Dismissed

State of Rajasthan through Public Works Department v. M/S Dev Kripa Construction Co.

Rajasthan HC24 Jan 2020CMA/165/2020

Case brief

AI extract

What is this about?

Dismissed appeals by State of Rajasthan against judgments awarding 6% per annum interest on outstanding construction payments. The High Court held interest was permissible under the Interest Act, 1978, dismissing checks on pleadings and noting payment delay.

What did the court decide?

Appeals dismissed; lower court decree awarding interest at 6% per annum upheld.

State of Rajasthan through Public Works… — Contract and Commercial Disputes | Rajasthan HC (2020)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT

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JODHPUR

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D.B. Civil Misc. Appeal No. 151/2020

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State Of Rajasthan, Through Public Works Department, Jaipur

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Chief Engineer (Building) Public Works Department, Rajasthan, Jaipur.

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Additional Chief Engineer Public Works Department, Jodhpur Division, Jodhpur

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Executive Engineer Public Works Department, City Division, Jodhpur.

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----Appellants Versus

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M/s Hari Om Builders, Partner, Ashok Chouhan S/o Kesu Singh Age 43 Years, B/c Mali, R/o Dhani Bera, Chainpura Mandore, Jodhpur

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----Respondent

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D.B. Civil Misc. Appeal No. 165/2020

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State Of Rajasthan Through Public Works Department, Jaipur

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Chief Engineer (Building) Public Works Department, Rajasthan , Jaipur

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Additional Chief Engineer Public Works Department, Jodhpur Division , Jodhpur

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Executive Engineer , Public Works Department, City Division , Jodhpur

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----Appellants

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Versus

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M/s Dev Kripa Construction Co., Through Propriter Kuldeep Gehlot S/o Santosh Singh Age 39 Yrs. B/c Mali , R/o Bera Jalwala Mandore , Jodhpur

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----Respondent

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For Appellant(s) : Mr. Anil Bachhawat, Govt. Counsel For Respondent(s) :

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(2 of 7)

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HON'BLE MR. JUSTICE SANGEET LODHA HON'BLE MR. JUSTICE ARUN BHANSALI Judgment

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24/01/2020 PER HON'BLE BHANSALI, J.

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Reportable

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These appeals have been filed by the appellants aggrieved against judgments & decrees dated 26.08.2019 passed by Commercial Court, Jodhpur, whereby, the Commercial Court has directed the appellants-defendants to pay interest @ 6% per annum from 01.04.2015 till the outstanding amount was paid by the appellants-defendants to the plaintiffs.

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The suits were filed by the respondents-plaintiffs, inter alia, for recovery of a sum of Rs. 42,23,075/- & Rs. 49,40,935/-, respectively towards the work undertaken by them for constructions of class rooms. It was, inter alia, indicated that as per the work order, which was issued pursuant to the tender process, the time fixed for completion of the work was 31.03.2015, the requisite work was completed by 30.03.2015 and the physical possession was handed over alongwith final bill.

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An amount of Rs. 33.65 lakh and Rs. 39.37 lakh remained outstanding, for which, the plaintiff-firms repeatedly contacted the appellants, however, the payment was not made and, therefore, the suits were filed in the year 2018 seeking payment of the outstanding sum alongwith interest @ 18% per annum.

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Written statements were filed, inter alia, admitting the averments made in the plaints pertaining to the grant of contracts and that the work was completed on 30.03.2015. It was claimed that as sufficient budget was not allotted, the amount could not be paid to the plaintiffs and that a sum of Rs. 33,64,896/- & Rs. 39,37,245/-, respectively was outstanding, the department

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(3 of 7)

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was trying to make payment and on budget being allotted the amount would be paid. It was denied that the plaintiffs were entitled to interest @ 18%.

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Based on the pleadings of the parties, the Commercial Court framed five issues. On behalf of the plaintiffs one witness each was examined, however, on behalf of the defendants no evidence was produced.

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The Commercial Court in the judgment impugned noticed that the outstanding sum of Rs. 29,35,594/- and Rs. 33,58,577/was paid to the plaintiffs during pendency of the suits (learned counsel for the appellants submits that the payment was made on 25.01.2018).

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Based on the above fact of payment, which was admitted by PW-1 in his statements, the issues pertaining to the amount being outstanding were not pressed.

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While dealing with the issue pertaining to interest, the Commercial Court came to the conclusion that as in the written statements the plea taken is that the amount could not be paid on account of non-grant of budget, there apparently was no mistake on part of the plaintiffs and, therefore, in the interest of justice and in the circumstances of the case, awarded interest @ 6% per annum w.e.f. 01.04.2015 at simple rate and passed decrees in this regard.

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It is submitted by learned counsel for the appellants that the Commercial Court was not justified in decreeing the suits. Submissions were made that the plaintiffs were required to comply with the requirements of Order VI, Rule 3A and Order VII, Rule 2A CPC, which deal with pleadings in a case where interest is

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(4 of 7)

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sought in a suit before the Commercial Courts and, therefore, the Commercial Court was not justified in awarding the interest.

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Further submissions were made that in the contract between

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the parties there was no provisions for awarding interest on delayed payment and, as such, there was no occasion for the Commercial Court to have awarded interest to the respondents for the delayed payments.

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Attempts were made to justify the delay on account of lack of budget and it was submitted that during pendency of the suits, the amount due has already been paid and, therefore, there was no occasion for the Commercial Court to have granted decrees for payment of interest.

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We have considered the submissions made by learned counsel for the appellants and have perused the material available on record.

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The facts are not in dispute, whereby, the plaintiffs were forced to file the suits for recovery of huge sum from the appellants, which apparently was outstanding and in response the only plea taken was that the amount could not be paid for lack of budget. No contest has been laid to the entitlement of plaintiffs and during pendency of the suits, the principal amount outstanding was paid on 25.01.2018 i.e. almost after 2 years and 9 months from the date the same became due to the plaintiffs.

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The submission made by learned counsel for the appellants that for non-compliance of provisions of Order VII, Rule 2A CPC the plaintiffs were not entitled to the award of interest, apparently has no substance.

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The provisions read as under:-

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“2-A. Where interest is sought in the suit. - (1) Where the plaintiff seeks interest, the plaint shall contain a statement

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(5 of 7)

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to that effect along with the details set out under sub-rules (2) and (3).

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(2) Where the plaintiff seeks interest, the plaint shall state whether the plaintiff is seeking interest in relation to a commercial transaction within the meaning of Section 34 of the Code of Civil Procedure, 1908 (5 of 1908) and, furthermore, if the plaintiff is doing so under the terms of a contract or under an Act, in which case Act is to be specified in the plaint; or on some other basis and shall state the basis of that.

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(3) Pleadings shall also state(a) the rate at which interest is claimed; (b) the date from which it is claimed; (c) the date to which it is calculated; (d) the total amount of interest claimed to the date of calculation; and

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(e) the daily rate at which interest accrues after that date.”

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A bare look at the provisions would reveal that the same require indication as to whether the transactions was commercial within the meaning of Section 34 CPC and the basis for the claim made and that the rate, debt, total amount etc. at which/from which the interest was claimed.

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Though the provision has been inserted for the purpose of clarity, on the basis of which interest is sought by the plaintiffs and to enable the defendants to contest the same on the plea raised in the plaint, however, for lack of such statement in the plaint in compliance of provisions of Order VI, Rule 3A CPC, as no consequence has been provided in the amended Code, it cannot be said that for non-compliance of the said provisions, the plaintiffs would not be entitled to award of interest.

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It is well settled that unless consequence of violation of a particular provision is indicated, the same cannot be termed as mandatory and, as such, for the alleged non-compliance of provisions of Order VII, Rule 2A CPC, it cannot be said that the plaintiffs would not be entitled to claim/award of interest.

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(6 of 7)

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Further submission made that as the contract between the parties did not provide for any award of interest for the delayed payment, the plaintiffs are not entitled to any interest also has no basis. Inasmuch as, the appellants cannot claim premium on the delay made by it in making due payment to the plaintiffs.

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As already noticed, there is no contest qua the entitlement of the plaintiffs to the amount claimed in the plaints, the amount has been paid with a huge delay of 2 years and 9 months.

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Provisions of Section 3 of the Interest Act, 1978 (‘the Interest Act’) deal with power of Court to allow interest and provides that in any proceedings for 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.

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In view of the express provisions of Section 3 of the Interest Act, the plea raised by learned counsel for the appellants apparently has no substance.

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A feeble plea was raised that as the amount claimed by the plaintiffs in the suits has been paid, the interest under Section 34 CPC could not be awarded. The said plea raised also has no substance as has been laid down by the Division Bench of this Court in State Bank of Bikaner & Jaipur & Ors. v. Abdul Wahid & Ors. : 2003 (1) WLN 69, wherein, it was laid down that even if the entire suit amount including the interest, for which, the suits are filed is paid during pendency of the suit, the interest for the period the suit remains pending could be awarded and, therefore, the plea raised in this regard also has no substance, inasmuch as, the

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(7 of 7)

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plaintiffs besides claiming the outstanding amount have also sought decrees for interest and admittedly the amount of interest as claimed in the plaints was not paid by the appellants.

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Further the Commercial Court has awarded interest at the rate of 6% only, which rate by no stretch of imagination can be said to be excessive so as to require interference by this Court.

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In view of the above discussion, there is no substance in the appeals filed by the appellants, the same are, therefore, dismissed.

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(ARUN BHANSALI),J

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(SANGEET LODHA),J

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10-11-AK Chouhan/-

State of Rajasthan through Public Works Department v. M/S Dev Kripa Construction Co.

Case brief

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State of Rajasthan through Public Works Department v. M/S Dev Kripa Construction Co.

Case brief

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