filed a  suit which. was dismissed by the High Court in appeal.  In appeal to this Court,  HELD : (1) (a) In- none of the clauses of the tender  notice  or conditions of contract or in any other document was there  any  assurance  that  if  stone was  not  available  at  the  distance  of 26 chains the appellant would ’be  paid  higher  rates.   It was for the appellant to have satisfied  himself  before  entering  into  the  contract  that  the  Cantonment  authorities  would permit him to take the stone.   Since  be  commenced  work  after  his  request  for  higher  rate  was  rejected, it could not be said that the appellant was in any  way  induced  by any assurance.   The  Executive  Engineer’s  letter  was  only recommendatory and did not  establish  any  right to obtain a higher rate. [472 G-H; 473 G-H; 475 C.]  (b)  It could not be said that once stone was not  available

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at a distance, of 26 chains, the contract was at an end  and  that  because the appellant had done the work, he should  be  paid  on the basis of quantum meruit.  That remedy would  be  available   only  when  the  original  contract   had   been  discharged by the defendant in such a way as to entitle  the  plaintiff  to regard himself as discharged from any  further  performance, and be elects to do so; but, where work is done  under  a  contract persuant to its terms no  amount  can  be  claimed by way of quantum meruit. [475 G-H; 476 C-D]  Adopi  Parshad  & Sons.  Ltd. v. Union of  India,  [1960]  2  S.C.R. 793, followed.  (2)  On  the  second  item  also  the  appellant  could  not  succeed,  because  of  cl. 12 of the  contract.   Under  the  clause  the  appellant was bound to perform  all  additional  work  which  was  required  of him on  the  same  terms  and  conditions  in  which  be undertook to  do  the  main  work.  Further,  470  paragraph  5 of the special instructions which  formed  part  and parcel of the original contract provided that unless  he  gave notice that he was not prepared to do any extra work in  excess  of  the  quantity  of the  wort:  mentioned  in  the  contract  plus  30 per cent of that quantity  of  work,  and  settled  fresh rates for such extra work over 30  per  cent,  the appellant could not claim anything other than the  rates  mentioned in the contract. [476 E-H]

JUDGMENT:  CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1687  of  1966.  Appeal  from the judgment and decree dated March 8, 1965  of  the Allahabad High Court in First Appeal No. 84 of 1954.  G.   N. Dixit and 0. P. Rana, for the respondent.  The Judgment of the Court was delivered by  P.   Jaganmohan  Reddy, J. This appeal is by  a  certificate  under  Art.  133(1)  (a) of  the  Constitution  against  the  judgment  and decree of the Allahabad High Court  dated  8th  March  1965 setting aside the decree of the Trial Court  and  dismissing the suit of the ,plaintiff-appellant.  The appellant had submitted a tender to construct mile 3  of  Nainital-Bhowali  Road at 13 per cent below the rates  given  in Schedule B to the notice issued by the Government of  the  United  Provinces on the 30th September, 1946.  This  tender  was  accepted  and a contract was signed  on  20th  November  1946.   It is alleged by the appellant that the rates  given  in  Schedule  B were based ,on the  calculation  that  stone  required  for the road construction work would be  available  at  a  distance of 26 chains while as a matter  of  fact  no  stone was available within that distance.  The appellant had  in  fact  to  get stone from Gadhera and  Bhumadar  from  ;a  distance  of  79  and 110 chains respectively.   It  is  his  contention  that  by reason of the non-availability  of  the  stone and the definite understanding and assurance given by  the local authorities of the P.W.D. that higher rates  would  be  given for the extra work done ,over and above  the  work  provided  in  the contract he carried on the work.   It  was  also  alleged that during the construction work,on the  road  very hard shale rock came in the way mot originally provided  for  in  the contract, as such he was entitled  to  get  the  costs  for  the work so done at the current rates  from  the  P.W.D. which was not paid to him.  In respect of these items  of  work  done as also due to his having done  the  work  by  bringing stone from a longer distance than was given in  the

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estimates  the  appellant  claimed  Rs.  48,840-0-0  due  as  balance  together  with interest by way of  damages  at  12%  amounting to Rs. 17,582-0-0, making a total of Rs. 66,422-0-  0.   When this claim was rejected the appellant gave  notice  under  Section 80 of the C.P.C. and thereafter filed a  suit  for the above amount.  471  The defendant respondent resisted the suit and pleaded  that  no assurance was given to the appellant by officers of-  the  PWD  as alleged; that the quantity of very hard shale  shown  in the plaint was incorrect and at any rate the  contractor,  under  paragraph  5  of the  special  instructions  must  be  prepared to execute the work at the original tender rate  in  excess  of the given quantities of work upto 30% and  if  an  increase  in  excess of 30% is ordered over  the  work.  the  contractor  must  intimate,  to  the  Engineer-in-Charge  in  writing  his willingness or refusal to do extra work at  the  original  tendered rates.  If he refuses to carry on at  the  original  rates  he  is required to settle  fresh  rate  for  increased work over 30% before doing the work.  On these averments the trial court held issues 1, 2, 6 and 7  in  favour  of the appellant while issues 3, 4  and  5  were  decided  against him.  In the result a decree for a  sum  of  Rs. 20,495/for extra lead plus Rs. 1,663-14-0 for extra work  done under the item very hard shale and Rs. 4,155/- interest by way of da mages, on Rs. 22,158-14-0 making a total of Rs.  26,313-14-0  was passed with interest at 3 % per annum.   In  appeal  the High Court reversed the decree holding that  (I)  the  employment of the figure 26 chains in the estimate  was  for  no  other purpose. than that of calculation. .  and  if  knowing  that  the same was available within  26  chains  it  (PWD)  worked out its estimates on that basis, it could  not  be held’ to have extended any assurance, much less guarantee  to  the  contractors that they would get stone  within  that  distance;  (2)  the plaintiff appellant performed  the  work  required of him without exercising his right under paragraph  5  of the special instructions which gives the option to  do  the extra work in excess of 30% but if he refuses to do  the  extra work at the originally tendered rates he should settle  fresh  rates  for increased work over 30% before  doing  the  work  which  he  failed to do.  In view  of  these  findings  against  the  appellant  the appeal of  the  respondent  was  allowed   and  the  suit  dismissed  but  in   the   special  circumstances  of  the case left the parties to  bear  their  respective costs in both the Courts.  The  two main questions in this appeal are: (1) Whether  the  estimate of the PWD formed part of the contract so as to  be  binding  on  both parties and whether  any  assurances  were  given to the, appellant that he would be given higher  rates  for bringing the stone from places situated at 79 chains and  1  1  0  chains respectively; (2) Whether clause  5  of  the  special  conditions  of the contract was applicable  to  the  extra  item of work contained in Ex.  B3 and whether he  was  entitled  on the assurances given by the local  officers  to  higher  rate for the extra work done.  Shri Bindra,  learned  Advocate for-the appellant has referred us to clauses 8,  11  and  14  of  the notice calling for the tender  as  also  to  certain letters and passages in the evidence to substantiate  his contention that the estimates of  472  the  PWD  were  part of the contract and that  in  any  case  assurances  were given to the appellant that when  he  could  not  get  stone from distance of 26 chains,  to  bring  from  chains  79 and 1 1 0 for which higher rates would  be  paid.  It may be stated that the PWD of the United Provinces, as it

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then  was,  had  issued a tender  notice  consisting  of  16  paragraphs  and  the  appellant was required  to  sign  this  tender  notice  in token of his having received  it  because  ultimately under clause 34 of the conditions of the contract  all  papers signed by the parties to the contract  and  bond  will  be deemed to be part of the contract bond and have  to  be read as conditions to the contract.  Clause 8, 11 and  14  of the notice to which reference was made are as follows :         8. All tenders should be on percentage  rates        above or below the rates given in the Schedule        ’B’.  11.  Items  not provided in the Schedule B will be  paid  at  current  schedule  of rate plus or minus  the  percent,  age  above or below as tendered by the contractor whose tender is  accepted for this work.  14.  Contractors  are  advised to see the  estimate,  plans,  specifications,  special conditions prescribed and  site  of  work before tendering.  It  is obvious, from these clauses that the rates are  given  in   Schedule   B  on  the  basis  of  certain   plans   and  specifications.  The person intending to tender for the work  was  required to examine this material and also inspect  the  site before tendering.  These instructions were designed  to  make  all those who were desirous of obtaining the  contract  responsible  for their acts so that it cannot be  said  that  any  mis-represeneation was made or. they were misguided  in  any  way.   The contention of the learned Advocate  for  the  appellant is that it was definitely stated in the  estimates  that  stone was available at 26 chains which  representation  was  binding  ,on  the  respondents  and  if  no  stone  was  available  within  that distance he was  entitled  to  claim  higher  rates  if he had to get stone  from  places  farther  away.   In  fact the appellant alleges  that  the  Engineers  assured him that he would be paid higher rates.  We  may  here  observe that in none of the  clauses  of  the  notice or conditions of contract or in any other document is  there  any specific mention that stone will be available  at  26  chains nor is there any assurance that if stone was  not  available  within that distance the contractor will be  paid  higher  rates.   The  mere  fact  that  the  estimates  were  prepared  by  the  PWD  on the  basis  of  the  stone  being  available at 26 chains which respondents admitted as  stated  in  the judgmen it of Civil Judge, Nainital, does  not  mean  that there was any assurance or undertaking given that stone  would be avail-  473  able at that place.  In fact it is not denied that stone was  available within the distance of 26 Chaim but it was in the.  area  belonging to the Cantonment, for the removal of  which  permission  of the Cantonment authorities had to  be  taken.  Evidently  the  contractor  was  not  able  to  obtain  that  permission.  In our view it was upto the contractor to  have  satisfied himself before entering into the contract that the  Cantonment  authorities would permit him to take stone  from  its  jurisdiction  just in the same way as  permission  Will  have  to be taken from any private individual in whose  land  stone   required  for  road  building  is  found.   If   the  contractor  has failed successfully to negotiate  with  the,  owners of land from which he could bring stone it cannot  be  said that the estimate prepared by the PWD on the basis that  the  stone was available at 26 Chains was a statement  which  amounted  to an assurance or constituted a condition of  the  contract.  The  appellant  as P.W. I stated in his evidence  :  "Before  giving offer I saw the estimates and plan.  In the  estimate

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it  was  written  that the stone would be  found  within  26  Chains.   On  this basis estimate was prepared  through  the  PWD,  I enquired this   be available within 26  Chains.   On  this  basis  I  prepared  the  estimate..............In  the  beginning of the year 1947 1 started work attempted to  take  out  stone from within 26 Chains.’, The moment I started  to  take out stones, the Cantonment authorities checked me.  For  this act I was challanged, but I was acquitted.  The  entire  area within 26 Chains was of the Cantonment." Further on he  says  "I have seen the tender notice and I had gone  through  it; after that I signed it.  Schedule B was attached to  the  notice.   I signed it after going through it.   I  submitted  tender 13% less than the Scheduled rate...... before  giving  the  tender I went to that place and found that  the  stones  were  available within 26 Chins, when I wanted to take  them  out, I learnt that this was within the Cantonment  boundary.  I  sought permission to take out stones from the  Cantonment  authorities, but, it was disallowed."  It  is  clear from this evidence that the  appellant  before  giving  the  tender inspected the site, went  to  the  place  where  stone was said to be available and  after  satisfying  himself that the stone was available he gave the tender.   A  perusal of the documentary evidence would also show that  he  actually  commenced  work  after his request  to  allow  him  higher rate was rejected which was long after the time  when  under  the contract he was required to start the  work.   In  fact  just before the date fixed for the completion  of  the  work, he had under Ex.  B4 dated the 12th June 1947 made the  following representation :  "That  as  agreed  upon the contract  deed  of  my  contract  Nainital  Bhowali Motor Road Mile 3 the lead of  stones  for  masonary  474  work  is  given only about half a mile.  On  inspecting  the  place  I  find it very difficult to get a  quarry  there  as  there is no stone at all.  I am getting the stones from near  the K. E. Sanitorium which falls at a distance of two and a  half  miles from may place, as has already been  brought  to  your  and  the  C.E.’s  kind  notice.   Therefore,  you  are  requested kindly to allow me a lead of two and a half  miles  distance."  On this the concerned authorities seem  to  have  made  the endorsement: "As lead and royalty is  provided  in  the schedule B of the tender, the request cannot be  acceded  to.   Draft reply is put up".  Accordingly by  letter  dated  the 21st June 1947 he was informed as follows :,  "Reference your application dated 12th June 1947.  Please  refer  to  item Nos. 6, 7, 8 and  9  of  Schedule  B  attached  with your tender and on which basis  you  tendered  your  rate in this connection.  As the rates  noted  therein  provides all lead and royalty and there is no mention  there  that  the rate contains a lead for I ’a mile,  your  request  cannot be acceded to".  This correspondence shows that the appellant’s claim to have  extra lead was definitely rejected as untenable even  before  he started the work under the contract, as is apparent  from  Ex.   B2  dated  the  19th July ’47.   In  that  letter  the  appellant was being informed as follows:-  "Please  note  that since you have signed the  contract  for  the,  above  work,  the work must be  started  now  in  con-  sultation  with  the Overseer-in-charge,  Nainital  Section.  The date of start and completion will be as follows  Date  of start-20 November 1946  Date of completion-19 July  1947".  It  cannot therefore be said that the appellant was in  any  way  induced by any assurances given by the PWD  authorities

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that  they  would  give a. higher rate for  the  extra  lead  before  he  commenced work.  The case of  the  appellant  in  these letters was that no stone was available within half  a  mile  while  in his,deposition he gave  a  contrary  version  altogether.   Subsequently he seems to have  become  hopeful  because  in the letter of the Assistant Engineer dated  28th  December 1948 it is stated  "In  the  estimate lead for 26 Chains was  provided  on  the  assumption that stone Will be available within the  distance  from  the quarries in Cantonment areas.  Later on  when  the  work was in progress the Cantonment authorities objected to  quarrying stones from Cantonment, land ........"  475  No  doubt  the Executive Engineer in his letter  dated  15th  June. 1950, Ex. 22 has recommended the case of the appellant  for  a  higher  rate as he says "When the  stones  were  not  available  from  the  Cantonment  area  it  seems  that  the  contractor naturally was forced to bring them from  quarries  situated  outside the Cantonment area" and he  further  says  "If  these quarries are the places from. where  stones  were  actually obtained then naturally the contractor is  entitled  to get the lead for the, full quantity of stones brought  by  him  to  complete  different  items  requiring  the  use  of  stones".  This letter seems to be a recommendatory letter by a  subor-  dinate  to  the  high officer but it does  not  in  any  way  establish  the  right of the appellant to  obtain  a  higher  rate, nor does the evidence justify this conclusion.  In our  view  neither the terms and conditions of the  contract  nor  the oral or documentary evidence justify the conclusion that  the appellant was entitled to any extra lead.  Another argument was put forward by the learned  Advocatefor  the  appellant which is also based on the  same,  assumption  that  the  availability  of the stone at  26  Chains  was  a  condition  of  the contract namely that once stone  was  not  available  at 26 Chains the contract was at an end and  that  because the appellant had done the work he should be paid on  the  basis  of quantum meruit.  This in our view  is  a  far  fetched  argument  and  has no relation  to  the  facts  and  circumstances  of  the case.  Even assuming that  the  stand  taken by the appellant that the availability of stone at  26  chains was a condition of the contract was justified, he had  notwithstanding  the rejection of his claim even  before  he  started  the  work,  acquiesced in the stand  taken  by  the  respondents  that  he is not entitled to any  higher  rates,  carried  on  and completed the contract as if there  was  no  such   condition.   We  therefore  cannot   understand   the  contention  of  the  appellant’s  Advocate  as  to  how  the  contract  came to an end and who put an end to it.  Even  if  at  that  stage the contract had been put an end to  by  the  respondents which is no one’s case, as the appellant had not  started the work no question of quantum meruit would arise.  The  principle  of quantum meruit is rooted in  English  law  under  which  there were certain  procedural  advantages  in  framing an action for compensation for work done.  In  order  to  avail of the remedy under quantum meruit, the original  contract must have been discharged by the defendant in  such  a way as to entitled the plaintiff to regard himself as dis-  charged  from  any  further performance  and  he  must  have  elected’ to do so.  The remedy it may be noticed is however,  not  available  to the party who breaks  the  contract  even  though   he  may  have  partially  performed  part  of   his  obligation.   This  remedy  by  way  of  quantum  meruit  is  restitutory that is it is a recompense for the value of  the  work done by the plaintiff in order to restore him

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476  to the position which he would have been,in if the  contract  had never been entered into.  In this regard it is different  to a claim for damages which is a compensatory remedy  aimed  at  placing  the  injured party, as near as may  be  in  the  position  which he would have been in, had the  other  party  performed  the  contract.   This Court had  in  M/s.   Alopi  Parshad  &  Sons Ltd. v. The Union of India(1)  observed  at  page 809 :  "Compensation  quantum  meruit is awarded for work  done  or  services  rendered when the price thereof is not fixed by  a  contract.   For work done or services rendered  persuant  to  the  terms of a contract compensation quantum meruit  cannot  be  awarded  where the contract provides  for  consideration  payable in that behalf".  Though  in  that  case the basis of the  principle  was  not  explained, it nonetheless lays down that where work is  done  under a contract pursuant to the terms thereof no amount can  be  claimed by way of quantum meruit.  In the view  we  have  taken on the facts of the case we do not propose to  examine  the decisions cited at the Bar in this behalf.  The claim of  the  appellant for higher rates which in fact was by way  of  damages has been rightly disallowed by the High Court.  On the second question also the appellant cannot succeed be-  cause  under  clause  12  of  the  contract  Ex.   B1.  the,  plaintiff  was  bound to perform additional work  which  was  required of him on the same terms and conditions on which he  undertook to do the work for which he tendered.  It  appears  that  by  a  subsidiary contract entered  into  between  the  appellant  and the P.W.D. Ex.  B3 on the 12th  April,  1946,  the appellant undertook to execute some additional work  for  the  Department.   The  quantity  of  work  which  appellant  actually  performed was far in excess of what was  mentioned  in Ex.  B.3. The appellant therefore claimed payment for the  work done by him in excess of the quantity mentioned in  the  contract  plus  30%  at  the current  rate  as  against  the  stipulated  rates.  It was submitted on behalf of the  State  of  U.P. before the High Court that under clause 1 2 of  the  contract   Ex.   B  I  and  paragraph  5  of   the   special  instructions the plaintiff was not entitled to any amount in  excess  of what he had already been paid.   This  contention  was  accepted  because under the, aforesaid clause  1.2  the  contractor  was bound to perform all additional  work  Which  was  required  of him on the same terms  and  conditions  in  which he undertook to do the main work.  Paragraph 5 of  the  special instructions further provides as follows :  "Contractors  must  be  prepared to do.  at  their  original  tender rate work in excess of the given quantities  (1) [1960]  2 S.C.R. 793.  477  of work upto 30% if an increase in excess of 30% is  ordered  over  the work the contractor must intimate to the  Engineer  Incharge  in writing his willingness or refusal to do  extra  work  at the originally tendered rates.  In the latter  case  he  should  settle fresh rate for increased  work  over  30%  before doing the work".  These  instructions  being part and parcel of  the  original  contract  Ex.  B1  would govern the parties.   As  such  the  appellant unless he gave notice under that paragraph that he  is not prepared to do the extra work over the 30% at  normal  rates,  he  cannot claim anything other than  at  the  rates  mentioned in the contract, unless he had settled fresh rates  for that extra work.  There is no evidence nor is it claimed  by  the appellant that he had given any notice  as  required  under  paragraph 5 of the special instructions and since  he

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did the work without fulfilling these requirements he is not  entitled  to  claim, any amounts at a higher  rate  for  the  extra  work done.  As neither of the contentions have  force  the  appeal  is dismissed but in the  circumstances  without  costs.  V.P.S.                                               Appeal,  dismissed.  478