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The State Of Bihar vs P.K.

Jain on 28 January, 1981

Patna High Court


The State Of Bihar vs P.K. Jain on 28 January, 1981
Equivalent citations: AIR 1981 Pat 280, 1981 (29) BLJR 545
Author: M Singh
Bench: S Choudhuri, M P Singh
JUDGMENT M.P. Singh, J.

1. This is an appeal by the State of Bihar (Defendant) from an original judgment and decree dated 13
September, 1965, of the Additional Subordinate Judge II, Gaya. The question in this appeal is
whether the respondent-contractor who was plaintiff in the money suit is entitled to certain
damages as claimed by him and if so, how the damages are to be assessed. The claim for damage is
based on breach of two contracts, Exts. B and B/i both dated 23rd March, 1956, executed by the
Executive Engineer, P. W. D. East Division, Gaya acting on behalf of the State of Bihar. The
respondent had agreed to supply about 31 lacs of bricks in groups A and B for the Panchanpur
Daudnagar Road with link to Tekari. 1762992 bricks were to be supplied in group A to be delivered
at 0 to 8 miles under the agreement (Ext. B/l) and 1330560 bricks were to be supplied in group B to
be delivered at 9 to 16 miles under the agreement (Ext. B). The supply was to start from 15th
February, 1957, and was to be completed by 30th June, 1957. The plaintiff supplied 582000 bricks
in group A and 785000 bricks in group B by 15th July, 1957, and payment was made for the same as
1st and 2nd on A/C bills. The grievance of the plaintiff is that the Sectional Officer, P. W. D.
Headquarters Subdivision 3 Gaya by his memo No. 229 dated 15th May, 1957, asked him to suspend
the supplies until further notice in miles 0 to 12 and the link portion on the ground that the actual
requirement would be intimated later to the firm after consulting the Sub-divisional Officer, P. W.
D. Subsequently by memo No, 327 of 23rd June, 1957, the plaintiff was informed that the
requirement was less. The Sectional Officer intimated to the firm to supply 293076 bricks in group A
and 146520 bricks in group B as against the contracted quantities of 1762992 and 1330560 bricks in
groups A and B respectively, that by memo No. 302 dated 15th July,1957, the Sub-divisional Officer,
P. W. D, No. 3 informed the plaintiff that separata tenders had been called for supply of bricks in
mile 1 and he restricted him from supplying any brick in mile 1. He further restricted him from
supplying any bricks in other miles also. These two restrictions are said to constitute the breach of
contract and causing loss to the plaintiff. It alleged that he sold the remaining bricks numbering
1180992 in group A and 545560 in group B at a very cheap price, namely, at Rs. 25/- per thousand
as a result of which the plaintiff suffered a loss of Rs. 16/- per thousand. The total amount of loss
thus being Rs. 67,697/-. The cause of action is said to have arisen on 30th December, 1958, when
the plaintiff had to dose his kiln.

2. Shorn of verbiage the case of defendant 1 the State of Bihar who appeared in the suit and filed
written statement is that as per condition 5 of the agreement the department was entitled to revise
the agreement and the plaintiff could supply only such quantity of bricks as revised, that a separate
tender was called for the supply of bricks because a separate estimate was prepared for the town
portion. It denied to have committed any breach of contract. It was further pleaded that the suit was
barred by limitation.

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The State Of Bihar vs P.K. Jain on 28 January, 1981

3. The Additional Subordinate Judge, Gaya has found, (i) that condition 5 of the agreement being
unilateral and arbitrary is void, (ii) that the plaintiff was entitled to a decree for the difference of
price as allgeed in the schedule of the claim calculating the sale price of the bricks at Rs. 25/- per
thousand plus the transportation charges of 4 lacs of bricks at the rate mentioned in the schedule,
(iii) that the suit was governed by Article 120 of the Limitation Act and was not barred by limitation,

(iv) that the plaintiff was entitled to a decree for the establishment expenses at the two places in
Panchanpur and Chandauit (Rs. 5,040+5,040), earnest money Rs. 1,800, to the refund of security
money Rs. 1,069 and the rent of the land Rs. 2,000+2,000 and also to the expenses for the carriage
of 4 lacs of bricks of group B from Panchanpur kiln to Gaya Rs. 6,400. He disallowed interest. On
these findings he decreed the suit in part with costs.

4. Mr. Chunni Lal appearing for the defendant appellant has pressed this appeal mainly on three
grounds:

(i) The suit is barred by limitation,

(ii) The Court below has erred in law in allowing compensation to the extent of difference between
the contract price and the price on the date of sale,

(iii) The court below has committed error of law in arriving at the conclusion that condition 5 of the
agreement was void. Point No. I,

5. His first contention is that the suit will be governed by Article 115 of the First Schedule to the old
Limitation Act and not by Article 120 and hence it is barred by limitation. I think, he is right. Article
115 provides that for any suit for compensation for breach of any contract expressed or implied not
in writing registered and not specially provided for, the period of limitation is three years from the
time when the contract is broken or (where there are successive breaches) when the breach in
respect of which the suit is instituted occurs or (where the breach is continuing) when it ceases, In
the instant case the cause of action is breach of contract. There is no doubt about it. The plaint
clearly states it, The question is when was the contract broken? The learned Subordinate Judge has
dealt with this aspect of the case in paragraphs 65 to 69 and without giving any finding as to when
the contract was broken he has applied Article 120 of the Limitation Act thinking that the cause of
action arose on 30 December, 1958. That residuary Article applies when no other Article is
applicable. The nature of the present suit is clearly covered by Article 115. In the Full Bench case of
Dhapai v. Dalla, AIR 1970 All 206 at p. 208 it has been said :

"Article 115 applies when there is a breach of contract and the suit is for compensation for the loss
suffered by the innocent party, A breach of contract occurs where a party repudiates or fails to
perform one or more of the obligations imposed upon him by the contract (vide Cheshire and Fifoot,
P. 484). If one of the two parties to a contract breaks the obligation which the contract imposes, a
new obligation will in every case arise a right of action conferred upon the party injured by the
breach (vide Anson's Law of Contract, p. 412)."

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In the present case there was admittedly a contract and according to the plaintiff there was a breach
of it inasmuch as the defendants stopped taking further delivery of the bricks. Clearly, therefore,
Article 115 applies. In Cheshire and Fifoot's Law of Contract, 9th Edn. 1976 by M. P. Furmston at
page 619 the following passage occurs:

"The expression "cause of action" means the factual situation stated by the plaintiff which, if
substantiated, entitles him to a remedy against the defendant. If, when analysed, it discloses a
breach of contract, it accrues when that breach occurs, from which moment time begins to run
against the plaintiff. The fact that actual damage is not suffered by him until some date later than
the breach does not extend the time when he must sue."

Under Article 115 limitation time starts to run from the date of breach. According to paragraph 11 of
the plaint one such date is 15th July, 1957. Another date of breach viz., the date of restriction which
is mentioned in pargraph 10 is not given. It being the own case of the plaintiff that the two
restrictions mentioned above in paragraph 11 of the plaint constituted the breach of contract, it is
not open to him to run away from that position. Mr. K.K. Saran argued that the breach became
complete only on 30th December, 1958, when the plaintiff closed the kiln for manufacturing the
bricks. I do not agree. Ext. 3 is a letter from the firm of the plaintiff to the Executive Engineer, P. W.
D, East Division, Gaya dated 27th January, 1958. It mentions about the stoppage of further supply
of bricks at the roadside. It also mentions that in spite of several letters sent by the plaintiff no reply
came from the department with the result that the bricks were lying at the two klin sites and the
plaintiff was suffering heavy daily losses. The letter further says, "it is not, you will kindly appreciate
possible for us to continue to bear the above heavy mounting losses indefinitely and we are,
therefore, proceeding to find customers for as much quantity as possible and at the highest possible
rates. We hope you will have no objection to this. This much however, we would like to state here
that in the peculiar circumstatnces in which we have been placed by your postmanufacture drastic
reduction in the quantity of supply we will have to prefer claim in due course for the quantities that
remained unsold and also for the difference in our manfacture (kiln site) cost of bricks and the rate
at which we shall be able to sell them, if any". It is clear that the plaintiff threatened the department
to bring action in due course. It is further clear that the plaintiff was not to wait indefinitely and,
therefore, he was proceeding to find out customers for selling the bricks to them. In view of this
letter it cannot be said that the contract still existed. The conduct of the plaintiff shows that he
treated himself as free from liability on 27 January, 1958. Thus 27th January, 1958 is the last date of
the breach o contract and the suit would be barred by Article 115 even from this date. The plaintiff
clearly claimed a right of action on that date. There is no doubt that in case of contract that date of
the nativity of the right of action (actionata) is generally speaking the date of breach of contract. In
the present case Ext. 3 dated 27 January, 1958, shows that the plaintiff had a right of action on that
day. The suit, therefore, would be governed by the provisions of Article 115 of the Limitation Act and
the period of limitation started from the date of the breach of the contract which occurred on 27
January, 1958, if not earlier: Sea the case of Firm Bhagwan Das Shobha Lal Jain v. State of Madhya
Pradesh, AIR 1966 Madh Pra 95.

5-A. Seeing difficulty in his way Mr. K.K. Saran contended that it is a case of continuing breach of
contract within the meaning of that expression in Article 115 and hence limitation would run when

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the breach became complete. He has referred to several letters Exts. 3 (n), 3 (m), 3 (a), 3 and 3 (1)
written by the plaintiff to the department requesting the latter to take delivery of bricks, making
complaint for giving no reply and informing it that the brick kiln was going to be closed. Learned
counsel drew our attention also to letters Exts. 3 (f) No. 229 dated 16 May 1957, 3 (e) dated 27 June
1957, which is letter No. 327 and 3 (d) dated 13 July 1957 written by the P. W. D. to the plaintiff
stopping further supply. By letter Ext. 3 (f) further supply in miles O to 12 and in link portion was
stopped and the plaintiff was informed that he would be told about the actual quantity of bricks to
be taken after consultation with the S. D. O, III. By Ext, 3 (e) the plaintiff got the information as to
how many bricks were to be supplied in what mile. By letter Ext 3 (d) the plaintiff was stopped to
supply bricks in mile 1. He was also informed that further supplies in miles which were vacant
should also be stopped for the present. On the basis of these letters it was contended on behalf of the
plaintiff that the breach of contract started on 16-5-1957 when the P. W. D. by letter No. 229 dated
16 May, 1957 (Ext, 3f) stopped further supplies in mile 0 to 12 and that it became complete on 30th
December, 1958, when the plaintiff had to close his brick kilns and hence it was a continuing breach.
I do not agree with this contention. In the first place there is no case of continuing breach in the
plaint. There is no evidence on record to that effect.

No such issue was framed by the trial Court and no such point was argued in the Court below nor
any finding was given on this point. Any way we have heard the learned counsel for the respondent
on this matter also. I think that the contention has no force. In Mansab AH v. Gulab Chand, (1888)
ILR 10 All 85 at p, 92 the expression 'continuing breach' has been explained.

"The contract under consideration was to do one thing; that was to pay the amount due on or before
the 30th June, 1871, and on the non-payment of the money on the day appointed the breach of the
contract was committed. It cannot, in our opinion, be said that there was here a continuing breach.
A covenant for title is an instance of a contract of which, according to the English Law, there may be
continuing breaches. So is a covenant to maintain a building in repair. There is a breach of covenant
for title so long as an adverse title exists, and there is a breach of covenant to maintain a building in
repair so long as the building is out of repair."

In Tagore taw Lectures - 1882 on The Law of Limitation and Prescription delivered by Mr. U. V.
Mitra, 5th Edn. 1909 at page 304 the following passage occurs:

"Where the breach is a continuing one, as in the case of a tenant neglecting, in violation of his
covenant, to keep the demised premises in repair a fresh right to sue arises at every moment of the
time during which the breach continues. The cause of action in this case is said to be renewed de die
in diem that is, renewed from day to day; and the suit is absolutely barred, only by the lapse of the
prescribed period from the time when the breach ceases to exist. But every breach persisted in by
the obligor is not a continuing breach. Mr. Shephard in his work on the Limitation Act, observes that
the rule as to continuing breaches applies on the contracts obliging one of the parties to adopt some
given course of action during the continuance of the contractual relation. The relation between the
contractor and contractee must continue to exist for some time, as in the case of partners, landlords
and tenants, principals and agents, bailors and bailees; and the matter to which the defaulting party
is obliged should not consist of doing specific acts at stated times, such as paying rent every quarter,

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or rendering accounts every six months. The nonpayment of rent every quarter, and the
non-rendering of accounts every six months, are successive breaches of contract. In either case each
act, or omission, though the same in kind, is distinct and complete in itself,"

In view of the above the instant case cannot be said to be a case of continuing breach. If specific
goods are contracted to be delivered at or by a fixed date, it will not be a continuing contract and
there can be no question of continuing breach. Mr. K.K. Sharan strongly relied upon Sections 39 and
53 of the Contract Act and contended that the obligation of the plaintiff in the matter of supply of
the bricks was partially discharged when the contracted quantity of the bricks was manufactured
and stacked at the kiln. Counsel submitted that further obligation left to be discharged was only
collection of these bricks at the roadside. He argued that the word 'supply' meant manufacturing as
well as collection. In my opinion, the argument is devoid of merit. Supply can never mean
'manufacturing' which is an earlier process for the purposes of supply. Section 39 cannot help the
con tention of the respondent. It reads thus "When a party to a contract has refused to perform, or
disabled himself from performing, his promise in its entirety, the promisee may put an end to the
contract, unless he has signified, by words or conduct, his acquiescence in its continuance."

On a perusal of the above it is clear that the Section merely authorises the promisee to put an end to
the contract in the two situations mentioned therein. The present case is not a case of total refusal to
perform the contract. Moreover the point to be determined in this case is whether there was breach
of contract, not whether there was end of the contract. The suit is based on breach, not on end of the
contract. It is not, therefore, understandable as to how this section is relevant on the point of
continuing breach. Counsel for the respondent relied on S.V. Harihara lyer v. Mathew George, AIR
1965 Ker 187 in which the principles underlying Sections 39 and 64 of the Contract Act were
enunciated and it was held that the respondent who had committed breach of contract could not in
justice or in law claim to be repaid the part of the consideration which he had paid to the appellant, I
do not see how this case is of any help to the respondent.

Similary Section 53 of the Contract Act also is not of any assistance to the respondent. It provides
that when a contract contains reciprocal promises, and one party to the contract prevents the other
from performing his promise, the contract becomes voidable at the option of the party so prevented;
and he is entitled to compensation from the other party for any loss which he may sustain in
consequence of the non-performance of the contract. It is clear that this section also cannot be
invoked for the purpose of the present case. Under this Section the contract becomes voidable at the
option of one party who is prevented by the other party from performing his promise and he is
entitled to compensation for any loss which he may sustain in consequence of the non-performance
of the contract, The facts alleged in the present suit do not attract the application of that section. The
section, therefore, has no relevancy to the points to be determined in this case. Learned counsel
relied on Hindustan Construction Co. v. State of Bihar, AIR 1963 Pat 254. That was a case where the
contract including the void agreement was one of running accounts with credits and debits being
adjusted from time to time. The main defence was that the contract was not valid and that in fact the
plaintiff had been paid more than what was due to it. One of the questions involved in that case was
whether time was the essence of the contract and as to when the contract came to end in that case.
On the facts of that case it was held that the contract did not come to an end after the expiry of the

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period and time was not the essence of the contract, Section 70 of the Contract Act also came to be
considered. That case, therefore, cannot be of any help to the respondent. Learned counsel next
relied on Karachi Bank Ltd. v. Sewa Ram, AIR 1933 Sind 103, but that was not a case of breach of
contract. It was a case of misfeasance. The misfeasance with which the directors were charged
appears from the resolution passed at a meeting of the Board of Directors. The Board resolved to
take security from the Assistant Manager, cashier of the head office in certain sums within a certain
time. The question of other members of the staff at head office and branches was differed for want of
time. The question thus deferred was never taken up again and never decided. This omission by the
directors to take any decision was the misfeasance against them. It was held that an omission by the
directors to come to any conclusion whatsoever on an important piece of business duly proposed for
decision of the Board was a continuing breach of duty which continued as long as the decision was
deferred; and limitation did not begin to run until a point of time to be determined by the
application of the appropriate time clause of Article 115. This case, therefore, is of no assistance to
the respondent. Learned counsel also relied on Bal Krishna v. D.M. Sansthan, AIR 1959 SC 708, in
which Articles 124, 120 and Section 23 of the Indian Limitation Act were considered. That was also
not a case of continuing breach of contract. Even Section 23 of the Limitation Act was not applied to
the facts of that case as it was not applicable. The facts of that case are quite different and I do not
see how it can help the respondent. He further relied on Edridge v. Sathna, AIR 1933 PC 233: ILR 58
Bom 101: 38 Cal WK 145 (PC). That was a case of reciprocal promises of which the order of
performance is given in Section 52 of the Contract Act. It was held by the Privy Council that in the
case of reciprocal promises, the right to claim performance by a party is dependant on and
postponed to what he on his part had promised and in the absence of such performance his claim
must fail. That case, thus, has no application to the facts of the present case. The contention of Mr.
K.K. Saran must, therefore, be repelled. In the present case the date of breach of contract was either
15th July, 1957, or latest 27th January, 1958, and if the period of limitation of three years is counted
from any of these two dates then under Article 115 the suit would be barred and I hold so.

6. Mr. Chunni Lal has cited the decision in Soundara Raj an & Co. Ltd. v. Annamalai, AIR 1960 Mad
480, in support of his contention that the suit must be instituted within three years of the date of the
breach of contract. He next referred to the case of Zilla Parishad T. Shanti Debi, AIR 1965 All 590
(FB) in which it was observed that there can be no suit without a cause of action and it must include
some act done by the defendant, that the plaintiff cannot create a cause of action solely by his own
effort, it must be created for him by some act of the defendant. He has also cited some other decision
which I do not think it necessary to discuss. He has further relied on the Full Bench case of Dhapia
v. Dalla, AIR 1970 All 206 (FB) (supra) in order to show that the word 'compensation' used in Article
115 of the Limitation Act has the same meaning as it has under Section 73 of the Contract Act and it
denotes a sum of money payable to a person on account of the loss or damages caused to him by the
breach of contract. This position in law is not disputed by the other side. The above discussion leads
to the conclusion that the suit is barred by limitation under Article 115 of the old Limitation Act.

7. Point No. 2. His second contention is that the plaintiff has totally failed to prove the rate of the
bricks prevalent at the time when breach of the contract was committed and in absence of the same
the suit must fail. I think the contention is sound. It is a settled law that for a contract to supply
goods of a particular sort, which at the time of the breach can be obtained in a market, the measure

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of damage is the difference between the contract price and the market price on the date of breach:
See Jamal v. Moolla Dawood's Sons Ltd., 43 Ind App 6: (AIR 1915 PC 48); Jivraj v. Chain Karan,
AIR 1944 Nag 279; Dominion of India v. Bhikhraj Jaipuria, AIR 1957 Pat 586 at p. 604 paras 39 and
40; Bhikhraj Jaipuria v. Union of India, AIR 1962 SC 113 para 36; Murlidhar Chiranji Lal v. Harish
Chandra Dwarkadas, AIR 1962 SC 366; Matanhella Bros. v. Sri Mahabir Industries Pvt. Ltd., AIR
1970 Pat 91; Erroll Mackay v. Maharaja Dhiraj Kameshwar Singh, AIR 1932 PC 196. Mr. K.K. Sharan
appearing for the plaintiff did not dispute the above principle. He, however, strenuously urged that
it was a case of continuing breach of contract and the breach became complete only on 30th
December 1958 and his client having produced evidence of the price of the bricks regarding their
sale in April and May, 1959, was rightly held by the learned Additional Subordinate Judge, to have
proved his case of damage. The argument is confusing and is not supported by any authority.
Another limb of his argument is that it was not the market price of any bricks which had to be
considered but the market price of the particular bricks which remained lying undelivered. He relied
on Bungo Steel Furniture (Pvt.) Ltd. v. Union of India, AIR 1967 SC 378. In my opinion, this
contention has no merit. The argument is wholly irrelevant in the present case. The points involved
in this appeal are different. While dealing with the point of limitation I have already said that it is
not a case of continuing breach of contract. In the present case there was one single term between
the parties, namely, an agreement to supply a fixed quantity of bricks by a particular date. In view of
the principles which I have already discussed, it cannot be called to be a case of continuing breach.
Learned counsel submitted that the department suspended the supply of bricks in mile 0 to 12
under the letter No. 229 dated 15 May, 1957 Ext. 3, thereafter it intimated to the firm that the
requirement was lees by memo No. 327 dated 27 June, 1957, Ext. 3 (3) and ultimately it restricted
the supplies, first, in mile No. 1 by memo No. 302 of 13 July, 1957, Ext. 3 (d) and then in other miles
also and in spite of several letters, Exts. 3 (m), 3 (a), 3 (b) and 3 written by the plaintiff to the
department no reply came and all these indicated that the P. W. D. was responsible for breaking the
contract and that it was a case of continuing breach. In continuation of this argument learned
counsel also pointed out that the department had complete control over the brick kilns of the
plaintiff and our attention was drawn to clauses 7 to 10 of the agreement.........and also to the fact
that under the agreement the plaintiff was bound to take coal at the rate of Rs. 30/- per ton instead
of Rs. 20/- which was then the prevailing rate in the market. Learned counsel read out Ext. 3/m to
show that 106 tons of coal were supplied to the firm. It was also argued that the P. W. D. had their
own symbol 'EEGE' on the bricks and in this connection a slip Ext. 3/h dated 25 December, 1956
was referred to. All these matters were placed before us in order to show that the plaintiff was not
free to dispose of the bricks in open market without written permission of the P. W. D. and that he
had to sell them at a low price because people were not willing to purchase them without such
permission, the same being specified and meant for the P. W. D. In my opinion, the contention has
no bearing to the points arising for decision in this case. I also do not agree that people would not be
willing to purchase the bricks simply because the P. W. D. had its symbol 'EEGE' on them.

So far as evidence of the sale price is concerned, the plaintiff examined four witnesses, namely, P.
Ws. 1, 5, 6 and 19. P. W. 1 Mangla Kant Prasad Sinha a contractor said in his evidence that he had
purchased 75000 bricks from the plaintiff in between May and July, 1959, at the rate of Rs. 25/- per
thousand. In his cross-examination the witness deposed that the rate of the bricks at the site was Rs.
30/- per thousand. He, however, admitted that he did not get any receipt from the plaintiff. He

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further admitted that there was no document to show that he took bricks from the plaintiff. It is,
therefore, difficult to rely upon him P. W. 5 Chandra Shekar Prasad Sinha another contractor
deposed that he had taken 2 lacks bricks from the plaintiffs at the rate of Rs. 25/- per thousand. In
his cross-examination ha said that when he used to make payment, he used to put signature on the
register. That register was not produced in court by the plaintiff. The witness further said that there
would be entry in his Rokar Bahi. That was also not produced in court. He admitted that receipts
were not granted to him. In my opinion, he also is an unreliable witness. P. W. 6 S. N. Sharma a
businessman, said that he had taken 80 to 85 thousand bricks from the plaintiff at the rate of Rs.
25/- per thousand in April/June, 1959. There is no documentary evidence to support his evidence.
P. W. 19 R. P. Sinha, an Advocate at Gaya said that he had purchased 1 to l 1/2| lacs bricks from the
plaintiff in 1959, from Chandauti brick kiln at the rate of Rs. 25/- per thousand, which rate was
lower than the market rate. He also is not supported by any documentary evidence. It is thus clear
that even the sale price of the bricks has not been proved. Even if it had been proved, the plaintiff
cannot be entitled to any damage because he did not adduce any evidence as to what was the market
price of such bricks on the date of breach of contract (15th July, 1957 or 27 January, 1958). There is
no allegation in the plaint about the rate of bricks on the date of breach. The only relevant paragraph
in the plaint is paragraph 24 in which it is stated that the plaintiff had to sell the bricks at the rate of
Rupees 25/- per thousand. There is no allegation in the plaint, no evidence on record, no issue and
no finding of the court below as to on what date the prevailing rate of the contracted quantity of the
bricks was Rs. 25/- per thousand. In view of the principles laid down above the plaintiff is not
entitled to any damage in this behalf. Moreover, the plaintiff adduced evidence of sale of only about
4 lacks of bricks and it is not understandable as to how it can be considered to be the price of the
entire 17 lacs bricks for which damage was claimed, The court below has allowed transport charges
of Rs. 6,400/- for the carriage of 4 lacs bricks from Panchanpur kiln to Gaya But there is no
evidence on record that 4 lacs bricks were carried from the site to the town. Furthermore there is no
statutory provision which entitles the plaintiff to this damage. The court below, therefore,
committed an error in granting a decree for it

8. Point No. 3. His third contention is that the trial court erred in holding that Clause 5 of the
agreement was void. That clause runs as below:--

"Supply shall be increased or decreased according to the necessity of the department."

In my opinion, this clause gives unfettered discretion to the department to decrease the number of
bricks to any extent it may desire and in that sense it may amount to cancellation of the agreement.
Such an arbitrary, unilateral term of agreement was rightly held to be void by the court below: vide
the principles laid down in Maddala Thathiah v. Union of India, AIR 1957 Mad 82 affirmed in AIR
1966 SC 1724. It was argued on behalf of the appellant that the plaint does not say that Clause 5 was
without his knowledge or that it was void and there was also no evidence to that effect and hence it
was not open to the respondent to argue that Clause 5 was void. In my opinion, the respondent can
raise this point because it is a point of law. The contention of the appellant is, therefore, rejected.

9. Learned counsel for the appellant also urged that the plaintiff was not entitled to any decree at
least in respect of the Panchanpur kiln because in the final bill Ext. C (2), the plaintiff had himself

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stated in writing "received Rupees 80/- only in full settlement of our demands". On the other hand,
it was argued for the respondent that the above settlement had to be written at the dictation of the
department in view of Rule 247 of the Bihar P. N. Account Code, otherwise the contractor would not
get any amount. The trial court has dealt with this contention in paragraphs 54 to 56 of its judgment
and also referred to AIR I960 Pat 30. But in the Patna case the plaintiff had not made any
endorsement. In the present case the plaintiff himself made the endorsement. That case, therefore,
is distinguishable. The trial court has not come to any conclusion with respect to this point. I am of
the opinon that the plaintiff is not entitled to any decree in respect of Panchanpur kiln for this
reason also. The contention of the appellant is sound and I accept it as valid.

10. Counsel for the appellant further submitted that the plaintiff was not entitled either to
establishment expenses or to ground rent or to transport charges. I think, he is right. So far as the
establishment expenses are concerned the plaintiff examined two chawkidars and two Munshis in
order to prove this claim. P. W. 11 is a Chawkidar of Panchanpur brick kiln. He has deposed that he
worked for two years in Panchanpur brick kiln and got salary at the rate of Rs. 60/- per month. P.
W. 12 was examined to say that he was chawkidar of another brick kiln at Chanauti and got salary at
the rate of Rs. 60/- per month for 24 years. He also said that there were two more chawkidars. P. W.
16 claimed to be Munshi of Panchanpur brick kiln at the rate of Rs. 100/- per month and further
said that there were three chawkidars. P. W. 20 said that he was Munshi at Chanauti at the rate of
Rs. 100/- per month and that three chawkidars also worked there. The trial court has dealt with this
item of claim in paragraphs 42 to 48 of its judgment. It has said that specific allegation made in
paragraph 24 of the plaint with regard to this claim was not denied in the written statement in
paragraph 28 and that the evidence on record was also sufficient to prove this claim. It relied on
Badat & Co. v. East India Trading Co., AIR 1964 SC 538 for the purpose of showing that if there is
evasive or vague denial of any fact in written statement then that fact must be deemed to have bern
admitted by the defendant. It, therefore, decreed this claim which came to Rs. 5.040/- for each kiln,
the total thus being Rs. 10,080/-. In my opinion, the trial court has erred. The denial in the written
statement in paragraph 28 is not vague or evasive. It clearly says that the allegations of paragraph
24 of the plaint are denied. Even if the allegations in paragraph 24 of the plaint be assumed to be
correct the plaintiff cannot be entitled to any damage. The plaintiff was a businessman. The
agreement was in writing with the Government. He was maintaining account. But no paper in this
case was produced to show as to how much was paid to the Chawkidar or to the Munshi per month.
When documents could be available and were not produced then it cannot be safe to rely only on
oral evidence. It must, accordingly, be held that this claim has not been proved. There is no
provision in the agreement and there is no law entitling the plaintiff to the establishment expenses.
The trial court has relied on State of Bihar v. Motilal Chamaria, AIR 1964 Pat 127. But he facts of
that case are different. It will appear from the facts stated in paragraph 16 at page 134 of that case
that there was oral and documentary evidence on record to show that the Government used to pay
godown rents to other purchasing agents at a certain rate but the claim of the plaintiff was refused
without justification. That is not the case here.

11. So far as the ground rent, namely, the rent of the land on which stood the brick kilns is concerned
the trial court has decreed it for Rs. 4,000/- i.e. Rs. 2,000/- for the land of each brick kiln. I do not
think that the trial court was Justified in granting a decree for this item either. It is not in

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The State Of Bihar vs P.K. Jain on 28 January, 1981

consonance with justice or permissible in law. So far as the transport charges are concerned it is not
understandable how the court below granted a decree for Rs. 6,400/- for the carriage of bricks from
Panchanpur brick kiln to Gaya. There is no evidence on record to show that these bricks were
carried to the place of mileage.

12. So far as earnest money and security deposit are concerned Mr. Chunni Lal appearing for the
defendant-appellant submitted that the appellant will have no objection if decree of the court below
for refund of the same is maintained by this Court. However, I find difficulty in maintaining the
decree of the court below for the reasons given below. As regards earnest money the claim is for Rs.
1,800/-. The trial court has also granted a decree for refund of security money to the extent of
Rupees 1,069/-. P. W. 1 P. K. Jain gave evidence that security deposit and earnest money of Group B
were refunded but he had not claimed security or earnest money of Group A and that these were to
be refunded. It is clear that there was no cause of action for this claim because there was no demand
and refusal. There is no allegation and there is no evidence that the plaintiff ever demanded them
and the same was refused. There can be no suit without any cause of action. The decree of the court
below, therefore, cannot be maintained even in respect of these items. The plaintiff may take steps,
if he so likes, to recover the same from the Government by making a demand. Mr. Chunni Lal has
said that the State will have no objection to refund it, if demand is made.

13. During the course of argument the respondent made an application under Order 41, Rule 27 of
the Code of Civil Procedure for taking two letters issued by the Executive Engineer bearing Nos. 183
dated 26-3-1957 and 1834 dated 26-3-1957 (Annexures l and 2 respectively) as additional evidence.
Suffice to say that the plaintiff-respondent is not entitled to produce such evidence for the first time
in the appellate court during the course of argument without fulfilling the conditions mentioned in
Order 41, Rule 27. Those conditions are not fulfilled in this case. He had full knowledge of these
letters but they were not filed in the trial court. The prayer is rejected. The application for additional
evidence is dismissed.

14. For the reasons given above the appeal is allowed with costs throughout, the judgment and
decree passed by the 2nd Additional Subordinate Judge, Gaya dated 13th September, 1965, are set
aside and the suit is dismissed with costs.

S.K. Choudhuri, J.

15. I agree.

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