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2022 LiveLaw (SC) 331

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IN THE SUPREME COURT OF INDIA

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CIVIL APPELLATE JURISDICTION
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ah HEMANT GUPTA; V. RAMASUBRAMANIAN, JJ.

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CIVIL APPEAL NO.556 of 2012; March 30, 2022

2
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SHRIPATI LAKHU MANE

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VERSUS
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THE MEMBER SECRETARY, MAHARASHTRA WATER SUPPLY AND SEWERAGE BOARD & ORS.
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Indian Contract Act, 1872 - Abandonment - Whenever a material alteration takes
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place in the terms of the original contract, on account of any act of omission or
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commission on the part of one of the parties to the contract, it is open to the other

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party not to perform the original contract. This will not amount to abandonment.

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Moreover, abandonment is normally understood, in the context of a right and not
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in the context of a liability or obligation. A party to a contract may abandon his

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rights under the contract leading to a plea of waiver by the other party, but there

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is no question of abandoning an obligation. (Para 19) – The refusal of a contractor

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to continue to execute the work, unless the reciprocal promises are performed by
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the other party, cannot be termed as abandonment of contract. A refusal by one

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party to a contract, may entitle the other party either to sue for breach or to rescind
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the contract and sue on a quantum meruit for the work already done. (Para 22)
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For Appellant(s) Mr. Vinay Navare, Sr. Adv. Ms. Gwen Karthika, Adv. Ms. Abha R. Sharma, AOR;
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For Respondent(s) Mr. Sunil Murarka, Adv. Mr. Satyajit A. Desai, Adv. Mr. Siddharth Gautam, Adv.
e
62

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Mr. Himanshu Sharma, Adv. Ms. Anagha S. Desai, AOR Mr. Satya Kam Sharma, Adv. e
9

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JUDGMENT
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2)
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V. Ramasubramanian
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1. The plaintiff in a suit for recovery of money has come up with the above appeal
10

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challenging the judgment and decree of the High Court of Judicature at Bombay in a
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regular appeal under Section 96 of the Code of Civil Procedure, 1908, by which the
2)

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(
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decree granted by the Trial Court for recovery of Rs.24,97,077/together with interest at
2)

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10% per annum was modified into a decree for recovery of Rs.7,19,412/together with
62
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29
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interest.
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2. We have heard Mr.Vinay Navare, learned senior counsel for the appellant, and Mr.
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(9

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62
10

M
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Sunil Murarka, learned counsel for the respondents.

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2)
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3. The appellant is a registered contractor with the Government of Maharashtra. In a

2)
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9
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tender for the execution of the work of Regional Rural Piped Water Supply Scheme for
10
(9

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82
2)

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DabholBhopan and other villages in Ratnagiri District, the appellant became the
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2)

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10

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successful tenderer. He was issued with a work order on 03.07.1986, for the execution
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of the work at the cost of Rs.80,45,034/, which was 47% above the estimated cost. The
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10
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time for the completion of the work was stipulated as 30 months. But it appears that
10
9

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2)

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62

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2
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62
0
(9

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Respondent No.3 herein issued a letter dated 28.07.1986 informing the appellant that

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29
(9

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the work order was kept in abeyance. After a few representations, Respondent No.3
62

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at

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2
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10

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informed the appellant vide letter dated 17.12.1986 to start the work.

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2)

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10
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4. Though the appellant started executing the work from 29.12.1986, he was informed

2)
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about the nonavailability of C1 pipes and cement pipes of the diameter stipulated in the

10
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8
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2

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contract. Later, the respondents wanted a change in the terms of the work order by

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2)

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substituting pipes of different diameter. Therefore, the appellant started demanding
im

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62

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82

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00
modified rate.

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9
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9
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5. When the above dispute was brewing, Respondent No.3 instructed the appellant, vide

a
2)

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29
9
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6

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letter dated 02.03.1987 to stop the pipeline work and start the work of construction of

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62

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at

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01

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(
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another work at a different place namely Panchanadi. By another letter dated 04.03.1987,

62
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29

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01

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8

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2
10
29
(9

at
the Respondent No.2 informed the appellant about a modification which involved the
ah

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10
(9
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2
construction of one headwork at Karjai and another at Panchanadi. A work order dated
)
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0
98
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62

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at

9
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82
(
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01.07.1987 was also issued in respect of these headworks.

2)

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2)
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0
9

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6. Compounding the agony of the appellant, the bills raised by him were not honoured in

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29
(9

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06
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time due to shortage of funds. Therefore, the appellant did not proceed with the work. As
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(9
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2
)

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a result, Respondent No.2 issued a threat to withdraw the work order and also to levy a
62

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2)

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98
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fine of Rs.10/per day from 01.03.1988. Ever since then, the parties were at loggerheads,
a

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06

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90

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62
0

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1
82

which ultimately led to the appellant filing a suit for recovery of a sum of Rs.51,35,289/-
im

00
90

)
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62
(9

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7. The aforesaid claim of Rs.51,35,289/- comprised of several heads of claim such as (i)
9
(9

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01
2
a
)

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98
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62

)M
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29
hi
value of the work done; (ii) release of the security deposit; (iii) compensation; and (iv)
ho

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(
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62

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damages etc.
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2)
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e
9

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1
82

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90

2)
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8. Before the Trial Court, the appellant examined himself as PW1 and marked several
ah

06
82

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0
(9
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82

documents as exhibits. On the side of the respondents, 5 witnesses were examined as

2)
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06

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)

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DWs 1 to 5 and the respondents also marked several documents.
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2
10

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at

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06

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90

2)
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e
10

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t
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06
82

9. Eventually, the Trial Court, by a judgment and decree dated 02.02.1998 decreed the
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)
th
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2
10
(9

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suit partially, directing the respondents to pay to the appellant, a sum of Rs. 24,97,077/-
R
0
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10
29
(9

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2)

R
90
98
re

together with interest at 10% per annum from the date of the suit till realization.
M
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06

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a
82
(
R

2)

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re
10

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at

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a

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06

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10. Aggrieved by the decree so granted, the respondents filed a regular civil appeal under
90

re
62
10

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at
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a
82

ho
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00
0

Section 96 of the Code of Civil Procedure, 1908 on the file of the High Court of Judicature
M

2
29
(9

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6
01
m

00
8
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9
(9

at Bombay. The appellant did not file any appeal though the suit was decreed partially.
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82
a
2)

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29
(9

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06

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11. By a judgment and decree dated 24.04.2009, impugned in this appeal, the High Court
8
e
62
10

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at

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a

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00
90

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2)
h

allowed the appeal partially and reduced the decree amount to Rs.7,19,412/-. Therefore,
M
t
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a

06
01
82

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2)
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M

10
9
(9

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the plaintiff has come up with the above appeal.

06
82

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R
90
re

10
(9

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82
2)

R
90
re

12. Before we proceed to consider the grounds of attack and the rival contentions, it will
M
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06

ah
ho

a
82
R

2)

m
re
10

M
at

(9
a

be useful to see the different heads of claims made by the appellant before the Trial
hi
06

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90

a
2)

re
10

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at
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06
82

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Court, the heads of claims and the extent to which these heads of claims were allowed
im

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90
M

62
10
(9

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ah

a
82

im

0
90

by the Trial Court, and the heads of claims allowed by the High Court in the impugned
re

10
9

ah
ho

a
82
(
2)

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90
re

judgment. For easy appreciation, they are presented in a tabular column as follows:
M
at

(9
06

ah
ho

a
82
R

2)

im
re
10

)M
at

(9
a

2
06

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90

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62
10

M
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a
82

ho
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00
90

2)
M

(9

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06
01
82

R
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10
29
(9
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(9
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06
1
82

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90

2)

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10
(9

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06
82

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90
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10
(9

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82

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62

M
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(9

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82
R

2)

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10

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2
10

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06
82

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90

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M

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62
0
(9

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1
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0
0
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th
M
S.No. Heads of Claim Amount claimed Amount awarded Amount awarded

0
29
(9

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1
a
)

R
90
8
re
62
in Plaint (Rs.) by Trial court by High Court

M
at

i
ah
ho

a
2
(
R

m
8
e
(Rs.) Rs.)

2
10

M
at

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06

ah
ho
m

R
90

2)

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10
i

M
t
ah

06
82

ho
im

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90
1. Value of work done but not paid, 12,25,864 28,418 28,418

2)
M

re
0
(9

t
ah

06
1
82

o
im

R
up to the date of withdrawal of

90
re

h
)M

10
(9

at
h
ho

a
2
a
work

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R
90
8
re
2

M
at

(9
06

ah
ho

a
2
R

2)

m
8
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10

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at

(9
a

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6

h
2. Value of work done under extra 5,82,250 4,42,944 4,42,944
im

00
90

a
th

e
62

)M
ah

or
a
01
82

item
im

00

th
M

2
9
(9

ah

or
a

6
01
82

00
e

th
M

9
(9
r

hi
ho

a
3. Release of security deposit 2,21,000 2,21,000 Disallowed

a
01
2
a
2)

R
8
e

)M
at

29
9
r

hi
6

ho

a
(
R

00

m
8
re
62

M
at

9
a

4. Idle labour 1,57,000 1,57,000 1,57,000

hi
01

ho

(
im

a
)

re
62
0
29

)M
at
ah

01

o
im

0
8

h
M

2
10
29
(9

5. Idle machinery 91,000 91,000 91,000

at
ah

o
m

0
90
8
e

h
M

10
(9
or

t
ah

a
2
)
h

R
0
98
re
62

6. Overheads 5,63,115 5,63,115 Disallowed

M
at

9
i
ah
ho

a
82
(
R

00

2)

im
e

M
at

9
a

or
6
01

ah
(
im

2)
7. Loss of Profit 11,55,000 9,73,250 h Disallowed

re
0
9

M
at
ah

06
01
82

o
im

2)
th
M

0
29
(9

ah

06
01

ho
im

8. Interest at 18% p.a. up to date of 11,38,860 Disallowed

R
Disallowed
8
e

10
9
(9
r

at
ah
ho

a
2
Suit
)

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R
90
8
re
62

M
at

(9

ah
ho

a
2
R

2)

m
98
re
10

)M
at
a

hi
06

9. Notice Charges 300 300 Not allowed

(
im

R
90

a
h

e
62
0

M
at
ah

or
1
82

im

00
90

)
h
M

62
(9

t
ah

a
01
82

TOTAL 51,34,389 24,77,0271 7,19,362

m

00
re

th
M

9
(9

hi
ho

a
01
2
a
)

R
98
re
62

)M
at

29
hi
1 Though the amount totals to Rs. 24,77,027/, the decree of the trial court was for Rs. 24,97,077/
ho

a
(
R

00

m
8
e
62

M
at

(9
a

hi
01

o
im

00

13. As could be seen from the above table, what was allowed by the Trial Court under

a
2)
th

e
9

M
ah

r
a

06
1
82

ho
im

R
90

2)
M

three heads of claims namely, (i) the release of security deposit to the tune of
10
(9

at
ah

06
82

im

R
90
e

0
(9
or

Rs.2,21,000; (ii) overheads for the period from January 1989 to 30.09.1990 to the tune

at
ah

1
82
2)
h

im

R
90
re

M
at

(9
06

h
ho

a
of Rs. 5,63,115/-; and (iii) loss of profits to the tune of Rs.9,73,250/, were disallowed by
82
R

a
)

m
e
2
10

M
at

(9
a

i
06

ah
o
im

R
90

the High Court. Therefore, the appeal before us is actually confined only to these 3 heads
2)
h

e
10

M
t
ah

r
a

06
82

o
im

R
90

)
th

of claims.
M

2
10
(9

ah

06
82

R
0
re

10
29
(9

i
ah
ho

a
14. The main and perhaps the only reason why the High Court rejected the claims under
2)

R
90
98
re

M
at

i
06

ah
ho

a
82
(
R

2)

m
the aforesaid 3 heads, was that the appellant had abandoned the work under the main
re
10

)M
at

9
a

i
06

ah
ho

(
im

R
90

re
62
10

contract and that therefore neither the question of release of security deposit nor the
)M
at
ah

a
82

ho
im

00
0
M

2
29
(9

at
ah

question of payment of overheads nor the question of allowing a claim for loss of profit,
6
01
m

00
8
re

9
(9

hi
ho

01
82

did arise. Therefore, the only issue that arises for consideration in this appeal before us
a
2)

R
re

)M
at

29
(9

hi
06

ho

a
R

m
8

is as to whether there was abandonment of work by the appellant.

e
62
10

M
at

(9
a

or

h i
im

00
90

a
2)
h

M
t
ah

or
a

06
01
82

15. In order to see whether there was abandonment on the part of the appellant, it is
im

2)
h
M

10
9
(9

at
ah

06
82

im

R
90
re

necessary to have a look at the timeline of events, as reflected by the documentary

M

10
(9

ah
ho

a
82
2)

R
90
re

evidence on record. The timeline was as follows:

at

(9

i
06

ah
ho

a
82
R

2)

m
re
10

M
at

(9
a

hi
06

ho
im

R
90

(i) The work order was issued to the appellant on 03.07.1986 and an agreement was
a
2)

re
10

)M
at
ah

06
82

ho
im

R
90
M

registered. The agreement stipulated a period of 30 months for the completion of the work;
62
10
(9

at
ah

a
82

im

0
90
re

10
9

ah
ho

a
82
(
2)

im

90
re

M
at

(9
06

ah
ho

a
82
R

2)

im
re
10

)M
at

(9
a

3
06

ah
ho
im

R
90

re
62
10

M
at
ah

a
82

ho
im

00
90

2)
M

(9

at
ah

06
01
82

R
e

10
29
(9
or

hi

a
 at

(9
a

r
06
1
82

ho
m

R
90

2)

re
10
(9

at
ah

06
82

ho
im

R
90
re

)M

10
(9

at
ah
ho

a
82

im

R
90
re
62

M
at

(9

ah
ho

a
82
R

2)

im
e
10

)M
at

(9
a

or
06

ah
im

R
90

e
2
10

)M
at
ah

or
06
82

im

R
90

h
M

e
62
0
(9

at
ah

or
1
82
(ii) By a letter dated 28.07.1986, the respondents informed the appellant that the execution

im

0
0
re

th
M

0
29
(9

h
ho

a
1
a
)

R
90
8
of the work order shall be kept in abeyance. Though no reason was indicated in the letter,

re
62

M
at

i
ah
ho

a
2
(
R

m
the respondents took a stand later that it was due to “administrative exigencies”;

8
e
2
10

M
at

(9
a

i
06

ah
ho
m

R
90

2)

re
10
i

M
t
ah

06
82

ho
im
(iii) After nearly 5 months, a letter dated 17.12.1986 was issued directing the appellant to

R
90

2)
M

re
0
(9

t
ah

06
1
82

o
im

R
90
re

commence work;

h
)M

10
(9

at
h
ho

a
2
a

im

R
90
8
re
2

M
at

(9
06

ah
ho

a
2
(iv) While the case of the appellant was that his obligation to commence the execution of the
R

2)

m
8
e
10

)M
at

(9
a

or

i
6

h
im

00
90

contract came into effect on 03.07.1986, the case of the respondents in the written statement

a
th

e
62

)M
ah

or
a
01
82

im

00

th
was that the date of commencement of the work should be taken only as 17.12.1986, which
M

2
9
(9

ah

or
a

6
01
82

00
e

th
M

9
was the date on which the order for keeping the work-order in abeyance was lifted;
(9
r

hi
ho

a
01
2
a
2)

R
8
e

)M
at

29
9
r

hi
6

ho

a
(
R

00

a
(v) Within a few days, the appellant notified the respondents, about the non-availability of C1

m
8
re
62

M
at

9
a

hi
01

ho

(
im

a
)

re
pipes and cement pipes of the diameter originally agreed. When the respondents wanted to

62
0
29

)M
at
ah

01

o
im

0
8

h
M

2
10
29
(9

replace the pipes with pipes of different dimension, the appellant demanded a fresh rate to

at
ah

o
m

0
90
8
e

h
M

10
(9
or

t
ah
be finalized, through a letter dated 20.02.1987. This fact is admitted in paragraph 8 of the

a
2
)
h

R
0
98
re
62

M
at

9
i
ah
ho

a
82
(
written statement;
R

00

2)

im
e

M
at

9
a

or
6
01

ah
(
im

2)
h

re
0
9

M
at
(vi) Even before the issue raised in the letter dated 20.02.1987 could be resolved, the
ah

06
01
82

o
im

2)
th
M

0
29
(9

ah

06
01
respondents issued another letter dated 02.03.1987 instructing the appellant to stop the

ho
im

R
8
e

10
9
(9
r

at
ah
ho

a
2
pipeline work and start the work at Panchanadi. Though the respondents claimed in
)

im

R
90
8
re
62

M
at

(9

ah
ho

a
2
R

2)

m
paragraph 9 of their written statement that the letter dated 02.03.1987 merely called upon

98
re
10

)M
at
a

hi
06

(
im

R
90

a
h

e
62
0

the appellant to concentrate on the construction of headwork, it is nevertheless admitted that

M
at
ah

or
1
82

im

00
90

)
h
M

the said letter contained the words, “please be stopped”, in so far as the pipeline work is

62
(9

t
ah

a
01
82

00
re

th
M

9
(9

hi
ho

concerned; a

a
01
2
a
)

R
98
re
62

)M
at

29
hi
ho

a
(
R

00

m
8
e
62

(vii) According to the respondents, they issued a telegram dated 02.04.1987 calling upon
M
at

(9
a

hi
01

o
im

00

a
2)
th

e
9

M
ah

the appellant to start the work of laying the pipelines;

a

r
a

06
1
82

ho
im

R
90

2)
M

10
(9

at
ah

06
82

im

R
90
e

(viii) By a letter dated 04.03.1987, the plaintiff was informed that the Scheme was undergoing
M

0
(9
or

at
ah

1
82
2)
h

im

R
90
re

M
at

modifications. While the appellant claimed that the modification involved one headwork at
(9
06

h
ho

a
82
R

a
)

m
e
2
10

M
at

(9
a

i
06

Panchanadi and another headwork at Karjai, the respondents claimed in paragraph 10 of

ah
o
im

R
90

2)
h

e
10

M
t
ah

r
a

06
82

the written statement, that the headwork at Karjai, was already included in the original tender
im

R
90

)
th
M

2
10
(9

ah

06
82

itself. However, the respondents admitted that there was at least one modification, imposed
R
0
re

10
29
(9

i
ah
ho

a
2)

R
90
98
re

by their letter dated 04.03.1987;

M
at

i
06

ah
ho

a
82
(
R

2)

m
re
10

)M
at

9
a

i
06

ah
ho

(ix) The fact that the appellant sent a representation dated 04.11.1987 raising 2 issues
im

R
90

re
62
10

)M
at
ah

a
82

ho
im

00
0

namely [1] the issue of nonpayment of bills due to paucity of funds and [2] the issue of delay
M

2
29
(9

at
ah

6
01
m

00
8
re

in sanction of the modified rate already proposed on 20.02.1987 for the work of laying pipes
M

9
(9

hi
ho

01
82
a
2)

R
re

)M
at

29
(9

of different dimension, is admitted by the respondents in paragraph 11 of the written

hi
06

ho

a
R

m
8
e
62
10

M
at

(9
a

or

statement, though they disputed the correctness of the contents of the said letter.
h
im

00
90

a
2)
h

M
t
ah

or
a

06
01
82

Interestingly, the averments of the appellant in paragraph 11 of the plaint about the reply
im

2)
h
M

10
9
(9

at
ah

06
82

im

R
90

dated 02.12.1987 in response to the appellant’s representation dated 04.11.1987, was not
re

10
(9

ah
ho

a
82
2)

R
90
re

at all dealt with by the respondents in paragraph 11 of their written statement;

M
at

(9

i
06

ah
ho

a
82
R

2)

m
re
10

M
at

(9
a

hi
06

ho
im

(x) It was at this juncture, that Respondent No.3 issued a letter dated 22.02.1988, imposing
R
90

a
2)

re
10

)M
at
ah

06
82

ho
im

R
90

a fine of Rs.10/per day w.e.f. the date of the said letter. By this letter the appellant was also
M

62
10
(9

at
ah

a
82

im

0
90
re

called upon to start the work by 01.03.1988;

10
9

ah
ho

a
82
(
2)

im

90
re

M
at

(9
06

ah
ho

a
82
R

2)

im
re
10

)M
at

(9
a

4
06

ah
ho
im

R
90

re
62
10

M
at
ah

a
82

ho
im

00
90

2)
M

(9

at
ah

06
01
82

R
e

10
29
(9
or

hi

a
 at

(9
a

r
06
1
82

ho
m

R
90

2)

re
10
(9

at
ah

06
82

ho
im

R
90
re

)M

10
(9

at
ah
ho

a
82

im

R
90
re
62

M
at

(9

ah
ho

a
82
R

2)

im
e
10

)M
at

(9
a

or
06

ah
im

R
90

e
2
10

)M
at
ah

or
06
82

im

R
90

h
M

e
62
0
(9

at
ah

or
1
82
(xi) Despite the appellant’s objections, another letter dated 22.03.1988 was issued,

im

0
0
re

th
M

0
29
(9

h
ho

a
1
a
)

R
90
8
reiterating the proposal for imposing a fine and calling upon the appellant to start work;

re
62

M
at

i
ah
ho

a
2
(
R

m
8
e
2
10

M
at

(9
a

i
06

ah
(xii) In fact, in the letter dated 22.03.1988, the respondents admitted for the first time that the

ho
m

R
90

2)

re
10
i

M
t
ah

06
82

ho
im
subject work was split into two parts and that the proposed revised rates were as provided

R
90

2)
M

re
0
(9

t
ah

06
1
82

o
im

R
90
re

therein;

h
)M

10
(9

at
h
ho

a
2
a

im

R
90
8
re
2

M
at

(9
06

ah
ho

a
2
(xiii) Subsequently, there were several communications in April, June, July and August, 1988
R

2)

m
8
e
10

)M
at

(9
a

or

i
6

h
im

00
90

all of which pointed to a disagreement on the revised rates on account of the modifications

a
th

e
62

)M
ah

or
a
01
82

im

00

th
and the nonpayment of bills;
M

2
9
(9

ah

or
a

6
01
82

00
e

th
M

9
(9
r

hi
ho

a
01
2
(xiv) While according to the appellant the execution of the work under the contract was to

a
2)

R
8
e

)M
at

29
9
r

hi
6

ho

a
(
R

00

a
commence on 03.07.1986 with a liability to complete it by 03.01.1989, the contention of the

m
8
re
62

M
at

9
a

hi
01

ho

(
im

a
)

re
respondents was that the execution of the work was to commence only in December, 1986

62
0
29

)M
at
ah

01

o
im

0
8

h
M

2
10
29
(9

and that therefore the liability to complete the work expired only in June, 1989;

at
ah

o
m

0
90
8
e

h
M

10
(9
or

t
ah

a
2
)
h

R
0
98
(xv) However, admittedly, the respondents increased the fine amount from Rs.10/-per day
re
62

M
at

9
i
ah
ho

a
82
(
R

00

2)

im
e
to Rs.25/- per day vide their letter dated 19.04.1989. By another letter dated 06.10.1989, the

M
at

9
a

or
6
01

ah
(
im

2)
h

re
0
9

M
at
respondents informed the appellant that though the time for completion of the project expired
ah

06
01
82

o
im

2)
th
M

0
29
(9

ah

06
01
on 17.06.1989 and though the appellant did not ask for any extension, he was being granted

ho
im

R
8
e

10
9
(9
r

at
ah
ho

a
2
extension up to 31.12.1989.
)

im

R
90
8
re
62

M
at

(9

ah
ho

a
2
R

2)

m
98
re
10

)M
at
a

16. The entire sequence of events narrated in the preceding paragraph would show that

hi
06

(
im

R
90

a
h

e
62
0

M
at
ah

or
1
82

the appellant was not guilty of anything including abandonment. Admittedly, Clause 3(a)
im

00
90

)
h
M

62
(9

t
ah

a
01
82

R
of the contract enabled the respondents to rescind the contract, forfeit the security

00
re

th
M

9
(9

hi
ho

a
01
2
a
)

R
98
re
62

deposit and entrust the work to another contractor at the risk and costs of the appellant.
)M
at

29
hi
ho

a
(
R

00

m
8
e
62

M
at

(9
a

This clause was never invoked by the respondents. Therefore, we are surprised,
r

hi
01

o
im

00

a
2)
th

e
9

M
ah

r
a

06
1
82

especially in the light of the communications from February, 1988 up to October, 1989
ho
im

R
90

2)
M

10
(9

at
ah

06
82

im

as to how the High Court could have found the appellant guilty of abandonment.
R
90
e

0
(9
or

at
ah

1
82
2)
h

im

R
90
re

M
at

(9
06

h
ho

a
17. In fact, Section 67 of the Indian Contract Act, 1872 makes it clear that if any promisee
82
R

a
)

m
e
2
10

M
at

(9
a

i
06

ah
o
im

R
90

neglects or refuses to afford the promisor reasonable facilities for the performance of his
2)
h

e
10

M
t
ah

r
a

06
82

o
im

R
90

)
th

promise, the promisor is excused by such neglect or refusal. Section 67 together with the
M

2
10
(9

ah

06
82

R
0
re

10
29
(9

illustration contained there under reads as follows:

i
ah
ho

a
2)

R
90
98
re

M
at

i
06

ah
ho

a
82
(
R

“67. Effect of neglect of promisee to afford promisor reasonable facilities for performance.—
2)

m
re
10

)M
at

9
a

i
06

ah
ho

(
im

R
90

re

If any promisee neglects or refuses to afford the promisor reasonable facilities for the performance
62
10

)M
at
ah

a
82

ho
im

00
0
M

2
29
(9

of his promise, the promisor is excused by such neglect or refusal as to any nonperformance caused
at
ah

6
01
m

00
8
re

9
(9

thereby."
hi
ho

01
82
a
2)

R
re

)M
at

29
(9

hi
06

ho

a
R

Illustration
a

m
8
e
62
10

M
at

(9
a

or

h i
im

00
90

a
2)
h

M
t
ah

A contracts with B to repair B’s house.

or
a

06
01
82

im

2)
h
M

10
9
(9

at
ah

06
82

im

R
90
re

B neglects or refuses to point out to A the places in which his house requires repair.
M

10
(9

ah
ho

a
82
2)

R
90
re

M
at

(9

i
06

ah

A is excused for the nonperformance of the contract, if it is caused by such neglect or refusal.”
ho

a
82
R

2)

m
re
10

M
at

(9
a

hi
06

ho
im

R
90

a
2)

re

18. In the case on hand, the respondents issued the work order on 03.07.1986 but
10

)M
at
ah

06
82

ho
im

R
90
M

62
10
(9

at

directed the work order to be kept in abeyance by a subsequent letter dated 28.07.1986.
ah

a
82

im

0
90
re

10
9

ah
ho

After this stalemate was lifted by a letter dated 17.12.1986, two things happened namely,
82
(
2)

im

90
re

M
at

(9
06

ah
ho

a
82
R

2)

im
re
10

)M
at

(9
a

5
06

ah
ho
im

R
90

re
62
10

M
at
ah

a
82

ho
im

00
90

2)
M

(9

at
ah

06
01
82

R
e

10
29
(9
or

hi

a
 at

(9
a

r
06
1
82

ho
m

R
90

2)

re
10
(9

at
ah

06
82

ho
im

R
90
re

)M

10
(9

at
ah
ho

a
82

im

R
90
re
62

M
at

(9

ah
ho

a
82
R

2)

im
e
10

)M
at

(9
a

or
06

ah
im

R
90

e
2
10

)M
at
ah

or
06
82

im

R
90

h
M

e
62
0
(9

at
ah

or
1
82
(i) a change in the diameter of the pipes supplied by the respondents for carrying out the

im

0
0
re

th
M

0
29
(9

h
ho

a
1
a
)

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90
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re
contract; and (ii) request for the performance of additional work without finalization of the
62

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at

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ah
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a
2
(
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2
10

M
modified rates. Therefore, the respondents cannot even accuse the appellant of

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a

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2)

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10
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nonperformance of the contract.

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82

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2)
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82

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19. It is fundamental to the Law of Contract that whenever a material alteration takes

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2
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2

M
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06

place in the terms of the original contract, on account of any act of omission or

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2
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2)

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8
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a

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commission on the part of one of the parties to the contract, it is open to the other party
im

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90

a
th

e
62

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ah

or
a
01
82

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00
not to perform the original contract. This will not amount to abandonment. Moreover,

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9
(9

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6
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82

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th
M

abandonment is normally understood, in the context of a right and not in the context of a

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(9
r

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01
2
a
2)

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29
9
r

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6

liability or obligation. A party to a contract may abandon his rights under the contract
ho

a
(
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8
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62

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9
a

hi
01

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leading to a plea of waiver by the other party, but there is no question of abandoning an

(
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a
)

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62
0
29

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01

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0
8

obligation. In this case, the appellant refused to perform his obligations under the

h
M

2
10
29
(9

at
ah

o
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0
90
8
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M

workorder, for reasons stated by him. This refusal to perform the obligations, can perhaps

10
(9
or

t
ah

a
2
)
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R
0
98
re
62

M
at

9
i
be termed as breach of contract and not abandonment.

ah
ho

a
82
(
R

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2)

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e

M
at

9
a

or
6
01

ah
(
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2)
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20. It is interesting to note that the respondents did not choose, (i) to allege breach of
0
9

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06
01
82

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im

2)
th
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0
29
(9

contract against the appellant; and (ii) consequently to invoke the right to rescind the
ah

06
01

ho
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8
e

10
9
(9
r

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ah
ho

a
contract under clause 3(a). The respondents, if they were justified in doing so, could have 2
)

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R
90
8
re
62

M
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(9

ah
ho

a
2
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taken recourse to the remedy available under Section 75 of the Contract Act and sought
2)

m
98
re
10

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a

hi
06

(
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compensation for the damage sustained through the nonfulfillment of the contract. On

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62
0

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ah

or
1
82

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00
90

)
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the contrary they attributed abandonment to the appellant (without understanding the true

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ah

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01
82

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9
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purport of the word ‘abandonment’) and refused to honour the claims made by the
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a
01
2
a
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98
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29
hi
ho

a
(
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appellant.
a

m
8
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62

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at

(9
a

hi
01

o
im

00

a
2)
th

e
9

M
ah

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a

06
1
82

21. The finding of the High Court that there was abandonment of contract, was on the
ho
im

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90

2)
M

10
(9

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06
82

basis that after the second bill was cleared in May, 1987, the work under the main
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0
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1
82
2)
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contract did not progress. This finding goes completely contrary to yet another finding
M
at

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06

h
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a
82
R

a
)

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e
2
10

M
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that the period of the contract was up to June, 1989 and that the respondents themselves
(9
a

i
06

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90

2)
h

e
10

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t
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82

granted extension of time to complete the contract up to 31.12.1989, despite there being
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)
th
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2
10
(9

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no request from the appellant. We fail to understand as to how a person who abandoned
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29
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2)

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the contract in May, 1987 could be granted extension of time up to December, 1989 on
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2)

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the very understanding of the respondents that the contract was up to June, 1989. In
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a

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fact, the High Court recorded a finding in paragraph 9 of the impugned judgment that
82

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0
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2
29
(9

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01

according to DWs 3, 4 and 5, the power to rescind under clause 3(a) of the tender was
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(9

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82
a
2)

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invoked and the security deposit forfeited. This was not how the respondents pitched
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(9

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06

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62
10

their claim even in the written statement. In any case such a finding cannot coexist with
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or

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90

a
2)
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t
ah

or
a

the specific stand of the respondents that the period of contract was extended up to
06
01
82

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2)
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M

10
9
(9

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06
82

December, 1989.
im

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2)

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22. The refusal of a contractor to continue to execute the work, unless the reciprocal
ah
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2)

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10

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promises are performed by the other party, cannot be termed as abandonment of

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contract. A refusal by one party to a contract, may entitle the other party either to sue for
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10
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ah

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82

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breach or to rescind the contract and sue on a quantum meruit for the work already done.
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9

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2)

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2)

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10

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2)

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2
10

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at
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or
06
82

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e
62
0
(9

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Paragraph 694 of Volume 9, Fourth Edition of Halsbury’s Laws of England, may be

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0
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th
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29
(9

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usefully extracted to highlight the remedies available to a party to the contract, if the other
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at

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2
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m
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2
10

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party absolutely refuses to perform his part of the contract.

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(9
a

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ah
ho
m

R
90

2)

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10
i

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t
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82

ho
“694. Work done under a contract terminated for breach. Where one party has absolutely
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2)
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re
0
(9

t
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06
1
82

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90
re

refused to perform, or has rendered himself incapable of performing, his part of the contract, he puts

h
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10
(9

at
h
ho

a
2
a

im

R
90
8
re
2

in the power of the other party either to sue for a breach of it, or to rescind the contract and sue on

M
at

(9
06

ah
ho

a
2
R

2)

m
8
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10

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a quantum meruit for the work actually done. Thus, where a publisher engaged an author to write a
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a

or

i
6

h
im

00
90

a
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62

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work but abandoned the project, the author was entitled to recover reasonable remuneration without
ah

or
a
01
82

im

00

th
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9
(9

ah

a
tendering the completed work; and where a defendant wrongfully revoked the plaintiff’s authority to

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a

6
01
82

00
e

th
M

9
(9
r

hi
ho

a
sell his land after the latter had found a purchaser, the plaintiff recovered reasonable remuneration

a
01
2
a
2)

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8
e

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at

29
9
r

hi
6

ho

a
(
for his work and labour up to that date.
R

00

m
8
re
62

M
at

9
a

hi
01

ho

(
im

a
)

re
62
0
29

This type of quantum meruit claim is analogous to claims for the repayment of money on total

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at
ah

01

o
im

0
8

h
M

2
10
29
(9

failure of consideration. In both cases, the contract must be at an end before the claim can be

at
ah

o
m

0
90
8
e

h
M

10
(9
or

t
brought; but once the contract is at an end there is a logical difficulty in saying that the claim is
ah

a
2
)
h

R
0
98
re
62

M
at

9
i
ah
ho

contractual.”

a
82
(
R

00

2)

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e

M
at

9
a

or
6
01

ah
(
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2)
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re
The respondents did not choose the option of rescinding the contract and suing for
0
9

M
at
ah

06
01
82

o
im

2)
th
M

0
29
(9

damages in terms of clause 3 (a) and (b). It was the respondents who made it difficult for
ah

06
01

ho
im

R
8
e

10
9
(9
r

at
ah
ho

a
2
the appellant to execute the contract as per the terms originally agreed.
)

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R
90
8
re
62

M
at

(9

ah
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2
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2)

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98
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23. In the light of the above, we are of the view that the High Court was clearly in error in
a

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06

(
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a
h

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62
0

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at
ah

or
1
82

overturning the judgment of the Trial Court with regard to the aforesaid 3 heads of claims,
im

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90

)
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M

62
(9

t
ah

a
01
82

on a wrong understanding that there was abandonment of contract on the part of the
m

00
re

th
M

9
(9

hi
ho

a
01
2
a
)

R
98
re
62

appellant. Hence this appeal is allowed. The impugned judgment and decree of the High
)M
at

29
hi
ho

a
(
R

00

m
8
e
62

M
at

Court are set aside and the judgment and decree of the Trial Court are restored. It
(9
a

hi
01

o
im

00

a
2)
th

e
9

M
ah

r
a

06
1
82

appears that during the pendency of the first appeal before the High Court, the
ho
im

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90

2)
M

10
(9

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06
82

respondents deposited a sum of Rs.42,98,168/towards the amount decreed by the Trial

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0
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or

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ah

1
82
2)
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Court. As seen from paragraph 16 of the impugned judgment of the High Court, the
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06

h
ho

a
82
R

a
)

m
e
2
10

M
at

amount deposited by the respondents before the High Court was withdrawn by the
(9
a

i
06

ah
o
im

R
90

2)
h

e
10

M
t
ah

r
a

06
82

appellant on 13.01.1999 by furnishing a bank guarantee. Therefore, while modifying the

o
im

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90

)
th
M

2
10
(9

ah

06
82

decree, the High Court directed the appellant to return the balance amount, failing which
m

R
0
re

10
29
(9

i
ah
ho

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2)

R
90
98
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the Trial Court was empowered to encash the bank guarantee for the remainder amount.
M
at

i
06

ah
ho

a
82
(
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2)

m
re
10

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at

In view of this, while ordering the issue of notice in the special leave petition and granting
9
a

i
06

ah
ho

(
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R
90

re
62
10

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at
ah

a
82

interim stay, this Court directed the appellant to keep the bank guarantee alive. Now that
ho
im

00
0
M

2
29
(9

at
ah

6
01

we are allowing the appeal setting aside the judgment of the High Court and restoring
m

00
8
re

9
(9

hi
ho

01
82
a
2)

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re

the judgment of the Trial Court, the bank guarantee shall stand discharged.
)M
at

29
(9

hi
06

ho

a
R

m
8
e
62
10

M
at

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a

or

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im

24. The appeal is allowed. There will be no order as to costs.

R

00
90

a
2)
h

M
t
ah

or
a

06
01
82

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2)
h
M

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9
(9

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06
82

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ah
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82

© All Rights Reserved @LiveLaw Media Pvt. Ltd.

2)

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90
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i
06

ah
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*Disclaimer: Always check with the original copy of judgment from the Court website. Access it here
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10

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a

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06

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06
82

ho
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62
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(9

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10
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06

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