State Ignored Its Own Obligations, Unilaterally Penalised Contractor Overlooking Difficulties Faced In Completing Canal Construction: Rajasthan HC

The Rajasthan High Court set aside a commercial court's order passed against a company whose contract for constructing a canal was terminated by the State for allegedly not completing the work. The court thus underscored that "termination of contract during subsistence of period of completion of work was illegal" and as employer unilaterally imposed penalty on the contractor of over Rs 25 Lakh. Even the principles of preponderance of probability does not give leverage to an authority to create a hypothesis by its own imagination without any evidence.On the claim made by the appellant-firm on account of loss of profit, the Commercial Court completely shut its eyes to the documents laid in evidence by the appellant-firm.In our opinion, the termination of contract during subsistence of the period for completion of the work was illegal. The letter dated 5th July 2006 records that the appellant-firm was able to complete the work to the tune of Rs.47,07,236.00/- but without referring to the reasons put forth by the appellant-firm simply records the appellant-firm did not take any effort to complete the work.The Commercial Court was required to bestow its consideration to non-performance of its obligation by the Employer which goes to the root of the matter.The various documents laid in evidence by the appellant-firm demonstrating protest by the agriculturist and difficulties faced by it in execution of subject works could not have been ignored on a specious plea that the possession of land was given to the appellant-firm," the court added.