Contract Act, 1872: ss.67 and 75 – Neglect or refusal on part of promisee to afford reasonable facilities for performance of the promise – Appellants, a registered contractor of state government, issued a work order for execution of work at the cost of Rs.80,45,034/-, 47% above the estimated cost – Appellant was informed about the non-availability of pipes stipulated in the contract – Since respondents wanted change in work order by substituting pipes of different diameter, the appellant demanded modified rate – Due to this dispute, respondent instructed the appellant to stop the pipeline work and start the work of construction of another work – Bills raised by appellant were not honoured in time, therefore he did not proceed with the work – Respondent issued threat to withdraw the work and to levy fine – Appellant filed suit for recovery of a sum of Rs. 51,35,289/- – Trial court decreed the suit partially directing the respondents to pay 24,97,077/- with 10% interest to the appellant – High Court allowed the appeal filed by respondent partially and reduced the decree amount to Rs.7,19,412/- – On appeal, held: The entire sequence of events showed that appellant was not guilty of anything including abandonment – Clause 3(a) of the contract enabled the respondents to rescind the contract, forfeit the security deposit and entrust the work to another contractor at the risk and costs of the appellant – This clause was never invoked by respondents – Material changes done in work order without the finalization of the modified rates caused the non-performance of contract – Hence, the respondent cannot accuse the appellant of abandonment and non-performance of the contract – The refusal of a contractor to continue to execute the work, unless the reciprocal promises are performed by the other party, cannot be termed as abandonment of contract – It was the respondents who made it difficult for the appellant to execute the contract as per the terms originally agreed – High Court’s order is set asdie and trial court’s order restored.
Contract Act, 1872: Abandonment – It is fundamental to the Law of Contract that whenever a material alteration takes place in the terms of the original contract, on account of any act of omission or commission on the part of one of the parties to the contract, it is open to the other party not to perform the original contract – This will not amount to abandonment – Moreover, abandonment is normally understood, in the context of a right and not in the context of a liability or obligation – A party to a contract may abandon his rights under the contract leading to a plea of waiver by the other party, but there is no question of abandoning an obligation. Allowing the appeal, the Court
HELD: 1. Refusal of a contractor to continue to execute the work, unless the reciprocal promises are performed by the other party, cannot be termed as abandonment of contract. A refusal by one party to a contract, may entitle the other party either to sue for breach or to rescind the contract and sue on a quantum meruit for the work already done. The respondents did not choose the option of rescinding the contract and suing for damages in terms of clause 3 (a) and (b). It was the respondents who made it difficult for the appellant to execute the contract as per the terms originally agreed. [Para 22][848-A-B, F-G]
2. The High Court was clearly in error in overturning the judgment of the Trial Court with regard to the aforesaid 3 heads of claims, on a wrong understanding that there was abandonment of contract on the part of the appellant. Hence this appeal is allowed. The impugned judgment and decree of the High Court are set aside and the judgment and decree of the Trial Court are restored. [Para 23][848-G-H]
2012.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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