THE HON'BLE MR JUSTICE V. ESWARAIAH AND THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR CITY CIVIL COURT APPEAL No.66 of 2009 DATE OF JUDGMENT: 03.09.2009 BETWEEN The Government of Andhra Pradesh, rep. by its Principal Secretary, I & CAD Department, Secretariat Buildings, Secretariat, Hyderabad and two others. …APPELLANTS/DEFENDANTS AND Smt. M. Pratimareddy, W/o. late M. Mohan Reddy and two others. …RESPONDNETS/PLAINTIFFS THE HON'BLE MR JUSTICE V. ESWARAIAH AND THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR CITY CIVIL COURT APPEAL No.66 of 2009 JUDGMENT: (per Hon’ble Sri Justice Vilas V. Afzulpurkar) This appeal is filed by the State of Andhra Pradesh and two others against the judgment and decree of the learned Chief Judge, City Civil Court, Hyderabad in O.S.No.306 of 2008 dated 22.01.2009. 2. The appellants, who are defendants in the suit, are aggrieved by the judgment and decree aforesaid whereunder the defendants were directed to pay to the plaintiffs the suit claim of Rs.78,49,052/- within a period of 60 days from the date of judgment and in default to pay interest on the said sum at 6% per annum from 05.09.2007 till the date of realization. The parties are referred to herein as they are arrayed in the suit for the sake of convenience. 3. The facts, in brief, are as follows: (a) The plaintiffs filed the aforesaid suit alleging that the second defendant acting on behalf of the first defendants entrusted three different works for excavation and formation Embankment at different stretches of kilometers of Kakatiya Canal under Sri Ram Sagar Project and during the execution of these works the first defendant cancelled the first set of work vide G.O.Ms.No.137 dated 22.06.1993. As per the said GO the Irrigation Department was permitted to recover 10% of the performance Bank Guarantee and the entire balance due to mobilization advance granted in the aforesaid contract works on furnishing bank guarantee through Vijaya Bank, M.G. Road, Secunderabad. As per the terms of contract the bank guarantee was 10% of the contract value towards performance security and mobilization advance was 15%, which would carry interest at 14% per annum to be recovered from the running bills. The said entire amount of mobilization advance was secured by bank guarantee. (b) The plaintiffs allege that several bank guarantees were given concerning all the three works covering the performance bank guarantee and mobilization advance totaling to Rs.6,30,00,599/-. It is further alleged that irrigation department invoked all the bank guarantees on 08.10.1993 and realized the total amount covered by the said bank guarantees. The aforesaid collected amount is alleged to be in excess by a sum of Rs.3,00,02,078/-. In fact, Late M. Mohan Reddy, the original contractor, who is now represented by the plaintiffs, as his legal representatives, filed W.P.No.19646 of 1994 and the bank also filed WP.No.7888 of 1993 for direction against the irrigation department to refund the sum of Rs.3,00,02,078/-. In the counter filed by the irrigation department though the receiving of the said excess amount was admitted, the quantum thereof was disputed. However, the refund of the said excess amount remained pending. (c) It is further alleged that meanwhile the bank initiated recovery proceedings against the plaintiffs by approaching the Debts Recovery Tribunal, Hyderabad vide O.A.No.467 of 1999 and in view of the common judgment of this Court in batch of writ petitions referred to above dated 16.10.2003, the bank impleaded the irrigation department as a party to the said OA. Thereafter, the plaintiffs made several representations dated 02.07.2007 onwards requesting the Government to settle the issue, thereupon a sum of Rs.51,30,379/- was paid to the plaintiffs on 05.09.2007 by way of a cheque but no interest thereon was paid. Plaintiffs thereupon demanded the irrigation department by a representation dated 12.09.2007 to pay the interest inasmuch as for the bank guarantees, the bank has charged the plaintiffs 22% compound interest. The plaintiffs, therefore, demanded interest at least at 14% per annum from 1993 till the date of payment. The said representation was followed by subsequent representations dated 08.11.2007 and 01.12.2007 but the amount having been remained unpaid viz. the balance amount as well as the interest on the refunded amount, the plaintiffs issued a legal notice dated 07.03.2008 under Section 80 of the Code of Civil Procedure, 1908 and as there was a denial by the defendants vide their reply dated 27.03.2008, the plaintiffs filed the present suit for the a decree of Rs.99,89,703/- with interest at 18% per annum from the date of suit till realization. (d) The defendants filed a written statement disputing the claim of the plaintiffs by alleging that there was no excess amount recovered by the Government and that the sum of Rs.51,30,379/- already refunded to the plaintiffs was in full and final settlement of the entire claim of the plaintiffs. It is also alleged that no liability of interest exists under law and that there was no fault on the part of the Government and in fact, the contractor never turned up for payment for fulfilling required formalities, such as acceptance of closing measurements recorded in measurement books and Release & Discharge certificates. It was also alleged that the plaintiffs have claimed for payment of interest only through letter dated 12.09.2007, which clearly shows that the claim of the plaintiffs is barred by time as it is made after more than three years. It was also alleged that the jurisdiction of the employer being within the district of Warangal, the Courts situated in the district of Warangal alone have territorial jurisdiction and the present suit filed in the Court in Hyderabad is not tenable. 4. Based on the above pleadings, the trial Court frame the following issues: 1. Whether the plaintiff is entitled for the claim of interest? 2. Whether the Court has jurisdiction to entertain the suit? 3. Whether the claim of the plaintiff is barred by limitation? 4. To what relief? 5. The plaintiffs examined P.W.1, who is the first plaintiff and the widow of the deceased contractor and marked Exs.A1 to A14. While Ex.A1 is the office copy of the plaintiff’s representation dated 02.07.2007, Ex.A2 is the letter of the Irrigation Department dated 16.08.2007, Exs.A3 to A7 are office copies of various observations and letters whereas Ex.A8 is the office copy of the legal notice under Section 80 of the Code of Civil Procedure dated 27.03.2008, Exs.A9 and A10 are the postal acknowledgements and Ex.A11 is the reply to the Ex.A8 notice, Exs.A12 to A14 are the certified copies of the affidavit, counter affidavit in WP.No.7888 of 1993 and copy of affidavit in WP.No.19646 of 1993. The defendants examined D.W.1, who is the in charge Executive Engineer and defendant No.3, and marked Exs.B1 to B16, which are attested and true copies of various notices, letters and orders. Ex.B1 is the final notice issued to the plaintiff dated 04.12.1991, Ex.B2 is another final notice dated 28.12.1991, Exs.B3 to B5 are the attested copies of the expulsion of the contractor from each of the package works, Ex.B6 is the copy of request for witnessing the closing measures dated 26.02.1992, Ex.B7 is also a similar request dated 22.04.1992, Ex.B8 is the attested copy of G.O.Ms.No.137 dated 22.06.1993 and Ex.B10 is the attested copy of G.O.Ms.No.151 dated 09.12.1999, Ex.B9 is the attested copy of the Government Memo dated 04.08.1993, Exs.B11 and B12 are the attested copies of the final orders of this court in WP.No.19646 of 1993 dated 16.10.1993 and WP.No.7888 of 1993 dated 01.11.2004 respectively, Ex.B13 is the copy of the letter of the plaintiff addressed to defendant No.2 whereas Exs.B14 to B16 are the abstract of closing accounts and release and discharge certificate singed by the plaintiff; attested copy of Government Memo dated 11.01.2008 and attested copy of the letter of Administrator- cum-Chief Engineer, SRSP contesting plaintiff respectively. 6. On the basis of the aforesaid evidence, the trial Court considered the suit and by a brief judgment came to hold that the suit claim being basically for interest claiming 14%, it was also found that after taking the final measurements there is nothing on record to show that the contractor has been informed about the same. The judgment also records that during the course of the arguments, the learned counsel for the plaintiffs and the learned Government Pleader have agreed that a reasonable rate of interest may be awarded and both of them have agreed over the following judgment. Accordingly, the suit was decreed directing interest at 11% per annum on Rs.51,30,379/- from 08.10.1993 to 05.09.2007 i.e. the date of issuance of cheque, which works out to Rs.78,49,052/- as claimed in the suit. Two months time was granted for payment of the said amount failing which interest on the said amount was awarded. Questioning the aforesaid judgment and decree, this appeal is preferred by the defendants. 7. We have heard the learned Advocate General for the appellants and Sri P. Venugopal, learned counsel for the respondents. 8. The primary contention of the learned Advocate General is that the judgment and decree under appeal has not considered several crucial aspects including the issue as to the territorial jurisdiction, limitation and lack of cause of action etc., which are specifically raised in the written statement. He also contended that on 22.01.2009 the suit was posted for cross- examination of D.W.1 and as soon as the same was over, the arguments were heard and judgment was also passed without addressing or appreciation the pleadings or the issues or the evidence. He also strongly disputed that there was any concession given by the Government Pleader and even if there was one, the same is not binding on the State in view of the decision of the Apex Court in PERIYAR AND PAREEKANNI RUBBERS LTD. v. STATE OF KERALA[1]. He further submitted that when the appellant/State, during the pleadings as well as in the evidence, having emphatically denied its liability on merits and on legal issues, giving of any concession by the Government Pleader on facts does not arise. He has also relied upon the decision of the Supreme Court in GOVERNMENT OF TAMIL NADU v. BADRINATH[2] and particularly paragraphs 8 and 11 thereof. 9. Sri P. Venugopal, learned counsel for the respondents herein, however, raised a preliminary objection with regard to the maintainability of the appeal by placing reliance on Section 96(3) of the Code of Civil Procedure, 1908, by contending that the decree in question being a decree of consent, the appeal is not maintainable. He also contends that the trial Court passed the aforesaid decree only when the learned Government Pleader agreed for a reasonable rate of interest and it is not open for the State to turn around and file the present appeal against the said decree. He also submitted that the said consent of the learned Government Pleader was recorded by the trial Court and as such, the appeal is not maintainable. He has relied upon a decision of the Full Bench of this Court in VENKATESWARLU v. NARASI REDDY[3]; judgment of the Supreme Court in SAROJ ANAND v. PRAHLAD RAI ANAND[4] as well as other judgments of the Supreme Court in BSNL V. SUBASH CHANDRA KANCHAN[5]; PUSHPA DEVI BHAGAT v. RAJINDER SINGH[6] and BYRAM PESTONJI GARIWALA v. UNION BANK OF INDIA[7] 10. Learned counsel, further, contends that the respondents had admittedly given the bank guarantee covering much more than which could have been recovered by the State and by invocation of bank guarantee the State has already recovered excess amount, out of which with great difficulty and after lot of persuasion they have refunded only a sum of Rs.51,30,379/- on 05.09.2007 and While no interest is being paid by the State while refunding the said amount, the balance amount also has to be refunded. Learned counsel, therefore, submits that the respondents had admittedly incurred huge expenditure on interest at 22% which the bank had charged for the aforesaid bank guarantees and when the said bank guarantees were unjustly invoked, even after far excess amount was recovered than what is due to the State, there is no reason as to why the State is not liable to pay the interest over the said amount at the same rate at which the respondents had paid to the bank. He, therefore, submits that the claim of the respondents in the suit was just and reasonable and in the nature of a reimbursement of the interest incurred by the respondents and during the hearing of the suit, the learned Government Pleader agreed for a reasonable rate of interest, which accordingly, has been granted by the trial Court. The liability, therefore, being purely contractual and easily established by the facts of the case, even otherwise, there are no merits in the appeal and as such, the same deserves to be dismissed. 11. We have considered the aforesaid submissions and in the light of the said submission the following questions arise for consideration. (i) Whether the decree under appeal is a consent decree and if so, whether the appeal is maintainable under Sections 96(3) of the Code of Civil Procedure, 1908? (ii) Whether the judgment under appeal is sustainable under Order XX Rules 2 and 5 of CPC? 12. Under the points for consideration framed above, we shall also consider the preliminary objection raised by the learned counsel for the respondents insofar as the maintainability of the appeal as it is covered by question No.1 framed above. 13. It is evident from the written statement of the appellants in the suit that the claim of the respondents/plaintiffs is disputed by the appellants on more than one ground including the ground as to jurisdiction and limitation and the entitlement of the respondents to the said claim in view of the receipt of part of the amount as a full and final settlement as alleged by the appellants. Keeping in view, the aforesaid rival pleadings, the trial Court had framed three issues, which are mentioned as above. Further, the parties went for trial by leading evidence on their respective case and as P.W.1 was examined in support of the respondents and several documents were marked through P.W.1, the appellants herein also examined D.W.1 and marked several documents in support of their case. The judgment under appeal, unfortunately, does not show any discussion on the issues framed nor there is any discussion with regard to the material evidence on record. We have also noted that the further chief examination of D.W.1 with reference to his evidence filed in lieu of chief examination was recorded on 22.01.2009 and on the same day his cross-examination was also recorded. Further, on the same day, the judgment under appeal was passed decreeing the suit with interest at 11%. The judgment, therefore, proceeds as if during the arguments both the learned counsel agreed for a reasonable rate of interest and agreed to pass the judgment, which is ultimately passed by the trial Court. 14. As rightly pointed out by the learned Advocate General, the appellants had contested the suit on various grounds and even after the cross-examination of D.W.1 on the date of judgment, the claim of the plaintiffs was denied. When and how the appellants consented to the judgment is, therefore, not discernible from the record. The affidavit in lieu of chief examination of D.W.1 places reliance on the full and final discharge certificate issued on behalf of the plaintiffs, which is marked as Ex.B14 and the concluding portion of the said affidavit specifically prays that the ‘Hon’ble court may be pleased to dismiss the above suit with exemplary costs in the interest of justice as the delay purely rests on the plaintiff and as such the claim for interest from 08.10.1993 to 05.09.2007 is not tenable’. It is, therefore, difficult to accept that the appellants had consented to the judgment when they are contesting the claim of the respondents even on the day of the judgment itself. Further, the impugned judgment records that “During the course of the arguments, the counsel for the plaintiff and the learned Government Pleader have agreed that a reasonable rate of interest may be awarded”, which at the most may show that on rate of interest the Government Pleader agreed that reasonable rate of interest may be allowed. The aforesaid, however, has no relation to the suit claim regarding which there is no mention that there was any consent by the learned Government Pleader. The trial Court, therefore, recorded that it is passing an agreed judgment. 15. Code of Civil Procedure provides that under Order XII Rule 6, the judgment on admissions can be made whenever such admissions are made either in the pleadings or otherwise, whether orally or in writing at any stage of the suit. The admission referred to in Order XII Rule 6 CPC, therefore, is that of an admission of any party to a suit, which is the very basis of Order XII CPC. The consent or admission of a counsel, therefore, is not contemplated under Order XII CPC. The suit may also be determined by the settlement or compromise or adjustment as provided under Order XXIII CPC. The compromise of a suit under Order XXIII Rule 3 CPC is required to be proved to the satisfaction of the Court that a suit is adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties. In the present case, admittedly, there is no agreement or compromise between the parties much less in writing and signed by the parties. The consent by the learned Government Pleader as recorded in the impugned judgment appears to be the only basis for the said impugned judgment. However, as consent was recorded in the judgment by the learned Government Pleader, we will have to proceed on that basis and examine as to whether the said consent binds the State. The judgment of the Supreme Court relied upon by the learned Advocate General in BADRINATH’s case (2 supra) held in Para 11 as follows: “11. We have no manner of doubt that the appellants are not bound by the concession made by the learned Advocate General before the learned Single Judge. It is unfortunate that the State Government was not properly advised at the earlier stages of the proceedings in insisting upon the view that such permission was required under Rule 17 and that it was justified in refusing to grant the permission prayed for. The concession made by the learned Advocate General being on a matter of law is not binding. That apart, Sri Ashoke Sen, learned counsel for the appellants has very fairly accepted the point of view put forth by respondent 1 in the writ petition that no such permission was required.” 16. Further, in a decision relied upon by the learned Advocate General in PERIYAR’s case (1 supra) it is laid down in the relevant portion of Para 19 as follows: “19…Any concession made by the government pleader in the Trial Court cannot bind the Government as it is obviously, always, unsafe to rely on the wrong or erroneous or wanton concession made by the counsel appearing for the State unless it is in writing on instructions from the responsible officer. Otherwise it would place undue and needless heavy burden on the public exchequer. But the same yardstick cannot be applied when the Advocate General has made a statement across the bar since the Advocate General makes the statement with all responsibility. In those circumstances we have no hesitation to accept the statement of Learned Advocate General and hold that the market value of the lands would be fixed at Rs.18 per cent…” 17. So far the decisions relied upon by the learned counsel for the respondents are concerned, the first of the decisions in VENKATESWARLU’s case (3 supra) relates to a case where both the parties filed a joint memo agreeing to abide by the decision of the trial Court where it is held that such decision would be a decision in the nature of a consent order and general right of appeal would be barred. In the present case, it is nobody’s case that joint memo was filed by the parties. The aforesaid decision, therefore, does not apply to the facts of the present case. In the second decision in SAROJ ANAND’s case (4 supra) particularly Para 15 is relied upon. On the facts of that case, it is evident that in that particular case in the presence of the parties before the court a concession was made by their counsel and the parties acted upon it without contraverting the same and only much later that the parties tried to take a contra stand that there was misunderstanding by the counsel. The Honourable Supreme Court, therefore, held that having regard to the fact that the parties were present in the Court and also having full knowledge of the statement made by their counsel, it was for them to spell out what could be the purported misunderstanding between them and their counsel. In the present case, the appellants have preferred an appeal against the decree within time and have specifically raised the ground Nos.14 and 15, which are extracted as under, in support of their contention that there was, in fact, no question of giving any consent by the appellants as it is contrary to the evidence let in by the appellants and even if any such concession is given by the Government Pleader the same does not bind the State. “14. The lower Court swayed away by the concession reported to have given by the Government Pleader for appellants. As a matter of fact, when the party/the appellants through their evidence categorically denied the liability, on merits and on legal points, the lower court ought not to have considered concession reported to have given by the Government Pleader on facts, which is contrary to the evidence let in by the appellants. Thus, the lower Court went wrong in passing the decree against the appellants. 15. The Court below ought to have seen that concession given by Government Pleader in the trial Court is not binding on the State, as held by the Apex Court in AIR 1990 SC 2192 and as such should have disposed of the suit on merits.” The facts and circumstances of the present case, therefore, are different from those, which were subject matter of the aforesaid decision of the Supreme Court. 18. Further, the decision in BSNL’s case (5 supra) relates to a case where consent for appointment of an Arbitrator was given by party through its counsel. The same was disputed before the Supreme Court on the ground that the said consent was given by the junior counsel, who had no instructions. It was also noticed by the Supreme Court that after the said consent order appointing an Arbitrator was made, the said Arbitrator entered on reference, the parties appeared before him and participated in the proceedings and one of the parties filed a claim settlement and the appellants had sought time to file their written statement and while so, after about ten months thereafter, the appellants had moved an application under Section 151 CPC to delete the no objection recorded in the order, which the High Court declined. It is in that context that the Honourable Supreme Court rejected the aforesaid contention that even before the High Court it was not contended that the counsel had no authority to make such concession. The said decision and the ratio thereof is, therefore, wholly inapplicable to the present case. 19. The last of the cases relied upon by the learned counsel for the respondents in PUSHPA DEVI’s case (6 supra), in fact, very elaborately analyses the provisions of Order XXIII Rule 3 CPC and clearly points out distinction between the first part and the second part of Rule 3. It is apt to extract the relevant portions of paragraphs 18 and 19 thereof, where Rule 3 of Order XXIII is analysed by the Honourable Supreme Court. “18. …The said Rule consists of two parts. The first part