IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE C.T.RAVIKUMAR THURSDAY, THE 8TH JANUARY 2009 / 18TH POUSHA 1930 AS.No. 585 of 1996(B) & CRTOSS OBJECTION --------------------- OS.52/1994 of ADDL.SUB COURT, ALAPPUZHA .................... APPELLANT(S)/DEFENDANT: -------------- STATE OF KERALA, REPRESENTED BY THE DISTRICT COLLECTOR, ALAPPUZHA BY GOVERNMENT PLEADER SRI. R.LAKSHMI NARAYAN RESPONDENT(S)/PLAINTIFF: --------------- M.N. BHASKARAN NAIR, S/O. K.G. PADMANABHA PILLAI, RESIDING AT 'USHUS', PAZHAVEEDU, ALAPPUZHA. ADVS. SRI.T.K.VENUGOPALAN,DINESH.R.SHENOY SRI.V.P.K.PANICKER, DEVAN.V. THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 08/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER IN C.M.P. NO. 5110 OF 1997 IN A.S. NO. 585 OF 1996. DISMISSED 8.1.2009 Sd/-(P.R. RAMAN, JUDGE) Sd/-(C.T. RAVIKUMAR, JUDGE) P.R. RAMAN & C.T. RAVIKUMAR, JJ. --------------------------------------------------------- A.S. NO. 585 OF 1996 & CROSS OBJECTION --------------------------------------------------------- Dated this the 8th day of January, 2009 JUDGMENT Raman J. This appeal is filed against the judgment and decree in O.S. No. 52 of 1994 on the file of the Additional Sub Court, Alappuzha. State is the appellant. 2. The respondent as plaintiff instituted the suit for damages arising out of non-payment of the amount legally due and payable to him as per the contract entered into between the parties. The plaintiff was a registered Government contractor who was awarded the work of construction of Civil Station building at Alappuzha , Block C2 on 17.9.1980. The agreement was executed on 29.10.1980 and the work was completed by January, 1987. However, the final bill was not prepared and the representation made by the plaintiff claiming enhancement was not even considered. It is not disputed that the plaintiff - respondent herein had filed a detailed representation before the Government claiming A.S.NO.585/1996 2 escalation of the rates of the contract since there was considerable delay by the time the work was completed , not due to any fault on the part of the plaintiff. The Government referred the said claim to an Arbitration Committee which eventually recommended an increase of 55% over 1978 schedule of rates, that is, increased the accepted tender of 77% to 132% above 1978 rates for all the work done after 16.9.1982. The Government subsequently issued an order dated 26.12.1990 accepting the said recommendation of the Arbitration Committee. Thus, the escalation as awarded by the Arbitration Committee was accepted and acknowledged with effect from 26.12.1990 by the Government. However, the final bill was not prepared in terms of the accepted rate as above inspite of lapse of time even thereafter. The plaintiff-respondent being a contractor had to raise funds for the completion of the work by availing of loan from scheduled bank after paying huge interest. According to the plaintiff, as a result of the delay in effecting payment, he had to pay interest to the bank and thus he sustained loss to the tune of Rs.6,61,821/- which was payable as early as in January, 1987 itself. It was also pleaded that the Government at any rate was liable to disburse the amount due to him by January, 1987 or at least from 26.12.1990 when the Government passed orders accepting the recommendation of the Arbitration Committee. A.S.NO.585/1996 3 3. The appellant-defendant in the written statement contended that the estimate of the work was prepared on the basis of the scheduled rates of 1978 and that the agreed period for completion of the work was 16.9.1982 which time was extended upto 31.3.1984, 30.9.1985 and finally upto 31.7.1986 as requested by the plaintiff. The work was finally completed in December, 1986. In the meantime, the schedule of rates had been subjected to revision on several occasion and the plaintiff demanded escalation of rates which at first was not acceded to by the Government. However, later the matter was referred to an Arbitration Committee which recommended escalation to 132% as contended in the plaint. According to the appellant, the amount was quantified in terms of the award of the Arbitration Committee, payment was effected and the plaintiff -respondent had accepted the award amount as full and final settlement of his claim. The appellant also denied their liability to pay any damages and even alleged that the delay in paying the final bill occasioned because of the non-execution of the supplemental agreement in time by the contractor. On the aforesaid pleadings, the court below framed necessary issues including the issue as to whether the defendant was responsible for the delay in making the payment to the plaintiff and what is the amount, if any, to which the plaintiff is entitled to inclusive of costs. A.S.NO.585/1996 4 4. The evidence in this case consists of the oral testimony of PWs.1 and 2 and Exts.A1 to A19 on the side of the plaintiff. Exts.X1 and X2 were also marked. There is absolutely no oral or documentary evidence on the side of the defendant. The plaintiff who was examined as PW.1 deposed in support of his plea raised in the plaint. Ext.A1 is the proceedings of the Superintending Engineer, P.W.D. dated 26.2.1985, Ext.A2 is the proceedings dated 28.2.1986 and Ext.A3 is the proceedings dated 9.3.1987 which were produced to show that the time for completion of the work was extended and there is no dispute regarding the same. Ext.A4 is the letter from the Government referring the matter to the Arbitration Committee and Ext.A5 is the decision taken by the Arbitration Committee on 26.12.1990 giving enhancement of 55% on 1978 scheduled rates. Though Ext.A5 decision was taken on 26.12.1990, it is beyond doubt that the amount was not paid in terms of Ext.A5 until 31.12.1992. As a matter of fact, the plaintiff instituted writ proceedings, O.P. No.11315 of 1992 for a direction to the Government to disburse the amount due to him. Ext.A10 is the judgment of this Court passed in the above Original Petition. Ext.A10 shows that the Government agreed to pay the admitted amount as and when its financial position improves. Therefore, a direction was issued to the Government to intimate the time within which the amount would be disbursed which intimation was to be given within a A.S.NO.585/1996 5 month from the date of the judgment. Thereafter the Government by letter dated 5.11.1992 offered an amount of Rs.5,90,710/-. At that time, the plaintiff moved for a clarification of the earlier judgment passed by this Court to the effect that acceptance of the offer made shall not prejudice the right of the petitioner to claim further amount, if any due and payable to him. Accordingly, Ext.A15 order was issued . It was thereafter that the writ petitioner accepted the offer made by the Government reserving his right to claim whatever balance amount, which according to him, is due and payable by the State. Later, the present suit was instituted. 5. The court below found that the actual amount of loss as claimed in the suit is not supported by cogent evidence. It was the specific contention of the State that they are not liable for the exorbitant interest paid by the plaintiff to the bank and that there is also no evidence to show that the plaintiff had utilised the entire over draft facility exclusively for the work. Though the plaintiff had produced statements regarding the amounts deposited by him in the bank, no accounts were produced to show how the amounts withdrawn from the bank were expended. Therefore, the court below rightly held that it was not safe to depend on the accounts of the plaintiff in calculating the damages. But the fact remains that the plaintiff had sustained damages due to the delay in A.S.NO.585/1996 6 payment of the amounts due to him by the defendant. Admittedly an amount of Rs.5,90,710/- was due to the plaintiff. But, the date on which the said amount was due is in dispute. The court below has observed that there is no dispute that the said amount was due on 1.1.1987. Whether the said stand was taken by the defendant is not stated nor was it pointed out so in the course of argument by the respondent herein that there was any admission on the part of the defendant of having accepted that the amount of Rs.5,90,710/- was due on 1.1.1987. Therefore, the court below decided to quantify the delay from 1.1.987 and held that there was a delay of five years in making the payment and placing reliance on the rate of interest under the provisions of the Kerala Land Reforms Act, 1963 awarded interest at the rate of 15% per annum on the said amount by way of damages from 1.1.1987 till 31.12.1992. The court below further awarded 12% interest under Section 34 C.P.C. for the adjudged amount from the date of the suit till realisation. 6. The learned Government Pleader appearing on behalf of the State, in the course of argument, raised a contention that the claim itself is bared by limitation. But, he fairly conceded that such a plea was not raised either in the written statement or in the memorandum of appeal presented to this Court. He further maintained that he is entitled to raise the plea of A.S.NO.585/1996 7 limitation at any stage of the proceedings. There is no dispute that a plea of limitation can be raised at any stage of the proceedings provided such plea does not rest on any evidence to be taken before such a plea is accepted by the court. In this case, however, materials are available on record to decide as to whether the claim is barred or not as on the date of filing of the suit. Hence, we heard both sides on this issue. Admittedly, the plaintiff had instituted an Original Petition before this Court wherein he had claimed interest from 26.12.1990. That Original Petition was filed on 1.9.1992 and was disposed of on 17.9.1992 with a direction to the Government to intimate the date within which the admitted amount could be disbursed to the petitioner. In the clarificatory order, it has been made clear that the acceptance of the amount will not stand in the way of the plaintiff claiming further amount, if any, due to him. So, there is no estoppel or waiver. Now on the question of limitation, the plaintiff is aware that he had been given escalation with effect from 26.12.1990. He further claimed interest only from that date onwards in the Original Petition. Therefore, even excluding the period during which the Original Petition was pending before this Court, the claim for interest prior to 26.12.1990 is barred. The court below has quantified the damages at 15% from January, 1987. We find that the decree for payment of interest at the rate of 15% from 1.1.1987 till 26.12.1990 is liable to be set aside, as the A.S.NO.585/1996 8 claim is barred by law of limitation. 7. It was then contended by the learned Government Pleader that the rate of interest at 15% as per the provisions contained under the Kerala Land Reforms Act is totally wrong. The suit being one for damages, it was upto the plaintiff to adduce evidence in support thereof. The plea as such raised is sound. But, in this case, the plaintiff had claimed more interest than awarded on the basis that he had to pay huge interest for availing loan for the purpose of completing the work. True, the plaintiff might not have adduced evidence on the actual amount so drawn and spent towards completion of the work. But, the fact remains beyond dispute that the over draft facility availed of by the plaintiff was after paying huge interest. Interest is awarded only on the quantified amount as admitted by the State. In that regard, we do not think interest at 15% per annum is in any way exorbitant and that the said rate fixed by the court below is perfectly justifiable. 8. The learned Government Pleader further contended that 12% interest awarded by the court below under Section 34 C.P.C. for the adjudged amount is on the higher side. We have heard both sides on this aspect and we find that the discretion exercised by the court below A.S.NO.585/1996 9 awarding 12% is on a higher side. Hence, we think it is only just and proper that some reduction in the matter of award of interest under Section 34 C.P.C. is granted. We, therefore, reduce the rate of interest to 10% instead of 12% provided the entire claim under this decree is satisfied within a period of three months from today, failing which the concession granted in the matter of reduction will not be available to the appellant and the rate of interest awarded by the court below will stand. Even though a Cross Objection is filed by the plaintiff, we find that over and above the amount awarded by the court below and to the extent we have granted relief as above, the plaintiff is not entitled to any more amount. The plaintiff has not adduced satisfactory evidence to substantiate his claim for enhanced amount and the court below has given valid reasons as to why such enhancement could not be acceded to in the absence of evidence. In the result, we allow this appeal modifying the decree as follows: The plaintiff will be entitled for damages quantified at 15% per annum on the amount of Rs.5,90,710/- from 26.12.1990 till 31.12.1992. The plaintiff will also be entitled for interest at the rate of 10% per annum over the said amount A.S.NO.585/1996 10 from the date of the suit till realisation, less what has already been deposited in the court below. The Cross Objection is dismissed. The parties shall bear their respective costs. (P.R. RAMAN) JUDGE (C.T. RAVIKUMAR) JUDGE sp/ A.S.NO.585/1996 11 P.R. RAMAN & C.T. RAVIKUMAR, JJ. A.S. NO.585/1996 & CROSS OBJECTION JUDGMENT 8th January, 2009 A.S.NO.585/1996 12