Devendra Kumar vs Nagar Palika Parishad Shamli & ...
2015 Latest Caselaw 3854 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Court No. - 34							  AFR
 

 
Case :- FIRST APPEAL No. - 175 of 2001
 

 
Appellant :- Devendra Kumar
 
Respondent :- Nagar Palika Parishad Shamli & Another
 
Counsel for Appellant :- Nalin Kumar Sharma,Amit Krishna,B.D.Sharma,I.N.Singh,Natin Kumar Sharma,Radhey Shyam,Ram Kant,Ravi Kant,S.K.Tyagi,S.N. Singh,S.Tyagi,Shashi Nandan
 
Counsel for Respondent :- S.K. Garg,Arjun Singhal,Brajesh Pratap Singh,P.K. Tyagi,P.S.Baghel,Smt.Kamla Mishra,Vinod Swaroop,Addl.A.G.
 

 
Hon'ble Sudhir Agarwal,J.

Hon'ble Rakesh Srivastava,J.

1. This is a plaintiff's appeal under Section 96 of Code of Civil Procedure (hereinafter referred to as 'CPC') arising from the judgment and decree dated 05.02.2000 passed by Smt. Poonam Sikand, IIIrd Additional Civil Judge (Sr. Div.), Muzaffarnagar in Original Suit No. 63 of 1998 whereby it has decreed the suit partly, allowing claim of plaintiff-appellant in respect to items no. 2 to 7, of schedule to the plaint and rejected plaintiff's claim in respect to items no. 1 and 8 which was for Rs. 12,45,465.34 and Rs. 3,65,000/- respectively.

2. The plaintiff instituted the aforesaid suit seeking a decree of recovery of Rs. 45 Lacs which included the amount mentioned in schedule appended at the bottom of plaint along with interest thereon. The plaintiff also prayed for interest on decreed amount at the rate of 12% pendente lite and future interest.

3. The plaint case set up by plaintiff is that in the year 1992, 1993 & 1994 several works contracts were awarded to plaintiff by defendant-respondent 1 which were completed by plaintiff. The final bill was prepared by defendant 1 i.e. Nagar Palika Parishad, Shamli through its Executive Officer in 1995-96 in accordance whereof plaintiff was entitled for payment of Rs. 24,07,380.97 but despite repeated requests, payment has not been made. The break-up details of aforesaid claim was mentioned in the schedule given at the bottom of plaint which consisted of 8 items as under:-

Schedule of the amount due:-

1.

Balance of construction of Palika Bazar Shamli.

Rs. 12,45,465.34

2.

Bill sanitary fitting in Palika Bazar Shamli.

Rs. 3,32,538.96

3.

Bill site development of Palika Bazar Shamli.

Rs. 1,64,670.55

4.

Balance Nala construction

Rs. 1,22,348.21

5.

Bill gerrenge construction at Janki Shamli

Rs. 83,567.60

6.

Bill of premizing of Tanki Road Shamli

Rs. 78,223.00

7.

Bill of constructino of C.C. Road Neer S.D.M.'s Quarter of Shamli

Rs. 15,562.31

8.

Bill of other misc. work.

Rs. 3,65,000.00

Total:-

Rs. 24,07,380.97

4. Trial Court decreed the suit so far as claims pertained to items 2 to 7. The defendants-respondents have not preferred any appeal against this part of decree, therefore, to this extent matter has attained finality.

5. Plaintiff, however, has been non-suited in respect to his claims, items no. 1 and 8 to the schedule appended to plaint and this appeal is confined only in respect to the aforesaid two items.

6. With respect to item 1 of schedule, the court below has observed that a work agreement for Rs. 40,27,725/- was executed whereagainst actual work, done by plaintiff, worth Rs. 53,83,852.47. This was verified by Junior Engineer after measurement and had shown in the measurement book. Out of the aforesaid amount of Rs. 53,83,852.47, plaintiff was already paid a sum of Rs. 41,38,387.31. The court below found that the work was completed by plaintiff in 1992 and it was to the satisfaction of defendants. As per measurement book a sum of Rs. 12,45,455.34 was found payable to plaintiff. In other words after deducting Income Tax and Sales Tax etc., plaintiff was entitled for payment of Rs. 10,83,948/- and in respect to this deduction of tax etc. there was no dispute on the part of plaintiff also. The court below recorded its finding as under:-

mDr fLFkfr;ksa es gh oknh ds nLrkost mikca/kA] oknh ds izkFkZuk i= 152x vkfn ds vuqlkj ij Hkh ;g lkfcr gS fd ns; /kujkf'k es ls VSDl dh dVkSrh ds mijkUr vkbZVe ua01 ds laca/k esa oknh ds izfroknh ds ftEes dqy 10]83][email protected]& :0 cdk;k gS ftlds Hkqxrku dk nkf[ky isij ua0 157&,&1 ls izfroknh la0&1 us viuk ekuk gSA

"Only in the said circumstances, it is established even on the basis of documents, annexure 1 and application 152 C etc. of the plaintiff that after the deduction of tax from the due amount, Rs. 10,83,948 is still due to the plaintiff from the defendant; liability for payment whereof the defendant 1 has acknowledged to be his own by way of paper no. 157-A-1."

(English Translation by Court)

7. Having said so, Trial Court, however, has non-suited plaintiff with respect to his claim for item 1 of schedule on the ground that work was completed in 1992 and limitation for suit for recovery of money is three years under Schedule 18 of Limitation Act, 1963 (hereinafter referred to as 'Act, 1963') which would commence from the date of completion of work. Since suit was filed in 1998, claim in respect to item 1 of schedule was barred by limitation.

8. With regard to item 8 of Schedule, Trial Court has non-suited plaintiff on the ground that for claiming the said amount, no notice under Section 326 of Municipalities Act, 1916 (hereinafter referred to as 'Act, 1916') was given, therefore, claim in respect to item 8 of schedule of plaint is not maintainable.

9. Therefore, following two points for determination have arisen for adjudication of this appeal:-

1. Whether Trial Court was justified in rejecting claim of plaintiff-appellant in respect to recovery of money under item 1 to the schedule appended to plaint on the ground that it was barred by limitation under schedule 18 of Act, 1963.

2. Whether Trial Court was justified in dismissing suit of plaintiff-appellant in respect to recovery of money under item 8 of schedule appended to the plaint on the ground that no notice under Section 326 of Act, 1916 was given.

10. We have heard Sri Shashi Nandan, learned Senior Advocate assisted by Sri Ankur Gupta, Advocate and Sri J.P. Pandey, Advocate appearing for Nagar Palika Parishad Shamli, District Muzaffar Nagar.

11. We proceed to consider first, the issue, whether claim of plaintiff in respect to item 1 of schedule to the plaint was barred by limitation or not.

12. It is evident from record that agreement was executed on 23.08.1990. Thereunder work contract of plaintiff awarded had total value of Rs. 40,27,725/-.

13. Agreement also mentions that in case any additional work is required to be performed by plaintiff, he shall be paid as per rates of Public Works Department. It also provides that on execution of work, running bills may be submitted by Contractor and after measurement and approval by competent authority, payments shall be made. With the progress of work, several running bills were submitted by plaintiff-contractor whereagainst measurements made and after approval, payments were also made. In fact against such running bills, a total sum of Rs. 41,38,387.31 was paid to plaintiff. It is admitted by defendant-1 that it had instructed plaintiff for extra work which was also performed by him. In these circumstances, it is evident that though initial work, worth Rs. 40.22 and odd Lacs, was supposed to be completed within one year but took much more time but the entire work which also included extra work, was completed in 1992.

14. Junior Engineer in his measurement book made measurement of work, worth Rs. 53,83,852.47. Against aforesaid amount plaintiff was already paid Rs. 41,38,387.31. The total amount, therefore found payable to plaintiff was Rs. 12,45,455.34. After deducting taxes, deductible at source, Junior Engineer as well as Assistant Engineer recommended for payment of Rs. 10,83,948/- to plaintiff.

15. It is admitted by parties that final measurement was made by Assistant Engineer concerned on 17.06.1996. Thereafter recommendation for payment of Rs. 12,45,465.34 was made by Additional Chief Officer, Nagar Palika Parishad, Shamli, after deduction of sales tax and income tax, on 26.06.1996, seeking appropriate sanction from Executive Officer/ Chairman/ District Magistrate. Paper No. 4Ka/6 and 4Ka/9 show that Junior Engineer made detailed measurement in October, 1995 while Assistant Engineer finalized measurement on 17.06.1996. Paper No. 4Ka/6 also shows that final measurement was approved along with satisfactory work certificate of Assistant Engineer on 17.06.1996. It was accepted by Additional Chief Officer, Nagar Palika Parishad on 26.06.1996 who made recommendation for payment of amount, after deduction of taxes and sought approval from Executive Officer.

16. Sri Shashi Nandan, learned counsel for plaintiff-appellant contended that limitation in respect to recovery of amount under item 1 of schedule would commence from the date when after submission of final bill, measurement is made and not from the date work was claimed to be completed by Contractor. He contended that in any case final measurement and recommendation for payment by authorities of defendant-1 amounts to acknowledgment of liability in writing, therefore, appellant could not have been non-suited on the ground of limitation.

17. Sri J.P. Pandey, learned counsel appearing for defendant-respondent 1 supported judgment of Trial Court by urging that work having been completed by plaintiff in 1992, limitation to claim payment was three years vide Article 18 of schedule to Act, 1963.

18. We first propose to examine whether Article 18 is attracted and the Trial Court was justified to non-suit plaintiff with regard to his claim for payment under item 1 of schedule to the plaint. Article 18 of schedule of Act, 1963 reads as under:-

Description of suit

Period of limitation

Time from which period begins to run

For the price of work done by the plaintiff for the defendant at his request, where no time has been fixed for payment.

Three years.

When the work is done.

19. The copy of agreement dated 23.08.1990 is paper no. 129 ka. Clause 8 thereof clearly provides that the plaintiff shall be entitled for final payment only when authorities of Nagar Palika Parishad, Shamli are satisfied.

20. A bare reading of aforesaid provision shows, where no time for payment has been prescribed or fixed in the agreement between parties or otherwise, limitation would be three years from the date work has been done by plaintiff. This Article applies where plaintiff has performed some work at the request of defendant.

21. All these conditions are satisfied in the present case. The dispute is confined as to the meaning of the term "work done". Whether literally it would mean that work is completed or done when claimed by plaintiff on his own or when it is measured and found satisfactory by defendants, at whose request work has been done by plaintiff.

22. In our view work done can only be said when defendant, who has to make payment and at whose request the work is done by plaintiff, is satisfied that work has been done. This satisfaction that work has been done on the part of defendant would come only when work done by plaintiff is measured by competent authority of defendant and entered in the measurement book.

23. If intention of legislature would have been only to commence limitation as soon as plaintiff has completed some work according to his own understanding or claim, rest of the part would not have been necessary to be mentioned in aforesaid provision. However, when legislature has added words 'for the defendant at his request' it means that whatever work is done by plaintiff, it must be such which has been requested by defendant and is performed for defendant. Therefore, ultimate decision to evident that work has been done, would be that of defendant.

24. In the present case it is not in dispute that work was done by plaintiff in his own way in 1992. The defendants, however, got his satisfaction after measurement thereof in 1996. Thus it can be said that work has been done only in 1996 when Assistant Engineer submitted his report on 17.06.1996 or when Additional Chief Officer, Nagar Palika Parishad made recommendation for payment seeking approval of higher authority vide report dated 26.06.196.

25. Words 'when the work is done' in clause 3 of Article 18, therefore, will have to be read in consonance with column 1 and we are of the view that to attract Article 18, limitation would commence when work done by plaintiff is measured by defendant and he finds satisfaction that work as requested has been done by plaintiff for defendant.

26. It is not disputed by learned counsel appearing for defendant-respondent 1 that, limitation, if commences from June, 1996 claim for item 1 to schedule of plaint was well within limitation.

27. A similar controversy came up for consideration before Punjab & Haryana High Court in Jullundur Improvement Trust Jullundur vs Kuldip Singh, AIR 1984 P & H 185 and it was held that the work will be deemed to have been done when it was duly entered in the measurement book and on the basis of which final bill is prepared. The date of furnishing of final certificate by Engineer in Chief or date of receipt of payment are immaterial and do not furnish any cause of action to the plaintiff for filing the suit. Therefore, for the purpose of filing the present suit, under Art. 18 of the Act, the work will be deemed to have been done when it was duly entered in the measurement book and on the basis of which final bill was prepared.

28. We are in respectful agreement with aforesaid view. Applying the said dictum as also the view we have taken above, in the present case, work shall be deemed to have been done when it was measured and entered in measurement book by competent authority i.e. Assistant Engineer on 17.06.1996.

29. Sri Pandey, learned counsel for defendant did not dispute that though initially ground level measurement was made by Junior Engineer who entered the same in measurement book but unless approved by Assistant Engineer, such measurement is not liable to be acted upon. In that view of the matter claim of plaintiff in respect of item 1 of schedule to plaint was well within limitation provided under Article 18 of schedule to Act, 1963.

30. There is another aspect of matter. If what has been read literally by Court below is taken to be correct, then we are of the view that in present case, Article 18 of the Act, 1963 would have no application whatsoever. The reason being that claim in item 1 of schedule to plaint was not in respect to initial work allotted to plaintiff vide agreement dated 23.08.1990 but it was payment for extra work for which no valuation was mentioned in agreement. Clause 7 of agreement simply provides that in case of additional work, payment shall be made as per PWD schedule of rates. Clause 8 of agreement further provides that plaintiff shall be entitled for payment when authorities of Nagar Palika Parishad are satisfied. Regarding refund of security etc., Clause 9 provides that after completion of work and expiry of further period of six months, if authorities find that work has been done satisfactorily security etc. shall be refunded. Clause 7, 8 & 9 of agreement read as under:-

¼7½ ;g fd VsUMj esa vafdr vkbZVeksa ds vfrfjDr ;fn dksbZ dk;Z f}rh; i{k ls djk;k x;k tks og ih0MCyw0Mh0 'ksM~;wy vkQ jsV ij djsxkA

7. That except the items mentioned in the tender, if any other work is executed through the second party, then the said party shall undertake it on the basis of the PWD's schedule of rates.

¼8½ ;g fd dk;Z dks izxfr dks ns[kdj gh dk;Z ds jfuax fcy dk Hkqxrku ukxfjd leUo;; ,oa vuqcU/k lfefr ds vf/kdkfj;ksa dh larqf"V ds mijkUr dh dk;Z dks 10 izfr'kr dkVdj f}rh; i{k dks le; le; ij fn;k tk;sxkA

8. That only after assessment of work progress, the payment of running bill shall be made to the second party with 10 percent deduction from time to time only on the satisfaction of the officers of civil coordination and contract committee.

¼9½ ;g fd dk;Z iw.kZ gksus dh frfFk ls 6 ekg ds lekIr gksus ij rFkk dk;Z lUrks"ktud ik;s tkus ij gh f}rh; i{k dh tekur vkfn okfil dh tk;sxhA

9. That only after expiry of six months from the date of completion of the work and on the work being found to be satisfactory, security amount etc. shall be returned to the second party."

(English Translation by Court)

31. Certain running bills after measurement and satisfactory certificate issued by officials of defendant 1 were cleared and payments were made. Final measurement was made by Assistant Engineer on 17.06.1996. Thereafter recommendation for payment was made by Engineer-defendant 1 on 24.06.1996. It reads as under:-

lacaf/kr fcy dk lR;kiu ¼dk;Z larks"ktud gksus laca/kh izek.k i=½ lgk;d vfHk;Urk yks0fu0fo0 vLFkk;h [k.M f}rh; eqtQ~Qjuxj }kjk fnukad 17&6&96 fcy ij vafdr gSA ftlds vuqlkj lEcfU/kr dk;Z ds vUrxZr lEiUu dk;Z 53]83]852&47 esa ds Bsdsnkj dks iw.kZ esa gq, pkyw fcyksa ds Hkqxrku ds vUrxZr :i;s 41]38]387&13 dh dVkSrh mijkUr vk;dj fcdzhdj lfgr vadu 12]45]465&34 dk Hkqxrku fd;k tkuk gSA

vr% mijksDrkuqlkj fcdzh dj vadu 53][email protected]& o vk;dj 1]07][email protected]& rFkk Bsdsnkj dks 'kq) /kukad 10]83]948&34 mlds 9os vfUre fcy ds vuqlkj Hkqxrku gsrq vkns'kkFkZ izLrqrA

"The verification of the concerned bill (certification as to the work being satisfactory) by the Assistant Engineer, PWD, Temporary Division - II, Muzaffar Nagar is recorded on the bill dated 17.06.96. As per it, out of an amount of Rs. 53,83,852.47 as against the completed work under the concerned work, an amount of Rs. 12,45,465.34 with the income/sales tax is to be paid to the contractor after the deduction of Rs. 41,38,387.13 under the payment of current bills.

Hence, as mentioned above, proposal for payment of sales tax to the tune of Rs. 53,839/- income tax to the tune of Rs. 1,07,678/- and net amount of Rs. 10,83,948.34 to the contractor as per the 9th final bill is presented for orders."

(English Translation by Court)

32. Additional Chief Officer of Nagar Palika Parishad made recommendation on 26.06.1996 as is evident from paper no. 4 ka/6 which was made part of plaint. In fact these documents are not disputed by defendant 1. Sri J.P. Pandey, learned Advocate appearing for defendant-respondent 1 fairly stated that final measurement and recommendation for payment was made in June, 1996. In this regard there is no dispute between the parties.

33. Initial contract was for work worth Rs. 40,27,725/-. More work than this was already performed by the plaintiff contractor and thereagainst payment of Rs. 41,38,387.31 was made. Plaintiff on request of defendant admittedly proceeded to do extra work. In respect thereto agreement only provides that payment shall be made as per rates prescribed under PWD schedule. Therefore, impugned item 1 of schedule to plaint was in respect to extra work performed by the plaintiff.

34. In respect to such a situation where price claimed is that of work done which is additional or extra, a division Bench of this Court in State of U.P. Vs. M/s Thakur Kundan Singh, AIR 1984 All. 161 has held that Article 18 would not apply and then the limitation under residuary Article 113 of Act, 1963 would come into picture for the reason that payment could not have been made to plaintiff-appellant till measurement is done and as per PWD rates schedule price; the value is ascertained by competent authority of Nagar Palika Parishad, Shamli. The Court in para 20 of the judgment said:-

"20. Another reason why we say that Article 18 cannot apply is that the present suit is not a suit for price of work done, but as mentioned above, the claim is for payment of additional rates over and above the stipulated rate in view of the altered circumstances, and plans and drawings submitted to the plaintiff subsequently to carry out extra work which was not mentioned or stipulated in the original contract."

35. Either way it thus cannot be said that claim of plaintiff-appellant in respect to item 1 of schedule to plaint was barred by limitation. The Court below in taking a view otherwise has erred in law. Findings of court below, therefore, on this aspect, are reversed. Point no. 1 is answered in negative i.e. in favour of plaintiff-appellant and against defendant-respondent.

36. Now we come to second question with regard to notice under Section 326 of Act, 1916.

37. Learned Senior Counsel Sri Shashi Nandan admitted that in respect to claim for payment under item 8 no notice under Section 326 of Act, 1916 was given to Nagar Palika Parishad, Shamli.

38. Section 326 reads as under:-

"326. Suits against Municipality or its officers.---

(1) No suit shall be instituted against a Municipality, or against a member, officer or servant of a Municipality, in respect of an act done or purporting to have been done in its or his official capacity, until the expiration of two months next after notice in writing has been, in the case of a Municipality, left at its office, and, in case a member, officer or servant, delivered to him or left at his office or place of abode, explicitly stating the cause of action, the nature of the relief sought, the amount of compensation claimed, and the name and place of abode of the intending plaintiff, and the plaint shall contain a statement that such notice has been so delivered or left.

(2) If the Municipality, member, officer or servant shall, before action is commenced, have tendered sufficient amends to the plaintiff, the plaintiff shall not recover any sum in excess of the amount so tendered, shall also pay all costs incurred by the defendant after such tender.

(3) No action such as is described in sub-section (1) shall, unless it is an action for the recovery of immovable property or for a declaration of title thereto, be commenced otherwise than within six months next after the accrual of the cause of action.

(4) Provided that nothing in sub-section (1) shall be construed to apply to a suit wherein the only relief claimed is an injunction of which the object would be defeated by the giving of the notice or the postponement of the commencement of the suit or proceeding."

39. Learned counsel appearing for appellant did not dispute that claim in respect to item 8 of schedule to plaint is not exempted from application of requirement of notice under Section 326 (1) since it was not a case covered by sub-section (4) of Section 326 of Act, 1916. In case conditions exempting requirement of notice are not attracted, this Court has held that a suit without giving notice under Section 326 would be bad in law and not maintainable.

40. A full Bench of this Court in Dargahi Lal Nigam Vs. The Kanpur Municipal Board, 1952 ALJ 122 (FB) has held that Section 326 applies to claims based upon contracts or tortious acts as the case may be.

41. In Haji Ahmad Raza & Ors Vs. Municipal Board, Allahabad, AIR 1952 All. 711 another full Bench this Court held that it is only in such suits for injunction in which object would be defeated, the condition of notice may be exempted by referring to Section 326 (4). Otherwise in all the cases notice under Section 326 (1) is necessary failing which the suit would not be maintainable.

42. This view was followed by a Division Bench in Municipal Board, Shikohabad, District Mainpuri v. Chandra Deo Prasad Srivastava, 1963 ALJ 688 holding "the courts below, therefore, went wrong in holding that the suit was not defective for want of notice as required by section 326 of the U.P. Municipalities Act."

43. In the present case since admittedly no notice was given in respect to claim made under item 8 of the schedule to the plaint, to this extent suit for recovery of said amount was defective and not maintainable.

44. The question no. 2 thus is answered against the plaintiff-appellant and in favour of defendant-respondent.

45. In the result the appeal is partly allowed.

46. The claim of plaintiff-appellant in respect to item 1 of schedule to the plaint is hereby decreed. The judgment and decree of court below, dated 05.02.2000 passed by IIIrd Additional Civil Judge (Sr. Div.), Muzaffarnagar, in Original Suit No. 63 of 1998 shall stand modified to that extent.

47. It is further made clear that the plaintiff also shall be entitled for the said payment after deduction of statutory taxes payable by him and liable to be deducted under relevant fiscal statutes by defendant-respondents.

48. The plaintiff-appellant shall be entitled to cost proportionately to the extent of success in this appeal.

Order Date :- 4.11.2015

Pradeep/-