IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE P.BHAVADASAN MONDAY, THE 17TH AUGUST 2009 / 26TH SRAVANA 1931 RFA.No. 176 of 2009() --------------------- OS.10/2004 of ADDL.SUB COURT, ALAPPUZHA .................... APPELLANTS/DEFENDANTS: ----------------------------------------- 1. THE STATE OF KERALA, REP. BY THE SECRETARY TO GOVERNMENT, PUBLIC WORKS & TRANSPORT (D) DEPARTMENT, GOVT.SECRETARIAT, THIRUVANANTHAPURAM. 2. THE SUPERINTENDING ENGINEER, N.H.SOUTH CIRCLE, THIRUVANANTHAPURAM. 3. THE EXECUTIVE ENGINEER, N.H.DIVISION, ALAPPUZHA. BY GOVERNMENT PLEADER SRI. R. LAKSHMI NARAYANAN. RESPONDENT(S): PLAINTIFF ---------------------------------------- A.G.CLETUS, S/O.GEORGE, RESIDING AT ARASARKADAVU, CIVIL STATION WARD, ALAPPUZHA, ALAPPUZHA WEST VILLAGE, AMBALAPUZHA TALUK. ADV. SRI.K.L.VARGHESE THIS REGULAR FIRST APPEAL HAVING COME UP FOR ADMISSION ON 17/08/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R. RAMAN & P. BHAVADASAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - R.F.A. No. 176 of 2009 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 17th day of August, 2009. JUDGMENT Bhavadasan, J, Aggrieved by the decree in O.S. 10 of 2004 before the Sub Court, Alappuzha, the State has come up in appeal. The facts and parties are hereinafter referred to as they are available before the court below. 2. The plaintiff, who had undertaken contracts from the State was asked to furnish security deposit of Rs.1,00,000/-. He furnished ten National Savings Certificates of Rs.10,000/- each with maturity date as 24.1.1997. The plaintiff would say that the contract is terminated and that was challenged before the court. The court passed a decree in his favour. Plaintiff was therefore entitled to get back the security amount. An appeal was preferred by the defendants before this Court, and this Court dismissed the appeal by judgment dated 11.7.2003. The forfeiture of the security deposit and withholding the amount due under the NSC was found to be illegal by the courts. The State had no right in law to either R.F.A. 176/2009. 2 treat the security as forfeited or to withhold the security amount. The same was the case in another contract, in which the plaintiff had furnished security deposit of Rs.90,000/-. That contract also suffered the same fate. Pointing out that the plaintiff is entitled to interest from January, 1997 till the date of payment, the plaintiff claimed Rs.1,81,350/- and Rs.2,01,500/-. It is also pointed out that notice under Section 80 of the Code of Civil Procedure was issued and thereafter the suit was laid. 3. The defendants resisted the suit. The defendants pointed out that it was the plaintiff who had committed breach of contract and the extra item of work was subsequently rearranged and completed by another agency at the risk and cost of the plaintiff. Since the plaintiff was a defaulted contractor, the security deposit was not released to him. The claim of the plaintiff that he could not complete the contract due to want of facilities to be provided by the defendants is not correct. Against the decree in favour of the plaintiff in the earlier suit, the State had preferred appeal before the High Court as A.S.444 of 1999. Execution of the decree was stayed by the appellate court. It was due R.F.A. 176/2009. 3 to that reason that the security deposits were not released. Pointing out that the plaintiff is not entitled to any relief, they prayed for a dismissal of the suit. 4. The court below for the purpose of the suit had P.Ws. 1 and 2 examined and Exts. A1 to A4 marked on the side of the plaintiff. Defendants had D.W.1 examined and Ext.B1 marked. 5. On a consideration of the materials before it, the court below came to the conclusion that the contentions of the defendants cannot be accepted and the plaintiff was entitled to release of the amounts due to him. 6. Learned Government Pleader appearing for the appellants pointed out that the security deposit was not released since there was stay from this Court and there was no wilful laches on the part of the State in not releasing the amount. It was also pointed out that the court below proceeded on the basis that the plaintiff would have redeposited the maturity amount in the NSC, had it been paid to him at the appropriate time and with interest due to him. Learned Government Pleader points out that there was no request from the side R.F.A. 176/2009. 4 of the plaintiff to re-deposit the amount due in the NSC. Viewed from that angle, according to the learned Government Pleader, the plaintiff is not entitled to amount as decreed by the court below. 7. The court below has observed that the plaintiff was not able to prove that he had applied or requested in writing to the defendants for the security deposits to be renewed or redeposited. The court below, as rightly pointed out by the learned Government Pleader, quantified the amount due to the plaintiff on the basis that he would have deposited the amount in NSC. Apart from the fact that there was no request from the side of the plaintiff to seek redeposit of the amount in the NSC, even after getting the amount, he had not deposited the amount in the NSC to show his intention that he would have continued to deposit the amount in the NSC. Therefore, the view taken by the court below on the basis that the amount would have been re-deposited in the NSC and calculating the amount due to the plaintiff on that basis does not appear to be proper. 8. But whatever that be, the plaintiff is certainly entitled to a reasonable interest on the security amount withheld by the State, R.F.A. 176/2009. 5 which has been found to be illegal. The State had no justification in doing so. That will be clear from the decree passed by the court below and confirmed in appeal. The amount was withheld by the State for six years. 9. Since there is nothing to indicate that there was a request from the side of the plaintiff to renew or re-deposit the amount in NSC nor any evidence to show that he would have done so had he been received the amount at the appropriate time, it will be appropriate to grant interest at 12% per annum on the amount due to the plaintiff from the date on which the amount will have to be released till they were actually released. Calculating on that basis, for six years at the rate of 12% for an amount of Rs.1,00,000/-, interest will come to Rs.72,000/-. So the amount due on that score will be Rs.1,72,000/-. Likewise, for the amount of Rs.90,000/- at 12% interest, the amount would be Rs.64,800/-. Total amount due on that regard will be Rs.1,54,800/-. The total amount due to the plaintiff under the two security deposits would be Rs.3,26,800/-. R.F.A. 176/2009. 6 In the result, this appeal is allowed and the judgment and decree of the court below is set aside and a decree is passed on the following terms: Plaintiff is allowed to recover an amount of Rs.3,26,800/- with 6% interest per annum from the date of suit till realisation from the defendants. There will be no order as to costs. P.R. Raman, Judge P. Bhavadasan, Judge sb.