KIRI ASSOCIATES PRIVATE LIMITED Vs. CAPARO MARUTI LIMITED

JUDGEMENT

(1.) In pursuance of tenders floated by defendant No.1 for civil construction work of the Press Shop of its company at Gurgaon the plaintiff submitted its tender in the form prescribed by defendant No.1. After negotiation the contract was allotted to the plaintiff. One of the clauses of the contract was that the contractor would submit a performance guarantee equivalent to 5% of the contract sum in the form of a bank guarantee from any nationalised bank in New Delhi and that the said guarantee should be valid for a period of 9 months or till the completion of the project. In terms of the aforesaid clause of the contract the plaintiff furnished a performance bank guarantee on 27.9.1994 for Rs.15 lac which was issued by defendant No.2, Bank of India.

(2.) After the contract was awarded the plaintiff started the construction work. It has been alleged by the plaintiff that there were various delays and hindrances created by defendant No.1 which adversely affected the smooth execution of the work by the plaintiff and that it had to suspend the work on various occasions. According to the plaintiff while the period contemplated under the contract for execution of the contract was 9 months, in view of hindrances and delays on the part of defendant No.1 it took nearly about 18 months for the plaintiff to complete the entire work. It is also alleged that the defendant No.1 failed and/or neglected to make payment towards the bills of the plaintiff although the aforesaid bills were certified by the Consultant of the defendant No.1 and in all at present more than Rs.3.62 Crore is due to the plaintiff from defendant No.1 on account of its various bills, securities etc.

(3.) The defendant No.1 howjever, denied that the plaintiff complet the construction work awarded to it and stated that the plaintiff was never in a position to execute the contract and that the contract was not executed by the plaintiff within the prescribed time as a consequence of which the defendant No.1 suffered losses and damages and moreover the work done by the plaintiff admittedly due to paucity of funds was sub- standard and that the defendant No.1 had to incur additional expenditure in getting the work corrected by outside agencies in respect of which the defendant No.1 incurred extra expenses. It is further stated that the defendant No.1 was compelled to review the scope of work of the plaintiff since the plaintiff failed and neglected to execute the contract in terms of the contract and was compelled to issue a legal notice on 27.11.1995 claiming about Rs.8.99 Crores from the plaintiff.