Karnataka High Court
The Chief Secretary vs M/S Anderson Marine on 22 March, 2017
Bench: Anand Byrareddy, K.Somashekar
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IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 22ND DAY OF MARCH, 2017
PRESENT
THE HONOURABLE MR.JUSTICE ANAND BYRAREDDY
AND
THE HONOURABLE MR.JUSTICE K.SOMASHEKAR
REGULAR FIRST APPEAL Nos.100066-100067/2014
IN RFA NO. 100066/2014
BETWEEN:
1. The Chief Secretary,
Government of Karnataka,
Vidhana Soudha,
Dr. Ambedkar,
Bangalore - 560 001.
2. The Secretary,
Public Works Department,
Government of Karnataka,
Multistoried Building,
Dr. Ambedkar,
Bangalore - 560 001.
3. The Chief Engineer,
National Highways,
K. R. Circle,
Bangalore - 560 001.
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4. The Director of Ports and
Inland Water Transport,
Uttara Kannada,
Baithkol, Karwar. ... APPELLANTS
(By Shri. Shivaprabhu S Hiremath,
Additional Government Advocate)
AND:
M/s. Anderson Marine Private Limited,
A registered Company,
Registered under the Companies Act,
Having its office at Zorrinto/SONCOALE
Vasco-Da-Gama, Goa-403 802.
By its Chairman, Cmde,
R.A.J. Anderson.
...Respondent
(By Smt. Hemalekha R Kulkarni, Advocate)
This appeal is filed under Section 96 of the Code of Civil
Procedure, against the judgment and decree dated 18.11.2013
passed in O.S.No.93/2000 on the file of the Principal Senior Civil
Judge, Karwar, decreeing the suit filed for recovery of money.
In RFA No.100067/2014
Between:
1. The Chief Secretary,
Government of Karnataka,
Vidhan Soudha, Dr. Ambedkar,
Bangalore-560001.
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2. The Secretary,
Public Works Department,
Government of Karnataka,
Multistoried Building,
Dr. Ambedkar, Bangalore-560001.
3. The Chief Engineer,
National Highways,
K. R. Circle, Bangalore-560001.
4. The Director of Ports and
Inland Water Transport,
Uttara Kannada, Baithkol, Karwar. ... Appellants
(By Shri. Shivaprabhu S Hiremath,
Additional Government Advocate)
And:
M/S Anderson Marine Private Limited,
A Registered Company,
Registered under the Companies Act,
having its office at Zorrinto/SONCOALE,
Vasco-Da-Gama, Goa-403802,
By its Chairman, Cmde, R. A. J. Anderson. ... Respondent
(By Smt. Hemalekha R Kulkarni, Advocate)
This appeal is filed under Section 96 of the Code of Civil
Procedure, against the judgment and decree dated 18.11.2013
passed in O.S.No.93/2000 on the file of the Principal Senior Civil
Judge, Karwar, decreeing the suit filed for recovery of money.
These appeals coming on for Hearing, this day, ANAND
BYRAREDDY J., delivered the following:
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JUDGMENT
Heard the learned Government Advocate appearing for the appellants and the learned Counsel for the respondent.
2. The present appeal is preferred against the judgment and decree in a suit for recovery of a sum of Rs.2,39,74,095.50 with interest thereon.
3. The parties are referred to by their rank before the trial court for the sake of convenience.
4. The respondent was the plaintiff. The plaintiff was a company registered under the Companies Act, 1956. It is also a company registered with the Ministry of Defence, Directorate of Quality Assurance for the purpose of manufacturing of marine crafts for Indian Navy, Coast Guards and Ports and Harbours. And was also said to be registered with the FAO of the United Nations for the manufacture and supply of rescue vessels.
It transpires that the Government of Karnataka, had invited tenders for the manufacture of six specially designed :5: Landing Craft Tanks (Hereinafter referred to as the 'LCTs', for brevity) to ferry heavy vehicles apart from other types of vehicles across the Sharavathi river from Honnavar to Kasarkod, along National Highway No.17. This was warranted as the bridge across the river at that point needed urgent repairs and had to be shut down.
The plaintiff was said to have been awarded a tender for the manufacture of six specially designed LCTs for the aforesaid purpose. In terms of the agreement entered into pursuant to the acceptance of the tender of the plaintiff, the said LCTs were delivered to the port authorities at Honnavar . Thereafter, the Government of Karnataka is said to have invited tenders for the purpose of operating ferry services round the clock. It transpires that the plaintiff was again awarded a contract in this regard, on terms and conditions which were specified, for the period from 1.4.1993 to 31.3.1994. It was agreed that the plaintiff would be paid a sum of Rs.2,60,000/- per month, per LCT, that was operated. The amount was to be paid every half month depending on the number of trips that were carried out by the :6: LCTs. The prescribed operational hours was 16 hours per LCT with an 8 hour rest period to enable the equipment to cool down. The cost of stores maintenance, repairs, fuel charges, crew charges were all to be met by the contractor and no toll charges were to be collected from any of the ferry traffic and a security deposit of Rs.1,00,000/- was to be furnished for the fulfillment of the contract and the same was to be refunded to the contractor after completion of the contract.
It transpires that the plaintiff had successfully executed the contract for the said period and the contract was said to have been renewed for a further period till 31.5.1995. In addition to renewal, the defendants had awarded a further contract in respect of operating and maintaining six departmental LCTs, apart from being required to procure two new LCTs, which were to be procured within 60 days from the award of work. The plaintiff was responsible for the maintenance of two pairs of landing ramps, maintenance of approach roads on both sides, operating and maintaining weigh bridges, warf lights, buoys, toll posts and collection of tolls as per Government Order No.PWD 200 CNH :7: 86 dated 17.9.1991. As per the contract, the company was required to credit to the government as per Schedule 'B' to the said contract a sum of Rs.8.00 lakh per month, when the road over the bridge was closed entirely for all traffic and Rs.5.00 lakh per month when light vehicles of less than 3 tonnes capacity were permitted to ply over the bridge. Apart from the above, there was no other payments contemplated in terms of the contract and the defendant was not also liable to pay any sum towards the maintenance and operation charges of 8 LCTs that were operated by the contractor.
In this background, from the date of the commencement of the second contract namely, from 1.6.1995, the bridge was never said to have been restricted to vehicles of 3 tonnes capacity and below, except for a period of 17 days in December 1995, when the bridge was closed for all kinds of traffic, completely. It then transpires that the defendants had issued another notification dated 6.1.1996 permitting the vehicular traffic of six tonnes and below to ply on the bridge and this notification was sought to be imposed on the plaintiff till the contract was ultimately terminated :8: as on 5.8.1997. It was the plaintiff's case that the plaintiff was required to pay to the Government in terms of Schedule-B to the contract and that the said condition was followed only for 17 days in December 1995 when the entire bridge was closed for all kinds of vehicular traffic on the said bridge. It is in this background that the defendants were compelled to pay Rs.5.00 lakh per month to the Ministry of Surface Transport and the same was paid in good faith and on the understanding that the said payment would be adjusted towards the payments due to the plaintiff.
It is the plaintiff's complaint that the defendants had unilaterally chose to permit the vehicles below 6 tonnes and above 3 tonnes to also ply on the bridge, on the assurance that the repair work could be carried out even with such vehicular movement. It is in this background that the ferry operations of the plaintiff were no longer viable as all kinds of traffic would opt for moving on the bridge. And that there was an impasse in the plaintiff refusing to make any further payment in view of the unilateral variation of the contract by the defendants in permitting such vehicles which was not contemplated under the contract for being permitted to :9: utilise the bridge. In terms of the contract, one month's notice was required to be issued to the plaintiff in the event of termination of the contract. However, the defendants had abruptly terminated the contract in August 1997 without any warning and this had lead to a crisis within the plaintiff's organisation in its workers having ransacked workshops and stores on being told that there was no further employment and this had resulted in loss of Rs.10.00 lakh by way of damages that were caused to the machinery and equipment of the plaintiff. In addition to having terminated the contract unilaterally without notice, two of the LCTs were said to have been seized by the defendants on the ground that till the plaintiff paid amounts due to the defendants, the said LCTs would not be released in favour of the plaintiff.
The cost of the LCTs at the time of such seizure, even after allowing for depreciation was Rs.45.00 lakh and the plaintiff, all along had put its best efforts to fulfill the terms of contract and it was also appreciated by the defendants themselves apart from the general public, which benefitted by their services on account of the abrupt termination of the contract and the forcible seizure of : 10 : their vehicles. The plaintiff had suffered damage to its reputation apart from being denied payments validly due to it and which were withheld illegally and unilaterally by the defendants. The plaintiff was faced with serial cases by its workmen seeking retrenchment compensation and other claims, which the plaintiff was unable to meet on account of the severe financial crunch which was brought about by the illegal acts of the defendants. It is in this background that the plaintiff was constrained to file a suit laying claim to various heads of account under which monies were due to it. It is the case of the plaintiff that it has submitted bills to the defendants from time to time after completion of the work in respect of the operation and maintenance of the LCTs on the rates specified.
It is stated that in the said bill, a total sum of Rs.34,28,080/- was said to have been due from the defendants apart from the defendants also being liable to refund the security deposit amount of Rs.35.00 lakh deposited by the plaintiff from June 1995 to December 1995 and interest was claimed on these amounts from the date due, till the date of payment. On the date of termination : 11 : of the contract, the LCTs which were operated by the plaintiff were in the custody of the defendants and the defendants did not permit the plaintiff to remove the two ferries from the workshop at Honnavar, but they had directed the ferry inspector to seize the said LCTs. The wrongful detention of the above crafts and on account of the neglect without maintenance, the said ferries deteriorated beyond repair and therefore the plaintiff was claiming the value of the ferries as on the date of the termination of the contract and the seizure of the said ferries along with interest thereon. In is in this fashion that the total suit claim was sought to be recovered namely, Rs.83.25 lakh towards the unpaid bills, Rs.81.30 lakh towards withholding of the security deposit with interest thereon and Rs.75.07 lakh towards the cost of the two ferries that were seized.
The defendants had entered appearance in the suit and filed written statement and also filed a counter claim. The transaction was admitted, namely, initially the contract was for manufacture and supply of LCTs, which was completed without incident and secondly, a contract for operating the ferry services : 12 : utilising six LCTs provided by the defendants and two LCTs contributed by the plaintiff. It was admitted that between the period 1.4.1993 to 31.3.1994 there was no dispute between the parties as regards the execution of the contract. The payments had also been made regularly. The renewal of the contract was also admitted. However, it was denied that the plaintiff had operated the LCTs in terms of the contract. It was contended that wherever there was a dispute between the plaintiff and the defendants, the decision of the State Government was final and therefore the claim as regards the unpaid bills at R.34.28 lakh was the subject matter of meetings and it was resolved that as against Rs.34.28 lakh, the plaintiff was actually entitled only to Rs.22.86 lakh and that the plaintiff had not come forward to receive the said sum. Therefore, the claim of Rs.34.28 lakh was without basis as the said amount was calculated as if the LCTs had run in terms of the contract, where as, many of them had not been operated for the required number of hours and it is on calculation, after discounting the period for which the LCTs were not operated, that the defendants had arrived at the amount, which has not been : 13 : received by the plaintiff for reasons best known to it and hence any claim for an amount exceeding Rs.22.86 lakh or interest thereon, was not justified.
Further, it was stated that the claim was in any case time barred and could not be the subject matter of the suit and that there was no violation of the terms of contract. Though the contract has been renewed even beyond 1.6.1995, it is not in dispute that the plaintiff had failed to reimburse the toll charges collected from the vehicular traffic from 1.6.1996 onwards till the termination of the contract on 5.8.1997 though by a notification dated 6.1.1996, the vehicular traffic up to 6 tonnes was allowed over the bridge it had not affected the revenue collection of the plaintiff and the plaintiff having withheld the amounts so collected and not paying the defendants in terms of the contract was a clear breach of the contract for which the plaintiff was answerable .
It was further contended in the written statement that the contractor was permitted to collect toll charges in terms of the Government Order dated 17.9.1991 and was required to pay monthly charges and as admitted by the plaintiff himself, the toll : 14 : charges were in terms of the contract, as prescribed in Schedule- B. Insofar as the notification by the Deputy Commissioner as of 6.1.1996, varying the limit of tonnage of the vehicles that could ply on the bridge is concerned, a controversy had been raised by the plaintiff and the plaintiff had refused to pay Rs.5.00 lakh per month and after negotiation, a rebate of Rs.1.40 lakh was given and the plaintiff was required to pay atleast Rs.3,60,000/- per month. Notwithstanding such a resolution having been arrived at, the plaintiff had again resiled from the arrangement and refused to make any payment.
It is in this background that the defendants were claiming a sum of Rs.71.12 lakh as being payable by the plaintiff to the defendants as on the date of notice dated 26.7.1997 with interest at 18% per annum and therefore the plaintiff was due to pay a total sum of Rs.1,22,58,193.00 Further, the plaintiff had neglected to hand over 6 LCTs which had been given to its custody for running ferry services and on account of the same being left without maintenance and exposed to the elements, the same had deteriorated and it was only with great difficulty that the : 15 : defendants could take possession of the same and had to be sold as scrap at Rs.6,84,800/- each, though the cost of the 6 LCTs was in the area of Rs.93,21,000/- and on account of the damage and the loss that was caused, the defendants had laid a claim for Rs.1,35,50,939.00 with interest till realisation.
In addition to this, it transpires that a huge block of granite was being carried in a lorry and when the lorry with such granite block was being ferried across the river, on account of negligence in the operation of the ferry, it had fallen into the river and by virtue of the same, the river traffic was seriously affected and the granite block could not be removed from the water thereby hampering and posing great danger to the river traffic. The removal of the granite block would be at an estimated cost of Rs.52.00 lakh which the plaintiff was again to reimburse to the State Government, as the granite block continues to remain in the water and poses serious danger even to this day. The plaintiff had deliberately left behind his two LCTs unattended on the port premises thereby using up the valuable space and falsely claimed that the same had been seized by the department and that the : 16 : plaintiff was liable to pay Rs.7,320/- as ground rent. It was also contended that the suit was bad for non-joinder as the Ministry of Surface Transport, Government of India, was a necessary party as the proceeds under the contract were payable to the Ministry of Surface Transport.
It was pointed out that the contract was terminated admittedly on 5.8.1997 and the suit was filed on 9.10.2000 and therefore the suit was barred by time.
The defendants were therefore claiming a total sum of Rs.3.10 crore by way of counter claim.
On the basis of the above pleadings, the trial court has framed the following issues:
"1. Whether the plaintiff proves that he is entitled for Rs.34,28,680/- towards first contract and Rs.35,00,000/- towards second contract and Rs.45,00,000/- towards seizure of two ferrys from the defendants?
2. Whether the plaintiff further proves that it is entitled for the interest at the rate of Rs.18% p.a., on the said amounts?
3. Whether defendant No.4 is entitled for Rs.71,12,581/- in respect of mis-use of concession given to it from the plaintiff?: 17 :
4. Whether the defendant No.4 is entitled for Rs.77,04,100/-
towards not handing over six LCTs from the plaintiff?
5. Whether the defendant No.4 is entitled for Rs.52,00,000/-
as the plaintiff has not removed the sunken stone fell into the river?
6. Whether defendant No.4 is entitled to recover the interest at the rate of 18% p.a., on the said amounts from the plaintiff?
7. Whether the defendant No.4 is entitled to recover Rs.7,320/- in respect of ground rent wherein plaintiff left 2 LCTs?
8. Whether the suit is barred by limitation?
9. What order or decree?"
The trial court has answered issue no.1 and 2 partly in the affirmative and issue nos.3 to 8 in the negative and has decreed the suit in favour of the plaintiff and dismissed the counter claim of the defendants.
It is that which is under challenge in the present appeal.
5. The learned Government Advocate has with some difficulty prepared the synopsis of the case and has filed the same and has sought to question the reasoning of the trial court on its findings on issues no.1 and 2 as well as the rejection of the counter claim of the State.
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Insofar as the plaintiff's claim for Rs.34.28 lakh as being the amounts unpaid towards the ferry services, in respect of such services rendered between the period 8.2.1993 to 1.5.1995, the invoices annexed to Ex.P.54, on the face of it, would indicate the several amounts that were claimed by the plaintiff and negated by the defendants for reasons indicated. In that, the payments were made for the actual number of hours that the LCTs were operated and the log sheets are maintained of each such LCT which is operated and the documents in this regard are placed on record by the plaintiff itself. A perusal of the same would indicate that all the LCTs were not operated continuously, as required in terms of the contract and it is after taking into account the non-operation of the LCTs during the relevant period, that the bills raised by the plaintiff have been negated. If the plaintiff was aggrieved by any such denial, it is apparent from the respective invoices appended to Exhibit P.54, that the cause of action has arisen as and when such denial was made and in that view of the matter, the limitation within which a suit could have been filed in respect of such cause of action, had long expired and the suit having been : 19 : filed in the year 2000 was clearly barred by limitation and therefore, the entire claim in respect of such unpaid bills was time barred, which the trial court has glossed over.
Secondly, it is pointed out that the interest claimed at 18% per annum on such amounts also is not provided under the contract and the claim was illegal and the trial court has not even addressed as to how the plaintiff was entitled to any such interest. It is also contended that the court below having awarded interest at 6% per annum from the date of decree till payment on the amount of the principal claim as well as interest at 18% would amount to interest being awarded on interest which is illegal and impermissible.
Thirdly, it is pointed out that in terms of the contract, the defendants were required to make a security deposit of Rs.45.00 lakh and to furnish an earnest money deposit of Rs.5.00 lakh, in lieu of which, the plaintiff had furnished bank guarantees, which had expired and when called upon to renew the bank guarantees had offered to pay cash which has been collected over a period. The plaintiff had even claimed as being toll charges that were : 20 : payable at Rs.5.00 lakh per month and seeks to claim that there was an understanding as to the said sums paid being adjusted towards the ferry services to which the plaintiff was entitled and seeks reduction of the amount which was to be treated as Security Deposit, according to the plaintiff, which is, in fact, incorrect and the amount paid was at Rs.5.00 lakh per month as agreed under the contract and the said sum is not refundable. It is further pointed out that even this amount had been completely stopped from the month of January 1996 and the plaintiff had not paid any further amounts till the termination of the contract and it is in this background that the defendants have raised a claim for Rs.71,12,581.00 It is contended that the purported refusal on the part of the plaintiff to pay toll charges in terms of the contract was on a plea that under the contract, the vehicular traffic that could be permitted on the bridge could not be of a tonnage exceeding 3 tonns and that the defendants had unilaterally issued the notification allowing the vehicles of more than 3 tonnes and less than 6 tonnes being allowed on the bridge. Though this did not : 21 : affect the revenue collection of the plaintiff, the plaintiff claimed unilateral variation in the contract imposed by the defendants and had chosen not to pay any amount to the defendants. Though there was an attempt at reconciliation and it was even agreed that instead of Rs.5.00 lakh per month, the State Government would receive Rs.3,60,000/- and the plaintiff had yet, after having participated at such conciliation meeting, neglected to make any further payment even at that rate.
It is also contended by the learned Government Advocate that in view of the plaintiff having failed to make any further payment beyond January 1996, the question of the plaintiff being put on notice of termination of the contract was otiose and in any event, the work having been completed on the bridge by August 1997, which was, in fact, to be completed by June 1997, the question of one month's notice did not arise. The contract having been terminated in August 1997, it was consented that in lieu of one month's notice, rebate could be given of Rs.2.00 lakh to the plaintiff on account of the same and it is after taking these into account that the State Government has calculated the amount due : 22 : from the plaintiff. Further, the plaintiff had illegally withheld the release of six LCTs and the same had been allowed to deteriorate by the neglect and willful act of the plaintiff in not providing maintenance to the said LCTs while in his custody and the same had deteriorated beyond repair and had to be ultimately disposed of as junk for a paltry sum of little over Rs.6.00 lakh where as the value of the LCTs was more than Rs.93.00 lakh and it is this loss which the State was ultimately claiming from the plaintiff and which has been unfairly rejected by the trial court.
In the face of material documents which clearly disclosed that the plaintiff had unlawfully withheld the LCTs and several letters, namely, Exhibit D.8 dated 7.2.1998, P.57 dated 6.3.1998, D.80 dated 19.3.1998 had been addressed to hand over 6 LCTs, the State was compelled to seize the said LCTs under a panchnama dated 27.3.1998, by which time, the said tanks had completely deteriorated in value and hence the trial court was not justified in denying the damages claimed on account of such loss.
Insofar as the further claim of Rs.52.00 lakh is concerned, was towards removal of a huge granite block that had been : 23 : dropped into the river in the careless ferrying of a lorry carrying the said block, thereby posing damage to the traffic on the river and this amount has been denied by the trial court. Whereas under
the terms of the contract, the necessary insurance insofar as the LCTs and crew and providing of necessary channel marking lighted buoys for demarking and the navigation channel in the operation of the ferry was clearly the responsibility of the plaintiff and the said granite slab, which is even now posing a serious danger to the river traffic requires to be removed and the cost is estimated at Rs.52.00 lakh, which the plaintiff is entitled to be reimbursed.
The learned Government Advocate would further contend that the claim of the plaintiff as to there being abrupt, illegal and unilateral termination of the contract is misleading, as the terms of the contract specifically indicated that the contract would come to a close 18 months from the date of the agreement or upon completion of the repair work to the bridge. Therefore, by August 1997, the bridge was fully operational and the contract by sheer lapse of time and completion of the work had spent itself out : 24 : and the allegation of unilateral termination, without issuing one month's notice is a bald claim.
Further, the learned Government Advocate would contend that particularly when there was no written statement to the counter claim of the defendants before the trial court, the same ought to have been allowed.
6. The learned Counsel for the plaintiff however seeks to justify the judgment of the trial court.
7. In the light of the contentions urged, and the reasoning of the trial court, the point that arise for determination in the present appeal is whether the plaintiff's claim under distinct heads which have been allowed by the trial court were tenable and whether the dismissal of the counter claim by the State was justified.
As seen from the record, there was no controversy insofar as the supply of the LCTs under the contract that was entered into between the plaintiff and the defendants. Thereafter, another contract having been entered into for the operation of the ferry services by the plaintiff between the period 1.4.1993 to 31.3.1994 : 25 : was also without incident. The plaintiff had been paid for the services rendered. There is also no dispute that the contract was renewed further for a period from 1.4.1994 to 31.5.1995. It is for the bills raised during that period that there was denial by the defendants on the ground that the bills raised were not tenable as the claims were made even in respect of non-operation of the LCTs for the required number of hours and therefore, could not be paid. In this regard, the trial court has been called upon to address whether the claims towards unpaid bills were tenable. The details of the outstanding bills and the same being claimed with interest at 18% per annum amounting to Rs.34,28,000/- are as per the details of the bills produced and marked as Exhibit P.54 series. It is on this amount of Rs.34.28 lakh, in all, that the interest at 18% per annum was claimed from the date the amounts fell due till the date of suit, which was claimed in a sum of Rs.83.25 lakh.
It was the defence set up by the defendants that insofar as the claim towards unpaid bills was concerned, it was the subject matter of discussion and a meeting had been called for by the State Government in the office of the National Highways : 26 : Authority under the chairmanship of the Secretary, Public Works Department at Bangalore. The minutes of the meeting were recorded as per Exhibit D.71 dated 19.9.1996, where it was resolved that as against the claim of Rs.34.28 lakh raised by the plaintiff the State Government was actually liable to pay only Rs.22.86 lakh. This is after taking into account the non- functioning of LCTs for the required number of hours and this amount having been offered, the plaintiff has failed to receive it and therefore, it was for the plaintiff to receive the money and having failed to do so, could not, at a belated point of time in the year 2000, raise a claim by way of a suit and that it was clearly barred by limitation and the question of payment of interest on such amount did not arise.
However, it is to be noticed that the State Government had not denied the liability and has admitted the same atleast to the extent of Rs.22.86 lakh and this admission has been reiterated in Exhibit P.57 and even as per the minutes of the meeting held by the Chief Engineer, Ministry of Surface Transport, New Delhi, on 6.3.1998. When the claim and liability are referred to are clear, : 27 : recording of such admission in the year 1998 could naturally afford extension of the period of limitation, since such acknowledgement has been made within the expiry of the period of limitation even if it is construed as running from the year 1995. Therefore, the court below having held that the liability which was to be demonstrated by reference to the bills and the corresponding log books of the LCTs as to the number of hours that they had run, was required to be reconciled, which exercise has not been carried out by the defendants. And it is seen, as for instance, with reference to the invoices, at Exhibit P.54 and the corresponding log book entries maintained as per the registers produced and marked as Exhibits D-11, D-12, D-14, D-16, D-21, D-23, D-26 and D-29. It is noticed that there is denial of the entire payment in respect of certain LCTs though they have been operated. And given the nature of operation, the non-working of the LCTs from time to time is not correspondingly worked out in denying the payment and no attempt has been made in the course of evidence of the defendants to point out these variations, in order to demonstrate that the plaintiff was not entitled for the : 28 : payment against such functioning or non-functioning of the LCTs. That exercise not having been carried out, the trial court, at Paragraph-30 of its judgment having opined that the contention of the defendants that the plaintiff has not operated the LCTs as per the terms and conditions of their contract, as not being convincing, cannot be faulted. The documents produced by the defendants, in support of its contention that the LCTs operated by the plaintiff did not run for the required number of hours and therefore were entitled to deduction from the payments claimed by the plaintiff, reliance is sought to be placed on a tabular statement produced at Ex.P55 . It is only on examination of the said Exhibit P.55 that the court has concluded that it is not convincing. There is substance in the opinion formed by the trial court. A plain examination of Exhibit P.55 would indicate that it is not reconciled completely with the Ferry Registers namely, Exhibits D.11 and 14 series. Therefore, the claim towards the unpaid bills was tenable and has been rightly allowed by the trial court.
However, the plaintiff has claimed interest at 18% per annum from the date the same was due till the date of suit and : 29 : 18% from the date of suit till the date of payment. There is no basis for the claim towards the rate of interest as no such rate of interest is prescribed under the contract. In which event, as this is a commercial transaction, by virtue of Section 34 of the Code of Civil Procedure, 1908, it would be the appropriate rate of interest at which the banks lend money. Therefore, given the date of the transaction, the rate of interest could, at best, be 12% and not 18% as claimed by the plaintiff. To that extent, the contention of the State Government as regards the award of interest on the suit claim is justified.
The further contention as regards the interest awarded at 6% from the date of decree till the date of payment is concerned, on the consolidated sum, namely the principal which is claimed as well as the interest, it is contended by the learned Government Advocate that it would amount to interest being granted on interest which is impermissible . The question whether such capitalisation of interest is permissible has been addressed by the Supreme Court in the case of Central Bank of India vs. Ravindra, : 30 : (2002 )1 SCC 367 and having examined the scope of section 34 of the CPC, the Supreme Court has held as follows:-
"41. A few points are clear from a bare reading of the provision. While decreeing a suit if the decree be for payment of money, the Court would adjudge the principal sum on the date of the suit. The Court may also be called upon to adjudge interest due and payable by the defendant to the plaintiff for the pre- suit period which interest would, on the findings arrived at and noted by us hereinabove, obviously be other than such interest as has already stood capitalised and having shed its character as interest, has acquired the colour of the principal and having stood amalgamated in the principal sum would be adjudged so. The principal sum adjudged would be the sum actually loaned plus the amount of interest on periodical rests which according to the contract between the parties or the established banking practice has stood capitalised. Interest pendente lite and future interest (i.e. interest post-decree not exceeding 6 per cent per annum) shall be awarded on such principal sum i.e. the principal sum adjudged on the date of the suit. It is well settled that the use of the word 'may' in Section 34 confers a discretion on the Court to award or not to award interest or to award interest at such rate as it deems fit. Such interest, so : 31 : far as future interest is concerned may commence from the date of the decree and may be made to stop running either with payment or with such earlier date as the Court thinks fit. Shortly hereinafter we propose to give an indication of the circumstances in which the Court may decline award of interest or may award interest at a rate lesser than the permissible rate.
42. It was submitted by the learned amicus and other counsel for the borrowers, that the expression "on such principal sum" as occurring twice in the latter part of Section 34(1), which refers to interest pendente lite and post-decree, should be interpreted to mean principal sum arrived at by excluding the interest even if it has stood capitalised. This would be consistent with the legislative intent as reflected in the report of Joint Committee and sought to be fulfilled by 1956 Amendment. For two reasons this contention has to be rejected. Firstly, entertaining such a plea amounts to begging the question. As we have already held that the interest once capitalised ceases to be interest and becomes a part of principal sum or capital. That being so the interest forming amalgam with the principal, in view of having been capitalized, is principal sum and therefore the question of awarding interest on interest does not arise at all. Secondly, well-settled principles of interpretation of statutes would frown upon such a plea being : 32 : entertained. A construction which leads to repugnancy or inconsistency has to be avoided. Ordinarily, a word or expression used at several places in one enactment should be assigned the same meaning so as to avoid "a head-on clash" between two meanings assigned to the same word or expression occurring at two places in the same enactment. It should not be lightly assumed that "Parliament had given with one hand what it took away with the other" [See - Principles of Statutory Interpretation, Justice G.P. Singh, 7th Edition 1999, p.113]. That construction is to be rejected which will introduce uncertainty, friction or confusion into the working of the system (ibid, p.119). While embarking upon interpretation of words and expressions used in a Statute it is possible to find a situation when the same word or expression may have somewhat different meaning at different places depending on the subject or context. This is however an exception which can be resorted to only in the event of repugnancy in the subject or context being spelled out. It has been the consistent view of Supreme Court that when the Legislature used same word or expression in different parts of the same section or statute, there is a presumption that the word is used in the same sense throughout, (ibib, p.263). More correct statement of the rule is, as held by House of : 33 : Lords in Farrell v. Alexander, [1976]2 All E.R. 721, 736, "where the draftsman uses the same word or phrase in similar contexts, he must be presumed to intend it in each place to bear the same meaning".
The Court having accepted invitation to embark upon interpretative expedition shall identify on its radar the contextual use of the word or expression and then determine its direction avoiding collision with icebergs of inconsistency and repugnancy.
Further, the apex court has observed thus:
"Subject to the above we answer the reference in following terms :
(1) Subject to a binding stipulation contained in a voluntary contract between the parties and/or an established practice or usage interest on loans and advances may be charged on periodical rests and also capitalised on remaining unpaid. The principal sum actually advanced coupled with the interest on periodical rests so capitalised is capable of being adjudged as principal sum on the date of the suit.
(2) The principal sum so adjudged is 'such principal sum' within the meaning of Section 34 of the Code of Civil Procedure Code, 1908 on which interest pendente lite and future interest i.e. post-decree interest, at such rate and for such period which the Court may deem fit, may be awarded by the Court. ": 34 :
In the light of the above, there is no error committed by the trial court in having awarded interest at 6% from the date of the decree till the date of payment on the consolidated amount.
Insofar as the claim towards withholding of Rs.50.00 lakh by the defendants, which was paid by the plaintiff over time from June 1995 to December 1996 and the same being disputed as to whether it was towards security deposit or towards toll charges payable at the rate of Rs.5.00 lakh per month, it is found that insofar as the security deposit and the earnest money deposit was concerned, the plaintiff had, in the first instance, furnished bank guarantees in lieu of any such payment, which was stipulated under the contract in a sum of Rs.45.00 lakh and Rs.5.00 lakh. Therefore, the subsequent payment made is not expressly stated to be towards such security deposit or earnest money deposit. It was the assurance of the State Government that any such payments made would be given due credit at the time of settlement of the bills has been misinterpreted, to claim that it was the security deposit which the plaintiff is bound to give up as the plaintiff was due to pay to the defendants a sum exceeding Rs.71.00 lakh apart : 35 : from other claims towards damages. This the trial court has held against the defendants and rightly so. As there was no intention to pay the security deposit or the earnest money deposit by way of cash, the defendants had accepted the bank guarantees furnished and though they have been allowed to lapse, the defendants did not choose to terminate the contract or call upon the plaintiff to furnish fresh bank guarantees. Therefore, the claim now sought to be put forth is ambiguous and cannot be countenanced. The trial court has rightly upheld the claim of the plaintiff. But however, interest awarded at 18% per annum would suffer from the same infirmity as is pointed out in respect of the claim towards the unpaid bills and would have to be appropriately modified in terms as stated above.
Insofar as the claim towards the loss of 2 LCTs is concerned, it is not in dispute that the same had been seized by the defendants. The learned Government Advocate has vehemently sought to contend that they were never seized as the LCTs were always in the custody of the plaintiff and even six LCTs were illegally withheld by the plaintiff had to be forcibly : 36 : taken possession of through the Ferry Inspector, who had seized the same in the year 1998 under cover of a panchnama and therefore since the 2 LCTs belonging to the plaintiffs were kept under lock, the question of the respondents or the Ferry Inspector taking possession of the same never arose and it was never in the possession of the defendants is a contention that cannot be accepted, for the reason that in the face of the panchnama admittedly drawn by the Ferry Inspector, in taking possession of the 6 LCTs and the direction which was issued to seize the LCTs belonging to the plaintiff till such time all the dues were paid by the plaintiff, it is clear that it was well within the power of the defendants, which has been exercised in taking possession of all the eight LCTs, including the two LCTs belonging to the plaintiff. They have deteriorated beyond repair and the amount claimed being the depreciated value as on the date of seizure is not seriously disputed by the defendants and consequently, the value having been awarded as damages to the plaintiff cannot be faulted.
The interest on the said damages at 18% however would require to be modified in terms as stated above.
: 37 :
Insofar as the counter claim is concerned, even though no written statement has been filed by the plaintiff before the trial court, it would depend on how far the counter claim would have to be met by a further written statement when the plaint could effectively be treated as the response to the counter claim, as well. However, it would not mean that the counter claim should be granted for the asking even if it has not been contested. It would be for the defendants to establish their claim independently, even if it has not been . contested to the satisfaction of the court. Therefore, the basis of the counter claim which has been addressed by the trial court would indicate that firstly, the claim towards the sum exceeding Rs.71.00 lakh as being due from the plaintiff to the defendants is on the footing that the plaintiff had continued to earn revenue by running ferry services well beyond January 1996 and had failed to make any payment till the date of completion of the contract as on 5.8.1997 and therefore was liable to pay the said sum is in the face of the circumstance that the schedule of payment prescribed under the contract contemplated payment of Rs.8.00 lakh per month by the plaintiff, in the face of : 38 : complete closure of the bridge for vehicular traffic, which was in effect, only for a period of 17 days during December 1995. But otherwise, the defendants had permitted the vehicular movement below 3 tonnes to ply on the bridge, in which event, the plaintiff was to pay Rs.5.00 lakh per month, which according to the defendants has been paid by the plaintiff. However, the defendants had unilaterally, without any contractual stipulation, chosen to enhance the tonnage of the vehicles that could ply on the bridge to below 6 tonnes, but above 3 tonnes and this had resulted in the complete stoppage of the ferry services as very few vehicles would exceed 6 tonnes and most of the vehicular traffic was allowed to ply on the bridge and there was complete loss of revenue to the plaintiff. It is in that background that the plaintiff had refused to make any further payment. The unilateral variation of the contract by the defendants was illegal and could not enable the defendants to claim any payments from the plaintiff. Consequently, the trial court having dismissed the counter claim for Rs.71.00 lakh cannot also be faulted.
: 39 :
Insofar as the claim towards the damages on account of the LCTs having deteriorated on account of negligence by the plaintiff in maintaining the same and keeping them sea-worthy is not a tenable contention. It was always open for the defendants to take possession of the same on termination of the contract. The defendants had not chosen to do so and waited for atleast six months before taking forcible possession of the same. It was no fault of the plaintiff. Therefore, the claim sought to be placed at the door of the plaintiff was not tenable. In fact, when it was the case of the defendants that the plaintiff had stopped making payments form January 1996,nothing prevented the defendants from terminating the contract and taking possession of the LCTs much earlier. Therefore, there was no attempt at mitigation of damages by the defendants and the trial court has rightly rejected their claim for damages on that count.
Insofar as the claim towards the cost of removal of the granite block, which had fallen into the river on account of the alleged negligence on the part of the plaintiff in ferrying a lorry carrying the same and the said granite block posing danger for the : 40 : river traffic, is a speculative claim and there is no material produced to indicate that it would cost a sum of Rs.52.00 lakh for the removal of the said granite block and there is also material evidence to demonstrate that it was on account of the negligence and want of care on the part of the plaintiff. Therefore, the said claim being construed as a speculative claim cannot also be found fault with.
There is a minor claim towards the rent by the defendants which is trivial and not worthy of consideration.
Therefore, the court below having decreed the suit of the plaintiffs and having dismissed the counter claim cannot be faulted. The judgment and decree of the trial court is thus confirmed, but modified to the extent that the principal amount claimed namely, a sum of Rs.34.28 lakh, Rs.35.00 lakh and Rs.45.00 lakh, which have been granted with interest at 18% stands reduced to 12%. If 12% is applied the amount due under the heads would be as follows:
: 41 :
Principal Amount Interest at 12% Interest at 6% on the (In Lakhs) consolidated sum Rs.34,28,626.00 Rs.25,85,997.00 Rs.59,55,054.00 Rs.35,00,000.00 Rs.20,05,356.00 Rs.54,50,831.00 Rs.45,00,000.00 Rs.20,05,151.00 Rs.64,40,724.00 The judgment and decree of the trial court in other respects as far as the award of interest at the rate of 6% per annum on the decretal amount is confirmed. The appeals stand dismissed.
Sd/-
JUDGE Sd/-
JUDGE nv