IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA OSA No. 7 of 2007. Judgement reserved on 11.3.2010. Date of decision: 9.4.2010. Anil Kumar Mahajan …..Appellant. Vs. State of H.P. & anr. …. Respondents. Coram The Hon’ble Mr. Justice Dev Darshan Sud, Judge. The Hon’ble Mr. Justice Kuldip Singh, Judge. Whether approved for reporting?1 For the appellant : Mr. J.S. Bhogal, Senior Advocate with Mr. Suneet Goel, Advocate. For the Respondents : Mr. R.K.Bawa, Advocate General with M/s P.K.Sharma, Additional Advocate General and P.M.Negi, Deputy Advocate General. Kuldip Singh, Judge. The plaintiff has come in appeal against judgement, decree dated 3.7.2007 passed by Hon’ble Single Judge in Civil Suit No. 10 of 2003 rejecting the claim of appellant for Rs.10,42,276/- on account of escalation. 2. The facts in brief are that appellant had filed a suit for recovery of Rs.21,50,000/- for not paying such amount to appellant by respondents in accordance with the agreements. It is the case of the appellant that he entered into contracts with respondent No. 1 Whether the reporters of the local papers may be allowed to see the Judgment? …2… through respondent No.2 for execution of works vide four agreements No. 60/1998-99, 34/1999-2000. 1/2000-2003 and 3/2002-2003. The agreements were executed on standard forms of contract. The works were duly completed by the appellant and the measurements were also recorded in the measurement book maintained by the respondents. 3. The respondents got the bills prepared in support of the works executed by the appellant, which bills were checked by respondent No. 2 in June 2007. The appellant had submitted five running bills to respondents amounting to Rs.10,36,284/- of four contracts, which became payable when the bills were passed but despite several demands, respondents have not paid the bills. 4. It has been alleged that vide agreement No. 60/1998-99 there was a price escalation clause and in terms of said clause the respondents had submitted the price escalation claim to respondent No. 2 alongwith letter dated 14.10.2002, but the escalation claim amounting to Rs.10,42,276/- was not paid to the appellant. The appellant has thus claimed that on account of execution of works he is entitled to Rs.20,78,960/-. He has also claimed interest at the rate of 2% per annum and in all has claimed a sum of Rs. 21,50,000/-. The appellant after serving a notice under Section 80 CPC has filed the suit for recovery of amount alongwith interest at the rate of 18% per annum. 5. The respondents contested the suit and took preliminary objections of maintainability, suit being pre-mature, appellant had concealed material facts and estoppel. On merits, the respondents …3… have admitted the agreement as well as completion of works by the appellant. It has been pleaded that an amount of Rs.45,076/- and amount of Rs.1,00,000/- were paid to appellant vide cheques dated 17.5.2003. The appellant could not complete the work before 29.1.1999 stipulated date for completion of works. 6. The appellant was required to pay royalty charges or attach M form issued by the Mining Department, but he neither paid the royalty charges nor he submitted the royalty receipts to the department. The appellant was required to return empty cement bags to department and he was liable to pay a sum of Rs.55,944/- on that account. An amount of Rs.2,56,000/- on account of deviation could be paid to appellant after approval from the competent authority. The appellant is not entitled to any escalation under clause 10(CC) of the agreement. The respondents ultimately prayed for dismissal of the suit. 7. In replication, the appellant has admitted payment of Rs.45,076/- and Rs.1,00,000/-. The Hon’ble Single has rejected the claim of appellant of Rs.10,42,276/- on account of escalation under clause 10(CC) of agreement and decreed the suit for recovery of Rs.8,86,551/- alongwith proportionate costs and interest at the rate of 6% per annum from the date of filing of the suit till deposit of the same. It was held that keeping in view the fact that counter claims of the respondents (defendants) are already before the Arbitrator, it was directed that respondents are liable to deposit the amount for which the suit has been decreed. However, the court at the time of application for refund of the amount may consider the question that …4… the amount shall not be released till the award is made by the Arbitrator or the court may consider the question seeking surety from the plaintiff for refund of the amount if required. 8. The appellant has filed the appeal assailing rejection of claim of Rs.10,42,276/- of the appellant by the Hon’ble Single Judge under clause 10(CC) of the agreement. We have heard the learned counsel for the parties and have also gone through the record. It has been submitted by the learned Senior Advocate appearing on behalf of the appellant that Hon’ble Single Judge has wrongly construed clause 10(CC) and clause 12-A of the agreement. The clause 10(CC) and clause 12-A are entirely two different clauses. The letter Ex. DW 1/E was written by the appellant undertaking not to claim enhanced rates under clause 12-A of the agreement. The appellant has never represented or gave an undertaking that he would not claim escalation on account of increase in price material and wages during subsistence of the work. The clause 12-A provides enhanced rates on account of deviation limits in respect of contractual or substituted items, which were required to be executed by the appellant. The learned Advocate General has supported the impugned judgement, decree whereby the Hon’ble Single Judge has rejected the claim of the appellant under clause 10(CC) of the agreement. 9. The relevant part of clause 10(CC) of the agreement is as follows:- “Clause(CC) If the prices of material (not being materials supplied or services rendered at fixed prices by the Department in accordance with Clause-10 and 34 here of) and/ or wages of labour required for execution of the work increase, the contractor shall be …5… compensated for such increase as per provisions detailed below and the amount of the contractor shall accordingly be varied, subject to the condition that such compensation for escalation in prices shall be available only for the work done during the stipulated period of the contract including the period for which the contract is validity extended under the provisions of clause 5 of the contract without any action under clause 2 and also subject to the condition that no such compensation shall be payable for a work for which the stipulated period of completion is 6 months or less. Such compensation for escalation in the prices of materials and labour when due, shall be worked out based on the following provisions:- 1. xxx xxxxx xxxxx 2. xxx xxxxx xxxxx 3. xxx xxxxx xxxxx 4. xxx xxxxx xxxxx 5. xxx xxxxx xxxxx 6. xxx xxxxx xxxxx 7. xxx xxxxx xxxxx 8. xxx xxxxx xxxxx.” 10. The clause 12-A of the agreement is as follows: “CLAUSE 12 A- In the case of contract or substituted items which individually exceed the quality stipulated in the contract by more than the deviation limit, except the items relating to foundation work which the contractor is required to do under clause 12 above, the contractor shall, within 7 days from the receipt of order, claim revision of the rates supported by proper analysis in respect of such items for quantities in excess of the deviation limit, notwithstanding the fact that the rates for such items exist in the tender for the main work or can be derived in accordance with the provisions of sub-clause (ii) of clause 12, and the Engineer-in- charge may revise their rates, having regard to the prevailing market rates and the contract shall be paid in accordance with the rates so fixed. The Engineer-in-charge shall, however, be at liberty to cancel as his order to carry out such increased quantities of work by giving notice in writing to the contractor arrange to carry it out in such manner as he may be considered advisable. But, under the circumstances the contractor shall suspend the work on the plea of non-settlement of rates of items falling under this clause. …6… All the provisions of the preceding paragraph shall equally apply to the decrease in the rates of item for quantities in excess of the deviation limits, notwithstanding the fact that the rates for such items exist in the tender for the main work or can be derived in accordance with the provisions of sub-clause (ii) of the preceding clause 12, and the Engineer-in-charge may revise such rates having regard to the prevailing market rates.” 11. The respondents have relied on Ext. DW 1/E so as to deny the claim of appellant under clause 10(CC) of the agreement. The defence of the respondents to deny escalation to appellant in view of letter Ex. DW 1/E has been accepted by Hon’ble Single Judge. The perusal of Ex. DW 1/E indicates that it is a letter dated 17.12.1999 written by appellant to respondent No.2. In the letter, the appellant had agreed to do the additional work required to be carried out on the tendered rates awarded to him vide letter dated 15.10.1998. In the said letter, the appellant has also undertook not to claim enhanced rates under clause 12-A of the relevant agreement. The letter Ex. DW 1/E is clear to the effect that appellant would not claim enhanced rates under clause 12-A of the agreement. The fact that clause 10(CC) and clause 12-A of the agreement operate entirely in two different fields is not denied on behalf of the respondents. The perusal of clause 10(CC) and clause 12-A of the agreement, noticed above, is clear to the effect that these two clauses are different. The affidavit of DW 1 R.C.Gupta that appellant had agreed not to claim any escalation charges cannot be believed in presence of letter Ex.DW1/E. The respondents have not pointed out any letter/ document from the record written by the appellant to show that appellant at any time had agreed not to claim escalation under clause …7… 10(CC) of the agreement. The letter Ex. DW1/E of appellant cannot be read that he agreed not to claim escalation charged under clause 10(CC) of the agreement. Thus simply on the basis of letter Ex.DW1/E the appellant cannot be denied the escalation charges amounting to Rs.10,42,276/- claimed by him in the suit. 12. On facts it has not been established that escalation charges amounting to Rs.10,42,276/- claimed by the appellant are factually incorrect. The escalation charges have been denied by the respondents to the appellant on the ground that escalation charges are not admissible to appellant in view of letter Ex. DW1/E, but this stand of the respondent as already noticed above is not sustainable. The appellant is thus entitled to escalation charges amounting to Rs.10,42,276/- and therefore, the impugned judgement and decree are liable to be modified. 13. No other point was urged. 14. As a result of above discussion, the appeal is accepted, judgement, decree dated 3.7.2007 passed by Hon’ble Single Judge in Civil Suit No. 10 of 2003 are modified and a decree for a sum of Rs.19,28,827/- is passed in favour of the appellant and against the respondents jointly and severally alongwith interest at the rate of 6% per annum from the date of filing of the suit till payment. No costs. ( Kuldip Singh ), ( Dev Darshan Sud ), Judge. Judge. April 9, 2010. (Hem)