In Kotah Match Factory (supra), the Rajasthan High
Court noted that the plaintiff did not raise the plea for
compensation under Section 70 of the Contract Act nor was
any issue framed, nor were the parties given an opportunity
to lead any evidence on the point.
It was found that the
case of the appellant before the Court was based upon an
agreement. It was held that since the parties had not gone
on trial on the question of compensation under Section 70
of the Contract Act, if the benefit of the aforesaid provision
is allowed at this stage, it would amount to taking the
opposite party by surprise.
THE HIGH COURT OF DELHI AT NEW DELHI
Judgment Pronounced on: February 23, 2011
CS(OS) No. 2448/2000
M/S. S.N.NANDY & CO.
- versus -
M/S. NICCO CORPORATION LTD.
.....Defendant
CORAM:-
HON’BLE MR JUSTICE V.K. JAIN
This is a suit for recovery of Rs.92,20,562/-.
The
defendant-company, which was awarded the work for
Biological Oxidation Plant for Coal Chemical Effluents at
Rourkela Steel Plant (hereinafter referred to as “RSP),
assigned the civil work for the aforesaid plant to the plaintiff
for a lump sum amount of Rs.2,87,30,000/- vide Letter of
Intent (hereinafter referred to as LOI) dated 15th October,
1992. The scope of work as also the commercial terms for
its execution were annexed to the LOI. It is alleged that in a
meeting held in the last week of February, 1993, among the
plaintiff, defendant and the officials of RSP, some major
changes were made in the nature of civil work which was
assigned to the plaintiff and those changes involved extra
work and extra price implications. Some other extra works
were later entrusted to the plaintiff for execution.
The
plaintiff submitted a claim of Rs.32 lakhs to the defendant
for the extra work executed by it, which was later on
corrected and changed to Rs.42,04,500/-. It is alleged that
a sum of Rs.5 lakhs was paid by the defendant to the
plaintiff in February, 1994, which was adjusted towards
payment for the extra works. The amount payable by the
defendant to the plaintiff towards payment of the extra work
is alleged to have accumulated to Rs.57,18,500/.
The
plaintiff has claimed an amount of Rs.43,51,217/- as
principal sum from the defendant along with interest on
that amount at the rate of 24 % per annum, amounting to
Rs.48,69,345/- - till 31st March, 2000.
2.
The defendant has contested the suit. It has taken a
preliminary objection that a full and final payment of
Rs.9,36,900/- was made to the plaintiff on 29.8.1997 and
having accepted that amount, the plaintiff cannot claim any
further amount under the contract in question. The other
preliminary objection taken by the defendant is that the suit
is barred by limitation having been filed on 26.9.2000. On
merits, it has been alleged that the defendant has cleared all
the liabilities which were due to the plaintiff under contract
in question. It is also alleged that extra work claimed by the
plaintiff was already covered in the scope of price breakup
given by it on 15.3.1993 which was subsequently amended
on 19.3.1993.
The defendant has denied for entrusting extra work to
the plaintiff and having assured payment for the alleged
extra work. It is claimed that the plaintiff, on his own did
the alleged extra work and got the same approved from RSP
because he was fully aware that under the contract he was
required to do that work.
3.
The following issues were framed on the pleadings of
the parties:-
1.
Whether plaint has been signed and
verified and suit instituted by a duly
authorized
plaintiff?
person
on
behalf
of
the
2.
Whether plaintiff executed extra
work not covered by the letter dated 15th
October 1992? If answer is in affirmative,
of what amount?
3.
Whether plaintiff is entitled to
interest? If so, on which amount, at
what rate and for which period?
4.
Whether amount of Rs.9,36,900/-
was received by the plaintiff by way of full
and final payment as alleged in para No.1
of the preliminary objection of written
statement?
5.
Whether suit is barred by time?
6.
Whether
this
Court
has
territorial jurisdiction to try the suit?
7.
no
Relief.
Issue No.6
4.
During
arguments,
the
learned
counsel
for
the
defendant stated that he was not pressing this issue.
Accordingly, this issue is stuck off.
Issue No.1
5.
Mr. S.N.Nandy is the proprietor of S.N.Nandy & Co.
and the plaint has been signed and verified by him.
Institution of suit, and signing and verification of pleadings
by the proprietor of a partnership concern is perfectly legal
and valid. In fact, Mr.S.N.Nandy & Co. is only a trade name
adopted by him and the suit ought to have been filed by Mr
S.N. Nandy as its proprietor. The issue is decided against
the plaintiff and in favour of the defendant.
Issue No.2
6.
The plaintiff has examined himself as PW-1 whereas
the defendant has examined one witness Mr. Kartick Kumar
Chatterjee as DW-1.
7.
In his affidavit by way of evidence, the plaintiff has
stated that in the last week of February, 1993, a meeting
was
organized
between
him,
the defendant and
the
department of RSP and certain major changes in the scope
of civil work were made by RSP and accepted by the
defendant.
He accordingly wrote letter dated 2.3.1993 to
the defendant giving details of the extra works as well as the
price implication.
He claimed to have sent another
communication dated 17.6.1993 to the defendant in this
regard and has stated that the defendant had permitted him
to proceed with the work including extra and additional
work with promise and assurance that payment would be
made in due course.
He has further stated that in the
meetings held on 3.1.1994 and 6.1.1994, the defendant
acknowledged the extra works done by the plaintiff and also
accepted his entitlement for payment. He accordingly sent a
communication dated 7.1.1994 to the defendant in this
regard. He claimed that the defendant made promises and
assurances to clear his dues but failed to do so. According
to him, in the joint meeting held on 11.3.1994 and
12.3.1994, the issue with regard to extra work was
discussed and the defendant promised to scrutinize the
claim and make payment against the same.
Similar
promise, according to him, was made when he visited the
office of the defendant on 29.6.1994 and 14.7.1994. He has
stated that on 10.11.1994, Deputy Managing Director of the
defendant company came to Delhi and the issue about
payment of extra work was discussed and a promise was
made to make payment.
He further stated that a sum of
Rs.5 lakhs was received by him towards extra work on
15.02.1994.
He maintained that the extra work was
executed at the site with the consent and due information to
the defendant and on their assurance to make payment.
He further stated that the defendant sent a cheque of
Rs.9,36,900/- being last 5% of the original contract value
and the payment towards extra work remained payable to
him. He has proved the comparative statement Ex.PW-1/51
prepared by him. Ex.PW-1/52, according to him are details
of change in scope of work.
8.
In rebuttal, Mr. Kartick Kumar Chatterjee who was
examined as DW-1 has stated that the plaintiff was
entrusted the work of design, construction and maintenance
of civil work in the Biological Oxidation Plant for coal
chemical effluents of RSP on turnkey basis, for a total lump
sum price of Rs.2,87,30,000/- as per the terms and
conditions stipulated in the LOI dated 15.10.1992. The LOI,
according to him, did not contemplate any extra work with
extra price implication nor did it contain any price variation
clause.
He has also proved the letter dated 15.3.1993
written by the plaintiff giving detailed item-wise price-wise
breakup and has stated that complete full and final
payment under the contract and LOI was made to the
plaintiff vide receipt dated 29.8.1997.
According to him,
nothing is left due to the plaintiff. He maintained that the
plaintiff never executed any extra item or extra work.
9.
Ex.PW-1/4 is the offer made by the plaintiff to the
defendant company for civil work of BOD plant at RSP.
Paras 2 and 3 of the letter read as under:-
“We have gone through the entire scope of
civil work and specifications furnished to
us along with the enquiry. Our lumpsum
offer for entire civil work is based on M/s.
NCL’s scope of work, specifications and
layout, and Flow diagram drawings sent
to us.
Our total lumpsum price consideration for
the above job shall be Rs.275 lacks
(Rupees two hundred seventy five lacs
only) includes design, execution and
supervision.
Our lumpsum price also
includes cost of all materials and
manpower required for the job. The price
implication of WCT is not considered, by
us.”
10.
Ex.PW-1/5 is the letter of the plaintiff dated 6.8.1992
whereby, he submitted lump sum price quotation for
Earthern Sludge lagoon for a covered area of 800 sqm. and
providing
one
metre
wide
pavement.
A
sum
of
Rs.2,55,000/- was quoted for the sludge lagoon and
Rs.3,35,000/- was quoted for the pavement. Ex.PW-1/6 is
the letter dated 15.10.1992 whereby the work for the
design, engineering, drawing, construction and maintenance
of all the civil works in the Biological Oxidation Plant for
coal chemicals effluents etc. at RSP was awarded to the
plaintiff for a lump sum price of Rs.2,87,30,000/-.
The
scope of work covered by the letter and major chemical
terms and conditions were also enclosed to this letter. The
scope of work as defined in the annexure to this document
reads as under:-
“SCOPE OF WORKS
The scope of work of this LOI covers
the Design. Engineering preparation of
Arrangement and Detailed Drawings,
obtaining approval from RSP, construction
in
accordance
with
the
approved
drawings, Specifications and Instructions
of RSP/NCL and maintenance of all the
Civil-Works involved in the Biological
Oxidation Plant for Coal Chemical
Effluents at RSP.
The list of items of Civil-Works
involved in the above project is shown in
the enclosed Annexure No.1.”
Annexure-I gave detailed breakup of the scope of work
awarded to the plaintiff.
11.
It would thus be noticed that though the initial offer
made by the plaintiff was for Rs.2,75,00,000/-, the work
was
awarded
to
him
for
Rs.2,87,30,000/-
which
is
Rs.12,30,000/- more than the quotation given by him and
the difference between the price and the price at which the
work
was
awarded
is
more
than
the
amount
of
Rs.5,90,000/- which the plaintiff had claimed for extra
items/earthern sludge lagoon and bituminous pavement,
vide letter Ex.PW-1/5. This becomes important since
contention of the learned counsel for the defendant was that
value of the work was enhanced in order to pay for the extra
work involved in the execution of contract.
12.
Ex.DW-1/P-1 is the letter of the plaintiff dated
15.3.1993 whereby he sent detailed price breakup for the
civil work awarded to him. This breakup was sent by the
plaintiff in order to facilitate progressive payment to him
during the execution of the work. A perusal of the annexure
to this letter would show that the plaintiff had divided the
amount of Rs.2,87,30,000/- into various heads and sub-
heads.
This break up is important as no item-wise value
was given either in the quotation of the plaintiff or in the
LOI issued to him by the defendant. It is not open to the
plaintiff to say that the items mentioned in this break up
were not included in the scope of work awarded to him, nor
can he claim any amount higher than the amount assessed
by him for each item mentioned in this document.
13.
Admittedly, the work was awarded to the plaintiff on
turnkey basis and a composite amount of Rs.2,87,30,000/-
was to be paid to him for the whole of the work. Unless the
plaintiff is able to show that the work claimed by him as
extra work was beyond the scope of the composite work
awarded to him on turnkey basis, he will not be entitled to
any extra payment.
Since the break-up submitted by the
plaintiff as annexure to his letter Exhibit DW1/P1 was
based on the awarded amount, which was higher than the
amount initially awarded by him, he can claim payment
only for that work, which was not included in the break up
sent by him to the defendant.
Of course, he would be
entitled to payment of the work, which was not included in
the break-up given by him to the defendant as well as for
the quantity which exceeded the quantity indicated in the
break-up, provided he is able to make out either a
contractual obligation or a statutory obligation on the part
of the defendant to pay to him for that extra work/extra
quantity.
14.
The case of the plaintiff is that the extra works were
executed by him on the instructions of the defendant. The
case of the defendant, however, is that no extra work was
entrusted by it to the plaintiff and the works claimed as
extra work were included within the scope of the work
awarded to the plaintiff.
15.
In his cross-examination, the plaintiff has admitted
that no prior permission was taken before executing the
extra works. The next question which then comes up is as
to whether the defendant had impliedly consented to pay for
the works. Exhibit PW1/9 is the letter sent by the plaintiff
to the defendant on 2nd March, 1993, referring to the
discussions held with various departments of RSP and
stating therein that the defendant had agreed for some
major changes/incorporations in the scope of civil work
having substantial extra price implication on the agreed
lump sum value.
The details of the additional work with
extra price implications were annexed as Annexure A to this
letter. The items mentioned and included in Annexure A to
this letter were sludge drying beds in place of sludge
lagoons, treated effluent sump for increased capacity,
screed concrete in channels and plaster with WPC in all
RCC tank floors, providing anti-forming system, providing
fencing around MCC/Transformer rooms with gates and
bituminous pavement, providing additional aprons around
RCC tanks and pathways as approach to units and two
coats of Epoxy Paint inside Equalization tanks. Out of these
items, screed concrete in channels and plaster with WPC in
all RCC tank floors, anti-foaming system, fencing around
MCC/Transformer rooms and pathways as approach to
units and two coats of Epoxy Paint inside Equalization
tanks have not been shown either in Exhibit PW1/51 or in
Exhibit PW1/128, which indicates that either these works
were not actually executed or were treated to be within the
scope of the awarded work and that is why the plaintiff has
not claimed any payment from the defendant for these
works.
Exhibit PW1/12 is the letter of the plaintiff dated
17th June, 1993, informing the defendant that the works
mentioned in the letter would be treated as extra works and
payment for them shall have to be made separately to him
over and above the agreed lump sum value. The two items
mentioned in this letter were dry pump house attached with
the sump size of 5.00 M X 5.00 M and providing necessary
support foundation and walkway platform suitable for
installation of Cooling Tower Device on the top of the sump.
However, neither of these items has been claimed in Exhibit
PW1/51 or PW1/128. Vide letter dated 7th January, 1994,
which is exhibit PW1/17, the plaintiff sought outstanding
payment along with finalization of extra work, which were
claimed to be worth Rs.32 lakhs.
Vide letter dated 25 th
July, 1994, which is exhibit PW1/21, the plaintiff again
sought payment for the extra claim raised by him.
Vide
letter dated 30th September, 1994, which is exhibit PW1/26,
the plaintiff again requested the defendant for finalization of
his extra claims, which he had submitted on 31 st December,
1993. This request was reiterated vide fax massage dated
9th November, 1994, which is exhibit PW1/27, fax message
dated 29th November, 1994, which is exhibit PW1/29 and
fax letter dated 12th December, 1994, which is exhibit
PW1/33.
16.
A payment of Rs.5 lakhs was made by the defendant to
the plaintiff vide cheque No.251361 dated 15 th February,
1994 drawn on Hong Kong Bank.
Vide letter dated 30th
May, 1995, which is Exhibit PW1/D-2, the defendant
claimed that this payment was to be adjusted against
further R/A bills commencing from 10 th R/A bill onwards
but inadvertently that was not done.
The plaintiff
immediately replied to this letter vide his response dated 2nd
June, 1995, which is Exhibit PW1/35 and claimed that the
payment of Rs.5 lakhs was made as advance against extra
work carried out by him and had been released after he had
submitted his claim of Rs.41 lakhs towards extra work. He
maintained that this amount could be adjusted against
payment of extra work.
There was no response from the
defendant to this letter, which leads to the inference that
this payment was made towards extra work. Vide letter
dated 5th August, 1997, which is Exhibit PW1/44, the
plaintiff sought payment for the extra work executed by
him.
Vide fax message dated 18th July, 1996, which is
Exhibit PW1/38, the plaintiff again sought payment for the
extra work.
Exhibit
Vide letter dated 17 th June, 1997, which is
PW1/43,
the
plaintiff
demanded
a
sum
of
Rs.51,34,500/- from the defendant towards price of extra
work after deducting a sum of Rs.5 lakhs already received
by him as advance towards these extra works. The above
referred correspondence clearly indicates that some extra
works were executed by the plaintiff to the knowledge of the
defendant. Had the defendant not given an implied consent
to any extra work, it would have adequately responded to
the letters of the plaintiff and would not have paid Rs 5
lakhs to the plaintiff towards payment of extra works.
Silence on the part of the defendant, despite repeated
correspondence and claims from the plaintiff for the extra
works alleged to have been executed by him gives an
indication of an implied consent for some payment for the
extra works by him.
17.
Assuming, however, that the extra works claimed by
the plaintiff were not authorized by the defendant and,
therefore, the defendant is under no contractual obligation
to pay for those works, the plaintiff is entitled to get
reasonable payment for these works in view of the
provisions contained in Section 70 of the Contract Act,
1872, which reads as under:-
“70.
Obligation
of
person
enjoying
benefit
of
non-
gratuitous act.— Where a person
lawfully does anything for another
person, or delivers anything to him
not intending to do so gratuitously,
and such other person enjoys the
benefit thereof, the latter is bound
to make compensation to the
former in respect of, or to restore,
the thing so done or delivered.”
18.
A bare perusal of the above referred Section would
show that three conditions need to be fulfilled before benefit
of this provision can be invoked by a person.
The first
condition is that the claimant should either lawfully do
something for another person or deliver something to him.
The second condition is that while doing or delivering
something, the claimant must not be acting gratuitously
and thirdly, the person for whom something is done or to
whom something is delivered must enjoy the thing done for
or delivered to him as the case may be.
Invocation of Section 70 of the Contract Act was
disputed by learned counsel for the defendant on the
ground
that
the
plaintiff
requirement of the Section.
has
not
pleaded
essential
In support of his contention
that pleading ingredients of Section 70 is a pre-condition for
its invocation, the learned counsel for the defendant has
referred to Kotah Match Factory Kotah v. State of
Rajasthan, AIR 1970 Rajasthan 118, Hansraj Gupta &
Co. v. Union of India, AIR 1973 SC 2724, Union of India
v. Sita Ram Jaiswal, AIR 1977 SC 329 and Devi Sahai
Palliwal v. Union of India and another, AIR 1977 SC
2082.
19.
In Kotah Match Factory (supra), the Rajasthan High
Court noted that the plaintiff did not raise the plea for
compensation under Section 70 of the Contract Act nor was
any issue framed, nor were the parties given an opportunity
to lead any evidence on the point.
It was found that the
case of the appellant before the Court was based upon an
agreement. It was held that since the parties had not gone
on trial on the question of compensation under Section 70
of the Contract Act, if the benefit of the aforesaid provision
is allowed at this stage, it would amount to taking the
opposite party by surprise.
In
Hansraj Gupta &
Co.(supra), the Supreme Court was of the view that the
conditions for the applicability of the Section 70 must at
least be set out in the pleadings and proved. In Sita Ram
Jaiswal (supra), the Supreme Court, inter alia, observed as
under:-
“6.
The three ingredients to
support the cause of action under
Section 70 of the Indian Contract
Act are these: First, the goods to
be delivered lawfully or anything
has to be done for another person
lawfully. Second, the thing done
or the goods delivered is so done
or delivered “not intending to do so
gratuitously.” Third, the person to
whom the goods are delivered
“enjoys the benefit thereof.” It is
only when the three ingredients
are pleaded in the plaint that a
cause of action is constituted
under Section 70 of the Indian
Contract Act.
If any plaintiff
pleads the three ingredients and
proves the three features the
defendant is then bound to make
compensation in respect of or to
restore the things so done or
delivered.”
In Devi Sahai Palliwal (supra), the Supreme Court
found that there was no allegation in the plaint to support
any pleading in proceeding under Section 70 of the Indian
Contract Act. Relying upon its earlier decision in Sitaram
Jaiswal (supra), it was held that in the absence of proper
pleadings under Section 70 of the Indian Contract Act, the
plaint should not be entertained.
20.
The learned counsel for the plaintiff on the other hand
has referred to State of West Bengal v. M/s B.K. Mondal
and Sons, AIR 1962 SC 779, V.R. Subramanyam v. B.
Thayappa and others, 3 SCR 663 and Food Corporation
of India & Others v. Vikas Majdoor Kamdas Sahkari
Mandli Ltd., 2007 (13) Scale 126.
In the case of B.K.
Mondal and Sons (supra), the Supreme Court, after
reiterating the three conditions, which need to be satisfied
before invoking Section 70 of the Contract Act, was of the
view that when these conditions are satisfied, Section 70
imposes upon the person for whom something is done or to
whom
something
is
delivered,
the
liability
to
make
compensation in respect of or restore the thing done for or
delivered to him.
During the course of the judgment, the
Court, inter alia, observed as under:-
“14.......If a person delivers something to
another it would be open to the latter
person to refuse to accept the thing or to
return it; in that case S. 70 would not
come into operation. Similarly, if a person
does something for another it would be
open to the latter person not to accept
what has been done by the former; in that
case again S. 70 would not apply. In other
words, the person said to be made liable
under S. 70 always has the option not to
accept the thing or to return it. It is only
where he voluntarily accepts the thing or
enjoys the work done that the liability
under S. 70 arises. Taking the facts in the
case before us, after the respondent
constructed the warehouse, for instance, it
was open to the appellant to refuse to
accept the said warehouse and to have
the benefit of it. It could have called upon
the respondent to demolish the said
warehouse and take away the materials
used by it in constructing it; but, if the
appellant accepted the said warehouse
and used it and enjoyed its benefit then
different considerations come into play
and S. 70 can be invoked. Section 70
occurs in Chapter V which deals with
certain relations resembling those created
by contract. In other words, this chapter
does not deal with the rights or liabilities
accruing from the contract. It deals with
the rights and liabilities accruing from
relations which resemble those created by
contract..........Therefore, in cases falling
under S. 70 the person doing something
for another or delivering something to
another cannot sue for the specific
performance of the contract nor ask for
damages for the breach of the contract for
the simple reason that there is no contract
between him and the other person for
whom he does something or to whom be
delivers something. All that Section 70
provides is that if the goods delivered are
accepted or the work done is voluntarily
enjoyed then the liability to pay
compensation for the enjoyment of the
said goods or the acceptance of the said
work arises. Thus, where a claim for
compensation is made by one person
against another under S. 70, it is not on
the basis of any subsisting contract
between the parties, it is on the basis of
the fact that something was done by the
party for another and the said work so
done has been voluntarily accepted by the
other party. That broadly stated is the
effect of the conditions prescribed by S.
70.”
21.
In V.R. Subramanyam (supra), the Court reiteratd the
settled proposition of law that if a party of a contract
rendered service to other not intending to do so gratuitously
and another person had obtained some benefit, the former
is entitled to compensation for the value of the services
rendered by him. It was further held that even if a person
has failed to prove an express agreement in this regard , the
Court may still award him compensation under Section 70
of the Contract Act and such a decree for compensation
would be under the statute and not under a contract.
22.
In Food Corporation of India (supra), the Supreme
Court, inter alia, observed as under:-
“12.....A person who does work or who
supplies goods under a contract, if no price
is fixed, is entitled to be paid a reasonable
sum for his labour and the goods supplied.
If the work is outside the contract, the
terms of the contract can have no
application; and the contractor is entitled
to be paid a reasonable price for such
work as was done by him.
13. If a party to a contract has done
additional construction for another not
intending to do it gratuitously and such
other has obtained benefit, the former is
entitled to compensation for the additional
work not covered by the contract. If an oral
agreement is pleaded, which is not
proved, he will be entitled to compensation
under Section 70. Payment under this
section can also be claimed for work done
beyond the terms of the contract, when the
benefit of the work has been availed of by
the defendant.”
23.
In the case before this Court, though the plaintiff has
not specifically pleaded the provisions of Section 70 of the
Contract Act, nor has any issue been framed by the Court
on its applicability, he has pleaded all the ingredients
necessary for invocation of the aforesaid statutory provision.
In the plaint, the plaintiff has repeatedly alleged execution
of extra work for the defendant. In fact, his entire claim in
the suit is based on the extra works alleged to have been
executed by him for the defendant. In para 7 of the plaint,
he alleged that since changes in the scope of work involved
extra work and extra price implications, the letter dated 2 nd
March, 1993 was written by him giving details of additional
work and price implication.
In para 9 of the plaint, he
alleged that in his letter dated 17th June, 1993, he had
clearly pointed out about the payment of extra work over
and above the value of the contract. Thus, the plaintiff has
made it quite clear in the plaint that the extra works were
not executed gratuitously and that the defendant was
obliged to make payment for those works. In para 19 of the
plaint, it is alleged that the extra work executed by him was
duly accepted by the defendant.
In para 21, he again
alleged that all the works executed by him were accepted by
the parties. In para 27 of the plaint, the plaintiff reiterated
that the extra work was duly executed by him and accepted
by the defendant.
The plaintiff has, thus, pleaded all the
necessary ingredients of Section 70 of the Contract Act by
claiming that (i) he had executed extra works for the
defendant; (2) extra works executed by him were accepted
by the defendant and (3) he had not executed extra work
gratuitously. The defendant could have refused to accept
the extra works/extra quantities executed by the plaintiff. In
that event, it would not have been liable to pay for them.
But, the defendant failed to do so and accepted these works.
Therefore, even if it is presumed that the defendant had not
consented to pay for the extra work by the plaintiff, it is
obliged in law to compensate him for the extra works, which
were accepted by it, without any protest and without
claiming that the plaintiff will not be paid for those works.
24.
Ex.PW-1/51 is the comparative charge filed by the
plaintiff showing change in scope of work in various units.
The charts reads as under:-
“BOD PLANT AT RSP, ROURKELA
CHANGE OF SCOPE IN VARIOUS UNITS
Sl.No. Units
1 Pump House-I
2 Pump House-II
3. Office-cum-Lab
4. DAF Building
5. MCC Building
6.
7.
8.
9.
10.
Treated
Effluent
Sump
Sludge
Lagoon/Drying Bed
Influent Sump
Pump
House
at
Common Catch Pit
Cooling Tower Basin
Over Common Catch
Pit
Original
Scope
128 m2
192 m2
300 m2
Nil
Nil
Revised
Scope
86.45 m2
90.00 m2
330.77 m2
255.79 m2
200.16 m2
Difference
(-)41.55 m2
(-) 102.00 m2
(+) 30.77 m2
(+) 255.79 m2
(+) 200.16 m2
40 m3 100 m3 343.17 m2
(+) 60 m2
800 m2 1080 m2 (+) 280 m2
Nil 35 m3 (+) 35 m2
Nil 33 m2 (+)Nil 33 m2
Nil 30.67 m2 31 m2
Pump House I & II
25.
A perusal of the above-referred chart would show
that as far as item No.1 and 2 viz. Pump House-I and Pump
House-II are concerned, there was reduction in the quantity
of the work, for which credit has to be given to the
defendant.
As per Ex.PW-1/51, the quantity of Pump House-I as
per the original scope of work is 128 sq.mt. but, on revision
the quantity was reduced to 86.45 sq.mt. Since the plaintiff
is claiming payment for the extra work as well as extra
quantity executed by him, he is required to give adjustment
to the defendant for the lesser quantity executed by him. A
perusal of Ex.DW-1/P1 would show that the plaintiff had
quoted Rs.4 Lacs for Pump House-I.
If the value of 128
sq.mt was Rs.4 Lacs, the value of 41.55 sq. mt. which is the
difference between the original quantity and the revised
quantity comes to Rs.129843/-. The plaintiff is required to
give adjustment of this amount to the plaintiff on account of
reduction in the quantity of the work for Pump House-I.
The plaintiff had assessed the value of Pump House-II
at Rs.3,50,000/- for 192 m2 in Ex.DW-1/P1. If the value of
192 sq.mt. was Rs.3,50,000/-, the value of difference
between the original quantity and the revised quantity of
102 sq.mt. comes to Rs.185937/-. The plaintiff is required
CS(OS)No.2448/2000
Page 25 of 51
to give adjustment for this amount to the defendant.
DAF Building
26.
As regards item No.4 DAF Building in chart Ex.
PW1/51, the case of the plaintiff as indicated in the Chart is
that this item was not included in the scope of work
awarded to him.
However, a perusal of the Annexure to
plaintiff‟s letter Ex.DW-1/P-1 would show that DAF Unit
was shown as item No.5 whereas DAF Dosing Pump House
was shown as item No. 15 and the plaintiff had assessed
value of DAF Unit at Rs.50,000/- and that of DAF Dosing
Pump House at Rs.7 lakhs. There is no evidence on record
to indicate that DAF Building was different from DAF unit
and DAF Dosing Pump House. Nowhere has it been alleged
in the plaint that DAF Building was a work different from
DAF Unit and DAF Dosing Pump. In fact, the plaintiff has
not specified any alleged extra item in the plaint. As a
result, the defendant had no opportunity to rebut the case
of plaintiff in respect of each item claimed to be extra item.
In his affidavit, the plaintiff did not say that DAF Building
was different from DAF Unit and DAF Housing Pump. No
other evidence was led by him to prove that these are
different items. Since the defendant had claimed that all the
works executed by plaintiff were included in the scope of
LOI, it was incumbent upon the plaintiff to prove that this
was a work different from the works included in Ex DW-
1/P1. In fact, there is no evidence during trial to even prove
that any such work was actually executed by the plaintiff.
27.
It was contended by the learned counsel for the
plaintiff that since there is no cross-examination of the
plaintiff in this regard, it is not open to the defendant to
dispute the execution of the extra works or to say that these
works were not extra works. In support of his contention, he
has relied upon the decision of this Court in Uttam Kumar
vs. State 2010(3) JCC 1946 and the decision of Punjab High
Court in Chuni Lal Dwarka Nath v. Hartford Fire
Insurance Co. Ltd. and Anr. AIR 1950 Punjab 440. In the
case of Uttam Kumar (supra), which was a criminal appeal
against conviction, it was found that no question was put to
the police officer as to why he took six police men along with
him. Observing, that without questioning a witness on a
point of controversy and eliciting a response, no argument
can be built on said controversy by hinging the controversy
on surmises and conjectures, this Court felt that had the
witness been asked, an answer would have come and then
there could have been some scope for a debate. It was also
found that another witness Vibhor was not cross-examined
with respect to the essential portion of his testimony, which
had virtually gone unrebutted. This Court, then, referred to
the observations made by Punjab High Court in Chuni Lal
Dwarka Nath (supra) that a party should put to each of his
opponent witness so much of his case as concerns that
particular witness and if no such questions are put, the
Court presumes that the witness account has been
accepted. However, these judgments are of no help to the
plaintiff for the simple reasons that in his affidavit by way of
evidence, the plaintiff did not even depose with respect to
execution of the alleged extra works. He did not say that
DAF building was different from DAF Unit and DAF Dosing
Pump House which were shown as Item No. 5 and 15
respectively in Ex.DW-1/P1. Had the plaintiff stated that he
had constructed DAF Building and that work was different
from DAF Unit and DAF Dosing Pump House, only then
failure of the defendant to cross-examine him in this regard
could have proved detrimental to the defendant and could
have accrued to the benefit of the plaintiff. The case of the
defendant has all along been that all the alleged extra work
was within the scope of the work awarded to the plaintiff.
Moreover, during the course of arguments, I gave an
opportunity to the learned counsel for the plaintiff to satisfy
me, from the drawings, if available on record that DAF
Building was different from DAF Unit and DAF Dosing
Pump House shown in Ex.DW-1/P1. No such attempt was,
however, made.
Hence, DAF Building cannot be considered
to be an extra item and the plaintiff is not entitled to any
extra amount for this work.
MCC BUILDING
28.
Item No.4 shown in chart Ex.PW-1/51 is MCC
Building.
A perusal of the annexure to plaintiff‟s letter
Ex.DW-1/P-1 would show that MCC-cum-transformer room
was shown as item No.18 in this document and the plaintiff
had assessed the value of this work at Rs.8 lakhs. Again,
there is no material on record to indicate that MCC Building
was different from MCC-transformer room. Also, there is no
evidence produced during trial, to prove execution of this
work. The plaintiff did not say about execution of this work
in his affidavit.
He did not claim that MCC Building was
different from MCC Transformer Room.
No attempt was
made to satisfy me, from drawings, etc. that these were two
separate works. Consequently, this work cannot be treated
as extra item and the plaintiff is not entitled to any amount
from the defendant towards payment of this work.
OFFICE CUM LAB
29.
As regards office-cum-lab which is item No.3 in the
Chart Ex.PW-1/51, according to the plaintiff there has been
increase in the scope of work since the quantity had
increased from 300 sq.m. to 330.77 sq.m., the increase
being 30.77 sqm.
The plaintiff had assessed the value of
office-cum-lab building at Rs.11 lakhs in the annexure to
his letter Ex.DW-1/P-1. If the cost of 300 sqm. was Rs.11
lakhs, the cost of the extra quantity measuring 30.77
quantity would come to about Rs.1,10,000/-. The plaintiff
therefore cannot claim more than Rs.1,10,000/- for this
extra work.
Though in his affidavit, the plaintiff did not
specifically say that the quantity of this item had increased
from 300 m2 to 330.77m2, I do not propose to deny the
payment, since during the course of arguments before me,
the contention of the learned counsel for the defendant was
that the plaintiff can claim for extra quantity, only as per
value assessed in Ex.DW-1/P1. This was not his contention
that in fact the quantity did not exceed 300 m 2.
TREATED EFFLUENT SUMP
30.
As regards Treated Effluent Sump which is item No. 6
in the Chart Ex.PW-1/51, the quantity according to the
plaintiff had increased from 40 cubic metre to 100 cubic
metre, the increase being 60 cubic metre. The plaintiff has
in annexure to letter Ex.DW-1/P-1 assessed the value for
Treated Effluent Sump at Rs.2 lakhs. If this was the value
for 40 cubic metre, he is entitled to only Rs.3 lakhs towards
payment of the extra quantity.
Though in his affidavit by
way of evidence, the plaintiff did not refer to execution of
extra quantity of this item, I am granting this payment to
him, as the contention before me was that he cannot claim
at a value higher than estimated by him, and this was not
the contention that there was no excess quantity of this
item.
SLUDGE LAGOON/DRYING BED
31.
Item No.7 shown in the Chart Ex.PW-1/51 is sludge
lagoon/Drying Bed.
The quantity is alleged to have
increased from 800 sqm. to 1080 sqm. the increase being
280 sqm. The case of the plaintiff is that he had given value
of Rs.2,50,000/- for 800 sqm. for sludge lagoon whereas he
CS(OS)No.2448/2000
Page 31 of 51
has
constructed
measuring
1080
Rs.17,28,000/-.
consideration
sludge
sqm.,
lagoon/
price
sludge
of
which
drying
comes
bed
to
The first question which comes up for
in
this
regard
is
whether
sludge
lagoon/sludge drawing bed is different from the sludge
lagoon shown in Ex.DW-1/P-1 and if so, whether the
plaintiff is entitled to any extra payment for this item.
The
heading of item No.14 in the annexure to letter Ex.DW-1/P-
1 is sludge lagoon/drawing bed. Same is the heading given
in the comparative chart.
The plaintiff, therefore, cannot
say that the work executed by him was different from the
work for which break up was given by him. By quoting Rs.3
lakhs for sludge lagoon/drawing beds, the plaintiff clearly
indicated that there were alternative works and valued this
work at Rs.3 lakhs irrespective of whether it was to be
sludge lagoon or drawing bed.
The plaintiff has not told the Court how drawing beds
are different from the sludge lagoons. More importantly, the
work indicated in EX.DW-1/P-1 is not sludge lagoon but
sludge lagoon/drawing bed and same is the work alleged to
have been executed by the plaintiff. Therefore, the plaintiff
is entitled only to the extra quantity measuring 280 sqm.
Calculated at the value assessed by the plaintiff himself in
Ex.DW-1/P-1, the price for the extra quantity measuring
280 sqm. would come to Rs.1,05,000/-.
The plaintiff is
entitled to recover only this much amount in respect of this
extra quantity. Here also, though the plaintiff did not claim
execution of extra quantity, in his affidavit by way of
evidence, I am inclined to allow payment for extra quantity
as this was not the contention before me that no extra
quantity was executed.
INFLUENT SUMP
32.
Item No.8 in chart Ex.PW-1/51 is Influent Sump which
the plaintiff claims to be a new item. However a perusal of
annexure to letter Ex.DW-1/P1 would show that influent
sump was shown as items No.3 in this document and the
plaintiff had assessed its value at Rs.1,00,000/-. There is
neither any pleading nor evidence before the Court to show
that more than one influent sump were constructed by the
plaintiff. NO attempt was made to show from drawings etc.
that the plaintiff had constructed an additional influent
sump. Therefore he is not entitled to any amount towards
this item.
PUMP HOUSE AT COMMON CATCH PIT
33.
Item No.9 in chart Ex.PW-1/51 is Pump House at
Common Catch Pit. Though Common Catch Pit has been
shown as item No.21 in annexure to letter Ex.DW1/P1, the
breakup of this item does not indicate any Pump House.
Therefore, if the plaintiff had constructed a Pump House at
Common Catch Pit, it would be an extra item and the
plaintiff would be entitled to payment for this item. During
arguments, this was not the contention of the defendant
that no pump house at common catch pit was constructed
by the plaintiff. The plaintiff has claimed a sum of
Rs.1,85,000/- for this extra item. No evidence has been led
by the defendant to prove that the value of this extra item
would be less than Rs.1,85,000/-.
I, therefore, hold that
the plaintiff is entitled to recover a sum of Rs.1,85,000/-
from the defendant towards payment of this extra item.
COOLING TOWER BASIN OVER COMMON CATCH PIT
34.
Item No.10 shown in chart Ex.PW-1/51 is Cooling
Tower Basin over Common Catch Pit, which is not included
in the work indicated under item No.2, Common Catch Pit
in annexure to letter Ex.DW1/P1.
Again this was not the
contention of the defendant that no Cooling Tower Basin
was constructed by the plaintiff over Common Catch Pit.
The plaintiff, therefore, is entitled to payment towards this
extra item. He has claimed a sum of Rs.1,20,000/- for this
extra item.
There is no evidence led by the defendant to
show that the cost of this extra item was less than
Rs.1,20,000/-. I, therefore, see no reason to disbelieve the
unrebutted evidence of the plaintiff in this regard and also
that he is entitled to recover a sum of Rs.1,20,000/- from
the defendant towards payment of this extra item.
APRON AROUND RCC TANK
35.
In
his
comparative
statement
Ex.PW-1/128,
the
plaintiff has also claimed Rs.80,000/- towards payment for
Apron around the RCC Tank.
A perusal of annexure to
letter Ex.DW-1/P1 would show that the plaintiff was to
construct Equalization Tank-TO1B, Aeration Tank-I T05
and Aeration Tank-II T07. Apron has been shown as one of
the sub items of Equalization Tank-TO1A. The plaintiff had
assessed its value at Rs.50,000/-. Aprons are also shows as
a part of Equalization Tank-TO1B and its value has been
assessed at Rs.50,000/- Aprons has also been included in
the work shown under the heading Aeration Tank-I and the
plaintiff has assessed its value at Rs.92,000/- for the
aprons/finishing.
Aprons/finishing has also been shown
under Aeration Tank-II against item No.10 and the plaintiff
has assessed its value at Rs.1,68,000/-. The plaintiff has
not told the Court how the Apron around the RCC Tank
shown by him at item No.21 in Ex.PW-1/128 is an extra
item when examined in the light of the fact that he has
already included aprons while giving detailed breakup of
Equalization Tank-TO1B, Aeration Tank-I T05 and Aeration
Tank-II T07. No evidence has been led by the plaintiff to
show how many aprons he was to construct in terms of the
LOI and how many were actually constructed by him. No
attempt was made to satisfy me from the drawings that the
any additional apron was constructed by the plaintiff.
He
has, therefore, failed to prove that aprons around the RCC
Tank were extra items. I, therefore, hold that the plaintiff is
not entitled to any payment for Apron around the RCC
Tank.
BOUNDARY WALL (EXTRA QUANTITY)
36.
At serial No.22 of Ex.PW-1/128, the plaintiff has
claimed a sum of Rs.75,000/- towards excess quantity
CS(OS)No.2448/2000
Page 36 of 51
measuring 25 RM of boundary wall.
The chart indicates
that the quantity as per the work order was 345 RM
whereas the quantity as per the approved drawing was 370
RM. During arguments, there was no claim by the
defendant that the actual quantity was not 370RM.
A
perusal of annexure to letter Ex.DW-1/P1 would show that
the plaintiff had assessed the value of boundary wall,
gates/guard room at Rs.5 Lacs. The breakup of this item
would show that a sum of Rs.25,000/- was claimed towards
design and drawing, Rs.50,000/- towards guard rooms and
Rs.20,000/- towards gates. This would mean that the value
of
the
boundary
wall
was
Rs.4,05,000/-
Rs.25,000/- – Rs.50,000/- – Rs.20,000/-).
(Rs.5Lac
–
If the value of
345 RM is taken as Rs.4,05,000/- the value of the excess
quantity measuring 25 RM would come to Rs.29,347/-. The
plaintiff is entitled to recovery of this amount from the
defendant towards excess quantity of boundary wall.
RECONSTRUCTION OF BOUNDARY WALL
37.
In
Ex.PW-1/128,
the
plaintiff
has
claimed
Rs.153217.50 towards reconstruction of boundary wall in
terms of his letter dated 30 th November 1994. A perusal of
CS(OS)No.2448/2000
Page 37 of 51
Ex.PW-1/23, which is the letter written by the plaintiff to
defendant on 27th August 1994 shows that there was some
verbal
discussion
between
the
parties
regarding
reconstruction of boundary wall and Bio-Oxidation plant
and the plaintiff quoted a price of Rs.1,55,000/- for this
work. He also gave details of the price quoted by him for this
item. A perusal of Ex.PW-1/25, which is the letter sent by
the defendant to the plaintiff on 31st August 1994, shows
that on receipt of the letter dated 27th August 1994, the
defendant requested the plaintiff to start the reconstruction
of boundary wall with immediate effect. This letter does not
indicate
that
reconstruction
of
boundary
wall
was
necessitated on account of some defect in the boundary wall
earlier constructed by the plaintiff.
Since the plaintiff
quoted a sum of Rs.1,55,000/- for reconstruction of the
boundary wall and the defendant asked him to go ahead
with the work, the defendant is liable to pay for this work
which has to be treated as an extra work. I, therefore, hold
that
the
plaintiff
is
entitled
to
recover
a
sum
of
Rs.153217.50 from the defendant for reconstruction of the
boundary wall.
38.
Thus the plaintiff is entitled to recover a sum of Rs
1,10,000/- for the extra quantity of the work involved in
office-cum-lab, Rs 3 lakhs for the extra quantity of the work
involved in Treated Effluent Sump.
Rs 1,05,000/- for the
extra work involved in Sludge Lagoon/Drying Bed. Rs
1,85,000 for the Pump House at Common Catch Pit. Rs
1,20,000 for Cooling Tower Basin over Common Catch Pit.
Rs 29,347/- for the extra quantity of boundary wall and Rs
1,53,217.50/- for reconstruction of boundary wall.
He is
entitled to give adjustment of Rs 1,29,843/-to the defendant
towards revised quantity of the work involved in Pump
House-I and Rs 1,85,937/- towards reduction in the
quantity of work involved in Pump House-II.
The balance
amount payable to the plaintiff for the extra work thus
comes to Rs 6,86,784.50/-
39.
This is plaintiff‟s own case that he had received a sum
of Rs.5 lakhs from the defendant as an advance towards the
extra work executed by him. After deducting the aforesaid
amount of Rs.5 lakhs from the amount of Rs 6,86,784.50/-
found payable to the plaintiff. The balance principal sum
payable to him comes to Rs 1,86,784.50. The issue is
decided accordingly.
ISSUE NO.4
40.
Relying upon the receipt dated 27th August, 1997,
which is exhibit PW-1/D1 the defendant has claimed that
payment of Rs.9,36,900/- was accepted by the plaintiff in
full and final settlement of all his claims and having done
so, he is now estopped from claiming any further amount
from it towards payment of the extra works.
The receipt
Exhibit PW1/D1 reads as under:-
“ “RECEIPT”
Received with thanks the full and final
payment of Rs.936900.00 (being last 5%
of our contract value) vide cheque
no.668151, dated: 28-08-97 drawn on
Allahabad Bank, Calcutta against Civil
Works of our original contract value of
Rs.2,87,30,000.00
Date: 29-08-97
41.
for S.N. Nandy & Co.
Sd/-
(S.N. Nandy)
Proprietor”
This document, to my mind, contains an admission
that the plaintiff had received Rs.9,36,900/- from the
defendant towards full and final payment of the work to the
extent it was covered under the LOI Exhibit PW1/6 dated
15th October, 1992. This document does not apply to the
claim of the plaintiff for the extra works executed by him to
the extent those works were beyond the scope of the LOI
dated 15th October, 1992. On receipt of this payment, the
plaintiff had no claim left against the defendant with respect
to those works, which were included in the scope of work
awarded vide LOI dated 15.10.1992, but, it does not
preclude the plaintiff from making claim for payment of
extra works, which he executed for the defendant.
While
executing this receipt, the plaintiff did not say that he had
no claim left against the defendant company with respect to
civil work for Biological Oxidation Plant at R.S.P. Rourkela
nor did he say that he had received payment for whole of
the work executed by him at the above referred plant. The
scope of the receipt was confined to the civil works, which
were awarded to him vide LOI dated 15th October, 1992 and
there is no justification for enlarging the scope of this
document beyond what is evident from its plain and natural
reading.
Use of the expression “being last 5% of our
contract value” and “contract value of Rs.2,87,30,000/-” in
this
receipt
clearly
indicates
that
what
the
plaintiff
acknowledged was full and final payment of the contracted
value and not the price of the extra works, which he had
CS(OS)No.2448/2000
Page 41 of 51
executed for the defendant.
In
Bharat
Coking
Coal
Ltd.
V.
Annapurna
Construction, (2003) 8 SCC 154, the respondent before
the Supreme Court had accepted the final bill.
It was
contended on behalf of the appellant that the respondent
having accepted the final bill, a further claim by it was
inadmissible.
Rejecting the contention, it was held that
acceptance of final bill would not mean that the respondent
was not entitled to raise any claim since the respondent had
not unequivocally stated that it would not raise any further
claim.
The Court was of the view that in the absence of
such a declaration, the respondent cannot be held to be
estopped or precluded from raising any claim.
In
Pandit
Construction
Company
v.
Delhi
Development Authority and another, 143 (2007) DLT
270, the petitioner had made the endorsement „accepted in
full and final‟ on the final bill submitted to the DDA. The
claim of the petitioner was rejected by the Arbitrator on the
ground that the final bill had been accepted by the
petitioner as full and final settlement.
The petitioner,
however, maintained that this was not full and final
settlement of accounts.
Accepting the contention of the
petitioner, this Court held that a settlement, to be binding,
must be recorded in clear and unambiguous terms. The
Court was of the view that the endorsement „accepted in full
and final‟ could also be read to mean that the amount
received was in respect of full amount of the bill on which
endorsement was made.
The issue is accordingly decided in favour of the
plaintiff and against the defendant.
ISSUE NO.5
42.
Admittedly, the defendant company had been making
payment to the plaintiff from time to time. The documents
filed by the plaintiff show that the payments used to be
made by cheques.
The following payments were made by
the defendant to the plaintiff between 1994-1997 :-
Cheque No. Date 527145 18.01.1994 Amount
(Rs.)
4,00,000/-
527175 27.01.2994 5,43,670/-
527338 04.02.1994 5,32,421/-
527431 18.02.1994 5,00,000/-
038274 15.03.1994 5,00,000/-
038339 23.03.1994 4,00,000/-
038628 20.04.1994 9,49,762/-
490273 27.05.1994 3,27,945/-
446810 04.08.1994 5,65,023/-
CS(OS)No.2448/2000
Page 43 of 51
575449 15,00,000/-
575430 11.10.1995 3,00,000/-
575450 13.10.1995 3,20,162/-
212246 10.11.1995 2,54,749/-
212247 10.11.1995 4,00,000/-
650410 23.07.1996 83,659/-
668151
43.
13.10.1995 28.08.1997 9,36,500/-
Section 19 of the Limitation Act, to the extent it is
relevant, provides that where payment on account of a debt
is made before the expiration of the prescribed period, by
the person liable to pay the debt or by his agent duly
authorized in this behalf, a fresh period of limitation would
be computed from the time when the payment was made.
The last payment having been made by the defendant is on
28th August, 1997, a fresh period of limitation if computed
from this date would expire on 28th August, 2000. The suit
having been filed on 26th May, 2000 is, therefore, well within
time. Though it was contended by the learned counsel for
the defendant that the payment on 28th August, 1997 was
made after the limitation prescribed for filing a suit of this
nature had expired, that obviously is incorrect since
payments by way of cheques were made by the defendant
from time to time and at no occasion there was gap of three
or more years between the two payments. In this regard, it
would be pertinent to note that though the extra works
executed by the plaintiff were out of the scope of work
contained in the LOI dated 15th October, 1992, the amount
payable by the defendant to the plaintiff towards the civil
work executed by him at Biological Oxidation Plant at R.S.P.
Rourkela was one debt and though having two components,
one for the works covered in the scope of LOI and the other
for the works which were beyond the scope of LOI cannot be
said that the payment for the work included in the scope of
work awarded vide LOI dated 15 th October, 1992 was one
debt and payment for the extra work executed by the
plaintiff was another debt.
The project executed by the
defendant for the plaintiff was one project, i.e., civil work at
Biological Oxidation Plant at R.S.P. Rourkela and, therefore,
payment for the entire quantity irrespective of whether for
the work included within the scope of work indicated in the
LOI or for the work beyond the scope of LOI, constituted one
debt, which the defendant owed to the plaintiff. Therefore,
even the payment was made by the defendant to the plaintiff
towards price of the contractual work, which was included
in the LOI it would extend the period of limitation also for
the extra work executed by the plaintiff while carrying out
civil work at Biological Oxidation Plant at R.S.P. Rourkela.
It would also be pertinent to note here that this is not the
requirement of law that while making a payment, the debtor
must make it towards part payment.
Any payment,
irrespective of, whether it is made as part payment or
otherwise, would extend the period of limitation under
Section 19 of the Limitation Act. In this regard I may refer
to the decision of the Privy Council in Rama Shah v. Lal
Chand, AIR 1940 Privy Council 63 where the Court, inter
alia, observed as under:-
“In the Limitation Act, Section 19, which
deals with acknowledgments, is not to be
read as based upon the theory of implied
promise: and it is difficult to see why
Section 20, which deals with payments,
should be regarded as based upon a
theory of acknowledgment. The Indian
Legislature may well have thought that a
payment if made on account of the debt
and evidenced by writing gave the creditor
some excuse for further delay in suing, or
was sufficient new proof of the original
debt to make it safe to entertain an action
upon it at a later date than would
otherwise have been desirable. The words
in Section 20 by which the matter must be
judged are "where part of the principal of
a debt is paid". As it is not prescribed by
the Section that the payment should be
intended by the debtor to go towards the
principal debt at all, the words 'as such'
having no place in this part of the Section,
it is not in their Lordships' view correct to
require that the payment should have
been made of part as part.”
44.
In support of his contention that the suit is barred by
limitation, learned counsel for the defendant has referred to
Major (Retd.) Inder Singh Rekhi v. Delhi Development
Authority, (1988) 2 SCC 338, Satender Kumar v.
Municipal Corporation of Delhi and another, 168 (2010)
DLT 15, and Hansa Vision Pvt. Ltd. V. Dabur (India)
Limited & Ors, 168 (2010) DLT 562.
45.
In the case of Inder Singh Rekhi (supra), the Court
was dealing with a petition under Section 20 of the
Arbitration Act, 1940. During the course of judgment, the
court observed that on completion of the work a right to get
payment would normally arise but where the final bills have
not been prepared, the cause of action would arise from the
date when the assertion of the claim was made.
It was
further observed that a party cannot postpone the accrual of
cause of action by writing reminders or sending reminders
but where the bill has not finally prepared, the claim made
by the claimant is the accrual of cause of action.
In the case of Satender Kumar (supra), this Court,
after referring to the decision of the Supreme Court in the
case of Inder Singh Rekhi (supra), inter alia, held as
under:-
“16(iii) As regards contracts for execution
of building work, Article 18 comes into
play in that when no specific date for
payment is fixed, limitation commences
and the cause of action accrues for the
purpose of limitation on the completion of
work.
(iv) In its application, Article 18 will cause
different dates for accrual of causes of
action in building works when a time
period is fixed for submitting of a bill by
the contractor and to which there is no
response to the owner. Where a final bill
is submitted and liability under the same,
even if, in part, is admitted or some
payment is made then such actions extend
limitation in terms of Section 18 of the
Limitation Act.”
In the case of Hansa Vision Pvt. Ltd. (supra), this
Court, referring to Article 113 of the Limitation Act, 1963,
observed that the period of limitation is 3 years to be
computed from the date when right to sue accrues,
wherever the aforesaid Article applies.
All these judgments tend to support the contention of
the learned counsel for the defendant that in a suit for price
of work executed by contractor, Article 18 of the Limitation
Act would be the relevant Article, which provides a period of
limitation of 3 years from the date when the work is done,
where no time has fixed for payment. They also support his
contention that a party cannot postpone the accrual of
cause of action by writing letters and reminders seeking
payment from the other party and once the period of
limitation starts running, mere sending reminders would
not postpone the accrual of cause of action even if the
defendant does not dispute his liability in this regard.
However, the benefit of Section 19 of Limitation Act cannot
be denied to the plaintiff even if Article 18 of the Limitation
Act is applied to the case. The issue is decided against the
defendant and in favour of the plaintiff.
ISSUE NO.3
46.
The plaintiff has claimed interest @ 18% per annum
for the period from 31st December, 1993 to 31st March, 2000
on the amount of Rs.41,98,000/- and from 30th November,
1994 to 31st March, 2000 on the amount of Rs.1,53,217/-
thereby making a total sum of Rs.48,69,345/- towards
interest.
The plaint does not disclose the basis on which
interest has been claimed by the plaintiff. Admittedly, there
is no agreement between the parties for payment of interest.
No custom or usage of trade with respect to payment of
interest has either been pleaded or proved by the plaintiff.
It is settled proposition of law that in a civil suit interest
cannot be awarded as damages. However, interest can be
awarded by the Court under the provisions of the Interest
Act, 1978. Section 3 of the Interest Act, 1978, to the extent
it is relevant, provides that in any
proceedings for the
recovery of any debt in which the claim of interest in respect
of any debt is made, the Court may, if it thinks fit, allow
interest to the person entitled to the debt on a rate not
exceeding the current rate of interest.
If the proceedings
relate to a debt, which is not payable by virtue of a written
instrument at a certain time, interest can be awarded for
the period from the date mentioned in this regard in a
written notice given by the person entitled or making the
claim to the person liable that interest will be claimed, till
the date of institution of the proceedings.
Vide his letter
dated 18th July, 1996, the plaintiff informed the defendant
that the losses incurred by him were being worked out in
terms of interest and the same shall be intimated to it. The
details of interest were then sent by the plaintiff to the
defendant vide its letter dated 20th July, 1996, which is
Exhibit PW1/39. He claimed interest @ 24% per annum. I,
therefore, feel that interest should be awarded to the
plaintiff from 20th July, 1996 till the date of filing of this suit
at the rate of 12% per annum. Calculating accordingly the
amount of interest at the rate of 12% per annum on the
principal amount of Rs.1,86,784.50/-, interest for the
period from 20th July, 1996 to 26th May, 2000 comes to
Rs.86,294.44p.
The plaintiff is entitled to recover total
amount of Rs.2,72,078.94p from the defendant.
ORDER
For the reasons given in the preceding paragraphs,
a decree for a sum of Rs.2,72,078.94p with proportionate
costs and pendente lite and future interest at the rate of
12% per annum is passed in favour of the plaintiff and
against the defendant.
Decree sheet be prepared accordingly.
(V.K. JAIN)
JUDGE
FEBRUARY 23, 2011
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