cs mm exe 02 february sr i 2009s22legal aspects contract mgmnt

8/3/2019 CS MM Exe 02 February SR I 2009s22legal Aspects Contract Mgmnt.

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LEGAL ASPECTS

ONCONTRACT MANAGEMENT


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CONTRACT

Meaning of a contract is an agreementenforceable by law which offers personalrights and imposes personal obligations,

which the law protects and enforcesagainst the parties to the agreement.


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In Law Dictionary, 5th Edition, Page 291,Blackhas given the meaning of contractas an agreement between two or more

persons which creates an obligation to door not to do a particular thing.


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Section 10 of the Indian Contract Act, 1872prescribes the essentials of a valid contract.

The Essentials of a valid contract are:-

Identity of minds

Legal Agreements

Lawful considerationCompetency of parties

Free consent

Lawful objectAgreement should not be immoral and opposed

to public policy


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OFFER (In English Law) / PROPOSAL (In IndianLaw)

According to Section 2 (a) of the Indian ContractAct, 1872 when one person signifies to another

his willingness to do or abstain from doinganything with a view to obtaining the assent fromthe other party to such act or abstinence, he issaid to make a proposal


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AGREEMENT.

According to Section 2(b) of the Indian ContractAct, 1872 a proposal when accepted becomes apromise.

According to Section 2 (e) of the Indian ContractAct, 1872 every promise and every set of promisesforming consideration for each other is anAgreement

According to Section 2(h) of the Indian ContractAct, 1872 a Contract is an agreement enforceableby law.


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TIME IS ESSENCE OF CONTRACT

Whether time is the essence of contract is aquestion of fact and real test is the Partiesintention. It depends on the facts and

circumstances of each case. An intentionto make time of the essence of contractmust be expressed the unmistakablelanguage, indicating that the parties wanted

to make their rights dependent uponobservation of time limits.


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SECTION 55

FAILURE TO PERFORM CONTRACT, WHENTIME IS NOT ESSENCE OF CONTRACT:

When time is not of essence of contract, delay inperformance does not render the contract void.

But the promisee is entitled for compensationfrom the promisor for any loss occasioned bysuch failure.

However, if the delayed work is accepted withoutgiving any notice of intention to claimcompensation, then the promisee can not claimcompensation.


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When contract expressly provides that the time is theessence of contract, the provision has to be read alongwith other provisions, which may on construction of the

contract, exclude the inference that the completion of thework by a particular date was intended to be thefundamental. Clauses providing for extension of time incertain contingencies or for payment of fine or penalty fordelay for the work under taken remain unfinished on the

expiry of time provided in the contract such clauseswould be construed as rendering ineffective the expressprovision relating to the time being of the essence ofcontract.

-(Hind Construction Contractors Vs.State of Maharashtra AIR 1979 SC 720)


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TIME IS NOT ESSENCE OF CONTRACT

Where contract provides for damages for delayedcompletion.

Extension of time in certain circumstances despiteprovision making time is of the essence.

Provision of default clause.Where time for performance was extended twice or

thrice.

Contract for supply of goods by a contractor togovernment where contract itself provided forextension of time.


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DOCTRINE OF FRUSTRATION

To attract Section 56 of the Indian Contract Act, thefollowing conditions must me fulfilled:

There should be a valid and subsisting contractbetween the promisor and promisee.

There must be some part of the contract yet to beperformed.

The contract after it is entered, becomes impossibleto be performed.

The impossibility is by reason of some event whichthe promisor could not prevent.

The impossibility is not induced by the promisor ordue to his negligence.


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LAW CHOSEN BY PARTY

The autonomy of the parties is recognised asone of the fundamental principles of PrivateInternational Law.

(Dicy and Morris, Conflict of laws

13th Edn., Page 1216-17)

The parties are entitled to agree what is to be the

Proper Law of their contract.

(James Miller & Partners Ltd., Vs. Whitworth

Street Estates (Maneheskr)Ltd.)


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LAW APPLICABLE IN THE ABSENCE OF EXPRESSCHOICE

In the absence of express choice of law applicable tothe contract, the court has to discover the commonintention of the parties from terms and circumstancesof the contract.

Law of the country with which transaction has its closetand most real connection.

Law of the place where contract is made. Law of the place where contract is performed. Law of the place of domicile, residence or business of

parties.

Law of Principal place of business of the Corporation. Law where subject matter of contract is situated.

(Ravindra N Maitra Vs. LICAIR 1964 Cal. 141)


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PLACE OF SUING

Place of Suing subject to the limitationcontained in the C.P.C., a suit may be institutedwithin the local limits of whose jurisdiction thecause of action, in whole or in part, arises(Section 20 C.P.C)

A suit for damages for breach for contract may,therefore, be filed either at the place where thecontract was made or at the place where thecontract was to be performed and its breach

took place; or at the place where inperformance of the contract any money towhich the suit relates was expressly orimpliedly payable.


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ATTESTATION BY WITNESS

Statute may provide that a contract be executedin presence of certain number of witness andthe manner it is to be so signed by theexecutant and witness. S-3 of Transfer ofProperty Act prescribes that when a document

is required to be attested under that Act, suchdocument must be signed by the executant inpresence of two witnesses.

o S-59 Mortgage

o S-22 Gift of Immoveable Property

o S-54 Sale of Immoveable Property

o S-107 Assignment of Actionable claims.


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PAYMENT OF STAMP DUTY

o An instrument not duly stamped is notinvalid.

o It is incapable of being used as evidence

until it is stamped properly.o Executing an instrument not duly

stamped is punishable.

(Subramaniam Chettiar Vs. Revenue

Divisional Officer 1956 Mad. 454)

(Indian Stamp Act 1899 S-35 & S-62)


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REGISTRATION OF CONTRACT

The obligation to register a document isgiven by the provision of substantive lawnamely Transfer of Property Act, 1882 and

the Registration Act, 1908. If suchdocument is not registered, the transfer isvoid and there is no transfer of property.

S-17 of Registration Act provides that allinstruments specified in that Sectionmust be registered under the Act.


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CONTRACT WITH GOVERNMENTARTICLE 299

A-299 of Constitution of India requires that all contracts made in exercise of theexecutive power of Union of India or a State must be executed by a person dulyauthorised in this regard by the President or Governor as the case may be. Therecan be a contract by correspondence and execution of formal document is notabsolutely essential provided the other conditions of Article 299 are satisfied, in theabsence of any direction by the President or Governor under Article prescribing themanner of executing the contract. Letter of acceptance signed by the authorised

officer on behalf of President of India is a valid acceptance to conclude contract.(Union of India Vs. Rallia Ram

AIR 1963 SC 1685)(1987) Supp SCC 127

AIR 1971 SC 141AIR 1967 SC 203 at 206

A Lawful Agreement of lease is a contract. If a contract is not in conformity with theprovision of Article 299 of the Constitution, such contract, though unenforceable

against the Govt., is binding upon the officer who actually made the contract.

(Chatturbhuj Vithal Das Jasani Vs. MoreshwarParasharam AIR 1954 SC 236)


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REMEDIES IN AN ACTION ON CONTRACT

The following remedies are available under the contract.

Damages by way of compensation under Section 73, incase of breach of contract.

Specific performance of contract under Section 12 ofSpecific Relief Act.

Rescission of Contract under Section 35.

Rectification of Contract under Section 31.

Cancellation of Contract under Section 39

Suit for Injunction under Section 52.

Contract cannot be specifically enforced if money

compensation would be an adequate relief for its non-performance under Section 21.

(Specific Relief Act.)


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ORAL CONTRACT

An oral contract by which itself the parties

intend to be bound is valid and enforceableunless required by any other law to be inwriting. Where a party seeks to enforce oralcontract, heavy burden of proof lies on such

party to prove that the contract is concludedand terms of contract were meant to be giveneffect to.


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CONTRACT IN WRITING

A written contract may be a single document each partybeing bound by signing it. A written document may be

handwritten in any language, or may be printed or madein any mechanical equivalent of handwriting.

Documents in electronic forms are treated as equivalentof writing. A signature may be affixed by way of digitalsignature in all cases where any law requires anydocument to be signed.

(The Information Technology

Act 2000 S-4 & S-5)


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LIQUIDATED DAMAGES NATURE

Liquidated Damages (LD) are those onwhich the parties agreed upon and fixedin anticipation of the breach.

Unliquidated damages (ULD) are such asare required to be assessed.

Broach principal for assessment is to putthe aggreived party monetarily in the

same position as far as possible in whichit would have been if the contract hadbeen performed.


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LAW RELATING TO DAMAGES ARISING OUTOF BREACH OF CONTRACT.

Section 73 of Indian Contract Act envisages

compensation for loss or damage caused bybreach of contract.When a contract has been broken, the party

who suffers by such breach is entitled toreceive, from the party who has broken thecontract, compensation for any loss or damagecaused to him thereby which naturally arose inthe usual course of things from such breach, orwhich the parties knew, when they made the

contract, to be likely to result from the breachof it.Such compensation is not to be given for any

remote and indirect loss or damage sustainedby reason of the breach.


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Section 74 envisages compensation for breachof contract where penalty stipulated for.

When a contract has been broken, if a sum is

named in the contract as the amount to be paidin case of such breach, or if the contractcontains any other stipulation by way ofpenalty, the party complaining of the breach is

entitled, whether or not actual damage or lossis proved to have been caused thereby, toreceive from the party who has broken thecontract reasonable compensation not

exceeding the amount so named or, as the casemay be, the penalty stipulated for.


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MITIGATION OF DAMAGES

A Person who sues for damages owes the dutyof taking all reasonable steps to mitigate the

loss consequent upon the breach and cannotclaim as damages any sum which is due to hisown neglect.

Damages are compensatory and not penal and

one who has suffered loss from breach ofcontract must take every reasonable step whatis available to him to mitigate the extent ofdamages caused by the breach. He can not

claim to be compensated by the party in defaultfor loss which is really due not to the breachbut to his own failure to behave reasonableafter the breach.


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Applicability & Enforcement.JUDICIAL CONSENSUS

Brief of case: ONGC Vs. Saw Pipes Dec 27,1995: Tender supply of 26 & 30 casing pipes

Jun 3, 1996: Letter of intent followed by detailedorder placed on Saw Pipes Ltd., thelast date of Delivery being Nov 14, 1996

Supply order contained LD Clause


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DELAY OCCURRED!


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EXTENSION GRANTEDSubject to Recovery of L.D. as per terms of Contract

ONGC deducted an amount of US$3,04,970.20 and

Rs. 15,75,559/- on account of LD chargesconstituting Customs Duty, Sales Tax, FreightCharges etc.


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Extracts of L.D. Clause

11. Failure and Termination Clause/Liquidated Damages:-

(a) Recovery from the contractor as agreed liquidateddamages are not by way of penalty, a sum equivalentto 1% (one percent) of the contract price of the whole

unit per week for such delay or part thereof (this is anagreed, genuine prestimate of damages duly agreedby the parties) which the contractor has failed todeliver thereof is accepted after expiry of the aforesaidperiod. It may be noted that such recovery of

liquidated damages may be up to 10% of the contractprice of whole unit of stores which the contractor hasfailed to deliver within the period fixed for delivery, or


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e) It may further be noted that clause (a) provides forrecovery of liquidated damaged on the cost of contractprice of delayed supplies (whole unit) at the rate of1%of the contract price of the whole unit per week for

such delay or part thereof up to a ceiling of 10% of thecontract price of delayed supplies (whole unit).Liquidated damages for delay in supplies thusaccrued will be recovered by the paying authoritiesof the purchaser specified in the supply order,

from the bill for payment of the cost of materialsubmitted by the contractor or his foreignprincipals in accordance with the terms of supplyorder or otherwise.



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12 levy of liquidated damages (LD) due to delay insupplies.

LD will be imposed on the total value of the orderunless 75% of the value ordered is supplied within thestipulated delivery period. Where 75% of the valueordered has been supplied within stipulated deliveryperiod LD will be imposed on the order value of delayedsupply (ies). However where in judgment of ONGC,thesupply partial quantity does not fulfill the operatingneed. LD will be imposed on full value of the supplyorder.



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ARBITRATION PROCEEDINGS

ONGC failed to establish its case that it sufferedany loss in terms of money because of delay in

supply of casing pipes

ONGC ordered to release LD amount withinterest @ 12% p.a. from 1st April, 1997

And thereafter, 18% p.a. Pendente lite tillpayment.

A d h ll d b ONGC i M b i Hi h


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Award challenged by ONGC in Mumbai HighCourt on various grounds ON May 2, 1999 byfilling Arbitration Petition No. 9171999

SINGLE JUDGE DISMISSED ONGCs

ARBITRATION PETITION.

APPEAL NO. 256/2000 FILED BEFOREDIVISION BENCH OF BOMBAY HIGHCOURT ALSO DISMISSED.


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GROUNDS OF APPEAL

The Arbitrator failed to decided inaccordance with the terms of the contract.

Arbitrator was wrong in holding that ONGCwas required to prove the losses

Arbitrator erred in granting interest whichwas against terms of the contract.

ONGC PREFERED APPEAL BEFOREHONBLE SUPREME COURT OF INDIA


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ISSUE BEFORE HONBLE SUPREME

COURT OF INDIA

Whether the Court would have jurisdictionunder Section 34 of the Arbitration andConciliation Act 1996 to set aside an

award passed by the Arbitral Tribunalwhich is:

Patently illegal or

In contravention of the provisions of the Act;or Is against the terms of the contract?


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RELEVANT PROVISIONS OF Arbitration and ConciliationAct 1996

Ground for setting asidethe Award (Sec.34)

Procedure for Arbitration:Part-1(Sec-2 to 43)

In capacity of the party.

Invalidity of Agreement under the governing law of Contract.

Inability of the aggrieved party to present its case due to nonservice ofnotice of appointment of Arbitrator or otherwise.

Award dealing with a dispute beyond ambit of reference.

Composition of Arbitral Tribunal not being in accordance with Agreement/part-1 of the Act.

The court Finds that:

The subject matter of dispute not being capable of settlement byArbitration under the law in force.

Arbitral Award is conflict with Public Policy of India.


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Award could be set aside if it iscontrary to:

Fundamental policy of Indian Law: or

The interest of India: or

Justice of morality: or

In addition, if it is patently illegal.

Award could be set aside if it is so andunreasonable that it shocks the

conscience of the Court. Such award isopposed to public policy and is required tobe adjudged void.


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It would be contrary to the basic conceptof justice if an award is in contravention ofthe provision of the Act, is not interfered

with. Procedural law can not fail to provide relief

when substantive law gives the right.

Award could be set aside if it is contrary to:


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If the award is contrary to thesubstantive provisions of law or theprovisions of the Act or against the

terms of the contract, it would bepatently illegal, which could beinterfered under section 34.

However, such failure of procedureshould be patent affecting the rights ofthe parties.

Award could be set aside if it is contrary to:


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Whether party required to prove the losswhen the contract contained L.D Clause? NO.

In the case, the compensation named in the contract isgenuine preestimate of loss which the parties knewwhen they made the contract.

If the compensation named in the contract for suchbreach is genuine pre-estimate of loss which the partiesknew when they made the contract to be likely to resultfrom the breach of it, there is no question of proving suchloss or such party is not required to lead evidence toprove actual loss suffered by him.

Under sectiion 73, when a contract has broken, the partywho suffers by such breach is entitled to receivecompensation for any loss to him which the parties knewwhen they made the contract to be likely to result from

the breach of it.


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ONGCs Appeal Upheld Award Set Aside

The Arbitrator failed to enforce thecontract between the parties to uphold thesanctity of the contract which forms the

basis of the civilized society and also thejurisdiction of the arbitrators.

There is nothing to show that LD was byway of penalty

The Contract is to be taken care byspecific terms of the contract.


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IN THE SUPREME COURT OF INDIA

DECIDED ON 29.07.2002

KANHAIYA LAL AGRAWAL ..APPELLANTS

VS.

UNION OF INDIA (UOI) & ORS. .. RESPONDENT

AIR 2002 SC 2766

Brief Facts


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e acts

Indian Railways invited tenders for supply, delivery and stacking of 75,000cubic meter Machine Crushed track ballast as per specifications at its depotsin Naurozabad and loading it into railway wagons.

The supply period was for 24 months.

The conditions in the tender notice require that the rates at which supplywas to be made had to be stated in words as well as in figures against eachitem of work as per Schedule attached thereto; that the tenders submittedwith any omissions or alteration of the tender document were liable to berejected. However, permissible corrections could be attached with duesignature of tenders.

That the tenderer should hold the offer open till such date as may bespecified in the tender which was for a minimum period of 90 days from thedate of opening of the tender.

The contravention of the conditions would automatically result in forfeitureof security deposit; that the tender was liable to be rejected for non-compliance of any of the conditions in the tender form.

Five tenders were received. The appellant made his


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Five tenders were received. The appellant made histender on 27.02.2001 with a covering letter that if hisoffer is accepted within the stipulated time rebate

would be offered by him to the effect that in case thecontract was given to him within 45 days, 60 daysand 75 days, he would extend rebate of 5%, 3% and2% respectively on the rates tendered by him.

Respondent No. 5 has made a similar offer but afterfive days of the opening of the tender, while the

appellant had made such offer of rebate even at thetime of making the tender in the letter accompanyingthe tender documents.


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Railways accepted the tender offered by theappellant on the rates subject to rebate.Agreement was entered into by him on19.04.2001. Respondent No. 5 filed a writpetition claiming that his tender should have

been accepted, as the rates offered by him arethe lowest.

Decision of Division Bench


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Decision of Division Bench

The matter was carried in appeal to the Division Bench.

The Division Bench after adverting to several decisions on the question ofaward of contracts, stated that the tender notice did not contemplate anyattachment of conditions by giving rebate which would amount to alterationof the tender document which is impermissible.

That the tender should be unconditional and relaxation, if any, should havebeen notified to all the tenderers to enable them to change their rates; thatall the tenderers should have been treated equally and fairly.

And on the basis, took the view that the tender of Respondent no. 5 is at alower rate and hence, acceptable and set aside the order of the learnedSingle Judge directing fresh negotiations with the parties.

The Division Bench directed that supply of material by the appellant bestopped forthwith and balance material be taken from Respondent no. 5 atthe rate furnished by him.

Before the Supreme Court of India


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Before the Supreme Court of India

The appellant preferred an appeal beforethe Supreme Court

Observations of Supreme Court


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Observations of Supreme Court

This Court is normally reluctant to intervene in matters ofentering into contracts by the Government, but if the same is

found to be unreasonable, arbitrary, mala fide or is indisregard of mandatory procedures it will not hesitate to nullifyor rectify such action.

It is settled law that when an essential conditions of tender is

not complied with, it is open to the person inviting tender toreject the same.

Whether a condition is essential or collateral could beascertained by reference to consequence of non-compliance

thereto.

If non-fulfilment of the requirement results in rejection of thetender, then it would be essential part of the tender otherwiseit is only a collateral term.

Bureaucratic delay is a notorious fact and delay in finalizing tenders willcause hardship to the tenderer In such circumstances it a hardened


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cause hardship to the tenderer. In such circumstances, it a hardenedbusinessman makes an attractive offer of concessional rates if tender isfinalized within a shorter period, it cannot be said that the rates offered aresubject to conditions.

The rates offered are clear and the time within which they are to beaccepted is also clear.

As long as such offer does not militate against the terms and conditions ofinviting tender it cannot be said that such offer is not within its scope.

All that is required is that offer made is to be kept open for a minimumperiod of 90 days. Offer in compliance of that term has been made by theappellant.

The concession or rebate given is an additional inducement to accept the

offer expeditiously to have a proper return on the investment made by thetenderer in the equipment and not keeping the labour idle for long periodwhich is part of commercial prudence.

The commercial aspect of each one of the offers made by the parties willhave to be ascertained and, thereafter a decision taken to accept or rejecta tender.

Now the appellant made his offer of concessionall i h h d hil R d N 5


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pprates along with the tender while Respondent No. 5made such offer after opening of the tenders.

It is difficult to conceive that the Respondent No. 5who is prudent businessman would not be aware ofcommercial practice of giving rebate or concession inthe event of quick finalization of transaction.

What the appellant offered was part of the tenderitself while the Respondent No.5 made such offerseparately and much later.

There was nothing illegal or arbitrary on the part ofRailway Administration in accepting the offer of theappellant, which was made at the time of submittingthe tender itself.

FINDING


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FINDING

In the result, we allow these appealsby setting aside the orders made by

the High Court both by the DivisionBench and the learned Single Judgeand dismiss the writ petition. No

costs.

MAN INDUSTRIES PVT LTD


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MAN INDUSTRIES PVT. LTD.

VS

NTPC LIMITED

(BEFORE DELHI HIGH COURT)

NTPC had invited bids for steel pipes for Make-up


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p p p

Water Supply package for Sipat Super Thermal

Power Project, Stage-I vide invitation of bids dated

15.12.2003.

The bid was accompanied with bid Security forRs.10,31,000/- .

The work was awarded to M/s. Man Industries videNotification of Award dated 30.07.2004.

As per the stipulations of instructions to bidders,price quoted by the bidders shall be firm.

NTPC issued a letter dated 19.08.2004 to


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M/s. Man Industries for submission of thecontract performance security.

M/s.MAN Industries requested for revision inthe basic price citing multiple increase in theinput cost, which was not accepted by NTPC,failed to furnish contract performance security.

NTPC invoked the Bank Guarantee andforfeited the bid security of Rs.10,31,000/-

The contract was annulled.

NTPC invited new bids for the same work, which


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was done by floating fresh tender dated 24.09.2004.

Again M/s. MAN Industries sent a DD for an amountof Rs.22,500/- for issue of tender documents in orderto participate in the fresh bid.

However, NTPC keeping in view of past conduct ofM/s. MAN Industries, declined to issue the tenderdocuments vide its letter dated 20.10.2004.


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Subsequently M/s. Man Industries filed a petition beforeDelhi High Court seeking following directions:a) To quash the letter dated 20.10.2004 issued byNTPC; and

b) To direct NTPC to issue bid documents and allow themto participate in the fresh bid.

Further in the said writ petition, M/s. MAN Industries havesought for interim order restraining NTPC from

i) Opening the bid on 09.11.2004 andii) Order directing NTPC to issue the bid documents.

Honble High Court vide its order dated 04.11.2004 directedNTPC to issue tender documents to M/s MAN Industries


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NTPC to issue tender documents to M/s. MAN Industrieswithout prejudice to its rights and contentions and if M/s.MAN Industries submits its bid in stipulated time, the sameshall be dealt in accordance with the NIT.

In compliance of the directions of the High Court, the biddocuments were issued to M/s. MAN Industries.

During the course of arguments M/s. MAN Industriessubmitted that in nutshell it is a case of refusal of NTPC toissue the bid documents, purportedly on the ground thatM/s. MAN Industries had failed to furnish the performancesecurity in respect of the earlier tender awarded to them istantamount to black listing without initiating any action in

terms of the earlier tender.

It was also pleaded by M/s. MAN Industries that there is nostipulation in the fresh NIT whereunder they could be barredfrom tendering.

IN THE SUPREME COURT OF INDIA


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CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2754 OF 2002

Chairman & Managing Director

NTPC Limited ..Appellant

Vs.

M/s.Reshmi Constructions,

Builders & Contractors. ...Respondent

(January 5, 2004)

NO DEMAND CERTIFICATE


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Name of the Package: Earth Filling in TemporaryTownship package Part-II

Letter of Award : LOA No. KYM/CS/89/022/NIT- 005/LOA-065 Dt.19.03.1990

Name of Contractor : M/s.Reshmi Construction, TC. 4/1298, Keston Road,

Kowdiar, PO: Trivendrum-3

1. This is to Certify that we have received all payment in full and finalsettlement of the supplied and services rendered and / or all workperformed by us in respect of the above referred LOA / Contract and wehave no other claims whatsoever final or otherwise outstanding against

NTPC. We further confirm that we shall have no claim / demands infuture in respect of this contract of whatsoever nature, final or otherwise.

2. We would now request you to please release our security deposit /contract performance Guarantee.

HOWEVER, on the same day a letter dated20 12 1990 was written by RESHMI


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20.12.1990 was written by RESHMICONSTRUCTION to NTPC Limited stating:

We have completed the aforementioned work inthe Kayamkulam Super Thermal Power Projectstemporary township area at Nangiakulangara bythe end of November,1990 itself. We hadsubmitted a pre-final bill in November itself but, theauthorities denied the bill and insisted final bill. Butwhen the alleged final was prepared the authoritiesinsisted that a No Demand Certificate should beexecuted by us in favour of the Corporation. They

served us with a printed specimen of the documentand insisted that it should be typed in our ownletterhead and submitted to the NTPC. We refusedto submit such document.

But, the authorities of NTPC threatened that unlessand until we execute the said document in favour of


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and until we execute the said document in favour ofthe Corporation, the NTPC would not effectpayment of our bill. More than six lakhs of rupees

is pending for payment vide the alleged final Bill.We have incurred huge losses in the execution ofthe work purely due to the latches and lapses ofrupees has to be paid to our Bankers, creditors,suppliers, workers , truck owners etc etc. under

such situation we have no other way than budgingto the coercion of the whatever they give merely forthe necessity of our survival. We have to complywith the instructions of the authorities of NTPCLimited out of our helplessness in order to receive

payment. Hence this letter.

The certificates, undertakings etc, as aforesaid have beenexecuted without prejudice to our rights and claims


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executed without prejudice to our rights and claimswhatsoever on account of the alleged final bill.

The money invested in the bank comprises loans fromFederal Bank Ltd., private financiers, etc. as well the firmsown funds. .Those additional sums raised by loans have tobe paid the bank, financiers etc. Hence under duress,coercion and under undue influence we are signing the bill

and execute such documents as aforesaid to receivepayment. Under such coercive circumstances the allegedfinal bill cannot be construed as final bill We are signing thealleged final bill under coercion, undue influence and underprotest only without prejudice to our rights and claims

whatsoever. There is no accord and satisfaction betweenthe contracting parties.

You are therefore requested to kindly pass the final


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bill incorporating all the measurements of the itemswhich as sinkage, in and under water execution of

works, compensation for suspension of works,reimbursement of cost escalation due to price hikeof petroleum products, cost of idling, enhancedrates for quantities executed beyond the

contractual period, market rate for excessquantities, extra additional items etc., besides thelosses and damages by way of idling of tools andplants, workmen, staff, establishment costs, capital

outlay, interest etc., as per actual. We hope andrequest that your good self may do the needful inthe matter.

(Emphasis supplied)

NTPC thereinafter discussed the matter at


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the company level and in its proceedings itwas recorded:

4.0 In case of Reshmi Constructions,Trivendrum, Kerala (1 above) and M/s.CS

Prakash, (1(d) above) of Porumbavoor,Kerala, the total payment for the works donewere effected, the final bills have been

settled without protest and the no duescertificate in the standard proforma havebeen submitted by the contractors.

5.0 To seek legal opinion in the matter, we


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have approached Shri BS Krishnan, aleading advocate from Cochin. On detailed

study of the claims of the agencies andconsidering legal conditions, the advocatehas advised us to appoint arbitrator/s

nominated by CMD of NTPC, immediately.Accordingly, our advocate has writtensuitable replies to the contractors advocate

Shri N.T. John of Trivendrum, informing themthat they will hear from NTPC regardingappointment of an arbitrator in terms of thecontract conditions.

6.0 Submitted to appoint arbitrator/s for the fourcontract packages at para 1 0 abo e


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contract packages at para 1.0 above.

NTPC thereafter by its letter dated 13

th

February,1992 replied thereto stating:

My client acting upon the notice, though defective,

takes it that all your claims are disputed ones andhence are to be resolved by Arbitration. Pleasenote that the reference to arbitration does not meanthat there is admission that the disputes are

arbitrable. Many of the claims raised are beyondthe terms of the contract and the Arbitrator willhave no jurisdiction to deal with them. This is amatter which has to be taken up later and not at thestage of appointment of an arbitrator.

As appointing authority, my client refrains from


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commenting upon in any manner, on the merits orotherwise of the disputes which your notice has set

out.

It may be noticed that your client has already takenthe final bill and has issued no dues certificate.

This is not merely accord and satisfaction, butbringing the contract to an end.

Your client will hear from my client as regards theappointment of the Arbitrator in terms of thecontract conditions shortly.

(Emphasis supplied)

MAIN ISSUES BEFORE THE COURT


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On the arguments of learned counsel for the parties,the question that arise for our consideration are:

Whether after the contract comes to an end bycompletion of the contract work and acceptance of thefinal bill in full and final satisfaction and after issuing aNo Demand Certificate by the contractor, can any party

to the contract raise any dispute for reference toarbitration?

Whether in view of letter dated 20.12.1990 sent by therespondent contractor the arbitration clause contained

in the agreement can be invoked?

Whether the arbitration clause in the agreement hasperished with the contract?

OBSERVATION OF THE HONBLESUPREMENT COURT


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SUPREMENT COURT

. Even when rights and obligations of the parties are worked out the

contract does not come to an end interalia for the purpose ofdetermination of the disputes arising thereunder, and thus, the arbitrationagreement can be invoked. Although it may not be strictly in place but wecannot shut our eyes to the ground reality that in the cases where acontractor has made huge investment, he can not afford not to take fromthe employer the amount under the bills, for various reasons which mayinclude discharge of his liability towards the banks, financial institutionsand other persons. In such a situation, the Public Sector Undertakiangswould have an upper hand. They would not ordinarily release the moneyunless a No Demand Certificate is signed. Each case, therefore, isrequired to be considered on its own facts.

Further, necessitas no habet legem is an old age maxim which meansnecessity knows no law. A person may sometimes have to succumb to

the pressure of other party to the bargain who is on a stronger position.

We may, however, hasten to add that such a case has to be made out andproved before the Arbitrator for obtaining an award

CONCLUSIONS / FINDINGS OF THE COURT


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The situation in the present case, would lead to the conclusion that the arbitrationagreement subsists because:

Disputes as regard to final bill arose prior to its acceptance thereof in view the fact

that the same was prepared by the respondent but was not agreed upon in itsentirely by the appellant herein.

The appellant has not pleaded that upon submission of the final bill by therespondent herein any negotiation or settlement took place as a result whereof thefinal bill, as prepared by the appellant, was accepted by the respondentunequivocally and without any reservation therefore.

The respondent herein immediately after receiving the payment of the final bill,lodged its protest and reiterated its claims.

Interpretation and / or application of clause 54 of the agreement would constitute adispute which would fall for consideration of the arbitrator.

The effect of the correspondences between the parties would have to be

determined by the arbitrator, particularly as regard the claim of the respondent thatthe final bill was accepted by it without prejudice.

The appellant never made out a case that any novation of the contract agreementtook place or the contract agreement was substituted by a new agreement. Only inthe event, a case of creation of new agreement is made out the question ofchallenging the same by the respondent would have arisen.

The conduct of the appellant would show that on receipt of the notice of the

respondent through its advocate dated 21 12 1991 the same was not rejected


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respondent through its advocate dated 21.12.1991 the same was not rejectedoutright but existence of disputes was accepted and the matter was sought tobe referred to the arbitration.

Only when the clarificatory letter was issued the plea of settlement of final billwas raised.

The finding of the High Court thaqt a prima facie in the sense that there aretriable issues before the Arbitrator so as to invoke the provisions of Section 20of the Arbitration Act, 1940 can not be said to be perverse or unreasonable soas to warrant interference in exercise of extraordinary jurisdiction under Article

136 of the Constitution of India.

The jurisdiction of the arbitrator under the Arbitration Act, 1940, althoughemanates from the references, it is trite, that in a given situation the arbitratorcan determine all questions of law and fact including the construction of thecontract agreement. ( See Pure Helium India Pvt. Ltd., Vs. Oil & Natural GasCommission reported in 2003 (8) SCALE 553)

The cases cited by the learned counsel for the appellant (P.K. Ramaiah andCompany (supra) and Nathani Steels (supra) would show that the decisionstherein were rendered having regard to the finding of fact that the contractagreement containing the arbitrator clause was substituted by anotheragreement. Such a question has to be considered and determined in eachindividual case having regard to the fact situation obtaining therein


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TATA CELLULARVs.

UNION OF INDIA(1994) 6 SCC P-651

JUDICIAL REVIEW

THE DUTY OF THE COURT IS TO CONFINE ITSELF TO


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THE DUTY OF THE COURT IS TO CONFINE ITSELF TOTHE QUESTION OF LEGALITY. ITS CONCERN SHOULDBE:

1. Whether a decision making autority exceeded itspowers?

2. Committed an error of law.

3. Committed a breach of the rules of natural justice.

4. Reached a decision which no reasonable tribunal wouldhave reached or;

5. Abused its powers

It is not for the court to determine whether a particular policy or a


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It is not for the court to determine whether a particular policy or aparticular decision taken in the fulfillment of that policy is fair. It isonly concerned with the manner in which those decisions havebeen taken. The extent of the duty to act fairly will vary from caseto case. Shortly put, the grounds upon which an administrative

action is subject to control by judicial review can be classifiedasunder:

i) Illegality: This means the decision maker must understandcorrectly the law that regulates his decision-making power andmust give effect to its.

ii) Irrationality: Namely, Wednesbury unreasonableness. It applies toa decision which is to outrageous in its defiance of logic or ofaccepted moral standards that no sensible person who hadapplied his mind to the question to be decided could have arrivedat. The decision is such that no authority properly directing itself

on the relevant law and acting reasonably could be reached it.

iii) Procedural impropriety.

The Principles deducible are:


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The Principles deducible are:

1. The modern trend points to judicial restraint in administrativeaction.

2. The court does not sit as a court of appeal but merely reviews themanner in which the decision was made.

3. The court does not have the expertise to correct the administrativedecision. If a review of the administrative decision is permitted itwill be substituting its own decision, without the necessaryexpertise which itself may be fallible.

4. The terms of the invitation to tender cannot be open to judicial

scrutiny because the invitation to tender is in the realm of contract.Normally speaking, the decision to accept the tender or award thecontract is reached by process of negotiations through severaltiers. More often than not, such decisions are made qualitativelyby experts.

5 The Go ernment m st ha e freedom of


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5. The Government must have freedom ofcontract. In other words, a fair play in the jointsis a necessary concomitant for an

administrative body functioning is anadministrative sphere or quasi-administrativesphere. However, the decision must not onlybe tested by the application of Wednesburyprinciple of reasonableness ( including its otherfacts pointed out above ) but must be free fromarbitrariness not affected by bias or actuatedby malafides.

6. Quashing decisions may impose heavyadministrative burden on the administrationand lead to increased and unbudgetedexpenditure.

In the Supreme Court of India AIR 1991, SC1579M/s. Poddar Steel Corporation


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Vs.M/s. Ganesh Engineering Works and others

This is a case relating to N.I.T. by Diesel Locomotive Works, IndianRailway in connection with disposal of one lot of Ferrous Scrap.

Earnest money of Rs.50,000/- was offered by Bankers cheque of aBank other than State Bank of India mentioned in the said clause.

The case of the appellant has been that its tender was for one anda half crores rupees for the 2000 MT of Ferrous Scrap which was avery fair price and the authorities were absolutely right inaccepting the same. With respect to the alleged deficiency in thematter of deposit of the earnest amount, the stand is that aBankers Cheque is as good as cash and especially so when a

verification from the bank in question about its authenticity wasmade and the Banks assurance to honour the same was obtained.Admittedly, the Tender Committee had taken the precaution ofgetting the matter confirmed from the appellants bank beforedeciding to accept this tender.

The requirements in a tender notice can be classifiedinto two categories those which lay down the

ti l diti f li ibilit d th th hi h


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essential conditions of eligibility and the others whichare merely ancillary or subsidiary with the main objectto be achieved by the conditions. In the first case the

authority issuing the tender may be required to enforcethem rigidly. In the other cases it must be open to theauthority to deviate from and not to insist upon thestrict literal compliance of the condition in appropriatecases.

In the instant case the certified cheque of the UnionBank of India drawn on its own branch must be treatedas sufficient for the purpose of achieving the object ofthe condition and the Tender Committee took theabundant caution by a further verification from the

Bank. In this situation, is not correct to hold that theDiesel Locomotive Works had no authority to waive thetechnical literal compliance of Clause 6, specially whenit was in its interest of not to reject the said bid whichwas the highest.

NOTICE INVITING TENDER (NIT)


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NOTICE INVITING TENDER (NIT)

Whatever procedure the Govt. proposes to follow inaccepting tender must be clearly stated in the TenderNotice. If a Tender Notice contains mistakes it is theduty of the authority issuing the tender either to issue acorrigenda or a fresh Tender Notice. If the original

terms of Tender Notice are changed, all the tenderersshould be given an opportunity to resubmit theirtenders in conformity with the changed terms, eligibilityand new conditions can not be imposed which were notdisclosed in Tender Notice.

(Dutta Associates P. Ltd., Vs.Mercantile P. Ltd. (1997, 1SCC53)

(Monarch Infrastructure Pvt.Ltd., Vs.Commissioner ULHAS Nagar Municipal

Corp. AIR 2000 SC 2272)

OBJECT OF INVITING TENDER


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The object of inviting tenders for contracting a work isasunder:

1. To select highly proficient and competent person to dowork.

2. To get the work done at a reasonable low cost.

3. To give opportunity to all the eligible tenderers tosubmit their tenders.

Inviting of Tenders ensures:-

i. Fairnessii. Legitimacy

iii. Non-discrimination

iv. Remove impression of bias, favouritism & Nepotism.


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Any departure to this rule should be only in rarest of

rare and exceptional cases, where it is not possible to

invite tender and supported by sound, compellingrational and cogent reasons.

(Haji T.M. Hussain Rawthar Vs.

Kerala Financial Corporation

AIR 1988 SC 157)


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A condition limiting the tender to personswho had already worked for their

employer was not arbitrary, the purposebeing to get more experienced personsfor increasing efficiency, nor was it

arbitrary to restrict the tenders tomanufacturers only and excludingmanufacturers representatives.

(Modern Marbles Ltd., Vs.

Grid Corporation of Orissa Ltd.,

AIR 1998 Orissa 183.)


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The Govt. may give or may direct theauthorities to give preference to parties

with special capabilities, cooperativesocieties, public sector undertakings,registered small-scale industrial units, or

unit based on a geographical area,especially backward tribal areas.

(MPCT Extraction Vs.

State of MP

1997 SCC 592)


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AVAILABILITY OF TENDER FORMS

Where a contract is qualified, thetender form can not be withheld from

him.

(Southern Painters Vs.

Fertilizer & Chemicals Travancore Ltd.,

AIR 1994 SC 1277)


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Failure to furnish documents relating towork experience and annual turnover

required to be given as pre-condition forsupply of Tender Books makes thetenderer to liable to be excluded from

consideration

-(GJ Fernandez Vs.State of Karnataka,

AIR 1990 SC 958)


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If th t f bid t d i


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If the acceptance of bid or tender issubject to confirmation or approvalof higher authority, the bid or tendercan be revoked any time before thecondition is fulfilled i.e. before theconfirmation or approval as there isno concluded contract.

(Haridwar Singh Vs.

Bagun Sumbrai,

AIR 1972 SC 1242)

The requirement in Tender Notice may be classified into two categories.


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1. Mandatory / Essential Conditions(Which must be enforced rigidly. Non-compliance of which justifiedrejection of Tender).

Furnishing of security deposit in the form of Bank Guarantee.

Discrepancy between the rates quoted in words and figures.

Non-supply of Balance Sheet.

Documentary proof of experience as required by Invitation of Tender.

Not making full signature in the Tender.

Photocpy of demand draft submitted instead of original.

(Monarch Infrastructure (P) Ltd., Vs.Commissioner of Ulhas Nagar Municipal

Corporation, AIR 2000 SC 2772)

2. Ancillary or discretionary conditions.


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y y(which may or may not insist strict compliance.Non-compliance does not justify rejecting of

Tender.) Deposit of earnest money in the form of Term

Deposit Receipt instead of Bank Draft.

Submission of character certificate.

Experience certification. No dues certificate. Non submission of revenue stamps.

Payment of earnest money by certified cheque

instead of bank draft.-(Poddar Shel Corp. Vs.

Ganesh Engg. Works,AIR 1991 SC 1579)

CONDITION PRECEDENT AND SUBSEQUENT


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Where letters of Intent issued on the terms that the

contractor would sign the formal contract andwould furnish irrevocable bank guarantee of ascheduled bank, which the contractor failed to do,it was held that the two conditions were conditionprecedent to the formation of contract andrevocation of the letters of intent was valid.

(Rickmers Verwaltung GmbH Vs.

Indian Oil Corporation

AIR 1999 SC 504)Rajsthan Cooperative Dairy Federation Ltd., Vs.

Mahalaxmi Mingrate Marketing Services (P) Ltd.,

( 1966) 10 SCC 405)

OPENING OF TENDER


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The fact that the train ran unusually lateand delayed the arrival of Tenderer wasnot jusstifiable ground for accepting theTender after the time fixed by the Tender

Notice.

Rejection of Tender, delayed by five

minutes, not invalid.-(Sailen Konwafr Dutta Vs.

Satya Capital Services Ltd.,

AIR 2000 Guj.152)


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Allowing the tenderer after opening oftenders to correct mistakes in the bidwhich were neither arithmetical norclerical and which were attributed to

faulty computer functioning was invalid.

-(WB Electricity Board Vs.

Peter Engineering

AIR 2000 SC 682)

DISCRETION OF ACCEPTANCE ANDREJECTION OF TENDER


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REJECTION OF TENDER

If the Government reserves the right toaccept or reject the lowest offer, thecondition is valid, but if done on policy,

should be on the grounds which arerational and reasonable.

-(Union of India Vs.Hindustan Develop Corp.

AIR 1994 SC 988)


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A clause in the Tender that tenders maybe rejected without assigning reasons isneither illegal nor opposed to Public

Policy.

(Adhir Ghosh Vs.

State of West Bengal,

AIR 1998 Cal. 317)


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It is not obligatory on the Govt. to acceptthe lowest quotation, nor does thehighest bidder have any right to compel

acceptance when the invitation reservesthe right to reject any tender.

-(Union of India Vs.Bhimsen Walaiti Ram

AIR 1971 SC 2295)


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Where a clause in the tender required


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Where a clause in the tender requiredthat the tenderer to execute formal

agreement by a specified date, else beliable for forfeit of earnest money, theexecution of agreement was a condition

precedent to the contract.

-(Lotus Constructions Vs.

Govt. of AP AIR 1997 AP 200)

BLACK LISTING OF TENDERER


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Black listing of Tenderer prevents him from the privilege andadvantage of entering into contract with the Govt. His reputationis tarnished by such order. It prevents him from lawful trade.

An order of blacklisting has an effect of preventing a person fromthe privilege and advantage of entering into lawful relationshipwith the Govt. for purpose of gains. The fact that a disability iscreated by the order of blacklisting indicates that the relevantauthority is to have an objective satisfaction. Fundamentals of fair

play require that the person concerned should be givenopportunity to represent his case before he is put on the blacklist.

-(Eurasian Equipment & Chemical Ltd., Vs.State of West Bengal

AIR 1970 SC 266)

DECISION OF EXPERT COMMITTEE


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The decision of Expert or technical orcommercial committees in thescrutinizing the tenders will not beinterfered unless the decision is taken

with a malafide intention or is arbitrary.The court should not substitute its owndecision for the decision of the expertevaluation committee.

(Raunaq International Vs.IVR Construction Ltd.

AIR 1999 SC 393)


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The Govt. is not bound to accept the

recommendations of the Committees setup for the purpose of evaluating thetenders and may decide to call fresh

tenders.

-(Y Kanda Reddy Vs. State of AP

AIR 1997 AP 121)

DUE DILIGENCE


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Diligence means Vigilant activity attentiveness orcare.

Due Diligence means such measures of prudence,activity or care or assiduity which man of common

prudence generally exercises in their affairs in thecountry and the age in which they live.

A fair proper and due degree of care or activity,measured with reference to the particular

circumstances.

Such diligence, care or attention as might be expectedfrom a man of ordinary prudence and activity.

KINDS OF DUE DILIGENCE


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Legal Due Diligence.

Financial Due Diligence

Technical Due Diligence

DUE DILIGENCE OF CORPORATEENTITY (COMPANY /


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(CORPORATION)

The following documents and papers shall be necessary forcarrying out due diligence of the Corporate Entity.

Name and address of registered office of the company.

Certified true and upto date amended copy of :

i) Certificate of incorporation of company.Ii) Memorandum and Article of Association of Company.Iii) Certificate of Commencement of business (in case of

Public Limited Companies.)

Audited Balance sheet and Profit and Loss account for the lastthree years.

Latest Income Tax clearance certificate of the company.

Full details of existing charges / mortgages / liens onthe assets of the company along with certificate ofregistration of charge / satisfaction of charge issued by


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registration of charge / satisfaction of charge issued byRegistrar of Companies.

A complete list of pending litigation and arbitrationcases for or against the company, clearly stating thefollowing:

o Suit / Case No.

o Name of Court / Judicial authority where case is

pending.o Date of filing the case.

o Nature of dispute.

o Quantum of financial liability

o Present Status of the case.o Name, address and phone no. of counsel / advocate of

company who are prosecuting / defending the case ofcompany.

STATEMENT OF AFFAIRS OF COMPANY SHALL STATE

Full particulars i e details description and location of


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Full particulars i.e. details description and location ofassets and liabilities of the company.

Complete list of debtors and creditors with theircomplete address.

List of shareholders of company

Complete name, parentage and address of directors ofcompany.

Complete name, parentage and address of Company

Secretary of Company.

Bankers Certificate regarding credit worthiness of thecompany.

CONTRACT MANAGEMENT


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CONTRACT MANAGEMENT

PRE CONTRACTUALPHASE

CONTRACTEXECUTION PHASE

POST EXECUTIONPHASE

NIT

LEGAL STATUS OF TENDER

DUE DILIGENCE

NEGOTIATIONS

COUNTER PROPOSAL

RETENDERING

TENDER EVALUATION

SPECIAL DILIGENCE

ACCEPTANCE OF TENDER

LOI/LOA FORMALEXECUTION OF CONTRACT

CONTRACT TERMS &INTERPRETATION

TRADE, USAGE ANDCUSTOMS e.g. FOB, CIF etc.,

BANK GUARANTEE

EXTRA ITEMS / CHANGEORDER

FORCE MAJURE

WITHOUT PREJUDICE

EXTENSION OF TIMELIQUIDATED DAMAGES

TERMINATION

FULL & FINALPAYMENT.

CLOSING OF

CONTRACT

WARRANTIESS

LATENT DEFECTS

RESOLUTION OF

DISPUTES


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SECTION : 4


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SECTION : 4EXPIRY OF PRESCRIBED PERIOD

WHEN COURT IS CLOSED

Where the prescribed period for any suit,

appeal or application expires on a daywhen the court is closed, the suit, appealor application may be instituted, preferredor made on the day when the court re-

opens.

SECTION : 5


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S C O 5Extension of prescribed period in

certain cases.

Any appeal or any application, other than an

application under any of the provisions of Or.21of the CPC may be admitted after the prescribedperiod if the appellant or the applicant satisfiesthe court that he had sufficient cause for not

preferring the appeal or making the applicationwithin such period.

SECTION : 6 (i)


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S C O 6 ( )LEGAL DISABILITY

Where a person entitled to institute a suit ormake an application for the execution of a

decree is at the time from which the prescribedperiod is to be reckoned, a minor or insane, oran idiot, he may institute the suit or make theapplication within the same period after the

disability has ceased, as would otherwise havebeen allowed from the time specified therefor inthe third column of the Schedule.

SECTION : 11


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SUITS ON CONTRACTS ENTERED INTO OUTSIDE

THE TERRITORIES TO WHICH THE ACT EXTENDS.

(1)Suits instituted in the territories to which this Act extends on contracts entered into inthe State of Jammu &^ Kashmir or in a foreighn country shall be subject to the rulesof limitation contained in this Act.

2) No rule of limiation in force in the State of Jammu and Kashmir or in a foreign countryshall be a defence to a suit instituted in the said territories on a contract entered intoin that State or in a foreign country unless:-

a) the rule has extinguished the contract; and

b) the parties were domiciled in that State or in the foreign country during the priodprescribed by such rule.

SECTION : 11


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SUITS ON CONTRACTS ENTERED INTO OUTSIDE

THE TERRITORIES TO WHICH THE ACT EXTENDS

1) Suits instituted in the territories to which this Act extends on contracts entered into inthe State of Jammu &^ Kashmir or in a foreighn country shall be subject to the rulesof limitation contained in this Act.

2) No rule of limiation in force in the State of Jammu and Kashmir or in a foreign countryshall be a defence to a suit instituted in the said territories on a contract entered intoin that State or in a foreign country unless:-

a) the rule has extinguished the contract; and

b) the parties were domiciled in that State or in the foreign country during thepriod prescribed by such rule.

SCHEDULE


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SCHEDULE

Description of suits Period oflimitation

Time from whichperiod begins to run

10) Against a carrier for compensation for losingor injuring goods.

3 years When the loss orinjury occurs.

11) Against a carrier for compensation for fornon-delivery of, or delay in delivering goods.

3 years When the goodsought to be delivered

14)For the price of goods sold and deliveredwhere no fixed period of credit is agreed upon.

3 years The date of thedelivery of the

goods.

15) For the price of goods sold and delivered tobe paid for after the expiry of a fixed period ofcredit.

3 years When the period ofcredit expires.

D i ti f it P i d f Ti f hi h i d


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Time from which periodbegins to run

27) For compensation forbreach of a promise to doanything at a specified timeor upon the happening of aspecified contingency.

3 years When the time specifiedarrives or thecontingency happens.

51) For the profit ofimmovable propertybelonging to the plaintiffwhich have been wrongfullyreceived by the defendant.

3 years. When the profits arereceived.

52) For arrears of rent 3 years When arrears becomedue.


Time from which periodbegins to run


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limitation begins to run

54) For specific performance of acontract

3 years The date fixed for theperformance or if no suchdate is fixed, when the plaintiffhas noticed that performanceis refused.

55)For compensation for the

breach of any contract express orimplied not herein speciallyprovided for.

3 years When the contract is broken

or (where there aresuccessive breaches) whenthe breach in respect of whichthe suit is instituted occurs or(where the breach is

continuing ) when in ceases.