RSA No. 1513 of 2008 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA No.1513 of 2008 Decided on : 27 -02-2009 Improvement Trust, Patiala ....Appellant VERSUS M/s Gagan Builders and others ....Respondents CORAM:- HON'BLE MR. JUSTICE MAHESH GROVER Present:- Mr. Amit Singh, Advocate for the appellant Mr. Gaurav Chopra, Advocate for the respondent no.1 Mr. N.S.Virk, Addl. A.G., Punjab for respondent no.4 MAHESH GROVER, J This is a second appeal by the defendant directed against the judgement of the learned Trial Court dated 28.3.2007 and as also of the First Appellate Court dated 28.1.2008. Briefly stated facts of the case are that plaintiff-respondent was engaged in the business of construction and providing internal water supply and sewerage work which work it executed for the appellant pursuant to a tender floated by the appellant on 16.5.2004. Two separate works were awarded to the respondent; one regarding the tender dated 16.11.94 of works estimating Rs.4.5 lacs and other pertaining to tender dated 2.3.1995 pertaining to works amounting to Rs. 5.25 lacs. The date of completion of these works was fixed as 31.8.95 which was duly completed by the plaintiff- respondent. The Trust made some payments as against the works which were executed i.e. on 7.4.1995 an amount of Rs. 2,61,346/- and Rs.89,207/- RSA No. 1513 of 2008 2 on 1.8.1995 against the works allotted vide memo dated 16.11.1994 and Rs.2,48,469/- on 1st September, 1995 against the work allotted vide memo dated 2.3.1995 after deducting necessary security and income tax from the running bills as submitted by the plaintiff-respondent. On 25th November, 1997 the officials of the appellant wrote to the respondent expressing their dis-satisfaction with the works executed by him and directed him to remove those defects, which were done. Accordingly, the final bill was submitted to the appellant by the respondent. But the same was not paid and the plaintiff-respondent submitted reminders dated 17.6.1998, 8.9.1998, 30.8.1999, 23.3.2000, 30.5.2000 and 2.6.2006. Utlimately notice under Section 80 was issued requiring two months time to make the payment on 22.11.2000 which was received by the appellant. The suit for recovery was filed with the aforesaid averments. The appellant who contested the suit pleaded that the suit is barred by limitation and on merits pleaded that the work was completed within the stipulated period and defects pointed out were not rectified to their satisfaction and since the respondent had failed to carry out the works to the satisfaction and further he did not carry out any entries in the measurement books, the bills could not be satisfied. It is pleaded that no final bills were submitted as necessary entries in the measurement books were not made. The parties went to trial on the following issues:- 1. Whether the plaintiff is entitled to recover a sum of Rs.5,14,000/- from the defendants?OPP. 2. Whether the plaintiffs' entitled to future interest, if so at what rate? OPP. RSA No. 1513 of 2008 3 3. Whether the suit is within limitation? OPP. 4. Whether the plaintiff is estopped from filing the suit? OPD. 5. Whether the suit is not maintainable for want of notice under S.80 CPC? OPD. 6. Whether the plaintiff has no locus standi to file the present suit?OPD. 7. Relief. It is pertinent to mention here that a suit for recovery of Rs.5,14,000/- was filed alongwith interest at the rate of 12% per annum from the date of filing of suit for the works allotted to them. Learned Trial Court after appraisal of evidence before it decided issues nos. 1 to 3 in favour of the plaintiff-respondent while issue no. 6 was decided against the appellant and decreed the suit for an amount of Rs.5,14,000/- and three months time was granted to defendant nos. 2 to 4 (appellant in this appeal) to make the payment failing which the respondent shall be held entitled to recover the amount with pendente lite and future interest @ 6% per annum from the date of filing of the suit till the date of full and final payment. Aggrieved against this, the appellant filed an appeal which was dismissed. The respondent also dis-satisfied with the decree in his favour filed cross-objections. Learned counsel for the appellant has assailed the findings of the learned First Appellate Court by saying that the suit was clearly barred by limitation as concededly the final bills were submitted in the year 1995 and the suit was filed in the year 2001. It was contended that date of submission of final bills would be irrelevant as limitation would run from RSA No. 1513 of 2008 4 the date when the work has been completed and period of limitation would start running from it. Reliance was placed on AIR 1984 Punjab & Haryana 185 titled as 'Jullunder Improvement Trust, Jullunder v. Kuldip Singh' wherein it was observed as under:- “The plaintiff in the instant case, contended to construct a road for the defendant. The work was completed on 28.9.1987. The certificate that necessary measurements had been recorded in the Measurement Book was given on 7.10.1967 by the Engineer in charge. The payment of the bill was received by the plaintiff under protest on 14.12.1967. The present suit by the plaintiff for the amount claimed for the work was filed on 9.2.1971. he pleaded that the starting point of the period of limitation of three years would start on 14.12.1967 and allowing a period of two months notice period, provided by the contract between the parties, his suit was within time. The defendant pleaded that the starting point was the completion of work on 28.9.1987 and hence the suit was barred. Held, that the suit was barred by limitation. For the purposes of filing the present suit, under Art. 18 the work will be deemed to have been done on 7.10.1967 when it was duly entered in the measurement book and on the basis of which the final bill was prepared. The further certificate that the work had been duly completed according to the terms of the contract and the measurements and other calculations entered into the bill were correct was necessary only for the purpose of making the payment of the final bill. It may be that the said certificate RSA No. 1513 of 2008 5 does not bear any date, but it does not mean that it will be deemed to have been given on 14.12.1967, when the plaintiff received the payment of the bill under protest. In any case, that certificate does not furnish any cause of action to the plaintiff for filing the present suit for which the limitation began to run from the date when the work was done. The furnishing of the final certificate by the Engineer in charge is required under the conditions of contract and is meant for a different purpose Besides, the plaintiff never claimed the suit amount in the final bill submitted by him and, therefore, any final certificate given thereon was immaterial for the purposes of filing the present suit.” and 1971 PLR 166 titled as 'State of Punjab and another versus Sham Lal Gupta' wherein it was held as follows:- “Held, that for the applicability of Article 56, three things are necessary:- (1)that the suit should be for the price of the work done by the plaintiff for the defendant. (2)That the said work was done by the plaintiff at the request of the defendant; and (3)that no time had been fixed for payment of the price of the work. Held, further that it was the Government in the first instance which invited tenders for the construction of their work. On that invitation various contractors submitted their tenders. It was not as if the contractor on his own put in his RSA No. 1513 of 2008 6 tender. If the plaintiff's tender was accepted, that only meant that the rate offered by the contractor was accepted by the Government. The tender was submitted at the desire of the Government and it was the Government, which wanted the work to be done by the contractor, whose tender had been accepted. There is no doubt that the work was of the Government and it was done for it by the contractor. The words 'at his request' will govern the expression' work done by the plaintiff for the defendant' and not the price thereof. If the work was of the Government, as undoubtedly it was and if it was done by the plaintiff for the Government as actually he did, then there is no escape from the conclusion that the plaintiff did that work obviously at the instance of the Government. By accepting the tender of the plaintiff, the Government had merely agreed to pay the price demanded by the contractor for the work, which was to be done by him for the Government at the latter's desire. Held, further that final bill was to be submitted by the Contractor within one month of the date fixed for completion of the work. If he does not do that then the Engineer-in-Charge's certificate regarding the measurements of the work done and the total amount payable for that work shall be final and binding on all the parties. It is common ground that the payment for the work had to be made after the final bill had to be submitted by the contractor. According to this clause, the final bill had been submitted by the contractor within one RSA No. 1513 of 2008 7 month of the date fixed for the completion of work, but no time had been fixed for the payment of that bill by the Government. If the contractor failed to present his bill within the specified time, there is nothing to indicate as to within what period, the Enginee-in-charge would issue the certificate regarding the measurements of the work done and the total amount payable to the contractor by the Government. It is also not mentioned as to when the payment will be made by the Government after the certificate of the Engineer-in-charge had been issued. In this state of affairs, it cannot be said that any time had been fixed for payment of the price of the work done by the contractor for the Government in the instant case.” It was further contended that Clause 7 of the agreement reveals that it was the bounden duty of the plaintiff to submit the final bills within one month of the date fixed for completion of work otherwise the Engineer- in-Chief's certificate of measurement and of the total amount payable shall be final and binding on all the parties. Relevant Clause 7 is extracted hereunder:- “The final bills shall be submitted by the contractor within one month of the date fixed for completion of the work, otherwise Engineer-in-Charge's certificate of measurement and of the total amount payable for the work, accordingly shall be final and binding on all parties.” On the other hand, learned counsel for the respondent contended that since the time when the works were completed, final bills were submitted in the year 1995 itself yet part payment was made to the RSA No. 1513 of 2008 8 respondent. Thereafter, in the year 1997 certain deficiencies were pointed out which were also rectified on the assurance that the bills would be cleared but the same was not done. Final bills were once again submitted which are on record as Ex. P-19 and P-20 and numerous reminders were sent but to no avail. Finally notice under Section 80 of the Improvement Trust was served upon the appellant. It was pleaded that if the notice period is excluded which has to be excluded then the suit is within limitation. Reliance was placed on AIR 1966 SC 1068 titled as 'Sawai Singhai Nirmal Chand versus The Union of India' and 2001(3) RCR (Civil) 211 titled as 'G.C.Nagaraju versus The Executive Engineer, PWD, Mysore Division'. It was further contended that in any eventuality, the appellant being a statutory body could not defeat the rights of an individual without any cogent reason. Reliance was placed upon Hon'ble Apex Court judgment rendered in case titled as 'The Madras Port Trust versus Hymanshu International by its proprietor V.Venkatadri (dead) by L.Rs' AIR 1979 SC 1144 wherein it has been observed as under:- “We do not think that it is a fit case where we should proceed to determine whether the claim of the respondent was barred by S.110 of the Madras Port Trust Act (II of 1905). The plea of limitation based on this section is one which the court always look upon with disfavour and it is unfortunate that a public authority like the Port Trust should, in all morality and justice, take up such a plea to defeat a just claim of the citizen. It is high time that governments and public authorities adopt the practice of not relying upon technical pleas for the purpose of defeating legitmate claims of citizens RSA No. 1513 of 2008 9 and do what is fair and just to the citizens. Of course, if a government or a public authority takes up a technical plea, the Court has to decide it and if the plea is well-founded, it has to be upheld by the Court, but what we feel is that such a plea should not ordinarily be taken up by a government or a public authority, unless of course the claim is not well founded and by reason of delay in filing it, the evidence for the purpose of resisting such a claim has become unavailable. Here, it is obvious that the claim of the respondent was a just claim supported as it was by the recommendation of the Assistant Collector of Customs and hence in the exercise of our discretion under Art. 136 of the Constitution, we do not see any reason why we should proceed to hear this appeal and adjudicate upon the plea of the appellant based on S.110 of the Madras Port Trust Act (II of 1905).” I have heard the learned counsel for the parties at some length and have perused the impugned judgements as also the record. The undisputed facts are that two works were allotted to the plaintiff-respondent pursuant to tender notices dated 16.11.1994 and 2.3.1995 which were executed by him and the work was completed in the year 1995. Some payment was also concededly made in the same year itself. The final bills were submitted initially in the year 1995. According to Clause 7 which has been reproduced above, if there was a dispute regarding the final bills submitted by the contractor then the Engineer-in- Chief was required to depute a subordinate to measure the said work in presence of the contractor whose counter signatures to the measurement RSA No. 1513 of 2008 10 books were required and the Engineer-in-Chief was enabled to prepare a bill from such completion and it would be binding upon the contractor in all the respects. No such exercise was carried out by the appellant and its officials. DW1 who appeared admitted the receipt of the final bills. He also admitted the receipt of all the letters submitted by the plaintiff-respondent. He categorically admitted that Ex.P-19 and P-20 are final bills submitted by the plaintiff-respondent but as per the record no action had been taken by the Improvement Trust. The appellant has not been able to justify as to on what account the payment of the respondent was withheld. An attempt was made before the Courts below to suggest that the payment could not be made because the entries in the measurement books were not made but no such measurement books were produced before the Courts below. Therefore, it seems that the appellant is merely trying to set up some excuse to wriggle out of his liability. In so far as question of limitation is concerned, it is to be noticed that on 25.11.1997 according to the own showing of the appellant itself, notice was issued to the respondent to recitify some shortcomings in the works which were done and final bills were submitted again. Therefore, the question as to whether the works were completed in the year 1995 or in the 1997 after shortcomings were removed would be a moot point. The rectification of the shortcomings which were pointed out after two years could legitimately be construed to be a point of time when the works were completed. The part payments made earlier and also the records speak that they were running bills which were prepared and which were honoured. In this view of the matter, when finally the shortcomings were cleared it could be construed that the works were completed at that point of RSA No. 1513 of 2008 11 jtime i.e in the year 1997. There is no quarrel with the observations made in the judgments of this Court in cases Jullunder Improvement Trust, Jullunder v. Kuldip Singh and 'State of Punjab and another versus Sham Lal Gupta' (supra) but in the opinion of this Court the starting point for completion of works would be the one when the shortcomings were removed to the satisfaction of the appellant. The final bills were submitted thereafter. If that is taken to be the starting point and the period of notice which is statutory requirement is excluded according to the observations of the Hon'ble Supreme Court in AIR 1966 SC 1068 titled as 'Sawai Singhai Nirmal Chand versus The Union of India' and Karnatka High Court in 2001(3) RCR (Civil) 211 titled as 'G.C.Nagaraju versus The Executive Engineer, PWD, Mysore Division' cases (supra) then in such an eventuality, the suit is clearly within limitation. The plea as raised by the learned counsel for the appellant regarding limitation is therefore negatived. Even otherwise the appellant is statutory body and is cast with a duty to honour its commitments. It is not expected that a body with a statutory status would wriggle out of its contractual liability on flimsy pretexts as has been observed by Hon'ble Apex Court in case 'The Madras Port Trust versus Hymanshu International by its proprietor V.Venkatadri (dead) by L.Rs (supra) which have already been reproduced above. Taking all the factors into consideration cumulatively, I am of the considered opinion that the appeal deserves to fail. Accordingly the same is hereby dismissed. February , 2009 (Mahesh Grover) rekha Judge