LAWS(CAL)-1963-6-15

RANJIT CHANDRA MITTER Vs. UNION OF INDIA

Decided On June 05, 1963
RANJIT CHANDRA MITTER Appellant
V/S
UNION OF INDIA Respondents

JUDGEMENT

(1.) This is an application for injunction. The object is to restrain the Union of India from accepting a tender for works of any other Contractor in respect to which the petitioner alleges to have a subsisting contract with the Government The application is made under the Indian Arbitration Act. There is no arbitration fending, though it is alleged in the petition that there is a dispute which is covered by the arbitration clause and the petitioner has already claimed that the disputes should be adjusted by arbitration. The petitioner is a contractor, and the contract subsisting between him and the Government is evidenced by an A/T dated March 16, 1960. The subject matter of the contract is construction works at Bon Hooghly. The estimated cost of the works is Rs. 5, 88, 938/-. The petitioner took up the construction works and from time to time Was paid on the running bills a total sum of Rs.1,30,000/-. The time within which the works were to be completed has long past. The petitioner's case is that the responsibility for the delay in completion is on the Union of India. It may be stated that the Government found fault with the construction of certain pillars, which according to the Government was not according to the specification and no payment was made on the running bills in respect to this work. The contractor further makes a grievance that by reason of the rising prices the contractor requested a revision of rates which request was unreasonably turned down by the Government. Attempt to iron out the differences between the parties having failed and the work not having been completed the petitioner Was notified by a letter of July 31, 1962 that he had not carried out the works with due diligence. He was called upon to show cause why action should not be taken against him under Clause 2 of the Conditions of the Contract. Steps indicated included the rescission of the contract under Clause 3(a) and to get the balance of the work done by another agency. By a letter dated October 31, 1962, the Government rescinded the contract and gave notice that the unexecuted part of the work would be completed by some other agency. On November 21, 1962 advertisements were issued inviting tenders for the unexecuted works. On December 21, 1962 the present notice was taken out. Four days prior, by a letter addressed by the solicitor of the petitioner dated December 17, 1962, to the Development Commissioner, the petitioner called upon the Development Commissioner to appoint an arbitrator under the arbitration clause to adjust the disputes and differences between the parties. In default of compliance within 3 days from the receipt of the letter, legal proceedings were threatened. A copy of this letter was sent to the Secretary, Ministry of Commerce and Industry.

(2.) It is contended by Mr. Subimal Roy learned counsel appearing for the petitioner that the Development Commissioner on behalf of the President will only be entitled to rescind the contract and to take the unexecuted part of the works out of the hand of the contractor and give it to another contractor, provided the contractor has made himself liable to pay compensation for breach committed by him. In the case of admitted breach, the Government may be empowered to act in terms of Clause 3 of the Contract. But if the contractor denies to have committed the breach, then there is a dispute. Before adjudication of the dispute by arbitration, there is no power under the contract to take the unexecuted works out of the hand of the contractor and give it to another contractor for completion. This is exactly what the Government is wrongfully trying to do in the instant case. That is the simple and clear case of the contractor. Mr. Roy cited a decision of Farwell I. in the case of Foster and Dicksee v. Hastings Corporation, (1903) 87 LT 736. In this case a contractor was employed to sink certain wells. The work was to be performed to the satisfaction of the defendants' engineer and any dispute between the parties war, to go to arbitration. Difficulty having arisen in carrying out the work and delay being thereby occasioned, the Council gave notice dismissing the contractor. The contractor thereupon instituted a suit for injunction and asked for interim injunction in the suit. Farwell J. who heard the application granted the injunction In this judgment the learned Judge observed in the opening paragraph that the case turns solely on the true construction of the clauses in the contract. The question involved was expressly stated to be of some difficulty and nicety, and, had it not been an interlocutory application and a matter of some urgency upon which the learned Judge was bound to give judgment at once, the learned Judge would have preferred to reserve his judgment and gone into the matter more fully. At page 739 the learned Judge gave his reasons for his decision as under :

(3.) The point to be noted is that, according to the learned Judge himself, the judgment is not a well considered judgment. Secondly, on a construction of the contract the learned Judga implied in it a negative covenant to the effect that till adjudication of the dispute under the arbitration agreement the contractor was not liable to be relieved of his works. Thirdly, the learned Judge noted that the work was being properly done by the contractor and there was no complaint against him. There were circumstances to raise a clear suspicion that the contractor was dismissed improperly by the Council and not by the Engineer. Lastly, the order for injunction was made in a pending suit. It is not for me to construe the contract in the cited case and express my opinion whether such a negative covenant can be implied on a proper construction of the said contract. An agreement to do an act, in one sense, implies that it would not be done by any other. From that point of view in every suit for specific performance an application for an injunction can be successfully maintained. But as noted by the learned Judge himself that no such injunction should be issued because if the allegation of breach by the defendant is proved at the trial, the plaintiff will be compensated in damages. Negative covenant is enforced by the Court, if there is an express covenant and very rarely, if at all, such a negative covenant is implied in the class of cases we are considering. The law of specific performance in India is regulated by Statute and Sections 12 and 21 of the Specific Relief Act make it clear beyond doubt that a decree for specific performance would only be passed if the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief. Section 21(a) expressly lays down that a contract cannot be specifically enforced, for the non-performance of which compensation in money is an adequate relief. So also Section 21(b) provides that there can be no specific performance of a contract which runs into such minute or numerous details or otherwise from its nature is such, that the Court can't enforce its material terms. It is very strongly urged by Mr. Chatterjee appearing for the respondent that a building contract of the instant character cannot be specifically enforced. If there is a breach of such a contract the remedy is to compensate the party damnified in damages. In Hudson's Building and Engineering Contracts (8th Ed.) 405 a reference is made to the case of (1903) 87 LT 736 as a case in which an injunction was granted. The comment made by the learned author on this decision, is as follows: