Gujarat High Court
Gujarat Water Supply & Sewerage Board vs Evergreen Trading & Construction Co on 8 October, 2025
NEUTRAL CITATION
C/FA/127/2006 JUDGMENT DATED: 08/10/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 127 of 2006
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
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Approved for Reporting Yes No
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GUJARAT WATER SUPPLY & SEWERAGE BOARD
Versus
EVERGREEN TRADING & CONSTRUCTION CO. & ANR.
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Appearance:
NIYATI D CHAUHAN(9082) for the Appellant(s) No. 1
DELETED for the Defendant(s) No. 2
MR KG SUKHWANI(871) for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 08/10/2025
ORAL JUDGMENT
1. Present appeal is filed under Section 96 of the Civil Procedure Code, 1908 by the appellant - Gujarat Water Supply and Sewerage Board against the judgment and award dated 30.06.2004 passed by the learned Civil Judge (S.D.), Civil Court, Bharuch [hereinafter be referred to as "the trial Court"] in Special Civil Suit No. 13 of 1987 whereby the trial Court partly allowed the suit and directed the appellant to pay Rs.13,85,065.93 paisa along with the interest at the rate of 15% Page 1 of 8 Uploaded by V.R. PANCHAL(HC00171) on Fri Oct 10 2025 Downloaded on : Sat Oct 11 10:37:04 IST 2025 NEUTRAL CITATION C/FA/127/2006 JUDGMENT DATED: 08/10/2025 undefined p.a. from the date of the suit till its realization.
2. Brief facts of the present case are that the Executive Engineer Public Health Works Division, Bharuch invited tenders for the work of under ground drainage scheme at Ankleshwar. That the respondent had filled up the form of tender and submitted the same to the appellant. That the tender of the respondent was accepted and on acceptance of the tender, the respondent had paid security deposit and entered into an agreement and as per the said agreement, the work was required to be completed within 36 months. That the contract created mutual bilateral reciprocal contractual obligations, inasmuch as certain reciprocal contractual obligations were required to be performed first by the appellant and on its performance, the respondent was required to perform his part of the contractual obligations and as the appellant failed to perform their part of the contractual obligations, the above said work could not be completed within stipulated time and the reasons for non-completion of the work within stipulated time period due to certain reasons, as mentioned in para-2 of the impugned judgment and award. Therefore, due to such reasons, the work could not be completed within stipulated time. The contract in question was extended by the appellant for further period of 18 months and during the extended period, the appellant failed to perform its contractual obligation and committed breach of the contract. The work could not be completed within stipulated time due to the full and/or part prevention created by the department and on the contrary, the department had illegally terminated the contract of the respondent during the extended period. That due to illegal act on the part of the appellant, the respondent had Page 2 of 8 Uploaded by V.R. PANCHAL(HC00171) on Fri Oct 10 2025 Downloaded on : Sat Oct 11 10:37:04 IST 2025 NEUTRAL CITATION C/FA/127/2006 JUDGMENT DATED: 08/10/2025 undefined suffered heavy loss such as the amount of work done, security deposit etc and due to the extension granted by the department, the respondent has incurred additional expenses of price rise over head and over stay etc and also the respondent suffered loss of profit due to illegal act on the part of the appellant. That due to such reasons, the respondent was required to be carried out the work during the extended period and hence, the respondent had incurred additional expenses for the said work. That the respondent has carried out the work to the tune of Rs.8,20,518/- within the stipulated time period and had carried out the work of Rs.3,97,669/- during the extended period and, therefore, the appellant was required to pay rise of 50% on the work done during the extended period. The delay was caused on account of the departmental reasons and hence, the department had extended the period which impliedly meant that the reasons for the delay were accepted by the department and extension of 18 months was granted to the respondent and, therefore, the respondent is entitled to the tune of Rs.1,98,834.50 paise on account of the work carried out during extended period. That due to performance of the contract, the respondent had paid an amount of Rs.65,136/- in the form of bank guarantee as a security deposit, which was to be released on failure of department. That due to departmental reason, the respondent has incurred an additional expenditure of Rs.15,000/- towards extending the bank guarantee from time to time after stipulated time period for which the respondent had suffered a loss of interest and had to pay bank commission charges for extended period and thus the respondent is entitled for a sum of Rs.27,568/-. That the total amount of tender was amounting to Rs.20,00,000/- and 10% of the said charges was taken into Page 3 of 8 Uploaded by V.R. PANCHAL(HC00171) on Fri Oct 10 2025 Downloaded on : Sat Oct 11 10:37:04 IST 2025 NEUTRAL CITATION C/FA/127/2006 JUDGMENT DATED: 08/10/2025 undefined account by the respondent towards overhead and over stay for the stipulated time period and hence, the respondent was required to spend Rs.1,00,390/- towards overhead and over stay for 18 months. Due to the departmental reason, the respondent had incurred an additional amount of Rs.1,00,390/- for extended period and due to the action on the part of the department, the respondent could not execute the work amounting to Rs.7,89,617/- and hence the respondent is entitled for 20% profit on the amount of unexecuted work which is amounting to Rs.1,57,923/-. The respondent had filed the suit seeking decreetal amount of Rs.17,27,435.43 paisa.
2.1 The trial Court, after considering the pleadings, has framed the issues in para-7 of the impugned judgment and award and the same has been answered accordingly in para - 8.
2.2 The trial Court, after considering the averments and submissions of both the sides, has partly allowed and awarded the aforesaid compensation with interest.
3. Being aggrieved, the appellant - original defendant has preferred the present appeal.
4. Heard Ms.Niyati Chauhan, learned counsel for the appellant and Mr.Paras Sukhwani, learned counsel for the respondent at length. Perused the material placed on record.
5. Ms. Chauhan, learned counsel has submitted that the impugned judgment and award passed by the trial Court is contrary to the provisions of law, facts and evidence available on Page 4 of 8 Uploaded by V.R. PANCHAL(HC00171) on Fri Oct 10 2025 Downloaded on : Sat Oct 11 10:37:04 IST 2025 NEUTRAL CITATION C/FA/127/2006 JUDGMENT DATED: 08/10/2025 undefined record of the case. She has submitted that the trial Court has committed a serious error while passing the impugned judgment and award and the respondent has not deputed sufficient technical staff for completing the work order within the stipulated period as per the agreement. She has further submitted that the respondent has failed to prove that the respondent is entitled for any additional amount over and above the amount mentioned in the contract and the respondent is also not entitled for any additional amount for price rise and thus, the trial Court has committed a serious error while allowing the suit of the respondent and thus, the impugned judgment and award is required to be quashed and set aside and the present appeal is required to be allowed.
6. Per contra, Mr.Sukhwani, learned counsel has submitted that there was no any breach of any terms and conditions mentioned on the contract, infact, it was provided in the agreement that if there is any price rise during the contractual work in progress, the respondent shall be entitled to get the difference of price rise and thus, the trial Court, after considering all the relevant facts and material, has rightly passed the impugned judgment and award in favour of the respondent. He has further submitted that the rate of interest awarded by the trial Court is a commercial rate of interest which was prevailing at that relevant point of time and no interference is required to be called for so far as the rate of interest is concerned.
6.1 Mr.Sukhwani, learned advocate has referred and relied upon the decision of this Court in the identical facts rendered in case of District Panchayat Bhavnagar & Others vs. Page 5 of 8 Uploaded by V.R. PANCHAL(HC00171) on Fri Oct 10 2025 Downloaded on : Sat Oct 11 10:37:04 IST 2025 NEUTRAL CITATION C/FA/127/2006 JUDGMENT DATED: 08/10/2025 undefined Babubhai Jivrajbhai Patel in First Appeal No.1020 of 2001 decided on 05.02.2024 and urged that the Court may consider the ratio laid down in the aforesaid decision and dismiss the present appeal and confirm the impugned judgment and award passed by the trial Court.
7. However, learned counsel for the appellant has objected so far as the rate of interest is concerned, since it was a contractual agreement executed by and between the parties, commercial rate of interest, cannot be awarded and the trial Court has committed a serious error in awarding interest at the rate of 15%.
8. I have heard the learned counsel appearing for the respective parties and perused the material placed on record. I have also perused the impugned judgment and award passed by the trial Court. On perusal of the Record and Proceedings and on examining the same, it appears that the claim of the respondent relates to the extra work carried out by the respondent and after considering all these aspects, the trial Court has rightly awarded the amount for the respondent was entitled to. I have also considered the submissions canvassed by both the sides and after going through the records, it appears that the controversy raised in the present appeal is very narrow in compass. The respondent was allocated the work by executing an agreement for contract between the respondent and the appellant and as per the terms and conditions of the said agreement, the respondent had completed the work within the period stipulated in the agreement and therefore, the respondent had raised following claims before the trial Court :
Page 6 of 8 Uploaded by V.R. PANCHAL(HC00171) on Fri Oct 10 2025 Downloaded on : Sat Oct 11 10:37:04 IST 2025NEUTRAL CITATION C/FA/127/2006 JUDGMENT DATED: 08/10/2025 undefined 1 Claim No.1 Rs.14,31,260.30 2 Claim No.2 Rs.76,269.14 3 Claim No.3 Rs. 10,318.00 4 Claim No.4 Rs.52,569.00 8.1 Thus, the trial Court, after considering the evidence on record and after considering all the relevant material, has allowed the suit and awarded the amount in favour of the respondent. I have also gone through all the relevant material and the evidence placed on record and I am of the opinion that the appellant has failed to discharge the burden of proof, except the bare averments in the written statement, the appellant could not produce any evidence before the trial Court and the respondent had shown prima facie case that the respondent was entitled for the amount sought for in the suit and thus, the trial Court has rightly passed the impugned judgment and award in favour of the respondent. I have also gone through the decision of the Co-ordinate Bench of this Court referred and relied upon by Mr. Sukhwani, learned counsel and on perusal of the same, I am of the opinion that while awarding interest at 15%, there was no evidence or material led by the respondent before the trial Court with regard to the entitlement of interest at 15% and there is no sufficient reason assigned by the trial Court while awarding interest at 15%. It is required to be noted that when there is no stipulation with regard to awarding interest at a particular rate, in absence of the same, it cannot be said that it is to be awarded at the commercial rate and it is a discretion on the part of the trial Court but, discretion cannot be shown unless and until there is any cogent and material reason assigned at the time of awarding any interest and therefore, I am of the opinion that the Page 7 of 8 Uploaded by V.R. PANCHAL(HC00171) on Fri Oct 10 2025 Downloaded on : Sat Oct 11 10:37:04 IST 2025 NEUTRAL CITATION C/FA/127/2006 JUDGMENT DATED: 08/10/2025 undefined rate of interest awarded by the trial Court is on very higher side and thus, considering the same, the rate of interest as awarded by the trial Court is required to be reduced to 9%, for which, learned counsel for the appellant has raised objection and submitted that 6% interest may be awarded, however, considering the rate of interest prevailing at that relevant point of time, this Court deems it fit to award interest @ 9%, which is just and proper.
9. In above view of the matter, the appeal is allowed in part.
The rate of interest is reduced from 15% to 9%. Except the rate of interest, the impugned judgment and award passed by the trial Court is upheld. If the appellant has not deposited the amount of compensation then the appellant shall deposit the same before the concerned Court. The appellant shall provide proper calculation to the concerned trial Court and if the appellant has deposited the amount awarded by the trial Court along with the interest at the rate of 15% then the appellant is entitled to get the refund difference of 6% interest as the same is reduced from 15% to 9%. The concerned trial Court shall refund the differential amount to the appellant and after deducting the said amount the remaining amount shall be disbursed in favour of the claimant after following due procedure and after verifying bank details of the claimant. Registry is directed to transmit back the record and proceedings to the concerned trial Court forthwith. Pending civil applications shall stand disposed of accordingly.
(HEMANT M. PRACHCHHAK,J) V.R. PANCHAL Page 8 of 8 Uploaded by V.R. PANCHAL(HC00171) on Fri Oct 10 2025 Downloaded on : Sat Oct 11 10:37:04 IST 2025