Market Committee vs H.P. Housing Board Himachal Pradesh Housing Board Vs Market Committee

Surjit Singh, J.—These two appeals are being taken up together for disposal, because both of them arise out of the same judgment, i.e., judgment dated 18th August, 2000 of learned Single Judge, whereby after adjustment of the claim of the plaintiff against the counter claim of the defendant, a decree for the remainder, has been passed in favour of the defendant.

Facts relevant for the disposal of these two appeals may be noticed. Plaintiff, Market Committee, Shimla, is a statutory body. Similarly, defendant, H.P. Housing Board, is also a statutory body. A meeting was held between the functionaries of the plaintiff and the defendant on 4.1.1986. Minutes were recorded, copy whereof is Ex. PW-3/A. As per these minutes, defendant was to construct some shops-cum-office buildings and also to develop some sites for the plaintiff on payment of the costs of material and labour charges plus 17% departmental charges. Work was started and some running payments were made by the plaintiff to the defendant. It was stopped mid-way some time in 1991. By that time, a sum of Rs. 61,50,000/- stood paid by the plaintiff to the defendant.

Thereafter, the defendant wrote a letter Ex. D-2 to the plaintiff, informing that it had executed the work to the tune of Rs. 67,81,445/- and that amount was inclusive of departmental charges. Defendant was required to pay the difference between the amount of Rs. 61,50,000/- already paid and the total amount of Rs. 67,81,445/- by 15th April, 1991. It was communicated in the letter that in case the money was not deposited by the aforesaid date, interest would be payable @ 18% per annum. In January, 1993, plaintiff paid a sum of Rs. 10,00,000/- to defendant.

Thereafter, there had been some other agreement between the plaintiff and the defendant, pursuant to which the defendant was to re-start the work. However, for some unknown reasons, work was not re-started and ultimately, the sites with incomplete works were handed over back to the plaintiff by the defendant on 30th May, 1995 against writing Ex. PW-5/D. It was agreed that any subsequent claim of contractors, which may become payable by the defendant on account of arbitration or other reasons at some later stage, will be reimbursed by the plaintiff to the defendant.

In the year, 1995, plaintiff filed a suit for recovery of a sum of Rs. 6,22,402.88/- alleging that it had paid a sum of Rs. 4,16,323/- in excess of the total amount payable to the defendant on account of the work, executed by it inclusive of its departmental charges, and so it was entitled to recover the said money with interest @18% per annum from 1.1.1993, i.e., the date of excess payment to 30.09.1995, the date of institution of the suit.

Defendant filed counter claim, alleging that it was entitled to a sum of Rs. 4,04,337/-, on account of preparation of estimates at the @ 2% of the estimated costs, and another sum of Rs. 1,94,082/-, on account of interest on the said 2% cost of preparation of estimates. It was also stated that after the handing over of the sites to the plaintiff, the defendant had to pay to the contractor engaged by it, a sum of Rs. 3,60,000/- with interest pursuant to the award of Arbitrator and as per terms of Ex.PW-5/D. Defendant pleaded that it was entitled to recover the said money. It was stated that the total amount due to the defendant from the plaintiff after adjustment of Rs. 10,00,000/- paid in January, 1993, came to Rs. 9,99,645/-.

Learned Single Judge framed the following issues on the pleadings of the parties on 6.1.1997.

Whether the memorandum of understanding dated 4.1.1986 was a formal agreement between the parties and not in accordance with the H.P. Agriculture Market Produce Act, 1970 and Rules of 1973. If so, its effect? OPP

Whether the material used in construction is of sub standard quality not in accordance with specification and beyond budget? OPP

Whether the defendant-Board did not send progress report as agreed. If so, its effect? OPP

Whether the plaintiff did not reimburse actual expenditure to the defendant as agreed, if so, its effect? OPD

Whether there was a breach of conditions of the memorandum of understanding dated 4.1.1986. If so by which party and its effect? OP-Parties.

Whether the counter claim filed by the defendant is barred by time? OPP

Whether the plaintiff is entitled to any amount. If so, to what extent? OPP.

Whether the defendant is entitled to any amount. If so, to what extent? OPD.

Relief.

At the end of the trial, learned trial Judge concluded that there was no agreement between the parties for payment of interest on the amount due to one party from the other. It was condluded that plaintiff had made excess payment of Rs. 4,16,323/-, which it was entitled to recover from the defendant without interest. It was also held that the defendant was entitled to recover a sum of Rs. 3,60,000/- from the plaintiff on account of Arbitrator''s award together with interest @ 12% per annum from 1.1.1992 to 10.7.1997, the total of which was worked out at Rs. 5,65,961/- and after the adjustment of its claim, the plaintiff was liable to pay Rs. 1,49,638/- to the defendant. Accordingly, a decree for the aforesaid amount with interest @ 12% per annum from the date of the counter claim, i.e., 5.8.1998 to the date of realization of decretal amount was passed in favour of the defendant.

Plaintiff is aggrieved by the finding of the trial Court with regard to the counter claim of the defendant and also the finding of the trial Court that the plaintiff is not entitled to any interest on the amount paid by it in excess of the amount due to the defendant. Defendant is aggrieved by the finding of the trial court that it (defendant) is not entitled to any money on account of preparation of detailed estimates and interest on that amount, and also the amount of interest paid on the award amount.

We have heard the learned Counsel for the parties and perused the record.

We find no merit in the appeal of the plaintiff. Minutes of the meeting, Ex. PW-3/A, make no mention that interest will be payable on the amount found due to either party from the other, leave alone of specifying the rate of interest. When there was no agreement between the parties for payment of interest and it was specifically agreed that the money would be paid, from time to time, as per requirement for purchase of material etc., there could not have been any question of agreement for payment of interest on the money found due to one party from the other. Also, we find no merit in the plaintiff''s appeal, as regard the allowing of the counter claim of the defendant with regard to the amount awarded by the Arbitrator and the interest payable thereon.

It has come in evidence that the defendant had to pay to the contractor under the award of the Arbitrator, not only a sum of Rs. 5,65,961/- inclusive of the interest, as held by the learned Single Judge, but a sum of Rs. 6,05,802/-, per unchallenged testimony of DW-1, Shri Rajinder Makkar. Therefore, we are of the view that defendant is entitled to recover a sum of Rs. 6,05,802/- from the plaintiff on account of money due to the contractor under the arbitration award in terms of writing Ex. PW-5/D.

As regards the defendant''s plea that it is entitled to the charges @ 2% on account of preparation of detailed estimates, there is no evidence on record suggesting that in addition of departmental charges of 17%, the defendant was entitled to preparation of estimates charges @ 2% or for that matter any other rate. In the absence of any agreement to this effect, in our considered view, the presumption should be that cost of preparation of estimates was included in 17% departmental charges. Otherwise also when the sites of work were handed over back to the plaintiff in 1995 against writing Ex. PW-5/D, defendant reserved its right only in respect of the claim, if any, of the contractor, which the Arbitrator, might adjudge, in future and no other claim like cost of preparation of estimates etc.

In view of the abovestated position, appeal filed by the plaintiff is dismissed. Appeal filed by the defendant is partly allowed and instead of a decree for a sum of Rs. 1,49,638/- as passed by the learned Single Judge, a decree for a sum of Rs. 1,89,479/- with proportionate costs and with interest @ 12% per annum from the date of the counter claim, i.e., 5.8.1998 to the date of payment of the aforesaid amount is passed in favour of the defendant and against the plaintiff. Decree of the learned Single Judge is modified to the aforesaid extent. Defendant''s appeal is disposed of accordingly.