Kerala High Court
The Chief Engineer vs L.Satheek on 26 May, 2025
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
MONDAY, THE 26TH DAY OF MAY 2025 / 5TH JYAISHTA, 1947
WA NO.1503 OF 2024
ARISING OUT OF THE JUDGMENT DATED 19.07.2024 IN WP(C)
NO.17963/2022 OF HIGH COURT OF KERALA
APPELLANTS/RESPONDENTS 3 TO 6 IN WP(C):
1 THE CHIEF ENGINEER,
PWD NATIONAL HIGHWAYS, PUBLIC OFFICE, MUSEUM.P.O,
THIRUVANANTHAPURAM, PIN - 695033
2 THE SUPERINTENDING ENGINEER,
PWD NATIONAL HIGHWAYS, SOUTH CIRCLE,
OPPOSITE LOURDE CHURCH, PATTOM.P.O,
THIRUVANANTHAPURAM, PIN - 695004
3 THE EXECUTIVE ENGINEER,
PWD, NATIONAL HIGHWAYS DIVISION,
NEAR CIVIL STATION, ALAPPUZHA, PIN - 688001
4 THE SECRETARY,
TO THE PUBLIC WORKS (D) DEPARTMENT, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001
BY ADV GOVERNMENT PLEADER SRI.K.P.HARISH
RESPONDENTS/PETITIONER AND RESPONDENTS 1 & 2 IN WP(C):
1 L.SATHEEK
AGED 65 YEARS
MANAGING PARTNER, K.LAKSHMANAN AND CO., AKKAVILA,
NO.200 SREE SARAVANA NAGAR, ERAVIPURAM.P.O,
KOLLAM, PIN - 691011
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2 THE CHIEF ENGINEER
(P-7), MINISTRY OF ROAD TRANSPORT AND HIGHWAYS,
TRANSPORT BHAVAN, NO.1, PARLIAMENT STREET,
NEW DELHI-110 001, PIN - 110001
3 THE REGIONAL OFFICER,
MINISTRY OF ROAD TRANSPORT AND HIGHWAYS,
OFFICE OF THE CHIEF ENGINEER, PWD NATIONAL HIGHWAYS,
PUBLIC OFFICE, MUSEUM.P.O,
THIRUVANANTHAPURAM- 695033, PIN - 695033
BY ADVS.
Amith Krishnan H, R1
B.G.HARINDRANATH (SR.), R1(K/378/1984)
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 21.05.2025, THE
COURT ON 26.05.2025 DELIVERED THE FOLLOWING:
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JUDGMENT
Dated this the 26th day of May, 2025 Syam Kumar V.M.,J.
This Writ Appeal is filed challenging the judgment of the learned Single Judge dated 19.07.2024 in W.P.(C) No.17963 of 2022. Appellants were respondents 3 to 6 in the W.P.(C) and respondents are the petitioner and respondents 1 and 2 in the W.P.(C). Parties are hereinafter referred to as per their status in the Writ Petition.
2. The Writ Petition was filed by the petitioner contractor inter alia seeking to quash Ext.P10 order dated 02.09.2021 and Ext.P12 letter dated 15.11.2021 issued by the Public Works Department and seeking a direction to the respondents to pay an amount of Rs.60,66,720/- as demanded by him in Ext.P13, which according to him is the interest payable for the amount which had been withheld by the Department.
3. The learned Single Judge allowed the Writ Petition and quashed Ext.P10 and P12 to the extent they limited the payment of interest to 1% below the Treasury Savings Bank rate. The learned Single Judge also directed the respondents to pay the petitioner interest on the sum of Rs.19,33,205/- at the rate of 12% per annum (simple interest) from 31.03.2010 till the date of payment, after deducting the amounts already paid. The said judgment is impugned in this appeal.
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4. Heard Sri.K.P.Harish, learned Senior Government Pleader for the appellants (respondents 3 to 6 in W.P.(C)) and Sri.B.G.Harindranath, learned Senior Advocate instructed by Sri.Amith Krishnan H., Advocate for the 1st respondent (petitioner in W.P.(C)).
5. The learned Senior Government Pleader assailed the impugned judgment contending that the Writ Petition was not even maintainable and the petitioner ought to have been relegated to the civil court seeking appropriate remedy on his claim for interest. It is also contended that the Single Judge ought not to have fixed interest at the rate of 12% merely based on the uncorroborated contentions put forth by the petitioner in the Writ Petition. There was no legally reliable material before the learned Single Judge to fix interest at the rate of 12% and the mandates of the Interest Act of 1978, which clearly described the power of the court to allow interest should have been taken note of. The purported reliance placed by the learned Single Judge on the two judgments of the Hon'ble Supreme Court in arriving at the interest rate of 12% was erroneous in so far as the learned Single Judge had overlooked the fact that the said decisions had been rendered by the Hon'ble Supreme Court in appeals preferred against judgment or decree in civil suits. The dictum laid down in the said judgments were not reliable precedents for fixing interest in a Writ Petition filed seeking payment of interest. The learned WA NO.1503/2024 5 2025:KER:35963 Single Judge ought to have dismissed the Writ Petition relegating the petitioner to his civil remedies, if any. The learned Single Judge without any reliable basis or reliable evidence fixed interest at the rate of 12% and computed an amount of Rs.23,97,174/- as payable to the petitioner towards interest and directed payment of the same less the amounts already paid. It is also contended that the learned Judge had quashed Exts.P10 and P12 without any valid reasoning and contrary to the dictum laid down in Central Council for Research in Ayurvedic Sciences v. Bikartan Das [2023 KHC 6774]. The learned Senior Government Pleader thus sought to set aside the judgment of the learned Single Judge and allow the Writ Appeal.
6. Per contra the learned Senior Advocate appearing for the petitioner contended that the judgment of the learned Single Judge does not call for any interference as it had been rendered in accordance with the law. The amount due to the petitioner had been withheld illegally by the respondents on an incorrect premise and finally, after a long drawn litigation when the amounts withheld were paid to the petitioner, he was legally entitled to interest for the delayed payment. The petitioner had paid a considerable sum of interest for the overdraft facility, which was availed by him to execute the contract as revealed from Exts.P13 and P14. While Ext.P13 is a letter and interest calculation sheet prepared by the Chartered Accountant of the WA NO.1503/2024 6 2025:KER:35963 petitioner, Ext.P14 is a letter from the Bank from which he had availed overdraft facility revealing the compound interest that the petitioner had to pay. The said documents by itself, it is contended, would reveal that Ext.P10 order which directed payment of interest to the petitioner at the rate of 1% less than the Bank rate and Ext.P12 letter which clarified/ affirmed the same, are arbitrary, unjustifiable and does not reflect any nexus to the loss sustained by the petitioner. Exts.P10, P12 being legally unsustainable were correctly quashed by the learned Single Judge. Placing reliance on the judgments of the Hon'ble Supreme Court in Hansa V. Gandhi v. Deep Shankar Roy and others [(2013) 12 SCC 776] and State of Tamil Nadu and another v. Saketh India Ltd. [(2011) 15 SCC 485], the learned Senior Counsel contended that the interest rate of 12% was arrived at by the learned Single Judge validly and properly by following the dictum laid down therein. No contention that the subject matter in dispute can be decided only by a civil court had been taken by the respondents at any stage of the writ proceedings and the same cannot be raised at this point of time. In this respect reliance is placed on the dictum laid down by the Hon'ble Supreme Court in Babubhai Muljibhai Patel v. Nandlal Khodidas Barot and others [(1974) 2 SCC 706] and Kisan Sahkari Chini Mills Ltd. and others v. Vardan Linkers and others [(2008) 12 SCC 500]. The learned Senior WA NO.1503/2024 7 2025:KER:35963 Counsel thus sought to dismiss the Writ Appeal.
7. We have heard both sides in detail. The contentions put forth and precedents relied on have also been considered. After receipt of amounts earlier withheld, the petitioner had preferred Ext.P8 representation seeking interest on the said amounts inter alia stating that the amount legally due to him as early as from 31.03.2010 was disbursed to him only on 29.07.2020 and hence he is entitled to receive interest at the rate of the interest charged by his Bank. He had, in Ext.P8 computed the interest charged by the Bank at Rs.60,66,790/- and apparently produced an interest calculation sheet and bank statements. He followed it up with W.P.(C) No.780 of 2021 seeking a direction to dispose of Ext.P8 representation and this Court had vide Ext.P9 judgment directed disposal of the said representation within three months. It is pursuant thereto that Ext.P10 order, which is sought to be quashed in the Writ Petition, had been passed and in Ext.P10, the Government had concluded as follows:
"Government have examined the matter in detail with all available details. In the light of the decision taken by the Committee chaired by the CE (Z-III), MoRTH, New Delhi, it is found that the petitioner is eligible for interest for delayed payment. But it cannot be at the bank rate. In the circumstance, permission is granted to the Chief Engineer (NH) to release interest to the petitioner on delayed payment at a rate 1% less than the bank rate."
Ext.P10 was followed up with a request for clarification viz., Ext. P11 and WA NO.1503/2024 8 2025:KER:35963 thereafter Ext.P12 clarificatory letter was issued which inter alia stated that compound interest as claimed by the petitioner is not payable and that interest can only be as stipulated in Ext. P10, that is, at 1 % below the interest rate of scheduled banks/treasury bank/savings bank interest, whichever is lower. It is at such a stage that the W.P.(C), in which the judgment impugned had been rendered, was filed by the petitioner seeking to quash Exts.P10 and Ext.P12 inter alia contending that unless he is paid interest at Bank lending rates, he would be put to irreparable loss and injury. Subsequent to the filing of the Writ Petition, pursuant to the order dated 03.06.2022, sanction was accorded to pay to the petitioner the admitted rate of interest without prejudice to his contentions in the Writ Petition. Accordingly, an amount of Rs.4,86,488/- had been sanctioned for payment which had been arrived at by calculating interest at the rate of 1% below of the interest of the Treasury Savings Bank. The said amount was received by the petitioner, albeit with initial reluctance. The learned Single Judge had thereafter heard both sides and disposed of the W.P.(C) quashing Ext.P10 order and Ext.P12 letter and directing the respondents to pay interest to the petitioner on the sum of Rs.19,33,205/- at the rate of 12% per annum (simple interest), from 31.03.2010 till the date of payment, after deducting the amount of Rs.4,86,488/- which had been paid pending the Writ Petition. It was also WA NO.1503/2024 9 2025:KER:35963 directed that the amount shall be released within three months from the date of the receipt of the certified copy of the judgment and in case of any further delay in payment, the respondents shall pay an additional 2% as interest and the said amount shall be recovered from the officers who are responsible for the delay.
8. We note that the learned Single Judge while holding so had taken note of the submission of the petitioner that he had undertaken the work by raising amounts through loans and that even payment at the rate of 12% will not compensate for the loss that he had allegedly suffered. The learned Judge also took note of the fact that the counter affidavit filed by the respondents did not mention the rate of interest of the Treasury Savings Bank and had only stated 1% less than the Treasury Saving Bank rate. Thereafter, the learned Judge arrived at the interest rate of 12% by relying on the judgments of the Hon'ble Supreme Court in Hansa V. Gandhi (supra) and Saketh India Limited (supra) by reasoning as follows:
"If the rate of interest adopted by the Hon'ble Supreme Court is taken as a yardstick, the interest payable for the 124 months of delay in releasing the unjustly withheld amount of Rs,19,33,205/- would be Rs.23,97,174/-. What has been paid is Rs. 4,86,488/- which is about 20%. of the amount. It only accounts for 2.4%. It is as good as no payment at all. There is no justification for the above conduct of the respondents. In such circumstances, I do not find any reason not to adopt the same rate of interest that was applied by the Hon'ble Supreme Court in the decisions in Hansa V. Gandhi (supra) and Saketh India (supra)"WA NO.1503/2024 10
2025:KER:35963 The correctness of the above reasoning to arrive at the rate of interest at 12% by the learned Single Judge placing reliance on the said judgments is the major bone of contention before us.
9. We note that Hansa V. Gandhi (supra) arose out of a suit for specific performance. The Hon'ble Supreme Court was considering the challenge against the judgment of the High Court of Bombay allowing the appeals directing the developer to return the amount of purchase price received by it from the plaintiffs with interest. The Supreme court while affirming the judgment in which interest had been fixed by the High Court of Bombay at the rate of 9% per annum held that taking note of the rising price and inflationary trend in the country, the plaintiffs shall be entitled to 12% interest from the developer. As regards the dictum in Saketh India Limited (supra), the Hon'ble Supreme Court was considering a cancellation of quarrying lease. The High Court of Madras had, relying on Rule 36 B of the Tamil Nadu Minor Mineral Concession Rules, 1959 imposed an interest of 18% on the refund from the State. The Hon'ble Supreme Court noting the absence of any contract or statutory provision as to the rate of interest, held that rate of 12% would be justified and reduced the interest from 18% to 12%.
10. We find merit in the contention put forth by the learned Senior Government Pleader that Hansa V. Gandhi (supra) and Saketh India WA NO.1503/2024 11 2025:KER:35963 Limited (supra) do not lay down a general precedent regarding payment of 12% interest in Writ Petitions seeking grant of interest on amounts withheld and later paid under works contract. It is trite that though a Writ Petition could be filed in certain circumstances to address contractual matters, it is not the primary or appropriate remedy for seeking interest on amounts payable under a works contract. The enforcement of such contractual obligations generally falls under the realm of private law and is best addressed through civil suits or arbitration. Further, the percentage of interest to be awarded depends on the facts and circumstances of each case and no straight jacket method can be evolved in the said respect. As is discernible from Saketh India Limited (supra), the Hon'ble Supreme Court had reduced the rate of 18% fixed as interest by the High Court to 12% taking note of the circumstances of that case. It has also to be noted that Article 142 of the Constitution is a unique provision that vests the Hon'ble Supreme Court with the power to pass orders necessary to secure complete justice. High Courts, while having wide powers under Article 226 to issue certain writs and orders, do not have the same discretionary power as the Hon'ble Supreme Court under Article 142. Hence it may not be proper for this Court to fix rates of interest on amounts payable under works contracts exercising discretionary power akin to that exercised by the Hon'ble Supreme Court. If the petitioner had a claim for interest based WA NO.1503/2024 12 2025:KER:35963 on the interest levied by his Bank, as attempted to be substantiated vide Ext.P13 and P14 documents which are issued by his Chartered Accountant and his Bank, he ought to have availed appropriate civil remedies and invocation of the extraordinary jurisdiction of this Court under Article 226 is not proper legal recourse to be adopted.
11. Similarly we find force in the contention put forth by the learned Senior Government Pleader based on Section 3 of the Interest Act, 1978 which laid down the power of the court to determine interest rate, not exceeding current rate of interest. It would be relevant to reproduce Section 3 of the Interest Act, 1978:
"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 where 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-section (1),--WA NO.1503/2024 13
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(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, then, the power conferred by that sub-section shall be exercised so as to include in that sum interest on those damages or on such part of them as the court considers appropriate for the whole or part of the period from the date mentioned in the notice to the date of institution of the proceedings, unless the court is satisfied that there are special reasons why no interest should be given in respect of those damages.
(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." The said provision unequivocally lays down that interest rate that could be granted by a court in a 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 and stipulates that it shall not exceed the current rate of interest. It was thus open to the petitioner to move a civil court to seek such current interest rate on amounts due after satisfying the concerned civil court his entitlement in the said respect under Section 3 of the Interest Act, 1978. Arriving at an amount of interest by summarily fixing the rate at 12% in a Writ Petition, basing on the dictum laid down by the Supreme WA NO.1503/2024 14 2025:KER:35963 Court in appeals arising out of civil disputes cannot be termed as legally correct and tenable. Hence the reasoning adopted by the learned Single Judge to award interest in a claim projected in a Writ Petition and summarily fixing the rate of interest at 12% based on judgments that are clearly distinguishable cannot be sustained. Though the learned Senior Counsel had basing on Babubhai Muljibhai Patel (supra) and Kisan Sahkari Chini Mills (supra) strenuously argued that the respondents have not at any stage of the writ proceedings raised a contention that the subject matter in dispute can be decided only by a civil court and hence the same cannot be raised at this point of time, we do not find the said argument to be sustainable for the reason that the question of jurisdiction in this case is a pure question of law that goes the root of the matter and could be raised at any point of time. Hence contention to the contrary based on the said judgments cannot be sustained.
12. The next contention put forth by the learned Senior Government Pleader concerns legality of quashing Exts.P10 and P12 by the learned Single Judge. No specific reasons have been stated or assigned in the impugned judgment for quashing Ext.P10 and Ext.P12. Ext.P10 had been issued in furtherance of Ext.P9 judgment of this Court and had stated that the same was being issued after examining the matter in detail with all available WA NO.1503/2024 15 2025:KER:35963 inputs. It had been specifically stated that the decision therein was being taken in the light of the earlier decision taken by the Committee chaired by the CE (Z-III), MoRTH, New Delhi and it had been found that the petitioner is eligible for interest for delayed payment, though not at the Bank rate. Permission was granted vide Ext.P10 to the Chief Engineer (NH) to release interest to the petitioner on delayed payment at a rate 1% less than the Bank rate. Since there was a need to obtain clarity as to the Bank rate, it was sought and clarified in Ext.P12 that the rate shall be 1% below the interest rate of scheduled banks or treasury banks or savings banks whichever is lower. No specific reason has been stated to quash Exts.P10 and P12 and hence the contention that there has been non compliance of mandates laid down in Bikartan Das (supra) holds merit. In Bikartan Das (supra), the Hon'ble Supreme Court had laid down the two cardinal principles of law governing exercise of extraordinary jurisdiction under Article 226 of the Constitution when it comes to issue of writ of certiorari. First being that in granting a writ of certiorari, the High Court does not not substitute its own views for those of the inferior tribunal/ authority and that it does not review or reweigh the evidence upon which the determination of the inferior tribunal/ authority purports to be based. The second cardinal principle of exercise of extraordinary jurisdiction under Article 226 of the Constitution as held in WA NO.1503/2024 16 2025:KER:35963 Bikartan Das (supra) is that in a given case, even if some action or order challenged in the Writ Petition is found to be illegal and invalid, the High Court while exercising its extraordinary jurisdiction thereunder can refuse to upset it with a view to doing substantial justice between the parties. It has thus been held in Bikartan Das (supra) that where the jurisdiction of a body depends upon a preliminary finding of fact in a proceeding for a writ of certiorari, the court may determine, whether or not that finding of fact is correct. The reason is that by wrongly deciding such a fact, the court or tribunal cannot give itself jurisdiction. Following the said principle, even assuming that the reasoning in Exts.P10 and P12 were erroneous, the same ought to have been explained so and the the learned Single Judge ought not to have proceeded to fix the rate of interest unilaterally basing on the dictum laid down in the precedents of the Hansa V. Gandhi (supra) and Saketh India Limited (supra) which could not have been relied on in the facts of the case at hand. A writ of certiorari, being a high prerogative writ, should not be issued on mere asking. On the said count too, we find that the judgment is fit to be interfered with.
13. In view of the above discussion, we set aside the judgment dated 19.07.2024 in W.P.(C) No.17963 of 2022 of the learned Single Judge. The petitioner shall be entitled to interest at the rate as arrived at and mentioned in Exts.P10 and P12. Since the same has been already paid to the petitioner WA NO.1503/2024 17 2025:KER:35963 vide interim orders passed in the Writ Petition, the petitioner is not entitled to any further amounts in the said respect.
The Writ Appeal is allowed. No costs.
Sd/-
SUSHRUT ARVIND DHARMADHIKARI JUDGE Sd/-
SYAM KUMAR V.M. JUDGE csl