BHARAT SANCHAR NIGAM LTD. Vs. TANNERU SUBBA RAO

JUDGEMENT

(1.) This appeal is preferred against the judgment and decree, dtd. 10/10/2011, passed in O.S.No.870 of 2008 on the file of the Court of II Additional Senior Civil Judge, Vijayawada.

(2.) Heard Sri I.Subramanyeswara Rao, learned standing counsel for BSNL appearing on behalf of the appellant and Sri Y. Vasudeva Rao, learned counsel for the respondent.

(3.) The plaintiff is a Government of India Enterprise, by name, Bharat Sanchar Nigam Limited ("BSNL", for short) invited sealed tenders for construction of 2 Nos. Type-IV and 2 Nos. Type-V (G+1) including internal and external services in the administrative building compound at Khammam. The defendant submitted tender and was awarded work under letter reference No.23(623)/BSNL/CDV/2004- 434, dtd. 8/4/2004, for Rs.41,76,076.50. The parties entered into an agreement. As per the terms and conditions of the contract, the defendant has to commence the work on 18/4/2004 and to be completed by 17/2/2005. However, the defendant could not complete the work within the stipulated time. The time was extended by the plaintiff upto 31/12/2005. The extension of time was granted without prejudice to the rights of the plaintiff to recover the liquidated damages in accordance with clause No.2 of the agreement. While so, all of a sudden, without giving any notice/intimation, the defendant stopped the work, vide letter dtd. 4/6/2005, notifying closure of the work with immediate effect. The plaintiff protested the action of the defendant as the closure of the contract by one party unilaterally without giving sufficient opportunity to the other party is illegal. The defendant invoked Clause No.25 of the agreement for adjudication of various issues of disputes before the Arbitrator. The defendant issued letter dtd. 12/1/2006. Mr. Gurubax Singh was appointed as an Arbitrator and award was passed on 27/2/2007 allowing certain claim and disallowing certain other claims. The plaintiff preferred an appeal before the District Judge, Machilipatnam, and the same is pending. The plaintiff got issued a notice to the defendant to pay Rs.4,17,608.00 towards liquidated damages, as per Clause No.2 of the agreement, vide letter dtd. 19/4/2006. The defendant did not choose to pay the same. The arbitrator has not decided the issue of levy of liquidated damages as it was exempted and beyond the purview of the arbitrator. The plaintiff also made several demands to the defendant to pay the amount along with interest, but the defendant postponed the same. Hence, the plaintiff filed the present suit for recovery of damages from the defendant. Sec. 74 of the Indian Contract Act provides for compensation for breach of contract. Hence, the plaintiff brought suit for recovery of an amount of Rs.5,26,604.00 from the defendant towards damages.