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Breach of a Construction Contract

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construction_0.jpgSome interesting incident happened at a construction site nearby. Turns out there was a contract between the owner of the property and a builder. Under the contract builder was supposed to carry out a construction on the property of the owner and owners were supposed to pay builder for the same. However there were some issues and construction had to be stopped. Here are arguments on behalf of owners of the land. Perhaps we hope you find them useful!

Basic issues can be summarized as follows:

  1. Architect has to supply detailed estimates and bills to show expenses incurred by her.
  2. Is the construction firm entitled to payment for something that is not mentioned under the contract? (w.r.t. construction of 1 ½ floors)
  3. Is the construction firm entitled to payment for something that is per se illegal? (w.r.t. construction of 1 ½ floors)
  4. Can the architect claim architectural fees when she was not even present at the work site?

 

Following arguments can be made with respect to the above issues:

  1. Architect has to supply detailed estimates and bills to show expenses incurred by her.

As per s. 101 and 102 of the Indian Evidence act, burden of proof is upon the individual seeking to assert a right or one who would fail if no evidence is given. Section 73 determines damages in case of breach. Clearly here architect is asserting her right to damage due to breach of contract. Further, her claim will fail if the same is not backed by any evidence. Hence, BoP in this case is on the architect.

Person claiming damage has to back it up with evidences.[1] Further, he has to also prove the quantum of damages. In this case non-payment of expenses is a simple allegation. It has to be backed by proof.

  1. No, construction firm is not entitled to payment for something that is per se illegal.

In this case there is violation of the contract. In Ranbir Singh v. Satya Narayan Sharma and Others,[2] Delhi HC was of the opinion that:

“..If we see the facts of the case. It is the plaintiff who carried out unauthorized construction and in terms of settlement he wants himself to be paid Rs.18,00,000/- towards the cost/part cost of construction and out of that agreement what defendants have got, nothing but a loss of Rs.18,00,000/- and their property is also sealed. In my opinion, plaintiff cannot be allowed to take advantage of his own wrong and rights of defendants cannot be prejudiced in this manner at all…”

This case has similar fact to the case in hand. Court concluded that it was the responsibility of the builder to take all permissions. If permission was not taken and construction carried on, it will be equivalent to misrepresentation. Subsequently contract will be void (u/s 18 rw s 19 of ICA).

Further, SC in Meghmala & Ors. Vs. G. Narasimha Reddy & Ors.[3] Suppression of any material fact/document amounts to a fraud or misrepresentation, as the case maybe. Here, it was a case of misrepresentation as property owners were made to believe that the construction will subsequently become legal. (However, they know that same will not be true)

As per SC’s ruling in Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd. & Anr on 10 July, 2008[4] land owners under this contract will be treated as consumers. Hence, as per s. 1(4) of consumer protection act (hereinafter CoPrA)read with s. 2 (1) (r) (1) (viii) of CoPrA, architect is liable for damages if proceedings are taken to consumer forum. (Separate proceedings allowed)

  1. Architect cannot claim fees when she was not present at the work site.

One of the considerations under this contract was identity and qualification of the individual. Neither the individual architect in question nor any qualified people were present at the construction site. Hence, breach of contract.[5]

As per SC’s ruling in Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd. & Anr on 10 July, 2008[6] land owners under this contract will be treated as consumers. Hence, as per s. 1(4) of consumer protection act (hereinafter CoPrA)read with s. 2 (1) (r) (1) (viii) of CoPrA, architect is liable for damages if proceedings are taken to consumer forum. (Separate proceedings allowed) Further, quality of services was deficient as per s. 2(1)(o) and 2(1)(d) of CoPrA.

Hence because of the above mentioned reasons, Builder in this case is not entitled to any monetary compensation.

__________________________________________________________________

[1] /S.Colgate Palmolive India Ltd vs T.J.George Available at https://indiankanoon.org/doc/1735717/; Also 1991 SCMR 1436; PLD 1973 SC 311; 1995 SCMR 1431.

[2] Available at http://www.delhidistrictcourts.nic.in/SEP14/Ranbir%20Singh%20Vs.%20Satya%20Narain %20Sharma.pdf

[3] Available at https://indiankanoon.org/doc/1329151/

[4] Available at https://indiankanoon.org/doc/1048731/

[5] No specific case in India with respect to the issue. (Or maybe I could not find one!) However, common law principles applicable in India when there is no express legal provision that says otherwise. Article 372(1) of the Indian constitution. Same was also said in the case of Haji Anwar Ahmed Khan Vs. The Punjab Wakf Board and Ors AIR1980P&H306. Hence, one could simply apply basic common law doctrines to this issue and state that identity and qualification of supervisors was important and if architect herself and qualified engineer were not present at the site, it will be in violation of the contract.

[6] Available at https://indiankanoon.org/doc/1048731/

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