K. RAVINDRAN v. SECRETARY, PUBLIC WORKS DEPARTMENT
2017-04-10
DAMA SESHADRI NAIDU
body2017
DigiLaw.ai
JUDGMENT : Facts: To the petitioner, a contractor, the Government has allotted a civil work--the improvement of a road. On 11.03.2005, he contracted with the Government. Later, the Government expanded the scope of the work and gave a revised estimate, as approved by the Superintending Engineer, Roads and Bridges, PWD, North Circle, Kozhikode-the third respondent. Eventually, the contractor completed the work on 13.03.2007 and obtained the work- completion certificate on 15.10.2007. Throughout or even thereafter, the Department did not complain against the contractor or the manner of his completing the work. 2. On 01.08.2007, the contractor raised a bill for the completed work. But he was paid only in part on 18.10.2007. The balance remained to be paid was Rs.42,48,665/-. 3. Failed to realize the balance amount, the contractor filed W.P.(C) No. 911 of 2009 before this Court and invited a judgment. This Court, overruling the Department's objections, fixed three-months' time, through Ext.P1 judgment, for the Government to pay the amount. That three months' time came to an end on 14.01.2010. Later, the contractor sent Ext.P2 reminder to the Superintending Engineer, who informed the contractor, through Ext.R4, that suitable directions were given to the Executive Engineer, the 4th respondent, to settle the bills. 4. So on 07.04.2012, the contractor requested the Executive Engineer to pay. Eventually, on 25.08.2012, the contractor, perhaps informed by the Executive Engineer, went to his office to receive the amount. He, however, wanted to receive the amount under protest. On the other hand, the Executive Engineer insisted that the contractor should receive the amount without protest. When the contractor refused to receive the amount without protest, the Executive Engineer, too, declined to settle the bills. 5. As seen from the record, on 27.08.2010, the Executive Engineer issued Ext.P5 communication reiterating his stand that the contractor should receive the amount without protest. Eventually, on 07.09.2012, the contractor received the amount and submitted Ext.P6 letter dated 07.05.2012, thereby recording his protest, anyway. Thereafter, the contractor filed this writ petition demanding interest on the entire period from the day the bill was due or, at least, from the day the Court fixed a time-frame for the Government to pay the bills. Submissions: The Petitioner's: 6.
Thereafter, the contractor filed this writ petition demanding interest on the entire period from the day the bill was due or, at least, from the day the Court fixed a time-frame for the Government to pay the bills. Submissions: The Petitioner's: 6. Smt. M.A. Vaheeda Babu, the learned counsel for the petitioner, strenuously contends that the Government had no tenable objection why it did not settle the bills, despite the contractor's completing the work to the Department's satisfaction. She has, on this count, reminded the Court that at no point in time did the Government object to or complain about the quality of the work or the time frame. She has straight away drawn my attention to Section 3 of the Interest Act, 1978, to hammer home her contention that under clause (a) of sub-Section (1) of Section 3, the contractor is entitled to interest. Respondents': 7. On the other hand, the learned Government Pleader has submitted that though the Department was willing to settle the bills, it is the contractor who insisted--unreasonably, at that--on his receiving the amount only under protest. According to her, clause 56 as extracted in Ext. R4(a) would mandate that the contractor is not entitled to any interest. She contends that the contractor undertook to claim no interest, as has been specified under Ext.R4(a). 8. Head Smt. M.A. Vaheeda Babu, the learned counsel for the contractor and the learned Government Pleader, besides perusing the record. Issue: 9. Section 3 (1) (a) of the Interest Act provides for payment of interest on delayed payments. Section 3 (3) (d) exempts the interest if there is an "express agreement," which the contractor has with the Department. That express agreement does not affect a "judgment debt", though. Here, the Court directed the Department to pay the amounts due to the contractor within a time frame. The Department did not. The questions to be answered are these: (1) Is the amount payable to the contractor a judgment debt? (2) Has the contractor entitled to interest on the delayed payment? Discussion: 10. There is, indeed, force in the learned Government Pleader's contention that the contractor could not demand any interest until he had Ext.P1 judgment. Had there been any demand by then, that should have been reflected in W.P.(C) No. 911 of 2009, and this Court could have had an opportunity of ruling on that aspect.
Discussion: 10. There is, indeed, force in the learned Government Pleader's contention that the contractor could not demand any interest until he had Ext.P1 judgment. Had there been any demand by then, that should have been reflected in W.P.(C) No. 911 of 2009, and this Court could have had an opportunity of ruling on that aspect. At this juncture, Smt. Vaheeda Babu has pointed out that the contractor did raise the demand for interest on the payment to be made. Nevertheless, this Court has not chosen to accede to the contractor's contention. Then, we can infer that this Court declined to entertain the contractor's request for interest. 11. Though the Code of Civil Procedure does not apply to the writ proceedings, the common-law principle enshrined in Rule 2 of Order II of CPC makes this position clear: Every judicial proceeding-- say, a suit--shall include the whole of the claim which the party is entitled to make regarding the cause of action, but the party may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court. Where a party omits to sue regarding, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue regarding the portion so omitted or relinquished. The principle, elaborated further, holds that a person entitled to more than one relief on the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted. It is equally well-settled that a relief sought but not adverted to by a Court is deemed to have been rejected, by implication. 12. In the alternative, the contractor wanted this Court to pay interest in terms of Section 3 of the Act beyond the date fixed in Ext.P1 judgment. The learned Government Pleader drew my attention to what is described as ‘clause 56 to form No.83' and the additional condition in Ext.R4(a). I am afraid that condition would have no application once this Court has directed, through Ext.P1 judgment, that the Department should pay to the contractor the amounts by a particular day. That judgment has become final.
The learned Government Pleader drew my attention to what is described as ‘clause 56 to form No.83' and the additional condition in Ext.R4(a). I am afraid that condition would have no application once this Court has directed, through Ext.P1 judgment, that the Department should pay to the contractor the amounts by a particular day. That judgment has become final. At any rate, we may examine clause 56, which reads as follows: "The tenderer/contractor must clearly understand that the settlement of claims either by part bills or by final bill will be made only according to the availability of budget provision and allotment of funds made with the Divisional Officer in charge of the work under the respective head of account in which the work is sanctioned and arranged and also subject to the seniority of such bills. No claim for interest or for damages whatsoever shall be made for the belated settlement of claims of bills. No such claims will be admitted by the Government." (emphasis added) 13. As seen from the above extract, the contractor claim no interest or damages, whatsoever, if the Department settles his bills belatedly. Until this Court directed the Department to settle the bills, that protective clause had insulated the Department. After the Court's fixing the time-frame, the Department failed to stick to it; the defence it took was the inevitable, ubiquitous administrative delay. If that be so, nothing prevented it from having the time originally fixed extended by this Court. But it did not. Does the amount payable to the contractor amount to a judgment debt? 14. Now, we may examine Section 3 (1) (a) of the Interest Act. It deals with the power of the court to allow interest. Clauses (a) & (b) of Sub-Section (1) declare: In a judicial proceeding to recover any debt or damages, if a contractor claims interest on the delayed payment, the Court may award interest at a rate not exceeding the current rate of interest, for the whole or part of the delayed period. That is, (a) if the proceedings relate to a debt payable on a written instrument, then, the interest should be paid from the date the debt becomes payable to the date the party instituted the proceedings; (b) if the proceedings do not relate to any such debt, then, from the date mentioned in a written notice claiming interest.
That is, (a) if the proceedings relate to a debt payable on a written instrument, then, the interest should be paid from the date the debt becomes payable to the date the party instituted the proceedings; (b) if the proceedings do not relate to any such debt, then, from the date mentioned in a written notice claiming interest. If the debt or damages have been repaid before the person institutes the proceedings, interest will not be allowed under this section for the period after the repayment. 15. Indeed, Section 3 (3) (d) prescribes that nothing in Section 3 will apply to "any debt or damages upon which payment of interest is barred, by virtue of an express agreement." Section 2 (c) of the Act defines "debt" to mean any liability for an ascertained sum of money and includes a debt payable in kind, but does not include a judgment debt. Once, the Court declares an amount payable or quantifies it; the debt must be treated as a "judgment debt." If we are still semantically curious, we may examine what a "judgment debt" is. Black's Law Dictionary defines it to be a "debt that is evidenced by a legal document or brought about by a successful lawsuit against the debtor. Here, I reckon, the amount the Department owed to the contractor is both evidenced by a legal document and brought about by a successful judicial proceeding. Has the contractor entitled to interest on the delayed payment? 16. Once we accept that the amount Department owes to the contractor could be termed a judgment debt, which we did, Section 3 (1)(a) of the Act applies. It is, then, inevitable for the Court to conclude that the Government could not escape paying interest. 17. Under these facts and circumstances, I deem it appropriate to hold--and so I hold--that the Government is required to pay interest to the contractor for its paying the amount belatedly despite a clear direction in Ext.P1 judgment. When the Department offered to pay, the contractor refused to receive the amount on the premise that he could only receive that under protest. The time that elapsed after the Department's offer to pay--one month--could not be attributed to it as delay. Therefore, the Department will pay interest from 15.01.2010 till 25.08.2012, but not beyond. 18. The Act is silent on the interest to be quantified.
The time that elapsed after the Department's offer to pay--one month--could not be attributed to it as delay. Therefore, the Department will pay interest from 15.01.2010 till 25.08.2012, but not beyond. 18. The Act is silent on the interest to be quantified. The expression employed in the Section is "current rate." Section 2 (b) has defined "current rate of interest": the highest of the maximum rates at which interest may be paid on different classes of deposits (other than those maintained in savings account or those maintained by charitable or religious institutions) by different classes of scheduled banks in accordance with the directions given or issued to banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949 (10 of 1949). So, I reckon, the rate of interest must be @9%. In the manner indicated above, I allow this writ petition. No order on costs.