JUDGMENT
A. Lekshmikutty, J.
1. The unsuccessful plaintiff in O.S. No. 38 of 1989 of the Subordinate Judge’s Court, Kozhikode filed this appeal against the judgment and decree in the said suit. The plaintiff filed the suit for recovery of money and for rendition of accounts.
2. The appellant was a PWD Contractor for a long time. ?He was awarded the work of Muchukunnu-Thikkodi Beach Road by the second respondent accepting the appellant’s tender. An agreement was executed on 22.1.1985. He was directed to make a security deposit of Rs. One lakh, much in exercise of what is usually insisted upon. The site was handed over to the appellant on 13.2.1985 and it had to be competed by 17.2.1986 as per the agreement. The appellant started the work very earnestly and diligently. Unfortunately, there were various objections and impediments in proceeding with the work. The handling over the said work was a myth and in fact the department had not obtained possession from the respective owners for the property through which the road had to be constructed. The original road had only a width of 4 metres and it has to be widened to 8 metres. Some portions of the proposed road belonged to the Food Corporation of India and Railways. No consent was obtained from them also. One Kelappan and Moidu had filed injunction suits restraining the department from proceeding with the construction work. Temporary injunctions were granted in the said suit. There were physical obstruction from the side of the landlords. Objections regarding the work were also filed before the Honourable Minister for PWD by one Balakrishnan. Further, many coconut trees had to be cut and removed for widening the road. In the suit filed by Kelappan, the department had to file an appeal from the order of injunction before the Sub Court, Badagara. The second respondent did not do any thing to remove the obstructions. When the appellant started the work, the landlords objected the same. When the actual work was commenced, the quantity required for filling, exceeded for from the estimated quantity. As per the agreement, 23 masonry culverts were to be constructed, but at the time of the work, they were converted into 3 pipe culverts and 25 box culverts. The department had no stock of pipes, cement and steel necessary for this work. Apart from this, a lot of extra items such as cutting and removing of trees, baling of water, dismantling and removing old masonries, fresh use of vibrated concrete etc. had to be done. There was undue delay for payment of part bills and payment for extra items were not paid at all. The department was really responsible for causing the delay in executing the work. As directed by the respondents, the appellant applied for extension of time and huge amounts were due from them up to 30.3.1987. An amount of Rs. 5 lakhs was due to the appellant. Still the appellant continued the work facing difficulties and about Rs. 10 lakhs fell due to him from the department allegedly for want of funds. Repeated request were made by the appellant. At last, the Assistant Engineer, Quilandy by his letter dated 6.8.1988 issued a notice threatening that the agreement would be cancelled. Thereafter, the appellant was forced to issue notice under Section 80 of the CPC and filed the suit.
3. The respondent filed written statement contending that the appellant stopped and abandoned the work after 40% of its execution and did not resume the same inspite of repeated instructions. There was no obstruction as alleged by the appellant. The site was handed over to the appellant on 13.2.1985. He had started the work only after 4 months. There was no complaint from any corner. Voluntary surrender was made by the land owners and agreement was for widening the existing road. The security amount deposited by the appellant is not in excess. During the time of executing the agreement, security deposit fixed by the Government was 5% of the PAC or Rs. One lakh which ever is less. The site was actually handed over to the appellant and as per the agreement he had to compete the work by 17.8.1986. He abandoned the work after 40% of the work and did not resume in inspite of the repeated instructions. So, the contract was terminated at the risk and cost of the appellant by retention of his security deposit and retention amount as per notice dated 1.12.1988. The earth work of filling and cutting had been carried out by the appellant in a major portion of the road without any obstruction except that of Kelappan who had filed a suit before the Munsiff’s Court, Payyoli. Neither the Food Corporation of India nor the Railways had objected the work at any time. The appellant accepted the tender in a keen completion with the expectation of making profit. After carrying out the major portion of the profitable items of works, he tactfully abandoned the work and withdrew all the men, material and machinery form the site. The payment for the competed work was made in proper time. First part bill was passed on 22.6.1985 for an amount of Rs. 4,72,817/-. The appellant raised unreasonable claims before the respondents. There was no protest as alleged by the appellant. Though Balakrishnan had filed a written protest before the Minister concerned as the existing road at the side of his land was having 8 metres with no additional land was required at that portion. So, the objection raised by him also did not cause any hindrance to the work. The formation of the road had been carried out by the appellant within three months from the starting of the work. The coconut trees standing at the boundary of the road did not cause any hindrance to the work. The appellant was not a party in the suit filed by Kelappan. The suit was against the Engineers and the State of Kerala. The injunction order was vacated within 3 months. Even if the suit was filed, it affect widening of the road at a length of 40 metres and width by 40 cms. If there were any objection as alleged in the plaint, it would not have possible for the appellant to carry out major portion of the earth cutting for widening the road, earth work filling for raising the road and side protection works during the first three months and it would not have been possible for him to resume the work in December 1986 to September 1987. Objections raised by three others were cleared in the month of March itself. So, the allegation that the appellant could not compete the work within the stipulated time since there was obstruction from the land owners is false. Since the appellant abandoned the work and withdrew all men, material and machinery from the site and did not turn up till May 1986. Due to the fault of his own, the respondents thought of cancelling the contract entered into between the appellant and defendants and arranging the remaining works to be carried out through the other agencies at eh risk and costs of the appellant. After receipt of the final notice issued by the 2nd respondent, the appellant informed the Assistant Executive Engineer as per letter dated 7.5.1986 requesting to mark the site for culverts. The appellant and agreed to commence the work of culverts by the end of 15.5.1986. He was well aware of the facts that the construction of the culverts passing through low lying paddy fields could not be possible during monsoon. So his letter dated 7.5.1986 and 28.4.1986 were only to confuse the department. He turned up to resume the work only in December 1986. Still the department granted extension of time for completion of the work up to 31.5.1987 and then up to 31.3.1988. But the appellant did not turn up to receive the materials. He had no intention to resume the work. The allegation that the materials were not supplied in time was also not correct. The materials were supplied in time at the request of the appellant. It is the appellant who have committed the breach of contract and therefore he is not entitled to any relief.
4. The evidence in this case consists of the oral testimony of PW1, DW1 and Exts. A1 to A8 and B1 to B6. The lower court after appreciation of the evidence passed a preliminary decree allowing the claim in part and disallowed the claim of security deposits and retention amount. Aggrieved by the said judgment and decree the appellant has come in appeal.
5. The question to be considered in this appeal is whether there is any reason to interfere with the judgment and decree under challenge. The appellant filed the suit for a sum of Rs. 4,56,000/- and for rendition of accounts. Admittedly, the appellant and the 2nd respondent entered into an agreement on 28.1.1985 for widening the Muchukunnu – Thikkodi Beach Road as per Ext. B1(a). As per the agreement the work had to be competed by 17.8.1986. The site was handed over to the appellant on 13.2.1985. It is the case of the appellant that he could not compete the work in time because of the obstructions caused by the land owners, Railway, Food Corporation etc. The respondents deny the same. According to them, there was dispute with regard to a length of 40 metres only, but in respect of the remaining portion there was no such dispute. The total length of the road is 7.670 kilo metres. It is true that one Kelappan has filed a suit and obtained an injunction against the department. But the injunction order was in force only for three months. It is the case of the respondents that the appellant after filling the earth work which is profitable, abandoned the remaining work. There is no justification for him to abandon the work. The appellant had committed breach of the agreement and so he is not entitled to get any relief. Both sides adduced evidence. As observed by the lower court, the appellant has not succeeded to prove that there were obstructions from the land owners as alleged by him. No independent evidence was adduced by him to substantiate the same. If actually there was such obstruction, he could have cited and examined independent witnesses to prove the same. On the other hand the evidence tendered by the respondents would show that the site was free of obstruction and the appellant was asked to resume to work on several occasions. Admittedly, the appellant had competed the earth filling work of the entire road. ExtB2(a), the letter sent by the appellant would show that he had taken over possession of the land on 13.2.1985. It would further show that he had competed the earth filling work throughout the road. The respondent gave evidence that there was no fault on their part. The lower court after analysing the entire evidence and circumstances found that the appellant abandoned the work without any justification. The oral evidence of DW1 along with Ext. B2 series would clearly show that the appellant was not interested in proceeding with the work and he some how or other wanted to escape from completing the work. A perusal of the evidence adduced by the respondents would show that they have performed their part of the agreement.
6. The lower court passed a preliminary decree in the following terms :
“The total work done by the plaintiff shall, be assessed with reference to the measurement books of the defendants and the amount payable to the plaintiff shall be fixed as per the agreement rate; after deducting the amount already paid and less the retaining amount, the balance amount payable shall be ascertained. The amount payable by the plaintiff towards the expense for transportation of 3 pipes from the Department store to the work site shall be ascertained and paid. Similarly, the amount payable towards dismantling of old masonry shall also be determined and paid less the amount already paid on this Court. Besides the plaintiff shall also be paid Rs. 100/- towards the expense incurred by him for conduct of O.S. 33/87 on the file of the Munsiff’s Court, Quilandy. The plaintiff shall also be paid additional expenses if any incurred in transporting cement and steel from Kuttiyadi Irrigation Project to the work etc. The claim for a decree specified in the plaint is disallowed. The plaintiff is entitled to get proportionate cost for the claim allowed and he shall be liable for cost to the defendants on the claim disallowed. The decree shall be subject to the payment of court fee for accounting. Plaintiff can apply for passing a final decree in terms of preliminary decree”.
7. The respondents have not challenged the preliminary judgment and decree passed by the lower court. So, there is no necessity for interference of the preliminary decree.
8. The claim of the appellant for refund of the security amount and retention amount was disallowed by the lower court. Now the point to be considered is whether the appellant is entitled to get the security amount of Rs. One lakh and the retention amount of Rs. 86,563/-. It is submitted by the learned counsel for the appellant that he was liable to deposit only 5% of the probable amount of contract which would come only Rs. 43,000/- but the respondent had collected Rs., One lakh as deposit. Originally the appellant was directed to deposit an amount of Rs. 50,000/- and subsequently he was directed to deposit another Rs. 50,000/-. Accordingly, he deposited Rs. One lakh. So, according to the appellant, he is entitled to get the said amount with interest on the respective date. As per the evidence on record, the appellant, deposited an amount of Rs. One lakh even prior to execution of the agreement. As per the appellant, the percentage of the deposit was increased and as such he was bound to deposit Rs. one lakh. But it is to be noted that he had deposited the amount without any hesitation. The security amount is deposited for the due performance of the agreement. So now it is idle to contend that he is liable to deposit only Rs. 43,000/-. Admittedly the contract was terminated as per Ext. A2. It is submitted by the learned Government Pleader that as per the stipulation in the contract, as the appellant had committed breach of contract, the respondents are entitled to forfeit the security deposit. Ext. B2(n) is the copy of the letter dated 23.9.1988 issued by the 2nd respondent. It is clearly stated in the notice that the appellant shall resume the work within 7 days from the date of notice and failure on his part to resume the work will result in termination of the contract and re-arrangement of balance work at the risk and cost as per Clause 61 of the agreement. Since the appellant had not resumed the work the respondents are entitled to forfeit the deposit. But this argument of the learned counsel cannot be accepted. It is true that the appellant and committed breach of contract. Under Section 74 of the Contract Act, the respondents will be entitled to get so much of the compensation as they are entitled. But the respondents had not proved that due to the breach of contract they have sustained any legal injury. The respondents have no case that they have re-tendered the work and thereby sustained any injury. Every case of compensation for breach of contract has to be dealt with on the basis of Section 73 of the Act. In Union of India v. Rampur Distillery & Chemical Co. Ltd. (AIR 1973 SC 1098) the Supreme Court observed that the party to a contract taxing security deposit from the other party to ensure due performance of the contract is not entitled to forfeit the deposit on ground of default when no loss is caused to him consequence of such default”. When the question is one of forfeiture of security deposit in case of breach of contract, such sum does not ipso facto go to the respondents. As stated, the respondents have not proved that they have sustained any legal injury due to the breach committed by the appellant. If the party complaining is in a position to adduce evidence whereby the court can assess reasonable compensation, then without proof of actual loss, damages will not be awarded and amount mentioned by the contract will be penalty. In such circumstances, the respondents are not entitled to forfeit the security amount. In the case of retention amount also, the same principle applies. Hence we set aside the finding of the lower court in respect of security amount and also the retention amount. The appellant is allowed to recover the security amount and retention amount of Rs. one lakh and Rs. 86,563/- respectively from the respondents. Since we have already found that the appellant had committed breach of contract, he is entitled to get interest at 6% per annum from the date of decree till realisation. The preliminary judgment and decree are confirmed in all other respects. No costs.