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Judgment
Sathish Ninan, J
The suit for money under a works contract was decreed in part. The defendant and the plaintiff are before this Court through appeal and cross objections respectively.
As per Ext.B2 dated 19.02.2001, the defendant invited tender for electrification of their building. The plaintiff was the successful tenderer. Ext.A4 dated 26.04.2001 is the agreement between the parties. The work was to be completed within four months. However, the plaintiff failed to complete the work within time. As per Ext.A20 = Ext.B13 dated 10.07.2002, the contract was terminated and the work was re-tendered. The suit was filed for realisation of the balance amounts payable to the plaintiff, for the works done by him.
The defendant contended that there was inordinate delay on the part of the plaintiff in completing the work which led to the re-tender. The re-tender was for a higher rate which resulted in loss to the defendant. So also the tender contained a penalty clause for recovery of penalty at the rate of 1% of the probable amount of contract for every week, subject to a maximum of 10%. The defendants are entitled to realise the said amount from the plaintiff.
The trial court found that the plaintiff was responsible for the delay in carrying out the work. It was held that the defendant is entitled to realise the loss suffered consequent on the re-tender. The claim for penalty for the delay was declined stating that the plaintiff was permitted to continue with the work even after the period stipulated in the contract and that thereafter penalty clause could not be invoked. It was also held that the relevant clause enabling recovery of penalty is only during the currency of contract and not after its termination. Challenging the declining of penalty, the defendant has preferred the appeal. The plaintiff is in cross objections challenging the grant of decree for damages under the head of re-tender.
Heard learned counsel on either side.
The points that arise for determination are :-
(i) Was the plaintiff responsible for the delay in completion of the works under the contract ?
(ii) Was the trial court right in having held the plaintiff liable for the loss/damages consequent on the re-tender ?
(iii) Was the trial court right in having declined the claim of the defendant for the penalty?
(iv) Without a claim of set-off, is the defendant entitled to seek for recovery of amounts under the heads of damages consequent on re-tender and penalty for delay?
As per the agreement between the parties, the work was to be completed within four months. The plaintiff contended that there was delay on the part of the defendant in handing over the site which contributed the delay in performance. Ext.A5 communication by the plaintiff to the District Electrical Inspector would indicate otherwise. There is no material to the contrary to suggest that there was delay in handing over of the site. The trial court found against the contention of the plaintiff. Ext.A7 is the time schedule suggested by the plaintiff to the defendant wherein the work was to be completed by 08.08.2001. Ext.A9 is the revised time schedule. Therein the date for completion is suggested as 30.08.2001. Ext.A15 is yet another revised time schedule submitted by the plaintiff. Therein the date of completion is given as 30.09.2001. Ext.A16 is the letter dated 11.10.2001 by the plaintiff seeking for time for completion. Ext.B12 is the letter dated 18.06.2002 by the plaintiff to the defendant wherein he has pointed out his inability to complete the work due to pendency of the proceedings with the Bank at the Debts Recovery Tribunal. On the materials it is evident that the plaintiff was responsible for the delay. The trial court has rightly found so.
The trial court has allowed the defendant to deduct an amount of ₹4,21,531/- towards damages suffered consequent on the re-tendering of the work. It is the defendant's contention that the plaintiff's quote was 17% below the probable amount of contract whereas in the re-tender the quote was 6% below the probable amount of contract. This has resulted in damages of 11%. The defendant quantified the same at ₹4,21,531/-. The defendant claims that they have the right to recover the said amount from the plaintiff.
Though the defendant claims that the re-tendering was at 6% below the PAC, curiously no document in the said regard is produced. When the defendant claims damages that has allegedly occasioned consequent on the re-tendering, it was for the defendant to produce the relevant documents to prove the damages. The documents relating to the re-tendering, including the quote at 6% below the probable amount of contract, was available with the defendants. However, the defendant has not produced the same before the Court. The contention that there was difference of 11% in the re-tender, remained unsubstantiated. The finding of damages by the trial court is without any material. The said finding is liable to be interfered with.
It is the case of the defendant that the trial court went wrong in not awarding penalty for the delay. The agreement permits recovery of 1% probable amount of contract for damages for every week of delay subject to a maximum of 10%. It is to be noticed that, but for a claim that the defendant is entitled to realise the penalty, there is no prayer for set off. Order VIII Rule 6 of the Code of Civil Procedure reads thus:-
“6. Particulars of set-off to be given in written statement.—
(1) Where in a suit for the recovery of money the defendant claims to set-off against the plaintiff's demand any ascertained sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the jurisdiction of the Court, and both parties fill the same character as they fill in the plaintiff's suit, the defendant my, at the first hearing of the suit, but not afterwards unless permitted by the Court, present a written statement containing the particulars of the debt sought to be set-off.
(2) Effect of set-off.- The written statement shall have the same effect as a plaint in a cross-suit so as to enable the Court to pronounce a final judgment in respect both of the original claim and of the set-off; but this shall not affect the lien, upon the amount decreed, of any pleader in respect of the costs payable to him under the decree.
(3) The rules relating to a written statement by a defendant apply to a written statement in answer to a claim of set-off.”
Section 8 of the Court Fees and Suits Valuation Act prescribes the fee payable for set off to be the same as that for a plaint. There is no specific plea of set off and no court fee is paid. At paragraph 26 of the written statement what is pleaded is that, “The final bill is produced after the termination of the contract and the said bill could be settled only after fixing the liabilities, penalties, risk and cost, damages, compensation, expenses etc.” There is no plea that the amounts due to the defendant were already adjusted. Therefore, in the absence of a plea of set off there was no occasion for the trial court to adjudicate on the said claim. Therefore, though for varying reason from that of the trial court, the rejection of the claim of the defendant under the head of penalty by the trial court does not warrant interference. So also, with regard to the claim for damages for re-tendering which has been dealt with earlier, the defendant ought to have raised a plea of set off.
Therefore, while upholding the judgment of the trial court to the extent it declined the defendant's claim for penalty, the grant of damages consequent on re-tendering is to be set aside.
The trial court had found that the decree amount due to the plaintiff from the defendant is ₹22,54,621/-. From the said amount the trial court deducted ₹4,21,531/- towards the claim for damages for re-tender. Such deduction is not liable to be made. Plaintiff is entitled to realise ₹ 22,54,621/-.
The trial court has granted interest from 10.07.2002 which is the date of termination of the contract till date of realisation. It is to be noticed that, though the termination of the contract was on 10.07.2002 the suit was filed only on 11.03.2004 ie. after the period of almost two years. Considering the delay involved, I am of the opinion that the plaintiff is not entitled for interest during the said period and the same is declined. Plaintiff is entitled for interest as granted by the trial court but from the date of suit.
The learned counsel for the defendants-appellants would point out that, pursuant to the decree the defendant has deposited the decree amount before the trial court on 09.01.2017. Necessarily, the plaintiff shall not be entitled for interest for such amount from the date of deposit.
Resultantly, the appeal and cross objection are allowed and a modified decree is passed as hereunder. The plaintiff is granted a decree for realisation of an amount of ₹22,54,621/- with interest at the rate of 6% per annum from the date of suit till realisation. It is clarified that the amount deposited by the defendant pursuant to the decree of the trial court shall be liable to be deducted therefrom and that the plaintiff shall not be entitled for interest for such amount, from the date of deposit. No costs.