Order 1

Order Details: Copy of Judgment
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MHCC010066482018 Presented on : 04-06-2018
Registered on : 02-08-2018
Decided on : 14-06-2022
Duration : Y M D
04 00 10
BEFORE THE CITY CIVIL COURT, MUMBAI
( Court No.14 )
(Presided Over by Sunil U. Hake)
COMMERCIAL SUIT NO.349 OF 2021
Ex.17
M/s. Bharati Enterprises
Daxta Police Cooperative Housing Society
Ltd. B1/3, Ganesh Building, Dr. Kapse
Nagar, Ghatkopar(East), Mumbai
400 075. Through proprietor, Shri Bharati Mukund
Kakad, Age 35 years, occupation: Business,
Civil Contractor, Mob: C/o.9321283545,
Email: mukundkakad44@gmail.com ..Plaintiff
Versus
1. The State of Maharashtra
Through Secretary, Public Works
Department, Mantralaya,
Mumbai 400 032.
2. The Superintending Engineer
Mumbai (P.W.) Circle,
Govt. of Maharashtra, 5th Floor,
Bandkam Bhavan, 25, Marzban
Road, Fort, Mumbai400 001.
3. The Executive Engineer
Presidency Division Govt. of
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Maharashtra, Bandhkam
Bhavan, 2nd floor, 25,
Marzban Road, Fort,
Mumbai 400 001.
Email:presidency.ee@mahapwd.com
Phone: 22016975/22016973
4. Dy. Engineer
MLA Hostel Sub Division, Manora
1st floor, 25, Marzban Road, Fort,
Mumbai 400 001. ..Defendants
______________________________________________________
Ld. Advocate G.B.Pawar for plaintiff.
Ld. Advocate Sachin Kadam for defendant Nos.1 to 4.
______________________________________________________
JUDGMENT
(Delivered on 14th June 2022)
Suit is for recovery of an amount of Rs.7,23,336/
alongwith interest.
Briefly stated, plaintiff's case, is as under:
2. Plaintiff is a registered Government Contractor.
Plaintiff has carried out the work as per work order issued by
defendant No.3 on 04/05/2011. Defendant No.4, Deputy
Engineer, recorded measurement of the work carried out by
plaintiff in the Measurement Book. Defendant No.4 submitted
final bill on 04/05/2011 to defendant No.3 for making payment
of an amount of Rs.4,81,594/ to plaintiff.
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3. As per the terms and conditions of the tender,
defendant No.3 was required to make payment within three
months to plaintiff after submission of final bill. Defendant No.3
paid an amount of Rs.1,51,594/ to plaintiff and withheld
payment of Rs.3,30,000/. Plaintiff sent letters dated 20/07/2012,
13/03/2013,16/10/2015,15/01/2016, 01/01/2016, 01/02/2016,
15/02/2016, 18/09/2017 and 16/10/2017 to defendant No.3.
But, defendant No.3 failed to make payment of outstanding
amount of Rs.3,30,000/. Defendant No.3, by issuing letters
dated 21/11/2017 and 12/02/2018, admitted and acknowledged
non payment of an amount of Rs.3,30,000/. Defendant No.3
withheld payment of an amount of Rs.3,30,000/ without any
sufficient cause. Therefore, plaintiff is entitled to the interest at
the rate of 18% p.a. on the outstanding amount of Rs.3,30,000/
from the date of submission of final bill till its realization.
Plaintiff issued notice as per Sec.80 of C.P.C. on 20/01/2018
asking defendant Nos.1 to 4 to make payment of outstanding
amount. However, defendants failed to make payment of
outstanding amount. Hence, this summary suit.
4. Plaintiff has taken out Summons for Judgment No.71
of 2019. As per order in Summons for Judgment No.71 of 2019
dated 17/11/2021, unconditional leave to defend the suit is
granted to defendants.
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5. Defendants by filing their written statement at Ex.2
strongly resisted the suit. Their averments may be summarized as
under:
(a) Defendants admit that work order for renovation of
room Nos.209, 210 and 103 of ‘Vistarit Amdar Niwas’ was granted
to plaintiff. Plaintiff completed the work. Defendants made part
payment of Rs.1,51,594/. However, an amount of Rs.3,30,000/
was remained to be paid. Defendants have made payment of said
amount by cheque on 09/10/2018.
(b) Defendants further submit that they are Government
officials. Bills are sent to various departments for approval.
Therefore, time is required for passing the bills. Defendants have
already made payment of the principal amount. Suit for interest
amount on account of delayed payment is not maintainable.
Delay on the part of defendants is neither intentional nor
deliberate. Payment of interest by defendants would cause loss to
the public exchequer. There is no provision in the Tender
document to pay interest on the delayed payment. Plaintiff has
not lodged any claim for compensation or interest in writing to
the Engineerincharge as per the Tender document. Therefore,
plaintiff is not entitled to claim interest for delayed payment.
Plaintiff is a proprietary concern and it does not fall within the
definition of 'Enterprises' as defined in the Micro, Small and
Medium Enterprises Development Act, therefore, plaintiff is not
entitled for interest as per the provisions of said Act. Plaintiff is
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also not entitled to the interest as per The Negotiable Instruments
Act. Plaintiff has not issued notice as per Sec.80 of C.P.C. By
making all these pleadings, defendants prayed to dismiss the suit.
6. Heard both sides. After case management hearing,
issues are settled at Ex.3. They are reproduced here alongwith
findings thereon, for the reasons to follow, as under:
Sr.No. Issues Findings
1. Does the plaintiff prove that
defendants have withheld principal
amount of Rs.3,30,000/ without
just cause?
Proved
2. Whether plaintiff is entitled to
interest for delayed payment? If
yes, what would be the rate of
interest?
Yes, @ 12% p.a. as
per final order.
3. What order and decree? Suit is partly
decreed as per final
order.
REASONS
Issue No.1
7. In order to substantiate the claim, plaintiff filed
evidence affidavit of PW1 Bharti Mukund Kakad at Ex.6.
Plaintiff relied upon following documents:
Ex.10 Copy of the registration of plaintiff.
Ex.11 Copy of the bill
Ex.12 Statement showing work done
Ex.13(colly) Office copies of the notices sent by plaintiff to defts.,
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Ex.14 Office copy of legal notice dated 20/01/2018
8. In rebuttal, defendants placed reliance upon evidence
affidavit of DW1 V.G.Nandrekar at Ex.8. Defendants relied
upon Tender document ( Ex.15).
9. PW1 Bharti deposes that plaintiff firm carried out
the work as per the work order issued by defendants and
submitted the final bill for payment. Defendant No.4 recorded
the work in Measurement Book. Plaintiff completed the work as
per work order on 06/06/2011. Defendants were liable to make
payment of the bill on completion of the work. Defendants paid
an amount of Rs.1,51,594/. PW1 Bharti further testifies that
defendants have withheld payment of principal amount of
Rs.3,30,000/ without any sufficient cause. Defendants made
payment of Rs.3,30,000/ after filing of the suit. However,
plaintiff is entitled to get interest on the said amount from the
date of submission of bill till its realization.
10. As against this, DW1 V.G.Nandrekar testifies that
defendants are officials of Government. Bills are required to be
sent to various departments for approval. Time is required for
getting approvals of higher authorities. Defendants have already
made payment of entire bill amount. Suit for interest on delayed
payment is not maintainable. Delay on the part of defendants is
neither intentional nor deliberate. Therefore, defendants are not
liable to make payment of interest to plaintiff.
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11. Ld. Counsel Shri G.B.Pawar appearing for plaintiff
submits that plaintiff has carried out the work as per work order
issued by defendants. Said work was completed on 06/06/2011
and final bill was submitted to the office of defendant No.3.
Defendants were liable to make payment of final bill within three
months of submission of final bill. However, defendants withheld
an amount of Rs.3,30,000/ without any just cause till
09/10/2018.
12. Ld. counsel Shri. Sachin Kadam, appearing for
defendants, submits that for making payment of the bill submitted
by plaintiff, approvals of higher authorities are required. Time is
required for taking approvals of higher authorities. Defendants
have made payment of entire bill amount to plaintiff. Due to
paucity of funds, payment could not be made to plaintiff
immediately after submission of bill.
13. Ld. Counsel for defendants further submits that there
is no material on record to indicate that delay on the part of
defendants was intentional or deliberate. Therefore, it cannot be
construed that defendants have withheld an amount of
Rs.3,30,000/ without just cause.
14. Considered the submissions advanced on behalf of
both sides. It is not in dispute that plaintiff has carried out the
work in the year 2011 as per the work order issued by defendants.
Plaintiff submitted final bill after completion of work on
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06/06/2011. Plaintiff was entitled to get bill amount within three
months of submission of final bill.DW1 VG Nandrekar, during his
cross examination, fairly admitted that as per PWD Manual, bill
amount is to be paid within three months, if the bill is in order. It
is not the case of defendants that final bill submitted by plaintiff
was not in order. Therefore, defendants were liable to make
payment of final bill within three months of submission thereof.
15. Defendants further submit that approvals of higher
authorities were required for making payment of the bill and due
to paucity of funds, payment of the bill was delayed.
16. Once the work order is issued to plaintiff for carrying
out certain work, it was the responsibility of defendants to make
the arrangement of funds for making payment of bill amount.
Paucity of funds for making payment would not be a just cause
for making delay in payment. So also, concerned Engineerin
charge was duty bound to take approvals of higher authorities
within stipulated period. It is not in dispute that plaintiff
completed the work on 06/06/2011 as per work order and
payment of Rs.3,30,000/ is made on 09/10/2018 i.e. almost
after seven years of submission of final bill. Thus, from the
material placed before the Court, it can be safely construed that
defendants have withheld payment of principal amount of
Rs.3,30,000/without just cause. Issue No.1 is answered
accordingly.
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Issue No.2
17. In answer to issue No.1, it is held that defendants
have withheld the payment of principal amount of Rs.3,30,000/
without any just cause. Next consideration would be whether
plaintiff is entitled to get interest for delayed payment or not.
18. Ld. Counsel for plaintiff submits that defendants have
made delay in making payment of principal amount without any
just cause. Plaintiff is deprived of said amount for almost seven
years. Although there is no stipulation in the work order
regarding payment of interest amount, plaintiff is entitled to get
interest on aforesaid amount as per Sec.3 & 4 of The Interest Act,
1978. To buttress these submissions, plaintiff relied upon
following judicial pronouncements:
(i) Thazhathe Purayil Sarabi and others V/s Union of India
& Anr. (2009) 7 SCC 372, wherein Hon’ble Supreme
Court held,
"The Courts are consistent in their views that normally when
a money decree is passed, it is most essential that interest be
granted for the period during which the money was due, but
could not be utilized by the person in whose favour an order
of recovery of money was passed.
As has been frequently explained by this Court and various
High Courts, interest is essentially a compensation payable on
account of denial of the right to utilize the money due,
which has been, in fact, utilized by the person withholding
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the same. Accordingly, payment of interest follows as a
matter of course when a money decree is passed."
(ii) Prabhavati Ramgarib B. V/s Divisional Railway Manager
Western Railway Manager, Mumbai, 2010(4)
Mh.L.J.691. In this case Hon’ble Bombay High Court
held,
"The position is not different under the Interest Act, 1978.
The words, in section 4(1)"or other rule law" would include
interest payable in equity. In fact, interest has been awarded
by our Courts in equity as well as on principles analogous to
Section 34 of the Code of Civil Procedure on the basis that
section 34 is based upon principles of justice, equity and
good conscience.
It is important to note that there is no legal provision or any
other rule of law that prohibits the grant of interest for the
period during which a debtor fails to comply with an order
of payment passed by a Court, Tribunal or any other
competent authority. This enables, therefore, the
application of the common law principles relating to equity.
In Hanbury and Maudsley Modern Equity, 13th Edition, it is
noted at page 33:
"As we shall see, it is in the field of remedies that equity
displays perhaps the greatest inventiveness and capacity for
development, providing relief in new situations as they
arise."
The foot note to this commentary refers to Anton, Piller and
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Mareva injunctions. The categories of equitable interest do
not appear to be closed despite the ongoing debate as to
whether new ones ought to be created or not. Commentaries
on equity suggest that the principles of equity have constantly
developed and found new fields of application. (Hanbury
and Maudsley Modern Equity, 13th EditionPage 44).
I would base the exercise of this power on the maxim that
equity will not suffer a wrong to be without remedy and
will intervene to protect a right which is not enforceable at
law as a result of the absence of a statutory provision. I am
satisfied about the suitability for the enforcement of this
right by a Court of equity".
(iii) Union of India V/s N.K.Garg & Co. 224(2015) Delhi
Law Times 668. In this case Hon’ble Delhi High Court
held,
"Therefore, nonpayment of interest can under no
circumstances be justified in today's world and it is clear
that illegal retention of moneys for a long period of time will
clearly amount to immorality and violation of the public
policy. Therefore there is not even an iota of doubt that
illegal retention of principal amounts of moneys which
are to be paid by a person to another person at an
appropriate point of time, on account of a contractual
clause, such as Clause 16(2) of the GCC, results in an
immoral action which is violative of public policy and hence
such a clause having the language of Clause 16(2) of the
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GCC in the present case, is liable to be and is accordingly
struck down in view of Section 23 of the Indian Contract
Act".
(iv) State of Maharashtra V/s Khare & Tarkunde & anr.
2021(3) Bom. C.R. 198. In this case, Hon’ble Bombay
High Court held,
" From the aforesaid observations it becomes clear that if
the Arbitrator has awarded interest payable from the date of
award to the date of payment at a particular rate in his
discretion then the same would prevail. Where the Arbitrator
has not awarded any interest after the date of the award the
party would be entitled to claim postaward interest on the
awarded sum at 18% per annum as stipulated in section
31(7)(b) of the Act of 1996. As noted above the Arbitrator
in his award has specifically granted interest at the rate of
25% per annum (compounded monthly) from the date of
the award up to its payment. Thus, when the award itself
directed the applicant to pay interest at the rate of 25% per
annum from the date of the award there was no reason for
the learned Principal District Judge to invoke the provisions
of section 31(7)(b) of the Act of 1996 for reducing the rate of
postaward interest. It was also not necessary to refer to the
provisions of the Interest Act, 1978. As a result there was no
jurisdiction to be exercised under section 34 of the Act of
1996 to reduce the rate of interest awarded by the Arbitrator
from 25% per annum to 18% per annum. To that extent the
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impugned judgment is liable to be interfered with."
19. Ld. Counsel for defendants contravened the above
submissions with following arguments:
(a) During the pendency of the suit, defendants have
made payment of principal amount of Rs.3,30,000/. After
receipt of principal amount, plaintiff was required to make
amendment in the plaint, more particularly amendment in prayer
clause of the plaint. However, plaintiff failed to make
amendment in prayer clause of the plaint.
(b) Plaintiff has not given notice in accordance with
Sec.80 of C.P.C.
(c) PW1 Bharti during her cross examination, admits
that there is no stipulation in the Tender document Ex.15
regarding payment of interest. Thus, in the absence of contract to
pay interest on delayed payment, plaintiff is not entitled to claim
interest.
(d) Plaintiff is claiming interest as per Mirco, Small and
Medium Enterprises Development Act. Plaintiff's firm is not
registered as per the provisions of the said Act. Therefore,
plaintiff can not claim interest as per said Act.
(e) As per clause No. 16 of the Tender document
(Ex.15), plaintiff was required to make claim for compensation
before Engineerincharge. Plaintiff failed to make claim before
Engineer incharge as per clause No.16 of the Tender document.
Therefore, plaintiff cannot claim interest for delayed payment. By
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making all these submissions, Ld. counsel for defendants prayed
to dismiss the suit.
20. Considered the submissions advanced on behalf of
both sides. As discussed supra, plaintiff was entitled to get bill
amount within three months of submission of final bill.
Defendants have made part payment of bill and withheld an
amount of Rs.3,30,000/. Plaintiff was entitled to get said
amount after submission of final bill in the year 2011.
21. Defendants submit that plaintiff has not given notice
in accordance with Sec.80 of C.P.C. Plaintiff has filed on record
office copy of notice given to defendants dated 20/1/2018
(Ex.14). This notice was given to defendants as per Sec.80 of
C.P.C. Therefore, suit would not be bad for non compliance of
Sec.80 of C.P.C.
22. Defendants submit that plaintiff has not made claim
for compensation with the Engineer incharge as per clause
No.16 of the Tender document (Ex.15). Plaintiff relied upon
notices given to defendants collectively marked as Ex.13. On
perusal of notice dated 16/10/2015, it is clear that plaintiff has
asked for interest at the rate of 18% p.a. Said notice was given to
defendant No.3. Copy thereof was also given to defendant No.2.
Likewise, plaintiff has also issued notices dated 01/01/2016,
15/01/2016 and 15/02/2016 asking defendants to make
payment with interest. Thus, on perusal of copies of notices
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issued by plaintiff, it is evident that plaintiff has made claim for
interest with defendants. Therefore, it cannot be construed that
plaintiff has failed to make claim for compensation or interest for
non payment of principal amount with the Engineerincharge as
per clause No.16 of Tender document Ex.15.
23. In answer to issue No.1, as discussed supra, it is held
that defendants have withheld principal amount of Rs.3,30,000/
without any just cause. Plaintiff relied upon Sec.3 and 4 of The
Interest Act, 1978. They are read as under:
Sec.3. Power of court to allow interest(1)In any proceedings for
the recovery of any debt or damages or in any proceedings in
which a claim for interest in respect of any debt or damages
already paid is made, the court may, if it thinks fit, allow interest
to the person entitled to the debt or damages or to the person
making such claim, as the case may be, at a rate not exceeding
the current rate of interest, for the whole or part of the following
period, that is to say
(a)if the proceedings relate to a debt payable by virtue of a
written instrument at a certain time, then, from the date when the
debt is payable to the date of institution of the proceedings;
(b)if the proceedings do not relate to any such debt, then,
from the date mentioned in this regard in a written notice given
by the person entitled or the person making the claim to the
person liable that interest will be claimed, to the date of
institution of the proceedings;
Provided that there the amount of the debt or damages has
been repaid before the institution of the proceedings, interest
shall not be allowed under this Section for the period after such
repayment.
(2) Where, in any such proceedings as are mentioned in sub
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section (1)
(a)judgment, order or award is given for a sum which,
apart from interest on damages, exceeds four thousand rupees,
and
(b)the sum represents or includes damages in respect of
personal injuries to the plaintiff or any other person, or in respect
of a person's death,
(3) Nothing in this section
(a)shall apply in relation to
(i)any debt or damages upon which interest is
payable as of right, by virtue of any agreement; or
(ii)any debt or damages upon which payment of
interest is barred, by virtue of an express agreement;
(b)shall affect
(i)the compensation recoverable for the dishonour of
a bill of exchange, promissory note or cheque, as defined in the
Negotiable Instruments Act, 1881(26 of 1881); or
(ii) the provisions of rule 2 of Order II of the First
Schedule to the Code of Civil Procedure, 1908(5 of 1908);
(c)shall empower the court to award interest upon interest.
Sec.4. Interest payable under certain enactments
(1)Notwithstanding anything contained in section 3, interest shall
be payable in all causes in which it is payable by virtue of any
enactment or other rule of law or usage having the force of law.
(2)Notwithstanding as aforesaid, and without prejudice to the
generality of the provisions of subsection (1), the court shall, in
each of the following cases, allow interest from the date specified
below to the date of institution of the proceedings at such rate as
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the court may consider reasonable, unless the court is satisfied
that there are special reasons why interest should not be allowed,
namely:
(a) where money or other property has been deposited
as security for the performance of an obligation imposed by law
or contract, from the date of the deposit;
(b) where the obligation to pay money or to restore any
property arises by virtue of a fiduciary relationship, from the date
of cause of action;
(c) where money or other property is obtained or
retained by fraud, from the date of the cause of action;
(d) where the claim is for dower or maintenance, from
the date of cause of action.
24. As per Section 3 of The Interest Act, 1978, plaintiff is
entitled to claim interest from the date when the amount was
payable to the date of institution of proceedings. Plaintiff is
claiming interest from 07/09/2011 to the date of filing of suit.
However, claim for interest for this period would not be
maintainable as per the provisions of The Limitation Act, 1963. As
per Sec.3 of The Limitation Act, although limitation has not been
set up as defence, it is the duty of the Court to see whether the
claim is made within limitation or not.
25. Considering the description of the suit, a reference
with profit can be made to Art.25 of The Limitation Act, which
provides the period of limitation of three years for money payable
for interest upon money due from defendant to the plaintiff. The
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time from which said period begins to run is when the interest
becomes due. Thus, as per Art.25 of The Limitation Act, plaintiff
would be entitled to claim interest for the period of three years
only. Suit is filed on 04/06/2018. Thus, plaintiff would be
entitled to get interest on the principal amount of Rs.3,30,000/
from 04/06/2015. Defendants made payment of Rs.3,30,000/
on 09/10/2018. Thus, plaintiff is entitled to get interest on
principal amount of Rs.3,30,000/ for the period from
04/06/2015 to 09/10/2018. So also, plaintiff would be entitled
to get further interest on the interest accrued on 09/10/2018
from 09/10/2018 till it’s realization.
26. Plaintiff claimed interest as per The Interest Act,
1978. Sec. 5 of The Interest Act, 1978, provides that nothing in
this Act shall affect the provisions of section 34 of C.P.C. As per
proviso to Sec.34 of C.P.C., plaintiff would be entitled to get
interest at the rate at which monies are lent or advanced by
nationalized banks in relation to commercial transactions.
Considering the overall facts and circumstances on record and the
rates of interest on which nationalized banks advanced money to
Commercial transactions during relevant period, this Court would
be well justified in awarding interest at the rate of 12% p.a. Thus,
plaintiff is entitled to get interest at the rate of 12% p.a. for the
period from 04/06/2015 to 09/10/2018 on principal amount of
Rs.3,30,000/. Plaintiff is further entitled to get interest @ 12%
p.a. on the interest which accrued on 09/10/2018 from
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09/10/2018 till its realization. Issue No.2 is answered
accordingly.
Issue No.3
27. In view of findings to Issue Nos.1 and 2, suit is liable
to be decreed partly. In the result, following order:
ORDER
1. Commercial suit is partly decreed with costs.
2. Defendants shall pay interest @ 12 %p.a. on the principal
amount of Rs.3,30,000/(Rupees Three Lacs Thirty Thousand
Only) for the period from 04/06/2015 to 09/10/2018.
3. Defendants shall further pay interest @ 12% p.a. on
aforesaid interest accrued on 09/10/2018 for the period from
09/10/2018 till its realization.
4. Decree thus follow.
SUNIL U.HAKE
14/06/2022 JUDGE,
CITY CIVIL COURT,
GR.MUMBAI.
Dictated on : 14/06/2022
Transcribed on : 16/06/2022
Signed on : 20/06/2022
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE
ORIGINAL SIGNED JUDGMENT/ORDER”.
22/06/22 at 05.00 pm.
Mrs.Tanushree C.Kamble
Name of the Judge HHJ SHRI SU Hake
Date of Pronouncement of
judgment/order 14/06/22
Judgment and order signed by P.O. 20/06/22
Judgment/order uploaded on 22/06/22
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