BENGAL NAGPUR RAILWAY CO LTD Vs. RUTTANJI RAMJI

JUDGEMENT

(1.) These consolidated appeals arise out of an action brought by the plaintiffs to recover from the Bengal Nagpur Railway Company Limited (hereinafter referred to as "the railway"), a certain sum of money on account of the price of the work done by them for the railway. The circumstances which have led to the litigation may be shortly stated. On 31 March 1920, one Ramji Madhoji, (described hereinafter as the contractor), the predecessor-in-interest of the plaintiffs, entered into three contracts with the railway for doing earth work, bridge work and miscellaneous work respectively, in the construction of a branch railway line known as Amda Jamda branch. The terms of each contract, which were embodied in a document variously described as schedule of works or schedule of rates, prescribed, inter alia, the rates at which payments were to be made to the contractor for various items of work to be done by him. In May 1920, the contractor commenced work in the section of the line allotted to him; but he soon found that owing to the wild and uninhabited nature of the locality through which the line had to pass, and to other local disadvantages, it was difficult to induce labourers from distant places to come and work there; and he encountered many other difficulties. He did not take long to realize that the rates specified in the schedules were wholly inadequate and asked for their enhancement. The railway recognized the reasonableness of the claim and enhanced the rates in August 1920, and framed new schedules of rates. But the contractor refused to sign the revised schedules, as he considered even the new rates to be inadequate. He was however asked to continue the work and on 5 October 1920 he received from the assistant engineer of the railway a letter in these terms :

(2.) As there appears to be a certain amount of discontent with regard to the schedules of rates for this subdivision and as I have received several letters containing proposals as to what the rates should be, I wish to bring to your notice the following points which have been conveyed to me by the District Engineer as a result of his last inspection : 1. It is not the policy of the Bengal Nagpur Railway to cause loss to their contractors by paying them final rates at which they cannot make a profit. 2. Work has scarcely been started at present and it is far too early to judge whether a further increase in rates is necessary. The final rates necessary cannot be determined until the work is in full swing. 3. Any representations which you may have to make will be sympathetically considered after a good effort has been put forth (say for six months) which will enable an estimate to be made of the actual expenses incurred.

(3.) This letter was followed by another letter in December 1920 which sanctioned a further increase in certain rates mentioned in the schedule of rates. Even this revision of rates was unacceptable to the contractor, but the railway entered the revised rates in the printed schedules without obtaining the consent of the contractor. The work however continued and was completed early in 1925; the contractor receiving payments periodically on the basis of periodical statements of accounts or bills called "on account bills". It appears that during the progress of the work and even after its completion, attempts were made by the parties to settle finally the rates at which payment should be made to the contractor for the various items of work done by him, but these attempts proved abortive. The contractor, in the meanwhile, having died, his representatives brought the present action for the recovery of the money due to them; and the main point in dispute, upon which the parties have produced voluminous evidence, is whether the rates as specified in the original schedules were abandoned with the consent of the parties. The trial Judge holds that the oral and documentary evidence adduced by the parties confirmed as it is, by their conduct, leads to the conclusion that "the original scheduled rates were abandoned by the mutual consent of parties". On appeal, the learned Judges of the High Court, upon a fresh examination of all the relevant circumstances have endorsed that conclusion in clear and emphatic terms.