STATE OF GUJARAT v. SHIRINBAI PIROJSHAH WADIA — 1975 DIGILAW 28 (GUJ)

B. K. MEHTA, S. H. SHETH, J. ( 1 ) THIS appeal by the State Government is directed against the judgment and decree of the Civil Judge (S. D.) Baroda in Special Civil Suit No. 72 of 1968 ordering the State Government to pay a sum of Rs. 78 747 paise with costs on the entire suit amount and with running interest at six per cent on the principal amount of Rs. 59 0 21 paise from the date of the suit till realisation and granting a permanent injunction restraining the State Government or its officers servants or agents from recovering or adjusting the amount of Rs. 25 0 claimed by the State Government as an excess payment to the deceased-contractor Shri P. P. Wadia. A few facts need be stated so as to appreciate the dispute involved in this appeal. ( 2 ) THE Executive Engineers Public Health in Public Works Department of the State of Gujarat had invited tenders for Dabhoi Water Supply Scheme. The tender filed by the deceased-contractor bearing No. B-24 of 1958 was accepted by the State Government as it was lowest. The estimated cost of the works in question was Rs. 3 7 440 the quotation of the aforesaid Contractor for execution of the said works was Rs. 2 82 557 The contract works consisted of constructing infiltra- tion wells inspection chambers jack-well with circular pump from connect- ing porous pipe line and constructing staff-quarters aqua privy etc. at Head works site and R. C. C. Tank in the town of Dabhoi near Municipal Garden. The contract document in respect of the aforesaid works was executed by and between the parties on 30th June 1958 The works com- menced on 27th November 1958 One of the items of works was laying down porous pipes in the bed of river Orsand near Dabhoi town by doing excavation and refilling the trenches in which pipes were to be laid down. This item of work had to be executed in the river-bed where there was a lot of sand. Since the river was stormy and the bed was sandy at the site of the work it was not possible to execute the work of laying porous pipes by excavation as required under the suit contract. This item of work had to be executed in the river-bed where there was a lot of sand. Since the river was stormy and the bed was sandy at the site of the work it was not possible to execute the work of laying porous pipes by excavation as required under the suit contract. The deceased- Contractor therefore brought this fact to the notice of the executive Engineer as well as the Deputy Engineer in charge of the works. The Contractor asked for the instructions from the Executive Engineer as to how he should proceed in execution of the works in view of the difficult nature of the item of work due to peculiar site condition. In the initial stages the Executive Engineer could not decide and therefore could not give instructions as to how the deceased-Contractor should proceed with the work. The contractor therefore was left with no alternative but to start laying pipes in the 10 feet wide excavation made at the top as required under the contract. The Contractor had therefore to bring strong and big centering materials from Bombay. However it was found that he was not success- fully able to execute the item of work as the vertical pressure of the sand was so much that there used to be land sliding and the work used to collapse with the result that the machinery brought for purposes of exca- vation and centering materials were completely buried and the son-in-law of the deceased-Contractor who was attending the works on behalf of the Contractor miraculously escaped. The deceased-Contractor adopted another method by using steel centering in the bottom but that also could not withstand the pressure of the sand and that centering also gave way which resulted in monetary loss to the Contractor. The authorities concerned therefore having realised the impossibility in execution of the said work instructed the Contractor to do open excavation with a width of 50 to 60 at the top as was done in similar work in the river-bed Narmada near Broach. The authorities concerned therefore having realised the impossibility in execution of the said work instructed the Contractor to do open excavation with a width of 50 to 60 at the top as was done in similar work in the river-bed Narmada near Broach. The contractor carried out the work as instructed by the authorities by having open excavation of 50 of 60 at the top and as he was required to do excess quantity of work of excavation than what was originally estimated he claimed in his running bills for the excess quantity of work done at the tender rate for the item of excavation as agreed in items Nos. 1 2 3 and 7 of the Bill of gurrantities attached to the suit contract. The Contractor was paid for the excess quantity of work at the tender rate upto 10th running bill but thereafter the authorities refused to pay for the excess quantity at the tender rate. The contract work was completed somewhere on 31st August 1962. The deceased-Contractor did not prefer the final bill as required under the contract document within one month of the comple- tion of the works. The Executive Engineer as well did not prepare the final bill as he was entitled to do under the contract document. It appears that the Executive Engineer was of the opinion that this was the excess work done by the deceased-Contractor of the item of excavation and that therefore the Contractor was entitled to recover the additional amount for the excess quantity at the contract rate. The Higher Authorities could not decide this question of additional claim of the Contractor for the work of excess quantity of the item of excavation. However somewhere in November 1963 the Under Secretary to the Government of Gujarat in Public Works Department way of the opinion that the excavation quantities recorded in the Measurement Books were as per open excava- tion with slopes and not as prescribed under the respective items in the contract document and it would therefore be necessary to pay for this excess quantity at such reduced rates by which no extra expenditure was incurred to the Government. He therefore requested the Superintending Engineer to work out rates for these quantities in such a way so as not to increase the cost with no consequent loss to the Government. The Contractor Shri P. P. Wadia died somewhere in 1966. He therefore requested the Superintending Engineer to work out rates for these quantities in such a way so as not to increase the cost with no consequent loss to the Government. The Contractor Shri P. P. Wadia died somewhere in 1966. It appears that the Executive Engineer by his letter of 6th March 1968 informed the daughter of the deceased-Contractor that the final bill for the works in question had been prepared by the Deputy Engineer Sub-Division Baroda which was under scrutiny in his office and the said bill however revealed that the deceased-Contractor was made excess payment of Rs. 25 0 She was therefore requested to repay the said amount in cash in the office so as to enable the Executive Engineer to adjust it finally and in case of her default to do so within a fortnight of the receipt of the letter she was informed that the same would be adjusted against the amount of security deposit of the works in question and other works of the deceased-Contractor with the Department and for the short-fall if any it would be recovered as arrear of land revenue from the properties of the Contractor. In view of this letter the widow and daughter of the deceased-Contractor who were his heirs and legal representatives served a statutory notice as required under sec. 80 of the Civil Procedure Code on the State Government making a total claim of Rs. 1 0 225 paise consisting of different amounts due and payable by the State Gover- nment to the deceased-Contractor by the letter of their advocate of 30th March 1968 As the State Government failed to comply with the demand made in the aforesaid notice the respondents-plaintiffs filed the suit in the Court of Civil Judge (S. D.) Baroda praying for a decree for a sum of Rs. 88 120 paise as made up of the following amounts and for permanent injunction restraining the Government from adjusting the alleged excess payment of Rs. 25000. 00 against the amount of security deposit and/ or from recovering it as arrear of public revenue. The amounts which have been claimed in the suit are as under: rs. 21,590-14 being the amount of difference payable for the excess quantity of work of the item of excavation. Rs. 25000. 00 against the amount of security deposit and/ or from recovering it as arrear of public revenue. The amounts which have been claimed in the suit are as under: rs. 21,590-14 being the amount of difference payable for the excess quantity of work of the item of excavation. Rs. 4,000-00 being the amount of damages for the loss caused as a result of collapse of centering material due to faulty specifications of the Department. Rs. 3,000-00 being the amount of extra item of dewatering which the Contractor was required to do as a result of the open excavation instructed to be done by the authorities. Rs. 18,251-00 being the amount of security deposit to be refunded. Rs. 19,200-00 being the balance price remaining unpaid for the work done. Rs. 22,080-00 being the amount of interest by way of damages at the rate of 6 per cent per annum for Years 5-9 months. ( 3 ) THE suit was resisted by the State Government by its written state- ment Ex. 15 contending inter alia that the suit was beyond the period of limitation; the statutory notice was neither valid nor legal and the decision of the Under Secretary awarding reduced rates for the changed item of work was final and binding and that the payments made under the running bills for the excess quantities at the contract rate were in nature of advances and in view of the decision of the Under Secretary to give reduced rates the State Government was entitled to recover Rs. 25000. 00 paid its excess to the Contractor by adjusting against the security deposit and/or by way of arrear of public revenue. ( 4 ) ON the aforesaid pleadings the learned Civil Judge raised necessary issues and on consideration of the oral as well as documentary evidence reached the conclusion that the plaintiffs were entitled to recover for the excess quantities of the item of work of excavation at the contract rate as this was done under the instructions of the authorities concerned and therefore the plaintiffs were entitled to recover all the amounts in full as prayed for except on account of damages security deposit and interest. The learned Judge has therefore upheld the claim of the plaintiffs resp- ondents of Rs. 21 590 paise on account of the claim for the excess quantities of the item of excavation. The learned Judge has therefore upheld the claim of the plaintiffs resp- ondents of Rs. 21 590 paise on account of the claim for the excess quantities of the item of excavation. He similarly upheld the claim of Rs. 3000 account of additional work of dewatering from the trenches excavated. He also upheld the claim of Rs. 19 200 account of the balance of price remaining unpaid for the work done. As regards the claim of damages in the sum of Rs. 4000. 00 the learned Civil Judge rejected the same. As for the claim of Rs. 18 251 account of the refund of security deposit the learned Civil Judge allowed it only to the extent of Rs. 15 291 paise as he found that this was the only amount deposited by the deceased-contractor. As regards the claim of interest for Rs. 22 80 though the learned Civil Judge found that the plaintiffs-respondents were entitled to claim interest at the rate of 6 per cent by way of damages since the total claim upheld by him in the suit were reduced the interest amount was also proportionately reduced and the learned Civil Judge allowed Rs. 19 738 interest by way of damages for the period prior to the date of the suit. In that view of the matter the learned Civil Judge granted a decree of Rs. 78 747 paise with running interest at 6 per cent on the principal amount of Rs. 59 0 paise from the date of the suit till realisation together with the costs of the suit. It is this judgment and decree which is the subject matter of this first appeal before us. ( 5 ) THE only claim which has been very seriously attacked by the learned Assistant Government Pleader was on account of the interest. The plaintiffs have claimed Rs. 22 80 interest at the rate of 6 per cent by way of damages for a period of five years and nine months. The trial court has allowed Rs. 19 738 the amount of interest by way of damages at the rate of 6 per cent on the principal amount of claims which the trial court has upheld. 22 80 interest at the rate of 6 per cent by way of damages for a period of five years and nine months. The trial court has allowed Rs. 19 738 the amount of interest by way of damages at the rate of 6 per cent on the principal amount of claims which the trial court has upheld. The learned Assistant Government Pleader has urged that the plaintiffs are not entitled to claim interest for the period prior to the date of the suit as there was no agreement between the parties nor there was any usage claimed or established nor under the Interest Act. On the other hand Mr. Kaji the learned Advocate appearing on behalf of the plaintiffs-respondents has urged that the trial court was justified in granting interest at the rate of 6 per cent under the first part of section 1 of the Interest Act where the Court has discretion to grant interest upon all debts or a sum certain payable at a certain time or in any case on equitable consideration that the sum was wrongfully withheld. Mr. Kaji however did not dispute the accepted position of law that interest cannot be allowed by way of dangers. In MAHABIR PRASAD RUNGTA V. DURGA DATTA A. I. R. 1961 SC 990 it has been held by the Supreme Court that it was well settled that interest as damages cannot be awarded. In BENGAL NAGPUR RAILWAY COMPANY LIMITED V. RATTANJI RAMJI AND OTHERS. 65 INDIAN APPEALS 66 the Privy Council held that in the absence of any usage or contract express or implied or of any provision of law to justify the award of interest on the decretal amount for the period before the insti- tution of the suit interest for that period could not be allowed by way of damages caused to the respondents for the wrongful detention of their money by the railway company. The contention of Mr. Kaji that the plain- tiffs were entitled to interest under the first part of sec. If of the Interest Act 1839 is also not well founded. The contention of Mr. Kaji that the plain- tiffs were entitled to interest under the first part of sec. If of the Interest Act 1839 is also not well founded. Sec. I so far as is relevant for purposes of this contention provides as under :1 Power of Court to allow interest :- It is therefore enacted that upon all debts or sums certain payable at a certain time or otherwise the court before which such debts or sums may be recovered may if tt shall think fit allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable if such debts or sums be payable by virtue of some written instrument at a certain timethe contention of Mr. Kaji is as stated by us not well founded for two seasons; in the first instance it cannot be said that the amount which was payable under the contract document Ex. 41 was a sum certain because sum could have been ascertained only after the final bill is prepared on taking the final measurements by the authorities concerned and after the final bill is accepted by the Government and secondly it cannot be said that it was payable at a certain time. Mr. Kaji however made an attempt to persuade us that under Clause 8 of the contract document Ex. 41 the final bill was to be prepared within one month after the com- pletion of the contract works and therefore that date should be conside- red as a time certain for the payment We are afraid we cannot accede to this submission of Mr. Kaji for the simple reason that if the final bill is prepared it is not certain that the payment would be made inmediat- ely on the final bill. It will depend on many considerations whether that final bill is accepted by the State Government having regard to the qua- ntities measured the quality of work etc. Kaji for the simple reason that if the final bill is prepared it is not certain that the payment would be made inmediat- ely on the final bill. It will depend on many considerations whether that final bill is accepted by the State Government having regard to the qua- ntities measured the quality of work etc. ( 6 ) IN RAJA OF PITTAPUR V. B. PALLAMRAJU AND ANOTHER A. I. R. 1921 MADRAS 76 the Court was concerned with a similar question where according to the building contract entered into between the parties all work done by the contractor was to be paid for according to the rates therein specified within a reasonable time after it has been inspected and finally approved and passed. The Court held that the money due to the contractor was not a debt or sum certain payable at a certain time and that interest was also not climbable under the proviso to sec. 1 of the Interest Act and that in the absence of any provision for the payment of interest in the contract or any demand for such payment no interest could be decreed. Seshagiri Aiyar J. while delivering his concurrent judg- ment posed the problem whether the respondent was entitled to claim interest in view of the finding of the trial court that the respondent-plai- ntiff was entitled to claim interest under first part of sec. I of the Inte- rest Act and he observednow comes the question whether the claim in this case is within the Act. As I began by saying it was a claim advanced by the plaintiff for money due after rendering accounts of the work which he had done for the 1st defendant. In such a claim a debt or sum certain payable by virtue of a written instrument at a certain time there is no doubt that there was a written instrument; but I am not satisfied that it is a sum certain. It is a sum which is sought to be made certain by the concurrence of the first defendant to the demand. Until that assent is obtained it is an unliquidated sum. Further I doubt whether it is a sum payable at a certain time. It may be as was suggested by the learned Vakil for the respon- dent that when no time is fixed for payment the money becomes payable at once. Until that assent is obtained it is an unliquidated sum. Further I doubt whether it is a sum payable at a certain time. It may be as was suggested by the learned Vakil for the respon- dent that when no time is fixed for payment the money becomes payable at once. But I do not understand the Act as referring to such legal presumption. As at present advised in my opinion the words payable at a certain time relate to the agreement between the parties and not to presumption of law. However. that may be this case is covered by the decision in the court of Appeal in HILL V. SOUTH STAFFORDSHIRE RAILWAY CO. (1874) 18 EQ. 154-43 L. J. CH. 556 ). That was a case where the Contractor made a demand in writing for a sum as balance due to him and claimed interest. The Vice-Chancellor held that the claim did not relate to a sum certain payable at a certain time. The same view was taken by the House of Lords in LONDON DOVER CHATHAM RAILWAY CO. V. SOUTH EASTERN RAILWAY CO. (1893) A. C. 429-69 L. T. 637-63 L. J. CH. 93 ). In that case there was a stipulation between the parties that accounts should be rendered and that a payment of not less than 75 per cent should be made on account of the balance appearing to be due on the faee of the accounts so rendered. The House of Lords came to the conclusion that there was no doubt of a sum certain payable at a certain time. The present case is an afortiori one. Here there is no agreement to pay any portion of the bill on its being tendered to the appellant; it became due only after the parties had settled the accounts. It follows from the above discussion that the claim in this case is one relating to a contract and not one in which a such certain is payable on a cer- tain date. The provisions of the Act are therefore not complied with and conse- quently the plaintiff is not entitled to the interest awarded by the lower courtwe are in respectful agreement with the principle stated above. Mr. The provisions of the Act are therefore not complied with and conse- quently the plaintiff is not entitled to the interest awarded by the lower courtwe are in respectful agreement with the principle stated above. Mr. Kaji attempted to persuade us that the plaintiffs were entitled to claim interest on equitable consideration since the amount which was lawfully due to them was wrongfully withheld by the appellant-State. In MAINE AND NEW BRUNSWICK ELECTRICAL POWER CO. LTD. V. ALICE M. HART A. I. R. 1929 P. C. 185 the Judicial Committee held that when once a contract has been executed then apart from cases where rescission on the ground of fraud is sought their remains nothing to attract the equitable jurisdiction and interest cannot be allowed on equitable principle. In that view of the matter therefore we do not think that the trial Court was justified in awarding interest by way of damages or on any other consideration far the period of five years and nine months from the date of the suit. The plain tiffs would be entitled to claim interest from the date of demand which they have made by the statutory notice which they thee served on the State Government. The statutory notice is to be found at Ex. 30. This notice is dated 30th March 1968 We are therefore of the opinion that the plaintiffs would be entitled to claim interest on the different amounts claimed and upheld by the trial court from 1st April 1968 at the rate of 6 per cent when the said notice had been received by the State Government till the date of the suit and at the same rate thereafter till realisation. ( 7 ) MR. Chhaya the learned Assistant Government Pleader lastly made a faint attempt to urge that the suit was time barred under Article 18 of the limitation Act 1963 Article 18 provides the period of limitation of three years for the price of the work done under contract at the request when no time has been fixed for the payment. The commencing point of limitation is when the work is done. It was urged that admittedly the work was comple- ted on 31st August 1962 and since the suit was filed on 7th August 1968 it was clearly time barred. We do not think that this contention of Mr. Chhaya is well founded. The learned trial. The commencing point of limitation is when the work is done. It was urged that admittedly the work was comple- ted on 31st August 1962 and since the suit was filed on 7th August 1968 it was clearly time barred. We do not think that this contention of Mr. Chhaya is well founded. The learned trial. Judge has held that the conditions required for attraction of Article 18 are not satisfied. We are of the opinion that this cannot be said to be a contract where no time has been fixed for payment. It is no doubt true that no time certain has been fixed. But therefore it cannot be said that this is a contract where no time has been fixed at all. The time for the payment is on the completion of the work to the satisfaction of the Executive Engineer and after the final bill is prepared and submitted. Secondly also the work could not be said to have been completed till the work is accepted as satisfactory work by the Executive Engineer and the final bill is accepted by them. It is only when the final bill is prepared and accepted by the State Government that it can be said that the work was satisfactorily completed. If there is any dispute as to the quality or the nature of the work the contract document Ex. 41 requires that the Contractor would re-execute the work. In our opinion therefore till the final bill is prepared and accepted by the State Government it cannot be said that the work is satisfactorily executed for which payment is due to the Contractor. But in any case the main condition of Article 18 that where no time has been fixed for payment under a contract the period of limitation for a suit for the price of the work done would be three years This condition is not satisfied in the present case. The learned Civil Judge was therefore right in holding that Article 18 was not attracted at all and the appropriate Article in the present case would be Article 113 corresponding to Article 120 of the Limitation Act 1908. It should be noted that the work was physically completed in August 1962 at which time the old Limitation Act was in force. It should be noted that the work was physically completed in August 1962 at which time the old Limitation Act was in force. The corresponding Article in the Limitation Act 1908 was Article 120 which prescribed a period of six years Since the work was completed on 31st August 1962 the limitation would have expired on 31st August 1968 and since the suit was filed on 7th August 1965 it is clearly within time. In any case under sec. 30 of the Limitation Act 1963 where the period of limitation prescribed under the new Act is less than the one prescribed under the old Act a party can file suit within extended period of seven years from the date of the commencement of the limitation Act 1963 In that view of the provision contained in sec. 30 of the limitation Act 1963 we are of the opinion that the trial Court was right in holding that the suit was within limitation. No other points have been urged by Mr. Chhaya the learned Assistant Government Pleader. ( 8 ) THE result is that this appeal is partially allowed and the decree be modified and it is ordered that the plaintiffs would be entitled to recover principal amount of Rs. 59 0 paise with interest at the rate of 6 per cent from 1st April 1968 till the date of the suit and at the same rate thereafter till realisation. Having regard to the fact that we have partially allowed this appeal on account of interest there should be no order as to costs in this appeal .