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The State of Rajasthan Vs. Ram Prashad - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 173 of 1973
Judge
Reported inAIR1976Raj102; 1975()WLN197
ActsConstitution of India - Article 226
AppellantThe State of Rajasthan
RespondentRam Prashad
Appellant Advocate D.S. Shishodiya, Addl. Govt. Adv.
Respondent Advocate S.R. Bajwa, Adv.
DispositionAppeal dismissed
Excerpt:
.....rules of natural justice.;(b) contract - s.d.o. certifying supply of bricks a per specification--chief engineer cannot reduce the agreed rate between parties.;(c) interest - payment with held inspite of service of notice--held, plaintiff is entitled to interest by way of damages. - - 10,782 only, but denied the rest of the claim as well as the claim for interest on the amount which remained unpaid, 4. the trial court after recording the statements of the witnesses produced by the defendant, who were the employees of the public works department of the state, and also examining the plaintiff, who appeared in the witness box, came to the conclusion that the chief engineer arrived at the decision, as contained in his letter ex. a/1 by the chief engineer, is binding on the state as well..........was a variation in the size of the bricks according to the state, the matter was referred to the chief engineer under clause 23 of the agreement and the chief engineer was of opinion that the rate specified in the agreement be reduced from rs. 86 to rs. 83.61 per thousand bricks. according to this rate the state admitted the claim of the, plaintiff to the extent of rs. 10,782 only, but denied the rest of the claim as well as the claim for interest on the amount which remained unpaid,4. the trial court after recording the statements of the witnesses produced by the defendant, who were the employees of the public works department of the state, and also examining the plaintiff, who appeared in the witness box, came to the conclusion that the chief engineer arrived at the decision, as.....
Judgment:

V.P. Tyagi, J.

1. This is a State appeal against the judgment and decree passed by the Additional District Judge, Ganganagar, on May 2, 1973, holding the State-defendant liable to pay to the plaintiff-respondent an amount of Rs. 13,115 with an interest @ Rs. 6.00 per cent per annum, which according to the trial court comes to Rs. 1,329. Since the defendant-State had paid during the pendency of the suit an amount of Rs. 10,782, the total amount of decree passed against the defendant-State remains to be Rs. 3,662.

2. Facts giving rise to this appeal, are as follows:

The plaintiff-respondent entered into a contract with the State Government to supply 9,76,000 bricks of the size of 9'X 4 1/2'X2 3/4' @ Rs. 86 per thousand bricks and a formal contract was executed by the parties, which is Ex. A/1. The case of the plaintiff was that he supplied the bricks to the defendant-State and the same was accepted by the Assistant Engineer, Rajasthan Canal Project, Tilwara Sub-Division, who was incharge of the canal construction work. The State paid a sum of Rs. 70,800.71 p. towards the price of the bricks supplied by the plaintiff, but the rest of the amount calculated at the specified rate, which comes to Rs. 13,115, was not paid by the State Government in spite of the fact that a notice under Section 80, C.P.C., was given by the plaintiff to the defendant-State. The plaintiff, therefore, filed a suit claiming an amount of Rs. 13,115 and interest on that amount @ Re. 1 per cent per annum.

3. The defendant-State, while admitting the fact about the contract entered into between the parties, came out with the plea that the bricks supplied by the plaintiff, were not in accordance with the specification and they were of the size 9' X 4-3/8' X 2 3/4'. Since there was a variation in the size of the bricks according to the State, the matter was referred to the Chief Engineer under Clause 23 of the agreement and the Chief Engineer was of opinion that the rate specified in the agreement be reduced from Rs. 86 to Rs. 83.61 per thousand bricks. According to this rate the State admitted the claim of the, plaintiff to the extent of Rs. 10,782 only, but denied the rest of the claim as well as the claim for interest on the amount which remained unpaid,

4. The trial court after recording the statements of the witnesses produced by the defendant, who were the employees of the Public Works Department of the State, and also examining the plaintiff, who appeared in the witness box, came to the conclusion that the Chief Engineer arrived at the decision, as contained in his letter Ex. A/3, reducing the rate from Rs. 86 to Rs. 83.61 p., after the filing of the suit and, therefore, that decision would not bind the plaintiff and the Court. While recording this finding, the trial court also took into consideration an earlier decision of the Chief Engineer Ex. 1, whereby the Chief Engineer directed the Superintending Engineer, Rajasthan Canal Project, Suratgarh Circle, to tolerate the variation in the specifications of the bricks in accordance with the prescribed condition of the contract embodied in the Hand Book, Rajasthan Canal Project, Volume I, at page 262. According to the Chief Engineer the variation was less than 1/8' in the width and, therefore, looking to the variation in the size of the bricks, the tolerance as given in the said Book, was advised by him. It may toe mentioned that after receiving the said letter Ex. 1 from the Chief Engineer, the matter was referred to the Accounts Officer, Rajasthan Canal Project, Suratgarh Junction, vide letter Ex. 2 of the Executive Engineer, RCP, Talwara Division, wherein the Executive Engineer described the decision of the Chief Engineer contained in Ex. 1, as final, conclusive and binding on all the parties including the State, as the said decision was given by the Chief Engineer while exercising his power under Clause 23 of the agreement. In this letter Ex. 2 a reference is given to the notice served by the contractor under Section 80 of the Code of Civil Procedure, on which the said decision (Ex. 1) is alleged to have been given by the Chief Engineer. But it so appears that the Accounts Branch did not accept this decision of the Chief Engineer and referred the matter back to the Chief Engineer on the ground that the provisions of the terms of the contract contained in the Hand Book relied upon by the Chief Engineer, were not attracted to this contract, as this contract was entered on the basis of the percentage rate tendered form as given at pages 433 to 461 of the Rajasthan P.W.F. & A.R. The Chief Engineer, it seems, discussed the matter with the higher authorities, namely, the Rajasthan Canal Board, as is clear from his letter dated February 24, 1972 (Ex. A/3), and decided that the bricks supplied by the contractor not being in accordance with the specifications provided in the contract, he could not be paid for them at the specified rate, but the rate should be reduced by Rs. 2.39 per thousand bricks and it is on the basis of this specific decision of the Chief Engineer that the written statement of the State was filed claiming that the plaintiff was entitled to get the rate of Rs. 83.61 p. per thousand bricks and not at the rate of Rs. 86 per thousand bricks, as given in the agreement.

5. The first question that has been urged before me by the learned counsel for the State, is that the decision given under Clause 23 of the agreement Ex. A/1 by the Chief Engineer, is binding on the State as well as on the contractor and since the Chief Engineer, while exercising his authority under the said clause, reduced the rate from Rs. 86 per thousand bricks to Rs. 83.61 p. per thousand bricks, that decision binds the plaintiff-contractor and he is not entitled to claim the specified rate. As regards the decision of the Chief Engineer contained in letter Ex. I, it is contended by Mr. Shishodiya that that decision cannot be said to have been given by the Chief Engineer, while exercising his authority under clause 23 of the agreement, as the letter Ex. 1 does not make a mention that the said decision was given by him in the exercise of his authority under Clause 23 of the agreement. According to Mr. Shishodiya, Ex. A/3 specifically mentions Clause 23 and, therefore, that is the only decision which was given by the Chief Engineer on a dispute raised before him. The directions contained in Ex. 1, according to him are only administrative directions, which do not bind either party. I regret I cannot accept this contention of Mr. Shishodiya. The contents of Ex. 1 definitely show that the matter went to the Chief Engineer on a notice given by the contractor to the State Government under Section 80, C.P.C. There is a specific reference of that notice in the said letter and, therefore, the dispute was very much before the Chief Engineer that the amount due to the contractor was being withheld by the authorities without any rhyme and reason. The Chief Engineer, therefore, decided that matter while issuing directions to the Superintending Engineer that the doctrine of tolerance embodied in the Hand Book, Rajasthan Canal Project, Vol. I (1968 Edition) at page 262, must be applied to the present case, as the variation in the width of the bricks was negligible, that is, 1/8'. This letter has (been interpreted by the Executive Engineer, who was incharge of the work, as a decision of the Chief Engineer under Clause 23 of the agreement as is clear from Ex. 2.

6. From the letters brought on the record it is apparent that the dispute was raised by the plaintiff-contractor about the non-payment of his dues and perhaps he did not know that the department was raising a dispute that the supply of the bricks was not in accordance with the specifications. The certified copies of the running bills have been brought on the record and they show that the S.D.O., R.C.P. Shri Veer Singh (D.W. 2) certified on every bill that the material supplied toy the contractor was as per specification. The material was accepted by the department at the time of the supply and no objection was ever raised by the department about the fact that the bricks were not in accordance with the specifications as given in the contract. It is true that Ex. A/3, the last letter of the Chief Engineer, which was issued by him much after the filing of the suit by the plaintiff, refers to Clause 23 of the agreement, which shows that he might have given a second thought to his previous decision on the request made by the Accountant of the department and that he changed his previous decision by reducing the rate from Rs. 86 per thousand bricks to Rs. 83.61 p. per thousand bricks. But it is not clear from the evidence adduced by the defendant-State that this subsequent decision was made after giving due notice to the plaintiff. Even if this argument is accepted (though I do not propose to decide it here) that the order passed by the Chief Engineer is of administrative nature and while exercising his authority under Clause 23 of the agreement, he does not decide the matter in a quasi-judicial manner, still while adjudicating the dispute between the two parties not as an arbitrator, but only as an expert chosen by both the parties, it is incumbent on such authority to comply with the fundamental rule of natural justice that no decision should be given against any one without giving him an opportunity of being heard in the matter. Such an authority is created under Clause 23 of the agreement and he is as much bound to follow this fundamental rule of natural justice as any other authority, because in the exercise of such an authority, he adjudicates the dispute between the two parties and, therefore, both the parties must have an opportunity of placing their view-points before such an authority. In this view of the matter I feel that the decision contained in Ex. A/3, having suffered from the defect of. non-compliance of fundamental rule of natural justice, cannot bind the plaintiff respondent.

7. Apart from this defect, I feel that the decision given by the Chief Engineer contained in Ex. i is binding on both the parties, though it may be a wrong decision. It is not as easy to say as has been argued before me that the directions contained in Ex. 1 were merely departmental directions, because I find that that matter was decided by the Chief Engineer on the dispute raised by the contractor contained in his notice under Section 80, C.P.C.

8. Other questions of law, which have been vehemently urged before me, however, lose importance in view of the fact that the running bills produced before the Court show that the S.D.O., R.C. P., Shri Veer Singh (D.W. 2) had given a certificate that the bricks supplied by the contractor were in accordance with the specifications. If that is so, then the question of reducing the rate would not arise. Moreover, I do not find as to how many bricks out of 9,76,000 did not conform to the specifications prescribed in the agreement. In these circumstances, it is difficult for me to accept that there was any occasion for the Chief Engineer to reduce the rate, as agreed between the parties.

9. Now remains the question of interest. Learned counsel for the State has urged that there was neither any contract for the payment of interest nor was any usage that the delay in payment will give a right to the contractor to claim interest pendente lite or up to the date the suit was filed.

10. In this case notice under Section 80, C.P.C., was served by the plaintiff-respondent on the State Government on February 8, 1971, and the Chief Engineer decided the matter in favour of the contractor on May 13, 1971. Thereafter, the department has no justification to withhold the payment, even if the Accounts Branch thought that the decision of the Chief Engineer was not correct. The withholding of the payment of the amount due after May 13, 1971, has caused the plaintiff to suffer financially, because his money remained blocked for no rhyme and reason with the Government. I, therefore, think that the plaintiff was entitled to get by way of damages, interest on the amount due on May 13, 1971 @ Rs. 6 per cent per annum. The trial court allowed interest on the amount due from August 14, 1970, when the final bill was prepared. But it appears that some objections were raised by the Accounts Branch about the specifications of the bricks and, therefore, the department was justified in not making payment till the dispute was finally adjudicated by some competent authority. The Chief Engineer decided that dispute on May 13, 1971, vide his letter Ex. 1. After this date the department could not have any justification to withhold the payment of the plaintiff, and, therefore, the plaintiff could claim damages by way of interest from that date. The decree passed by the trial court is, therefore, modified to this extent that the amount due shall bear interest only from May 13, 1971.

11. During the pendency of the suit the defendant-State paid Rs. 10,782. The amount that remained due to the plaintiff was, therefore, Rs. 2,333. This amount shall bear interest @ Rs. 6 per cent per annum during the period of the pendency of the suit till it was paid by the defendant-State. To this extent the decree shall stand altered.

12. The appeal of the appellant succeeds only on the question of interest, as referred to above. Rest of the appeal fails and is hereby dismissed. The plaintiff shall get costs proportionate to his success.


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