Case Note & Summary
The appeal arose from a contract for construction of a portion of the Nainital-Bhowali Road awarded by the Public Works Department of the United Provinces, later the State of Uttar Pradesh. The appellant contractor submitted a tender at 13 percent below Schedule B rates and entered into a contract on 20 November 1946. He later claimed higher rates due to non-availability of stone at the estimated distance and for extra work involving hard shale. The estimates in the tender notice were based on stone being available within 26 chains of the work spot, but actual stone in the Cantonment area required permission which the appellant could not obtain. Consequently, he brought stone from distances of 79 and 110 chains. He requested a higher rate, but his request was rejected before he commenced work. He completed the work, after which the Executive Engineer recommended a higher rate, but no additional payment was made. The appellant also performed additional work far in excess of the contract quantity and claimed higher rates for that as well. After his claim was rejected, he gave notice under Section 80 of the Code of Civil Procedure and filed a suit for Rs. 66,422 with interest. The trial court decreed Rs. 26,313-14-0 with interest, allowing extra lead and hard shale claims. The High Court reversed the decree, holding that estimates were for calculation only, no assurance was given, and the appellant failed to invoke the option under paragraph 5 of the special instructions. The Supreme Court heard the appeal by certificate under Article 133(1)(a) of the Constitution. The Court identified two main questions: whether the PWD estimate formed part of the contract and whether assurances of higher rates were given; and whether clause 5 of the special conditions applied to the extra item of work. The appellant argued that the estimates were incorporated into the contract through tender notice clauses and clause 34, that local officers assured higher rates, and that non-availability of stone frustrated the original contract, entitling him to quantum meruit. The respondent State contended that no assurance was given, estimates were not binding, and the contractor was bound by clause 12 and paragraph 5, which required him to settle fresh rates for excess over 30 percent. The Court examined the clauses and evidence and found no clause that assured higher rates if stone was unavailable; it was for the appellant to satisfy himself about availability and permissions. The rejection of his request before commencing work negated any inducement, and the Executive Engineer's letter was only recommendatory. Following Adopi Parshad & Sons Ltd. v. Union of India, the Court held that quantum meruit arises only when the original contract has been discharged by the defendant and the plaintiff elects to treat it as discharged; here work was done under a subsisting contract, so no quantum meruit claim lay. On extra work, clause 12 bound the appellant to perform additional work on the same terms, and paragraph 5 required notice and settlement of fresh rates for excess over 30 percent, which the appellant failed to do. Accordingly, the Supreme Court dismissed the appeal and upheld the High Court's dismissal of the suit, leaving the parties to bear their own costs.
Headnote
A) Contract Law - Quantum Meruit - Claim sustainable only when original contract discharged by defendant - General Contract Principles - The appellant sought payment on quantum meruit because stone was not available at 26 chains. The Court rejected this, holding that quantum meruit arises only if the defendant's breach discharges the contract and the plaintiff elects to treat it as discharged; here work was performed under a subsisting contract pursuant to its terms. Held that no amount can be claimed by way of quantum meruit for work done under the contract. (Page 475 G-H, 476 C-D) B) Contract Law - Tender Estimates and Assurances - Estimates are for calculation and do not guarantee availability of materials - General Contract Principles - The PWD estimate used 26 chains as the distance for stone availability, but no clause assured higher rates if stone was unavailable there. The appellant's request for higher rate was rejected before he commenced work, so he was not induced by any assurance. The Executive Engineer's recommendation did not create a legal right. Held that no assurance or guarantee was extended to the contractor. (Page 472 G-H, 473 G-H, 475 C) C) Contract Law - Additional Work and Special Instructions - Contractor bound by clause 12 and paragraph 5; must settle fresh rates for excess over 30% - General Contract Principles - Clause 12 required the appellant to perform additional work on the same terms; paragraph 5 of the special instructions required notice and settlement of fresh rates for work exceeding original quantity plus 30%. The appellant failed to exercise this option, so he could not claim more than contract rates. Held that his claim for extra work at higher rates was barred. (Page 476 E-H) D) Civil Procedure - Notice to State - Precondition for suit under Section 80 CPC - Code of Civil Procedure, 1908, Section 80 - The appellant gave notice under Section 80 CPC after his claim was rejected and then filed suit. This procedural requirement was fulfilled, but the substantive claims failed. Held that the suit was maintainable after notice. (Page 470)
Issue of Consideration
Whether the estimate of the PWD formed part of the contract so as to bind both parties and whether any assurances were given to the appellant for higher rates for bringing stone from longer distances; whether clause 5 of the special conditions of the contract applied to the extra item of work and whether the appellant was entitled to higher rates for extra work based on assurances by local officers.
Final Decision
Appeal dismissed; the Supreme Court upheld the High Court's judgment setting aside the trial court decree and dismissing the contractor's suit, holding that no assurance existed, quantum meruit was not available, and the contractor was bound by clause 12 and paragraph 5.
Law Points
- A claim on quantum meruit is sustainable only when the original contract has been discharged by the defendant in a way entitling the plaintiff to regard himself as discharged from further performance and he elects to do so
- where work is done under a contract pursuant to its terms no amount can be claimed by way of quantum meruit
- tender estimates are for calculation only and do not amount to an assurance or guarantee of availability of materials at specified distances
- an executive engineer's letter recommending higher rates is merely recommendatory and creates no legal right
- clause 12 and paragraph 5 of special instructions bind contractor to perform additional work at original rates and require settlement of fresh rates for excess over 30%
- notice under section 80 CPC is a precondition for suit against the State
