State of Punjab V AK Raha Engineers

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Page 1 Friday, June 17, 2022

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1963 SCC OnLine Cal 66 : AIR 1964 Cal 418
In the High Court of Calcutta

(BEFORE R.S. BACHAWAT AND A.K. MUKHERJEA, JJ.)
State of Punjab … Appellant;

Versus
A.K. Raha (Engineers) Ltd. … Respondent.
A.F.O.D. No. 40 of 1960
Decided on September 18, 1963
Page: 419
The Judgment of the Court was delivered by

BACHAWAT, J.:— This is an appeal by the defendant State of Punjab against a
decree directing an enquiry as to the amount due and payable to the plaintiff
Company in respect of their claim as mentioned in paras. 6, 7 and 8 of the plaint.
2. Under paragraph 6 of the plaint the plaintiffs claimed a sum of Rs. 31,949-12 as
on account of excess deductions from running bills and under paragraphs 7 and 8 of
the plaint they claimed a sum of Rs. 3,35,211-12 as on account of the price of work
done, refund of security deposit and damages as in the schedule to the plaint. The
claim for damages as mentioned hereafter has been abandoned and given up before
us. The plaintiff's claim as it stands now is for the refund of the security deposit and
for the price of work done under the contract
Page: 420
between them and the defendant. Under the contract the plaintiffs undertook to
construct for the defendant a broad gauge Railway tunnel on the Bhakra Nangal Canal
Railway. The contract was between the plaintiffs, a limited company having then its
registered office at D5, Clive Buildings in the town of Calcutta and the Punjab
Government having then its Head Quarters at Simla. The tender was submitted by the
plaintiffs to the Superintending Engineer, First Bhakra Civil Circle, Ellersley, Simla-E.
The acceptance of the tender was sanctioned by the Chief Engineer, Irrigation Works,
East Punjab Simla. The contract was signed on behalf of the plaintiff Company under
the authority of the resolution of their Board of Directors passed at their registered
office at Calcutta. Part of the Security deposit, namely a sum of Rs. 5,000/- was
deposited in cash by the plaintiff company with the Sub-divisional Officer, Left Bank
Tunnel Sub-division at Barmula and the balance of the deposit, i.e., a sum of Rs.
20,000/. was deposited by them with the Punjab National Bank Rupar Branch. The
work of construction of the tunnel on the Nangal Bhakra Railway was done under the
supervision of the Executive Engineer, Tunnelling Division, Nangal Township P.O.
Nangal Nikku Hoshiarpur. During the progress of the work the plaintiff Company had a
temporary office at Nangal Nikku. The work was practically completed on or about the
4th of March 1949 but the last stone was removed on or about the 9th April 1949.
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According to the certificate of the Sub-divisional Officer Railways Tunnel Sub-division

the work was completed on the 9th April 1949. The contract required the plaintiff
Company to submit their bills to the Executive Engi-neer-in-Charge of the works.
During the progress of the work running bills for work done were submitted to the
Executive Engineer and payments were received by the plaintiff Company at its
temporary office at Nangal by cheques. Under the contract the plaintiffs were entitled
to receive monthly payments against the running bills which were to be treated as
advances against the final payment. Considering that the plaintiff Company would
maintain a temporary office at Nangal during the progress of the works and
considering also that the payments under the running bills were made by way of
advances to meet, the running disbursements on the spot, a term may well be implied
in the contract that the payments under the running bills could be made by the
defendant to the plaintiff at its temporary office at Nangal. The contract required the
plaintiffs to submit their final bill to the executive engineer in charge within one month
of the date fixed for completion of the work. The contract also provided that the
certificate of completion shall not be given and the work shall not be considered to be
complete until the contractor shall have removed from the premises on which the work
shall be executed all scaffolding, surplus materials and rubbish and cleaned off the dirt
from all wood work, doors, windows, wells, floors and other parts of any building in
upon or about which the work is to be executed or of which he may have had
possession for the purpose of the execution thereof. In view of this clause in the
contract, the work was not considered to have been completed until the 9th April 1949
when the last stone was removed from the site. After the conclusion of the work, the
plaintiff Company could not also maintain their temporary establishment at the site of
the work at Nangal and had to bring to Calcutta all their accounts and measurements
relating to the construction work. The final bill to the Executive Engineer was sent by
the plaintiff Company from their registered office at Calcutta on or about the 15th
March 1949. Then and at all material times previously the plaintiffs had their
registered office at D5, Clive Buildings, Calputta. The correspondence suggests that
the registered office of the plaintiffs was shifted from D5, Clive Buildings, Calcutta to
premises No. 22, Canning Street, Calcutta in or about October, 1949. In spite of
demands the defendant failed and neglected to pay any portion of the plaintiff's claim.
The plaintiffs contend that they are entitled to payment of their final bill at Calcutta
whereas the defendant claims that the bill was payable to the plaintiff in the Punjab.
The case made in the plaint is that inasmuch as the contract contained no provision as
to the place where the final payments under the contract were to be made, it was the
duty of the defendant to make such payment at the registered office of the plaintiffs at
Calcutta. Before Mallick J., the plaintiffs contended that there was no provision in the
contract as to the place of payment of the final bill, whereas, the defendant contended
that the final bill was payable by the defendant at one of its Treasuries in the Punjab.
Mallick, J. held the final bill including the security deposit was not payable either
expressly or impliedly in the Punjab, and there being no place of payment agreed to,
the money was payable at the plaintiffs' Calcutta office either under Section 49 of the
Indian Contract Act or in accordance with the common law rule that the debtor must
seek the creditor and make the payment at the creditor's place. Both parties have
repeated their respective contentions before us and additionally the plaintiffs have
contended that if we are to hold that the contract fixes the place of payment of the
final bill by necessary implication, we should find that the contract by necessary
implication provided for payment of the final bill at the plaintiffs' registered office at
Calcutta.
3. The place of payment of the final bill is not stated in the contract in express
terms. If no place of payment is specified in the contract in express terms, the place
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may sometimes be fixed by necessary implication from the nature and the terms of
the contract and the surrounding circumstances, see Mahaluxrni Bank Ltd. v.
Chotanagpore Industrial and Commercial Association. 95 Cal LJ 64 : (AIR 1955 Cal
413), Sailendra Nath v. Ramsundar Ghosh, 18 Cal LJ 279, Riley v. Holland (William) &
Sons Ltd., (1911) 1KB 1028 at p. 1031. In Soniram Jeetmull v. R.D. Tata & Co. Ltd.,
54 lad App 265 : (AIR 1927 PC 156) the Judicial Committee found that the obligation
to pay the plaintiff company involved the obligation to pay them at their branch office
at Rangoon. In Thompson v. Palmer, (1893) 2 QB 80, the Court held that the
obligation to pay the plaintiff a civil engineer, his travelling expenses and percentage
of commission on the value of the work of construction done under his
superintendence outside England involved an obligation to pay him at Newcastle
where he generally carried on business and where the necessary plans and calculations
for the work would be available and he would have the means of ascertaining the
correctness or otherwise of the amount tendered. The fact that the moneys are
payable to limited company may support the conclusion that the payment should be
made at their registered office, which is the only place where in point of law they can
be considered as legally existing: See Charles Duval & Co. Ltd. v. Gans, (1904) 2 K.B.
685, at p. 692. The question is whether in the instant case, the place of payment of
the final bill may be fixed by necessary implication from the nature and terms of the
contract and the surrounding circumstances. During the relevant period of time, the
Government of Punjab had its head-quarters at Simla but it is not suggested that
Simla is the place of payment. Nangal is the place where the work was done and
where the Executive Engineer had his office and measurement books and where the
final bill was submitted. Mr. Ghose does not, however, claim that
Page: 421
Nangal is the place of payment of the monies due under the final bill. The suggestion
in the written statement was that the monies due to the plaintiff were payable at the
treasury at Una, district Hoshiar-pur, Punjab. The suggestion is not supported by the
evidence on the record. Before us Mr. Ghose did not attempt to support the case so
made in the written statement. On behalf of the defendant the only positive
suggestion was that the final bill was payable at one of the treasuries of the defendant
in the Punjab, but we cannot accept this suggestion. We cannot find any necessary
implication in the contract that the plaintiffs were obliged to receive payment of their
final bill at any one of the numerous treasuries of the Punjab Government in the
Punjab. Mr. Ghosh did not make any other positive suggestion with regard to the place
of payment of the final bill. On the other hand, we find that the plaintiff company had
all along their registered office in Calcutta. They had a temporary establishment at
Nangal during the progress of the work; but with the conclusion of the work the
temporary establishment was closed down. Before the commencement of the work the
defendant sent to the plaintiffs at their registered office at Calcutta the tender notice,
the request in writing to send the security deposit and also the order to commence
work. After the conclusion of the work, the plaintiff company sent all their
communications to the defendant from their registered office at Calcutta. The final bill
was sent by the plaintiff company from their registered office where their
measurements and circulations were available. In the light of these surrounding
circumstances and on a fair reading of the contract, we think that the obligation under
the contract to pay to the plaintiff company the amount due on their final bill by
necessary implication involved the obligation to pay them at their registered office at
Calcutta where their measurements and calculations were available. The breach of this
obligation therefore took place at Calcutta.
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4. The case has been argued on the alternative footing that no place for payment
can be fixed by necessary implication. No application was made by the defendant to
the plaintiffs for fixing a place of payment and Section 49 of the Indian Contract Act
cannot apply to the facts of the case. The general rule is that where no place of
payment is specified in the contract either expressly or impliedly, the debtor must
seek the creditor, see The Eider (1893) P. 119 at p. 136, Drexel v. Drexel. (1916) 1 Ch
251 at p. 261, North Bengal, Das Brothers Zemindary Co. Ltd. v. Surendra Nath Das,
ILR (1957) 2 Cal 6. The obligation to pay the debt involves the obligation to find the
creditor and to pay him at the place where he is when the money is payable. The
application of the general rule is not excluded because the amount of debt is disputed.
On behalf of the appellant it is argued that the claim in the instant case is not a
liquidated demand and therefore not a debti and in this connection our attention was
drawn to the case of Sabjee Sahib v. Noordin Sahib, ILR 22 Mad 139. We cannot
accept this contention. The claim for damages has been abandoned. The claim, as it
stands now, is for refund of the security deposit and for payment of the price of the
work done. The bill gives the quantities and particulars of the work done and the rates
charged. Part of the claim is for price of the work done, including extras, to be
ascertained by measuring each particular class of work and pricing it in accordance
with the contract schedule. Beyond doubt, this claim is a debt or liquidated demand,
see Halsbury's Laws of England, Third Edition Volume 3, Article 917, page 474. The
rest of the claim is on a quantum meruit for reasonable price for work done for which
no price is fixed. It is again well settled that an action of debt can be maintained for
the value of work and labour upon a quantum meruit, see Lagos v. Grunwaldt, (1910)
1 KB 41 at pp. 46, 48, Stephenson v. Weir, (1879) 4 LR Ir 369 at p. 373. The value of
the work done and of goods sold and delivered for which no price is fixed, formerly
recoverable under the Courts known as quantum meruit and quantum valeabat could
be sued for under the indebitatus accounts, see Bullens and Leake Pleadings, Second
Edition, p. 28. By the, application of the general common law rule also the defendant
was under an obligation to pay to the plaintiffs their idues under their final bill at their
registered office at Calcutta and the breach of this obligation took place there.
5. It is to be observed that in the written statement the defendant admitted that a
sum of Rs. 11,582 was due to the plaintiff. In other words, a part of the plaintiff's
entire demand under their final bill was admitted. No portion of this admitted demand
was paid before the institution of the suit. The defendant was under an obligation to
pay the debt to the plaintiffs at their registered office at Calcutta and the breach of
this obligation took place at Calcutta. It is true that after the institution of the suit, the
defendant deposited the admitted amount of the claim in Court and the plaintiffs have
withdrawn the same. But the fact of this deposit during the pendency of the suit in no
way displaces the cause of action existing on the date of the institution of the suit.
6. We are therefore satisfied that a part of the cause of action arose at Calcutta
within the jurisdiction of the trial Court and the Court had jurisdiction to entertain and
try the suit.
7. On behalf of the defendant it was next argued that the leave under Cl. 12 of the
Letters Pattent should have been revoked by the learned Judge.
8. In order to sustain this point the defendant must make out that there is an over-
whelming balance of convenience in favour of a trial in the Punjab. But the defendant
has not made out any case whatsoever for revocation of the leave granted under Cl. 12
of the Letters Patent. We are not told in what way the balance of convenience is in
favour of a trial in the Punjab. We are not told which of the oral and documentary
evidence which the defendant would be obliged to call is available in the Punjab and
not elsewhere. The oral and documentary evidence of the plaintiff is available in
Calcutta. At one time we thought that we should direct the trial of the reference at
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some place in the Punjab convenient to the defendant. But Mr. Ghose stated that he
did not want a trial of the reference in the Punjab. He added that the point strictly is a
point of jurisdiction and not a point of inconvenience to the defendant. Besides, an
application for revocation of the leave granted under Cl. 12 of the Letters Patent
should have been made at the earliest possible opportunity. No such application was
made by the defendant. In all the circumstances of the case, we think the learned
Judge rightly refused to revoke the leave granted under Clause 12 of the Letters
Patent.
9. There is no merit in this appeal. We pass the following order:—
The appeal be and is hereby dismissed with costs. Certified for two counsel.
10. Be it recorded that the plaintiff-respondent A.K. Raha (Engineers) Ltd., through
consent hereby unconditionally abandons and gives up the following items of claims,
namely:
(1) Rs. 31000/- on account of expenditure incurred in constructing godowns as a
result of godowns not being handed over to them (3) godowns;
(2) Rs. 50,000/- on account of compensation due to them because of departmental
unnecessary interference with work resulting in slowing down progress, causing
heavy losses in time and labour, also
Page: 422
because the department failed to supply adequate machineries and equipments as per
Schedules A and B to the agreement as also for failure to supply continuous power for
lighting the tunnel and compressed air on many occasions causing huge losses in time
and labour;
11. Rs. 29,500/- on account of compensation for work done by other contractors
under work order basis from within the contracted works composed of the item of Rs.
19,500/- on account of compensation for 130 tunnel done from two faces at 150 per
rft., and of the item of Rs. 10,000/- on account of compensation for duly excavation
done for 40 rft., of tunnel at Rs. 250/- per rft.;
12. The claim for Rs. 25,000/- on account of losses as mentioned in paragraph 4 of
the plaint.
A.K. MUKHERJEA, J.:— I agree.
FH/A.G.T./R.G.D.
13. Appeal dismissed.
———
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SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd.

Page 1 Friday, June 17, 2022

1963 SCC OnLine Cal 66 : AIR 1964 Cal 418

In the High Court of Calcutta

State of Punjab … Appellant;

The Judgment of the Court was delivered by

According to the certificate of the Sub-divisional Officer Railways Tunnel Sub-division

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