1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Suit No.3902 of 1992 Pessumal Pamandas Menghrajani. .. .. Plaintiff v/s. Maharashtra Housing and Area Development Authority & ors. .. .. Defendants Mr.U.S. Samudrala with Mr.Ram Prakash Pandey for Plaintiff. Plaintiff in person, present. Mr.P.G. Lad, AGP for Defendants. ----- CORAM : SMT.ROSHAN DALVI, J. Dated : 22nd August, 2008 JUDGMENT : 1.This Suit is filed for recovery of Rs.1,31,345.90 with interest at the rate of 21% per annum thereon from the date of the judgment till realization and the costs of the Suit payable by way of interest on the delayed payments made under the contract between the parties. 2.The Plaintiff is a Civil Engineer and a Government contractor. He carries on business in the name of Jeevan Construction as a sole proprietor thereof. The Defendants had invited tenders for construction of three Septic Tanks and three Soak Pits for 196 tenements under the High 2 Income Group Housing Society (H.I.G.H.S.) at Bandra Reclamation, Mumbai. The Plaintiff' s tender was accepted. The Plaintiff was issued the Work Order dated 16.1.1987 on 28.1.1987. It is the Plaintiff' s case that the Plaintiff had to complete the work within three months. 3.The Defendants delayed giving the site to the Plaintiff. After the site was provided, the Plaintiff commenced the construction work of the Septic Tanks and Soak Pits and completed the same on 28.2.1988. 4.It is the Plaintiff' s case that the Defendants were to make payment for the construction work to the Plaintiff within three months. This was as per the Maharashtra Public Works Account Code issued by the Government of Maharashtra, Buildings and Communications Department initially in 1967 and amended from time to time thereafter. It is the Plaintiff's case that even otherwise the Plaintiff would have to be paid within a reasonable time of the completion of work and that would be a period of three months. The Plaintiff has consequently claimed that the amount for the construction work was to be paid to the Plaintiff by 28.5.1988. 3 5.The Plaintiff was to be paid at the tender rate. He had incurred certain expenditure for extra items. The Plaintiff made claims with regard to those items also. The Plaintiff claims that even those payments were to be made within the aforesaid reasonable time. 6.The Defendants delayed to settle the Plaintiff's bills. The Plaintiff's bills came to be settled by Defendant No.2, the Deputy Chief Engineer of the 1st Defendant on 26.10.1990. The Plaintiff was intimated about the same by the 2nd Defendant' s letter dated 3.11.1990. 7.The Plaintiff had raised the bill of Rs.1,50,535.35 for the extra items. The bill was passed for Rs.1,45,764/-. The Plaintiff accepted the bill. The Defendants failed to make payment of that bill within a reasonable time from the passing of that bill also. 8.It is the Plaintiff' s case that there was a delay in finalizing the amount payable to the Plaintiff and a delay in the payment of the finalized amount also. This was despite the fact that the 2nd Defendant, the Deputy Chief Engineer of the 1st Defendant had issued orders for payment of outstanding amounts in October 1990. 4 9.Consequently, it is the Plaintiff's case that not only the amount payable on the Plaintiff' s bills upon the tender was not paid, but the amount payable under the Plaintiff' s bills for the extra items under several claims made by the Plaintiff was not adjudicated upon within a reasonable time and was not paid even after they were adjudicated upon by the 2nd Defendant under his order dated 26.10.1990. The Plaintiff claims that Rs.25,764/- came to be wrongly withheld and paid much later on 11.3.1992. The Plaintiff further claims that the initial security deposit was to be released to the Plaintiff by 28.4.1990. Even upon it being released, Rs.2381/- was withheld from the original final bill and was paid only on 27.12.1991. 10.It is the case of the Plaintiff that the amounts which were justifiably due to the Plaintiff were paid to the Plaintiff, but much later. The very fact of payment shows that they were justifiably due. A delay in payment shows that they were unjustifiably delayed. The Plaintiff has, therefore, claimed interest at the rate of 21% per annum on the delayed payment. The interest is calculated under four separate heads. 5 11.The delayed payment of the final bill of Rs.13,697/-, payable on or before 29.5.1988 but actually paid on 28.1.1990. Even when that amount was paid it was after withholding Rs.4731/- therefrom. That amount was released on 24.12.1991. The Plaintiff has claimed interest on the delayed payment of Rs.13,697/- from 29.5.1988 to 28.1.1990 and on the withheld payment of Rs.4731/- from 29.1.1990 to 24.12.1991. 12.The other claims of the Plaintiff for extra work done by the Plaintiff and the expenses incurred thereon and for extra items was for Rs.1,50,535.35/-. The 2nd Defendant accorded his sanction for payment of that bill to the extent of Rs.1,45,764/- on 26.10.1990. The Plaintiff claims that the 2nd Defendant was enjoined to consider the Plaintiff' s claims and extra items within the reasonable period of three months from the date of completion of contract and that that decision was long delayed. The Plaintiff accepts the decision for payment of Rs.1,45,764/- under the third and final bill for 1,50,535.35/-. However, the Plaintiff claims interest on the amount awarded by the 2nd Defendant from 29.5.1988 until 3.12.1991 when that bill was ultimately passed. 13.Even from that bill a sum of Rs.25,784/- was unlawfully 6 and unjustifiably withheld by the Defendants and the same was released only on 11.3.1992. Consequently, the Plaintiff claims interest on the wrongfully withheld amount of Rs.25,764/-from 4.12.1991 to 11.3.1992. 14.It is accordingly seen that the Plaintiff has claimed interest under four separate heads viz. (i) for delay in the payment of his final bill of Rs.13,697/-, (ii) for interest on the wrongfully withheld amount of Rs.4731/- from the bill for Rs.13,697/-, (iii) interest for the amount decided and awarded by the 2nd Defendant under his letter/order dated 26.10.1990 in a sum of Rs.1,45,764/- and (iv) from the wrongfully withheld amount of Rs.25,764/- from Rs.1,45,764/-. [The Defendants having made payment of Rs.1,20,000/- on 3.12.1991.] 15.The amount of interest claimed by the Plaintiff is at the rate of 21% per annum for the period of delay. The Plaintiff has claimed interest on his bill dated 24.5.1990 which has been considered in the aforesaid order of the 2nd Defendant dated 26.10.1990 and rejected. 16.The Plaintiff claims interest under Section 3(1)(a) of the Interest Act, 1978 at the then current rate of interest from 7 the date on which each of the aforesaid four debts came to be payable. The particulars of the Plaintiff' s claim, Exhibit- M to the Plaint, set out the amounts payable for the specified periods mentioned in paragraphs 21 to 25 of the Plaint. 17.The last of the payments came to be released on 11.3.1992 and hence, from 11.3.1992 the Plaintiff has claimed interest on the aforesaid consolidated amount of interest payable also at the rate of 21% per annum for the period of time during which it remained unpaid. These five heads constitute the total amount of interest claimed by the Plaintiff upon payments unduly, unjustifiably and wrongfully stated to have been withheld by the Defendants. 18.The Plaintiff issued the statutory Notice under Section 173 of the Maharashtra Housing and Area Development Authority Act, 1976 (MHADA Act) to the Defendants on 17.8.1992. The Plaintiff was called to settle the dues on 19.9.1992. Since the dues remained unsettled, the Plaintiff filed this action for recovery of the interest for payments made after much delay. 19.The Plaintiff claims further interest at the same rate from the date of the filing of the Suit until payment/realization. 8 20.There are several facts which are admitted by the Defendants. It would be prudent to enumerate them at this juncture. (a) The Plaintiff was awarded the tender for the work of construction of three Septic Tanks and three Soak Pits for the Defendants' tenements at Bandra. The Plaintiff was directed to start the work by the Defendants' letter dated 28.1.1987. (b) The Plaintiff was to complete the work by 27.4.1987. The Plaintiff completed the work on 28.2.1988. The Plaintiff contends that that was because the Defendants did not provide the site for starting the work to the Plaintiff. The Defendants have disputed this aspect. However, the Defendants have issued their letter dated 24.4.1987 calling upon the Plaintiff to start work. This shows that the work was to begin only on and from 24.4.1986. This is well after the three-month period for completion of the work under the contract. It is the 9 Plaintiff's case that the Plaintiff was called upon to do more work than was contracted for. That work was the work that arose as per the exigencies for carrying on the work on site. The Plaintiff carried out the work on various other items. This is shown in the various claims made by the Plaintiff in his final bill dated 24.5.1990. -(c) The Plaintiff's contract was for a total amount of Rs.1,85,594/-. (d) Three running account bills have been submitted by the Plaintiff. (e) Under the last bill of the Plaintiff for Rs.1,50,535.35, the Defendants agreed to pay and paid the Plaintiff a sum of Rs.1,45,764/-. (f) The sum of Rs.1,45,764/- was ultimately decided and awarded to the Plaintiff by the 2nd Defendant under his letter/order dated 26.10.1990. (g) The Plaintiff accepted the amount of Rs.1,45,764/- as payable to him. 10 (h) This amount was payable to him under the various claims made by the Plaintiff which have been considered on merits in the letter/order dated 26.10.1990 by the 2nd Defendant. (i)Part of this amount was paid to the Plaintiff on 3.12.1991. The remainder of Rs.25,764/- was paid to the Plaintiff on 11.3.1992. 21. In the Written Statement of the Defendants, they have raised the plea of the bar of jurisdiction of the Civil Court, the bar of limitation and the plea of estoppel against the Plaintiff from raising any issues with regard to the amount claimed to have been unconditionally accepted by the Plaintiff in full and final settlement of his bills. The Defendants consequently deny and dispute their liability to make payment of any interest to the Plaintiff in respect of any of the payments stated by the Plaintiff to have been made after much delay. 22. Based upon the aforesaid pleadings, Justice P.V. Kakade, as he then was, raised the following issues, which are answered as follows:- ISSUES 11 (i)Whether the Plaintiff proves that the due and payable amounts were delayed for a long time from the due dates by the Defendants. - YES (ii)Whether the Plaintiff proves that he is entitled for interest on the delayed payment from the Defendants. - YES (iii)Is the Plaintiff entitled for the payment of Rs.1,31,345.90 with interest thereon at 21% p.a. from the date of the Suit till judgment ? - AS PER FINAL ORDER. (iv)Whether the Plaintiff is entitled for costs of the Suit. - AS PER FINAL ORDER. (v)Is the Plaintiff entitled for any other reliefs ? - AS PER FINAL ORDER. It may be mentioned that in Issue No.2 the rate of interest is not specified. The issue is, therefore, amended as follows:- Issue No.2 : Whether the Plaintiff is entitled to interest on the delayed payments from the Defendants and if so, at what rate and for which period. - YES @ 12% p.a. As 12 claimed in Exhibit-M to the Plaint and paras 21 to 25 of the Plaint. Similarly, in issue No.3 the rate of interest payable is only till judgment. The Defendants would also require to pay further interest if the payment, if any, as per the judgment is delayed. Hence, even issue No.3 is amended to read as follows:- Issue No.3 : Is the Plaintiff entitled to further interest from the date of the Suit till judgment and from the date of the judgment till payment/realization and if so, at what rate ? - YES @ 12% p.a. From the date of the filing of the Suit till payment/realization. 23. It must be clarified that the Defendants have given up their dispute/claim with regard to bar of the jurisdiction, the bar of the limitation and the receipt of the statutory Notice of demand claimed in the Written Statement. Mr.Lad on behalf of the Defendants argued that no interest whatsoever is payable to the Plaintiff as there is no contractual rate of interest under the suit contract. 24. The Plaintiff has filed an Affidavit of examination-in- 13 chief. He has not examined any other witness. The Defendants have cross-examined the Plaintiff. The Defendants have not examined any witness. 25. The Plaintiff's Affidavit of examination-in-chief sets out the fact of the invitation of tenders, the date of commencement of the work, the period of the contract, the extra items of work done by the Plaintiff, the bills submitted by the Plaintiff and the finalization of the final bill by the Defendants. The Affidavit further shows the date of the completion of the work and the Completion Certificate issued to the Plaintiff. It speaks about three bills of the Plaintiff revised by the Defendants, the third and final bill having been paid on 11.3.1992 after wrongfully withholding Rs.25,764/- therefrom. 26. The Affidavit sets out in paragraph 13 the amounts of the Plaintiff's bills as well as the amounts paid after withholding part of the amounts. The Affidavit shows the computation of the amount towards interest claimed by the Plaintiff. The Plaintiff' s Affidavit further sets out the fact of the statutory notice being sent to the Defendants. 27. The Plaintiff has relied upon the various letters 14 written by the Plaintiff to the Defendants making claims as set out therein which include the claim for interest. We are not concerned in this Suit with the initial claims of the Plaintiff because those claims have been settled and the Suit is not filed for recovery of any of those claims other than the Plaintiff's claim for interest which has been rejected by the 2nd Defendant in his order/letter dated 26.10.1990. The Defendants have not disputed exhibiting those documents but have not admitted the contents thereof. 28. The Plaintiff has also relied upon several letters issued by the Defendants to the Plaintiff. The Defendants have admitted those letters. These are letters dated 20.1.1987, 24.4.1987, 19.8.1988, 16.12.1988, 3.11.1990, 22.1.1991 and 20.3.1992. By consent of the Defendants, these letters have been marked Exhibits A to G. The Plaintiff's other letters have been marked Articles 1 to 25 for identification. The Plaintiff has been cross-examined before the Court Commissioner appointed for that purpose. A large part of the cross-examination is not with regard to the Defendants' liability for payment of interest. It is with regard to the Plaintiff' s bills for the execution of the work by the Plaintiff under the suit contract, its extension, running account bills and for the extra items claimed by the Plaintiff 15 which have been adjudicated by the 2nd Defendant in the aforesaid letter/order dated 26.10.1990. The Defendants have relied upon only two documents; the Plaintiff' s letter dated 24.5.1990 calling upon the Defendants to decide 11 claims made by the Plaintiff and the 2nd Defendant's letter/order dated 26.10.1990 which are marked Exhibits H and I in evidence. 29. The Plaintiff's claim would be best decided upon the aforesaid admitted documents alone. 30. Issue No.1 : The Plaintiff was admittedly awarded the aforesaid contract on 28.1.1987 under the letter of the 3rd Defendant marked Exhibit-A in evidence. As per that letter, the work was to be completed within a period of 3 months i.e. on or before 27.4.1987. 31. The Plaintiff was, however, issued the letter dated 24.4.1987, Exhibit-B in evidence. That letter states that the site was made clear from 13.4.1987. It calls upon the Plaintiff to start the work without any further delay. This letter is sent at the fag end of the 3-month contract period. This letter itself shows the delay in giving the clear site to the Plaintiff. The work was ultimately completed on 28.2.1988. 16 The Plaintiff's Affidavit of that date shows that the site for Soak Pit No.3 was not made available to the Plaintiff even on that date. That letter is sent to the Defendants and is received by the Clerk to the Deputy Chief Engineer, as well as the Clerk to the Executive Engineer of the 1st Defendant. It is signed and stamped by the Defendants' office. The Plaintiff has produced the carbon copy containing the original endorsement of the Defendants' office. The proceedings before the Commissioner show that the Advocate for the Defendants Mr.Lad did not admit the contents of the documents. The proceedings further show that the documents were not admitted by Mr.Lad because they were not verified by his officer. It may be mentioned that it is for the Plaintiff to prove the letters written to the Defendants. The Plaintiff has proved the receipt of the letter dated 23.11.1987 by the Defendants by the signature and the stamp of the Defendants on the carbon copy of the letter. However, the Plaintiff has not led oral evidence with regard to the proof of the truth of the contents of the letter in his Affidavit of examination-in-chief. Consequently, the delay of the Defendants in handing over the clear site for Soak Pit No.3 cannot be taken to be proved through the Plaintiff' s said letter. 17 32. Nevertheless, the contract was admittedly completed on 28.2.1988. There has been some amount of delay in handing over the site to the Plaintiff as reflected in the letter, Exhibit-B and a further amount of delay which has not been strictly proved by the Plaintiff by direct evidence. 33. After the completion of the contract on 28.2.1988, the Plaintiff was required to be made payment for the amount of work undertaken by the Plaintiff under the contract. That payment was to be made within a reasonable time. 34. The Plaintiff's bills were not paid despite request. The 2nd Defendant, under his letter dated 19th August 1988, Exhibit-C in evidence, informed the Plaintiff that the 3rd Defendant has been asked to take appropriate action for finalization of the final bill of the Plaintiff. Consequently, the factum of payment to the Plaintiff was not disputed. Only the Plaintiff's bill has to be finalized. 35. The 3rd Defendant issued the certificate on 6.12.1988, Exhibit-D in evidence, that the Plaintiff had completed the work of constructing 3 Septic Tanks and 3 Soak Pits for 196 tenements under the H.I.G.H.S. at Bandra Reclamation on 28.2.1988 and the tender cost of the work was 18 Rs.1,85,594/-. Consequently, not only the date of completion but the amount payable to the Plaintiff under the contract, as aforesaid, has been admitted. The letter/order dated 26.10.1990, Exhibit-I in evidence, shows the finalization of the final bill of the Plaintiff by the 2nd Defendant. It would be interesting to consider the said letter. It is an in-house decision of the Defendants. It considers separately each of 11 claims made by the Plaintiff in his letter dated 24.5.1990, Exhibit-H in evidence. It is an dispassionate, objective, fair, just and open-minded decision on the Plaintiff' s claims. 36. Claim No.1 : It considers the number of brick bats claimed by the Plaintiff and allows payment for 424850 brick bats. 37. Claim No.2 : It allows the claim for the extra item of de- watering with pumps for carrying out the work of foundation items for 480 hours for an amount of Rs.8496/- against the Plaintiff's claim of Rs.12,000/-. 38. Claim No.3 : It allows payment of extra item of excavation. 19 39. Claim No.4 : It also allows the claim of the Plaintiff for the extra item on cement plaster as proposed by the Deputy Engineer concerned and rejects the Plaintiff's claim as made by him. 40. Claim No.5 : It accepts the claim of the Plaintiff for coping per cum. 41. Claim No.6 : It records that the claim of the Plaintiff for the beam is already settled and paid to him. 42. Claim No.7 : It allows payment to the Plaintiff for thickness of the RCC slab for both Septic Tanks 1 and 2 since that claim was not refuted by the Executive Engineer concerned. 43. Claim No.8 : It allows refund of the amount recovered from the third and final bill towards the water charges after the period of the contract when such amount could not be claimed by the Defendants in view of the certificate of completion of work produced by the Plaintiff. Consequently, he directs refund of Rs.1731/- to the Plaintiff but without payment of the interest amount on the delay for refund of the amount as claimed by the Plaintiff. 20 44. Claim No.9 : It records that there was an abnormal delay of about 2 years in releasing the Bank Guarantee submitted by the Plaintiff towards the initial security deposit expiring on 15.12.1988. It records that the amount of Rs.2386/- is recovered from his final bill which the Plaintiff has accepted under protest on 31.1.1990. It records that on the Plaintiff's repeated requests, the Bank Guarantee could have been released before the final bill on its expiry on 15.12.1988 but the Department took two years to pay the final bill and that also without settling his Extra Items (EI) and claims. It records that there are no comments of the relevant Executive Engineer on such claim. Hence, it allows refund and release of the said amount but without interest as claimed by the Plaintiff. 45. Claim No.10 : This is the claim for interest at the rate of 24% per annum on the final bill amount for which the payment was delayed. That claim was rejected on the ground that there was no such provision in the tender Agreement. 46. Claim No.11 : It allows the claim of refund of Rs.614/- taken as penalty for not applying for extension of 21 time of 307 days at the rate of Rs.2/- per day. That was the amount withheld from the Plaintiff' s second RA bill. It is observed that the contractor could not apply for extension of time because actually clear site was not handed over to him. It records the Plaintiff' s application for extension of time- limit by the Plaintiff's letter dated 29.2.1988 immediately after completing the work on 28.2.1988 mentioning the reasons for delay in completing the work. It records that in the absence of any provision in the tender, recovery could not be made and the amount was directed to be refunded. 47. Conclusion : In the last paragraph, it is observed as follows :- “ .... this entire case is not dealt properly since beginning inspite of numerous/constant communication from the Agency and no timely action from the Board which has resulted into embarrassing position and this is liable for creating incident of contractual complications. Hence it is imperative to sort out this matter. In the light of this situation as stated above, you are directed to take necessary action in the matter. Sd/- Dy. C.E. ( )/BB 22 Copy submitted to CE/BB COPY “ 48. The delay alleged by the Plaintiff is writ large in the objective assessment of the Plaintiff's claim made by the then Deputy Chief Engineer of the Defendants in his letter/order dated 26.10.1990. 49. This order shows that the Plaintiff's claims have been legitimately made. These are for extra items of work done by the Plaintiff. They were part of the third and the last running bill submitted by the Plaintiff. That bill was finalized by allowing almost all the claims of the Plaintiff, mostly fully and some partly except the claim for interest. This order dated 26.10.1990, Ex.H in evidence has been served upon the Plaintiff as the decision of the Deputy Chief Engineer upon all the claims and extra items (EI) under