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PETITIONER: STATE OF GUJARAT

       Vs.

RESPONDENT: DAHYABHAI ZAVERBHAI

DATE OF JUDGMENT:       24/02/1997

BENCH: K. RAMASWAMY, G.T. NANAVATI

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Delay condoned.      Leave granted.  We have  heard learned  counsel on both sides.      This appeal  by special  leave arises from the judgment of the  Gujarat High  Court, dated August 21, 1995 passed in First Appeal No.3875/95.      Admittedly the  respondent-contractor had  entered into an agreement  No.B-1/17 of  1981-82 to  complete the work of protective measures for the road bridge across river Ambica. The appellant  had issued the work order on June 3, 1981. It is true  that there  was a  delay in  handing over  the work sheet and  the specifications.  But the  trial  Court  after considering the entire evidence had noted its finding thus:      "In the  present case  the land  on      which  the  construction  work  was      required to  be made  was a land of      the Government  and not  of private      party or  private owner,  so  there      was no  hurdle in  the construction      work  of   the  plaintiff  but  the      plaintiff  himself   has  left  the      construction  and   hence,  in  the      present case,  only  the  plaintiff      can  be   held  a  person  who  has      revoked   the    contract.   Before      revoking    the    contract,    the      plaintiff was given sufficient time      and   reasonable   opportunity   to      complete the work but the plaintiff      has not  done anything  to complete      the work  and left the work and the      sit  so  we  have  no  option,  the      deft/Department   to    take    the      decision  for   revocation  of  the      contract."      In view of the above finding, the inevitable conclusion is that  the respondent  had abandoned  the execution of the work in spite of the opportunity having been given to him to complete the work. Clause 3 of the Contract reads as under:

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    "Clause-3: In  any case,  in  which      under any clause or clauses of this      contract the  contractor shall have      rendered  himself   liable  to  pay      compensation amounting to the whole      of his  security  deposit  (whether      paid in  the sum  or  deduction  by      instalments)  or  in  the  case  of      abandonment of  the work  owing  to      serious illness  or  death  of  the      contractor  or   any  other  cause,      Executive Engineer,  on  behalf  of      the  Government  of  Gujarat  shall      have power:-      (a)  to  rescind   the  contract(of      which recession  notice in  writing      to the Contractor under the hand of      the  Executive  Engineer  shall  be      conclusive evidence)  and  in  that      case the  security deposit  of  the      Contractor  shall  stand  forfeited      and be  absolutely at  the disposal      of Government.           That in  view of  this express      provision the  Hon’ble  High  Court      erred   in    holding   that    the      petitioner/State is not entitled to      forfeiture the deposit."      A reading  thereof would  clearly indicate  that in any case, under  any clause  or clauses  of  the  contract,  the contractor  would   have  rendred   himself  liable  to  pay compensation amounting  to the whole of his security whether paid in  the sum  or deducted by instalments; in the case of abandonment of the work owing to serious illness or death of the contractor or any other cause, the Executive Engineer is empowered to  have the  contract rescinded; in that case the security deposit of the contractor shall stand forfeited and be  absolutely   at  the  disposal  of  the  Government.  In consequence, forefeiture of the security deposit, on account of abandonment  of the  work by the appellant, was perfectly valid. The High Court, therefore, was not right in directing the  appellant  to  refund  the  security  deposit.  Learned counsel for  the respondents  contends that time was not the essence of  the contract and therefore, the recession of the contract was  not for  valid reason. We are, however, not on the validity  of the  recession of  the contract  but on the question whether  the respondent  had abandoned the contract or not.  The question  in that  backdrop arises: whether the recession of the contract was correct in law? In view of the above facts,  the action was legal. In that perspective, the ratio in  M/s Hind  Construction  Contractors  v.  State  of Maharashtra [A.I.R. 1979 SC 720] has no relevance. Therein , the contract  was not rescinded. Work was executed after the extended time and the claims were made before the Arbitrator for the  work done  during the  extended time.  Therein, the contention was raised that time was essence of the contract. Respondent and  the contractor  having not complete the work within the  schedule time, he was not entitled to the amount under the  award. In that contract, this Court had held that time  was  not  essence  of  the  contract.  That  question, however, does not arise in this case for the reason that the respondent had abandoned the contract.      The appeal is accordingly allowed. No costs.

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