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2025 DIGILAW 706 (GUJ)

State of Gujarat v. Gayatri Construction Co.

2025-07-09

HEMANT M.PRACHCHHAK

body2025
JUDGMENT : HEMANT M. PRACHCHHAK, J. 1. The present First Appeal is filed under Section 96 of the CIVIL PROCEDURE CODE , 1908 read with Section 41 of the CPC at the instance of the appellants – State Authorities being aggrieved and dissatisfied with the judgment and decree dated 30.09.1999 passed by the learned Civil Judge (S.D.), Valsad (herein after referred to as “the trial court”) in Special Civil Suit No. 160 of 1991, whereby, the learned Judge partly allowed the suit and directed the appellants to pay Rs.6,73,970/- plus Rs.25,048/- interest total amount Rs.6,99,018/- to the respondent herein and also directed to pay 12% interest on Rs.6,73,970/- from the date of the suit till realization of the decreetal amount. 2. Brief facts leading to the present appeal are as under :- 2.1 That, the respondent was an Engineer and Contractor carries on their business activities in the name and style of M/s Gayatri Construction Co. and they were registered with the Public Works Department and were also approved by various other departments of the State. That, the Executive Engineer, Navsari (R&B) Division, appellant herein had invited the tenders publicly for the work of constructing B.C.K. Sector, Regional School at Dharampur. That, the respondent had filled the tender and submitted the same to the appellant Department. That, the tender of the respondent was accepted by the Department and on acceptance of the tender the respondent had paid security deposit and entered into an agreement bearing Agreement No. B-2/24 of 1987-88 and as per the said agreement, the work was required to be commenced according to the work order issued on the respondent, from 15.09.1987, the said work was required to be completed on or before 30.09.1989, and the said work was required to be carried out to the tune of Rs. 20,37,018-25. 20,37,018-25. That, the present contract created mutual bilateral reciprocal contractual obligations, inasmuch as, certain reciprocal contractual obligations were required to be performed first by the appellant Department, and on its performance, the respondent was required to perform his part of the contractual obligations and as the appellant Department failed to perform their part of the contractual obligations, the above said work could not be completed within its stipulated time and the reasons for the non-completion of the said work within its stipulated time period, are as under: 2.1 That, as per the terms and conditions of the contract, the appellant Department was required to give item-wise programme for the work to be executed, but no item-wise programme was ever furnished by the appellant - Department. As per the terms and conditions of the contract, the appellant - Department was required to supply the detailed working drawings, together with work order but failed to do so and thereby the appellant - Department had committed breach of the terms and conditions of the contract. That, as per the terms and conditions of the contract, the appellant - Department was required to give the line out for executing the above said work immediately on issuance of the work order but, the appellant had given line out after a month. That, the appellant did not make the payment of the extra work done and thus, due to non-payment of the work done also thereby committed breach of the terms and conditions of the contract. That, as per the Schedule A the appellant was required to supply the respondent with the cement for the work to be executed, but no cement was made available to the respondent by the Department. Therefore, due to these reasons the work could not be completed within stipulated time. That, as per the Schedule A the appellant was required to supply the respondent with the cement for the work to be executed, but no cement was made available to the respondent by the Department. Therefore, due to these reasons the work could not be completed within stipulated time. That, the contract in question was not extended by the appellant on account of non-payment of the due and legitimate payment and non-payment of the work done and also, non- payment of the work done beyond the scope of the contract conditions amounting to a breach of the terms and conditions of the contract, and the work which was required to be completed on or before 30.09.1989, could not be completed and further, due to non-payment of the work done and other losses, the respondent was not under any contractual obligations to proceed and complete the work after the said date and on account of breaches committed by the appellant, the respondent did not seek for extension and hence, the contract in question by efÒux of time had come to an end on 30.09.1989, thereby no contract was in existence after and hence, the termination of the contract by the appellant, being against all the settled principle of law and hence, the same being illegal and unwarranted and further levy of penalty and forfeiture of security deposit is also unwarranted. That, the respondent had executed the work to the tune of Rs. 5,60,689/- and the same was executed under the supervision of the appellant - Department and out of the said work done, the payment of Rs. 4,88,881/- was made, therefore, the respondent was entitled to a sum of Rs. 71,808/-. That, as per the terms and conditions of the contract, the work was required to be completed within its stipulated time period but, due to departmental reasons, such as non-payment, clear site etc., the work in question could not be completed and also the time limit for execution of the work was not extended by the appellant, no contract was extended bilaterally by both the parties, and thereby, the appellant had no right to deduct a sum of Rs. 500/- towards the time limit deposit being contrary to the terms and conditions of the contract, was required to be refunded back to the respondent. 500/- towards the time limit deposit being contrary to the terms and conditions of the contract, was required to be refunded back to the respondent. That, as per the terms and conditions of the contract, the respondent had paid initial security deposit of Rs. 40,000/- in form of Bank guarantee and N.S.C. and the remaining sum of Rs. 17,547/- were recovered in cash from R.A. Bills, but, after the appellant had resorted to illegal and unwarranted action, the appellant - Department had to release Bank Guarantee of Rs. 20,000/-, N.S.C. of Rs. 20,000/- and refund of cash recovery of Rs. 17.547/- total amounting to Rs. 57,547/- and hence, the appellant - Department was required to release bank guarantee, N.S.C. of Rs. 20,000/- and to refund Rs. 17,547/- to the respondent. That, as per the terms and conditions of the contract, the respondent was required to execute the work to the tune of Rs. 20,37,018-25p. but, due to the appellant, the respondent could not execute the work to the tune of Rs. 15,98,793/-, the respondnt had suffered his expected profit which the respondent had calculated at 15% at the time of tendering, and hence, on account of non-execution of the work to the said tune, the respondent was entitled by way of compensation, a sum of Rs.2,39,819/- from the appellant. That, his materials like sand, metal etc. were lying on site, the value of which was Rs. 50,000/- and the department had taken over the possession of the said material, therefore, the respondent had claimed for Rs. 50,000/-. That, as per the terms and conditions of the contract, the respondent was required to execute item no.5, 10 as contemplated therein but, the respondent was instructed to carry out the said items with all materials etc. but, in fact, and as per the items, the respondent was not required to provide the same and hence, the respondent was entitled for the same for a total sum of Rs. 2,95,989/- from the appellant. That, the respondent had suffered interest loss which he was entitled. The respondent had claimed interest at the rate of 18% p.a. and in all he had claimed Rs. 7,40,711/- from the appellant. 2,95,989/- from the appellant. That, the respondent had suffered interest loss which he was entitled. The respondent had claimed interest at the rate of 18% p.a. and in all he had claimed Rs. 7,40,711/- from the appellant. Therefore, in these circumstance, the respondent had filed the suit to recover the said amount with interest and costs of the suit, whereby, the learned Judge partly allowed the suit and directed the appellants to pay Rs.6,73,970/- to the respondent herein with 12% interest from the date of the suit till realization of the decreetal amount. 3. Being aggrieved and dissatisfied with the impugned judgment and award dated 30.09.1999 passed by the learned Civil Judge (S.D.), Valsad in Special Civil Suit No. 160 of 1991, the appellants – State Authorities have preferred this appeal. 4. Heard learned Assistant Government Pleader Ms. Krishna Desai, appearing for the appellants – State Authorities and learned advocate Mr. Paras Sukhwani, appearing for the respondent – Company. 5. Learned AGP Ms. Desai has submitted that the impugned judgment and award passed by the trial court is contrary to the provisions of law, facts and evidence available on record of the case. She has submitted that the trial court has committed a serious and grave error while passing the impugned judgment and award. She has further submitted that the respondent has failed to prove that he is entitled for any additional amount over and above the amount mentioned in the contract and he is also not entitled for any additional amount for price rise and thus, the trial court has committed a serious error while allowing the suit of the respondent and thus, the impugned judgment and award is required to be quashed and set aside and the present appeal si required to be allowed. 6. Per contra, learned advocate Mr. Paras Sukhwani, appearing for the respondent – Company, has submitted that there was no any breach of any of the terms and conditions mentioned on the contract, infact, it was provided in the agreement that if there is any price rise during the contractual work in progress, the respondent shall be entitled to get the difference of price rise and thus, the trial court after considering all the relevant facts and material produced before it has rightly passed the impugned judgment and award in favour of the respondent. He has further submitted that the rate of interest awarded by the trial court is a commercial rate of interest which was prevailing at that relevant point of time and no interference is required to be called for so far as the rate of interest is concerned. 6.1 Learned advocate Mr. Sukhwani has referred and relied upon the decision of this Court in the identical facts rendered in case of District Panchayat Bhavnagar & Others vs. Babubhai Jivrajbhai Patel in First Appeal No.1020 of 2001 decided on 05.02.2024 and urged that the Court may consider the ration laid down in the aforesaid decision and dismiss the present appeal and confirm the impugned judgment and award passed by the trial court. 7. However, learned AGP has objected so far as the rate of interest is concerned and submitted that since it was a contractual agreement executed by and between the parties, commercial rate of interest cannot be awarded and the trial court has committed a serious error in awarding interest at the rate of 12%. 8. I have heard the learned advocates appearing for the respective parties and perused the material placed on record. I have also perused the impugned judgment and award passed by the trial court, the issues framed by the trail court in para-3 and answered in para-4. On perusal of the Record & Proceedings and on examining the same, it appears that the claim of the respondent relates to the price hike as well as extra work carried out by the respondent and after considering all these aspects, the trial court has rightly awarded the amount for the respondent was entitled to. I have also considered the submissions canvassed by both the sides and after going through the records, it appears that the controversy raised in the present appeal is very narrow in compass. I have also considered the submissions canvassed by both the sides and after going through the records, it appears that the controversy raised in the present appeal is very narrow in compass. The respondent was allocated the work by executing an agreement for contract between the respondent and the Executive Engineer, Navsari (R & B) Division, Navsari and as per the terms and conditions of the said agreement, the respondent had completed the work within the period stipulated in the agreement and therefore, the respondent had raised following claims before the trial court : Description Remarks Work done not paid Rs.71,808/- Time limit deposit Rs.500/- Safety deposit Rs.57,547/- Loss of profit Rs.2,39,819/- Material left at site Rs.50,000/- Material used Rs.2,95,989/- Interest 18% 8.1 Thus, the trial court after considering the evidence on record and after considering all the relevant material placed before it, has allowed the suit and awarded the amount in favour of the respondent. I have also gone through all the relevant material and the evidence placed on record and I am of the opinion that the appellants have failed to discharge the burden of proof, except the bare averments in the written statement, the appellants could not produce any evidence before the trial court and the respondent had shown his prima facie case that he was entitled for the amount prayed for in the suit and thus, the trial court has rightly passed the impugned judgment and award in favour of the respondent. I have also gone through the decision of the Co-ordinate Bench of this Court referred and relied upon by learned advocate Mr. Sukhwani and on perusal of the same, I am of the opinion that while awarding interest @ 12%, there was no evidence or material led by the respondent before the trial court with regard to the entitlement of interest @ 12% and there is no sufÏcient reason assigned by the trial court while awarding interest @ 12%. Sukhwani and on perusal of the same, I am of the opinion that while awarding interest @ 12%, there was no evidence or material led by the respondent before the trial court with regard to the entitlement of interest @ 12% and there is no sufÏcient reason assigned by the trial court while awarding interest @ 12%. It is required to be noted herein that when there is no stipulation with regard to awarding interest at a particular rate, in absence of that, it cannot be said that it is to be awarded at the commercial rate and it is a discretion on the part of the learned Judge but, discretion cannot be shown unless and until there is any cogent and material reason assigned at the time of awarding any interest and therefore, I am of the opinion that the rate of interest awarded by the trial court is on very higher side and thus, considering the same, the rate of interest as awarded by the trial court is required to be reduced to 9%, for which, learned AGP has raised objection and submitted that 6% interest may be awarded, however, considering the rate of interest prevailing at that relevant point of time, this Court deems it fit to award interest @ 9%, which is just and proper. 9. In the result, the appeal is partly allowed. The judgment and decree passed by the judgment and decree dated 30.09.1999 passed by the learned Civil Judge (S.D.), Valsad in Special Civil Suit No. 160 of 1991 is confirmed except the interest part. The respondent is entitled to the interest @ 9% p.a. upon the amount awarded by the trial court from the date of suit till realisation. Interim Relief, if any, stands vacated forthwith. No order as to costs. 10. Record and proceedings, if any, be sent back to the concerned Court forthwith.