RAMPUR ENGINEERING COMPANY LIMITED Vs. UNITED CONSTRUCTION CO

JUDGEMENT

(1.) This is a suit for recovery of Rs.9,50,000.00 filed by the plaintiff, a public limited company registered under the Companies Act through its managing director Shri Rajender Kumar Gupta. Case of the plaintiff in brief is as under: That sometime in the year 1978-79, the plaintiff was awarded a contract for construction and erection of the Coal Handling Plant at Kota Thermal Power Station under the auspices of Rajasthan State Electricity Board, Kota; that in furtherance of the said contract the plaintiff invited offers from the various civil contractors including defendant 1 for-completion of civil work for said plant and defendant 1 sent its offer dated 28.12.1979 and that the said offer of defendant 1 was accepted by the plaintiff vide its letter dated 27.2.1980.

(2.) It was agreed that defendant No.1 would execute the work in accordance with the terms and conditions and technical specifications given in Annexures 1 and 2 of the said letter and would take the whole responsibility of maintaining quality work to the entire satisfaction of the said Board and the plaintiff. The contract price of the said order worked out to Rs.94,96,925.00 and the plaintiff was obliged to pay an advance of 10% of the said contract Bill subject to the defendant No.1 furnishing bank guarantee of equal amount. It was obligatory upon defendant 1 to mobilise all its equipment, supervisory staff and labour power before 15.3.1980 and to complete the work within the stipulated time.

(3.) On or about 26.3.1980 three bank guarantees for Rs. 4 lacs, 3 lacs and 2.5 lacs were executed by defendant No.2 for and on behalf of defendant No.1 in terms of the aforesaid contract in favour of the plaintiff's bankers and defendant No.3 and as part of its obligation plaintiff issued a cheque for Rs.9,49,692.00 dated 5.4.1980 towards advance of 10% of the contract value. During the execution of the work the plaintiff made part payment of Rs.6.55,000.00 till May 1981 to defendant 1 besides aforesaid amount of Rs.9,49,692.00 and on finding that the work was totally unsatisfactory and beyond the acceptable limits of the Board and the standards of the plaintiff, defendant No.3 on behalf of the plaintiff requested defendant No.1 to extend the validity period of the bank guarantees vide letter dated 23.3.1981 and in view of the fact that defendant 1 had yet not fulfilled their commitments under the said bank guarantees, the defendant No.3 requested defendant No.2 to extend the period of guarantees for the period equal to the period defendant 1 would take in fulfilling their commitments or in the alternative to treat this letter as notice of invocation of bank guarantees and remit the guarantees amount to the defendant No.3 by 26th instant.