IN THE HIGH COURT OF JUDICATURE AT PATNA First Appeal No.816 of 1995 ====================================================== 1. The State of Bihar through the Collector, Munger. 2. The Engineer in Chief-cum-Special Secretary, Public Health Engineering Department, Patna. 3. The Chief Engineer, Urban, Public Health Engineering Department, Bihar, Patna. 4. The Chief Engineer, Public Health Engineering Department, Bhagalpur. 5. Sri Ram Nangina Rai, the Superintending Engineer, Public Health Engineering Department, Munger. 6. Sri Om Prakash, the Executive Engineer, Public Health Engineering Department, Munger. Defendants …… .... Appellants Versus Shri Ajay Kumar Sinha son of late Babu Singeshwar Prasad, Proprietor of M/S Shankar Enterprises, Gulzar Pokhar, Munger P.O. and P.S. Munger, District- Munger by profession Business. Plaintiff ……….... Respondent. ====================================================== Appearance : For the Appellants : Mrs. Nivedita Nirvikar , G.P.-3. Mr. Anil Kumar Singh, A.C. to G.P.-3 For the Respondent : Mr. Dhiranjan Kr. Sinha, Adv. ====================================================== PRESENT HON'BLE MR. JUSTICE MIHIR KUMAR JHA ORDER (15.10.2011) Mihir Kumar Jha, J. Heard counsel for the parties. This appeal at the instance of the defendants appellants arises out of a Judgment and decree in Money Suit No. 8 of 1991 wherein the learned Court below had decreed the suit for a principal amount of Rs. 79,198/- along with 12% interest pendentelite and future till realization of the principal amount. The facts giving rise to the present appeal lie in a very narrow compass. The plaintiff respondent being the contractor and the order supplier and carrying his business under the name and style of M/s Shankar 2 Enterprises in the town of Munger had submitted his offer for supplying of C.I. Specials valves and C.I. Sluice valves in response to a short tender notice dated 03.04.1989 of the Executive Engineer of the Public Health Engineering Department (P.H.E.D.), Munger. The work in question being of one of urgent nature for undertaking the construction water intake in Kasturba Water Works Supply Works, Munger, the offer submitted by the plaintiff and other contractors were examined and the plaintiff’s quotation being the lowest, his offer was also accepted and he was directed by the Executive Engineer vide his letter no. 851 dated 21.04.1989 to supply the materials as per quoted rates in anticipation of approval of the rate from the Chief Engineer (P.H.E.D.), Bhagalpur. It is also an admitted fact that the plaintiff had accepted the aforesaid offer of supplying the materials, subject to the rate approval of the Chief Engineer by his letter dated 04.05.1989, whereafter a formal purchase order was placed to him for supply of materials by the Executive Engineer on 10.05.1989 and the plaintiff had supplied all the materials to the office of the Executive Engineer on 08.06.1989. Ever since supply of the materials on 8.6.1989 whenever the plaintiff had made a request for payment of the billed amount for the aforesaid supply of aforesaid materials, the Executive Engineer, P.H.E.D., Munger had shown inability to make such payment on the ground that the Chief Engineer, P.H.E.D, Bhagalpur had not approved the rates. The plaintiff accordingly having waited for a considerable length of time and 3 after serving notice under Section 80 of the C.P.C. had instituted Money Suit No. 8 of 1991 on 24. 08.1999 wherein he had claimed the principal amount of Rs. 79,198/- and the interest of Rs. 9,503/- by way of loss in business suffered by the plaintiff assessed at the rate of 12% per annum, besides Rs. 375/- as a cost of notice under Section 80 of the C.P.C. The aforementioned money suit filed for a total sum of Rs. 89,076/- was sought the contested by the defendants appellants by taking their solitary plea in the written statement that since the plaintiff had himself agreed to supply the materials on the condition that his bill would be paid after the approval of the rate by the Chief Engineer, he was legally not entitled to claim it through the money suit because the Chief Engineer had never given the approval of the rate. The trial court in the light of the pleadings of the parties had framed the following seven issues. I. Whether the suit as framed is maintainable? II. Whether the plaintiff has got cause of action or right to sue? III. Whether the suit is barred by law of limitation, waiver, acquiescence and estoppel? IV. Whether the notice under Section 80 of the C.P.C. served by the plaintiff upon the defendants is proper? V. Whether the withholding of payment of bill for the work done by the plaintiff in compliance with the direction of defendant no. 6 since 08.06.1989 due to 4 non-approval of the rate by the Chief Engineer (defendant no. 4) is reasonable? VI. Whether the plaintiff is entitled to the amount with interest at the rate of 12% per annum on the principal sum? VII. To what relief or reliefs the plaintiff is entitled? After the plaintiff had led their oral and documentary evidence, the defendants also had examined one witness as also had exhibited a few documents in evidence. The Trial Court having found that there was no dispute either with regard to supply of materials, its quality and time schedule had found no justifiable reason for withholding the payment of price of materials supplied by the plaintiff to the Executive Engineer, P.H.E.D., Munger. The Trial Court has also held that the rate approval by the Chief Engineer was an internal matter for the Department and for that reason the plaintiff could not have been kept deprived from receiving payment of the amount of price of the goods supplied by him. The Trial Court has also on the basis of evidence on record apart from allowing price of Rs. 79,198/- has gone award the interest at the rate of 12% per annum. Learned counsel for the appellant had assailed the impugned judgment and decree on the ground that supply of materials by a Contractor in the Government organization is governed by the set of rules in which as per financial limit approval of the project and the rates is to be given by the 5 competent authority. It has, therefore, been suggested by learned counsel for the appellants that in the present case since the Executive Engineer was not competent to give approval of the rate for the supply of materials worth Rs. 79,198/-, he had made the appellants agree to supply such materials subject to the rate approval by the Chief Engineer before whom a proposal had also been sent for approval of the rates. Counsel for the appellant, therefore, is of the view that the appellants instead of filing the suit ought to have awaited the approval of rate by the Chief Engineer, PHED, Bhagalpur and to that extent he had also questioned the maintainability of the suit. Counsel for the respondent in reply has submitted that when the rate quoted by the plaintiff was found to be lowest amongst all the contractors and that his offer was accepted by the Executive Engineer, there could have been hardly any justification for withholding payment of amount after supply of materials. He has led stress on the aspect that on account of emergent requirement of the materials when the Executive Engineer, P.H.E.D., Munger had directed the plaintiff to supply materials by conveying that payment of amount of material will be made immediately after approval of the rate by the Chief Engineer, it was the duty of the Executive Engineer to ensure that such approval of rate by the Chief Engineer was obtained by him at an early date. Counsel in this regard had submitted that the material was supplied in the month of June 1989 pursuant to the work order of the Executive Engineer dated 10.05.1989 and in fact when payment was not made even in next two years from the date of 6 supply at the materials, the suit was filed on 04.08.1991. He would accordingly submit that there is no error in the impugned judgment allowing the money claim of the plaintiff respondent and that a sum of 12% per annum by way of interest for the loss of business also cannot be the said to be excessive, keeping in view that the plaintiff had to arrange such material and bear expenses for its procurement by arranging funds at his own level. The crucial question, therefore, for determination would be as to whether prevailing inaction in the office of the defendants appellants can be a good defence for denying payment of the admitted amount towards the supply of materials made by the plaintiff? It is not in doubt that there was a tender notice issued by the Executive Engineer, P.H.E.D. Munger in response where of a number of contractors including the plaintiff respondent had submitted their offer and the rate of the plaintiff was found to be lowest. It is also not in doubt that the procurement of such materials was to be made by way of inviting emergent tender notice inasmuch as in the notice dated 03.04.1989 it was clearly mentioned that materials were urgently required for commissioning of newly constructed Intake well at Kast Harni to Munger Town. For such an emergent work if the Executive Engineer, P.H.E.D. was authorized to issue tender notice, it was his duty to complete the official paraphernalia of also getting the rates approved. The very fact that in his letter dated 01.04.1989 after finding the rate of the plaintiff to be lowest, he had indicated that the materials have to be supplied 7 immediately as the work in question has to be done on a war footing would leave nothing for speculation that the Executive Engineer, P.H.E.D. had sought to convey to the plaintiff contractor that the approval of rate by the Chief Engineer was his concern and that the plaintiff's acceptance of the condition in its letter dated 04.05.1989 has to be only read in that context. As a matter of fact the issue of a formal purchase order on 04.05.1989, within four days of acceptance of the offer by the plaintiff, with a clear instruction to supply the material in question as early as possible (Yatha Shighra) will leave nothing for speculation that plaintiff in good faith and believing the bona fide of the Executive Engineer, P.H.E.D., Munger had supplied the materials on 08.06.1989. These facts being admitted facts, a question would arise that if the Executive Engineer thereafter could not get the rate approved from the Chief Engineer, can the plaintiff be victimized in receiving the amount by way of price of the materials supplied by him. It is not in doubt that such materials supplied were found to be as per the specifications and there was no reason on which the Executive Engineer, P.H.E.D., Munger could have withheld the payment of the amount payable by way of price of materials supplied by the plaintiff for a period of more than two years before the suit came to be instituted. In that view of the matter if the Chief Engineer, P.H.E.D. had consumed time in giving approval to the proposal of the Executive Engineer, P.H.E.D. that by itself could not adversely affected the plaintiff contractor and as such this Court does not find any merit in the 8 main contention of the learned counsel for the appellants that the plaintiff was not entitled to institute a suit for recovery of the price of materials and the interest on such amount. As a matter of fact there being no dispute as with regard to quality of materials supplied by the plaintiff as also the time frame in which such materials was supplied by him, it has to be held that the bill for the supply of materials by the plaintiff ought to have been paid even before institution of the suit. A contractor has to arrange financial resource for supplying the materials and it cannot wait endlessly for receiving payment from the Government and its agencies/officers. It was part of the contract entered into by the Executive Engineer, Munger with the plaintiff while seeking supply of materials for an emergent work that the payment of such materials to be supplied by the Contractor was also to be made in an expeditious manner if not in the same emergent manner. This Court, therefore, will have little option but to hold that withholding of payment by the Executive Engineer or for that purpose by the defendants appellants for the period of more than two years before filing of the suit and coercing the plaintiff to institute a suit for claiming payment of admitted amount by itself was wholly unjustified. As with regard to rate of interest at 12% per annum this Court would find that principal amount of Rs. 79,198/- was already deposited by the appellants in the executing Court prior to 19.04.1996 and the plaintiff had shown his inclination for lowering the rate of interest from 12% to 9% 9 as is clearly recorded in the order of this Court dated 19.04.1996 also reiterated in the subsequent order dated 04.07.1996. Though it would transpire that subsequently the application for stay of execution case of the appellant was rejected by this Court due to lack of instructions on the issue of agreement of payment of interest but then considering the facts that the principal amount has already been paid by the appellants on or before 19.04.1996 and that the plaintiff respondent had also agreed for reducing the interest from 12% to 9%, of course with a rider that such payment should be made immediately to them, this Court would scale down the rate of interest from 12% to 10%, keeping in view that plaintiff had to wait for realization of interest for a very long period. That being so, this appeal is, accordingly, dismissed subject to only modification in the impugned judgment and decree that the rate of interest shall be payable at the rate of 10% in place of 12%. There would be, however, no order as to costs. (Mihir Kumar Jha, J) Patna High Court Dated the 15th October 2011 N.A.F.R./Bhardwaj/-