Andhra Pradesh High Court - Amravati

The Appeal vs Hotel Garudadri (Private) ... on 31 July, 2023

            THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

                         APPEAL SUIT NO.73 OF 2009

                                     IN/AND

                 I.A.No.4 OF 2009 (X-OBJS.12416 OF 2009)

JUDGMENT:

1. The Appeal, under Section 96 of the Code of the Civil Procedure, 1908

(for short 'C.P.C.'), is filed by the appellant/3rd defendant challenging the

decree and Judgment dated 19.09.2008 in O.S. No.30 of 2005 passed by

the learned IV Additional District Judge, Kurnool (for short, 'the trial

court'). Contrary to the Appeal Suit, the 1st respondent/plaintiff filed cross

objections questioning not granting interest by the trial Court.

2. 1st respondent is the plaintiff, who filed the suit in O.S. No.30 of 2005

seeking recovery of Rs.21,41,510/- being the principal and interest due to

the plaintiff for the supply of wooden dining tables and wooden dining

benches to the 3rd defendant office with future interest at 12% p.a. Res-

pondents 2 and 3 are defendants 1 and 2 in the said suit.

3. The parties will hereinafter be referred to as arrayed before the trial

Court.

4. The facts leading to the present Appeal, in a nutshell, are as under:

(a) The plaintiff is the registered dealer, identified by No.

N.R.E./0478/2958/ 2002-2003, DT.21.06.2002, engaged in supply-

ing furniture. The 3rd defendant called for quotations regarding the

supply of long wooden benches and wooden office chairs to the

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Ashram Schools under their control. The plaintiff submitted their qu-

otations specifying the rates of the required material. The 3rd defen-

dant accepted the plaintiff's quotation and placed an order for 275

sets of wooden dining tables and dining benches. The specification

for the furniture was set at 6 feet in length, 1½ feet in width, and 2 ½

feet in height. It is also stipulated that the supplied stock must meet

the specified requirements, and the payment would be made two

months after the material was delivered, subject to budget availabili-

ty.

(b) After receiving the material, the 3rd defendant verified the quali-

ty, quantity and acknowledged the receipt of the material and issued

proceedings Rc.No.A/5796/01-iii on 21.08.2002, officially sanction-

ing the order. In compliance with the 3rd defendant's instructions, the

plaintiff then delivered the wooden material to the Ashram Schools

under proper acknowledgement from the Headmasters of the respec-

tive schools. The plaintiff supplied 275 sets of dining tables as per

the order. However, the 3rd defendant made only payments for 131

sets of dining tables. The 3rd defendant failed to pay 144 sets

amounting to Rs.15,86,304/- including the sales tax payable to the

Commercial Tax Dept., which accounts for Rs.1,17,504/-. The plain-

tiff demanded the defendants several times for payment of the out-

standing amount. But their efforts were in vain. The 3rd defendant, in

response, asked for additional information regarding the transaction

through their letters dated 15.03.2005 and 02.04.2005. The plaintiff

wrongfully provided all the required information, but the 3rd defen-

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dant failed to pay despite receiving the necessary details. Finally, the

plaintiff issued a legal notice under section 80 of C.P.C. on

03.08.2005 demanding the defendant to settle the balance. However,

the defendants neither replied to the notice nor complied with the

payment demand.

5. The 3rd defendant filed a written statement, adopted by defendants 1

and 2, contending that the 3rd defendant called for quotations for the

supply of wooden dining tables and wooden dining benches to the Ashram

Schools. The plaintiff has submitted the quotations at higher rates. The

then Project Officer formed a committee and placed a supply order

09.05.2002 for 275 Nos. of wooden dining tables with certain specifica-

tions. Still, the Divisional Manager, G.C.C., has called for the quotations,

and the purchasing committee has accepted the rates. It is a fact that the

lowest rates had been accepted, and a supply order was placed by the then

Project Officer and the plaintiff supplied poor-quality material. The plain-

tiff, the then Project Officer and other purchasing committee members col-

luded with purchases to inflate the purchase rates. The Commissioner of

Industries, AP, constituted a Multi-Disciplinary Committee (for short

'MDC') with the District Legal Officer on 27.12.2003. According to the

MDC's assessment, the correct rate for each set was determined to be

Rs.4,400/-. Accordingly, the total amount for 144 sets supplied would be

Rs.6,33,600/- and with an 8% tax, it amounts to Rs.8,84,298/-. However,

the Department has paid Rs.10,13,472/- including tax, resulting in the

excess payment of Rs.3,29,184/- to the plaintiff. The plaintiff failed to re-

spond to notices issued by the Department on multiple occasions

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(11.03.2005, 15.03.2005, 02.04.2005 and 09.06.2005). The plaintiff has

not given a legal notice, and the sending of a reply notice does not arise.

The supply orders did not include any stipulation for payment of interest.

6. Based on the above pleadings, the trial Court framed the following

issues:

(1) Whether the plaintiff has supplied the material to the 3rd defendant as per the specifications and standards mentioned in the supply order placed by the third defendant?

(2) Whether the plaintiff is entitled to recover the suit amount? (3) To what relief?

7. During the trial, on behalf of the plaintiff, P.Ws.1 and 2 were ex-

amined and got marked Exs.A1 to A.31. On behalf of the defendants,

D.Ws.1 and 2 were examined and got marked Exs.B1 to B.22.

8. After completion of the trial and hearing the arguments of both sides,

the trial Court partly decreed the suit with proportionate costs for

Rs.14,68,800/- against the 3rd defendant with interest thereon at 6% per

annum from the date of suit till the date of realization.

9. The learned counsel for the appellant/3rd defendant contends that

the trial Court ought to have directed both the parties to substantiate the

respective rates of wooden tables for Rs.10,200/- and Rs.4,400/- particu-

larly concerning the variety of wood on the date of supply, i.e., on

07.02.2002. The trial Court committed a grave error in applying the

'Principle of Estoppel based on an officer's admission regarding the condi-

tion of the goods.

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

10. Per contra, the plaintiff enterprises/cross objector filed cross-

objections in this Appeal, contending that the appellant vides proceedings

dt.09.05.2002 called for the supply of material to the Ashram Schools. One

of the conditions clearly states that the payment will be made after two

months, subject to budget availability, following the material supply.

Therefore, it is the appellant's responsibility to make the payments within

the stipulated time frame. In light of the appellant's failure to make pay-

ment, the plaintiff claims they are entitled to receive the due amount along

with 12% interest from the date of supply until the date of realization.

Hence, the trial court erred in not granting the interest that the cross ob-

jector is entitled to.

11. Having regard to the pleadings in the suit, the findings recorded by

the Trial Court and in light of the rival contentions and submissions made

on either side before this Court, the following points would arise for deter-

mination:

I. Whether the plaintiff supply the material without dev- iation from the specifications and standards men- tioned in the supply order?

II. Whether the trial Court justified in not awarding the interest at 12% per annum from the date of supply to the date of realization?

POINT NO.I:

12. The following facts are either admitted or undisputed:

a. The plaintiff is a registered dealer with the commercial tax depart-

ment, holding Certificate of Registration No. N.R.E./0478/2958/

2002-2003 dated 21.06.2002, and is engaged in the furniture

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

supply business. The 3rd defendant called for quotations to supply

wooden materials to the Ashram Schools under its control. The

plaintiff submitted quotations for the required articles, specifying

the rates of the material. Based on the proceedings in Ex.A.1, is-

sued by the Project Officer, it is evident that the plaintiff's submit-

ted quotation was reviewed, and a decision was made to place an

indent for the supply of 275 Dining Tables to I.T.D.A (Indian Tribal

Development Agency). The specifications for the tables are as fol-

lows:

- Dining Table: 6 feet length x 1 ½ feet width x 2 ½ height

- Dining Table: 6 feet length x 1 ¼ feet width x 1 ½ height

b. The indent is subject to specific terms and conditions, which are as

follows:

a. The stock should be handed over to the I.T.D.A. with transportation.

b. The quality of the stock should be as per the specified spe-

cifications.

c. If any deviation in the quality of the stock, it will be re-

jected.

d. Payment will be made only after satisfaction with the sup-

plied stock.

e. Payment will be made after two months, subject to budget availability, after the material has been supplied. f. Sales tax will be deducted and remitted to the Govern-

ment.

g. The stock should bear the I.S.I. brand.

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c. Exs.A.2 to A.16, the proceedings of the Project Officer, I.T.D.A.,

provide evidence that the plaintiff enterprises, l in Markapur, of-

fered lower rates than other firms. Subsequently, the plaintiff en-

terprises successfully supplied the required materials, and the re-

ceived stock was in good condition. The Project Officer sanctioned a

payment of Rs.99,144/- for each proceeding to the plaintiff enter-

prises, as per the Proprietor, G.V.A.Mallikarjuna Rao, for the sup-

plied materials to the Ashram Schools under I.T.D.A.'s control.

d. Exs.A.18 to A.22 consist of copies of delivery receipts issued to the

plaintiff enterprises by the respective Ashram School headmasters.

These receipts serve as evidence of the successful delivery of the

materials by the plaintiff enterprises to the designated Ashram

Schools.

e. The defendants, in this case, made a payment of Rs.10,13,472/-

for the supply of 131 sets of Dining tables to the plaintiff enterpris-

es. However, it is essential to note that the plaintiff enterprises ac-

tually provided 275 sets of Dining tables. The defendants have ac-

knowledged receiving all 275 sets of Dining tables for the respective

Ashram Schools, and this information has been duly recorded in

the stock register.

13. The defendants' contention is that the plaintiff supplied inferior and

substandard quality material. In response to these allegations, the MDC

was formed by the Commissioner of Tribal Welfare. The MDC conducted

inspections at the respective schools to verify the supplied materials and

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

assessed the rates based on the quality of the wood provided. The MDC

concluded that the appropriate rate for each set of materials was

Rs.4,400/-, which is significantly lower than the Rs.10,200/- claimed by

the plaintiff enterprises.

14. During the cross-examination of PW.1 (Sri G.V.A. Mallikarjuna

Rao), the Proprietor of the Plaintiff enterprises, the suggestion was made

that the actual amount payable to the plaintiff enterprises was only

Rs.6,84,298/- and the defendants made excess payment of Rs.10,13,472/-

for the supply of wooden dining tables and the defendants demanded the

refund of Rs.3,29,184/- from the plaintiff enterprises. Notices were issued

to the plaintiff enterprises on 11.03.2005 and 15.03.2005, requesting the

repayment of the excess amount, but the plaintiff did not respond.

15. It is noteworthy that the defendants did not file a counterclaim as

per the requirements of Order 8 Rule 6(a) C.P.C. The counterclaim would

have necessitated the disclosure of the date of cause of action, and the de-

fendants would have been required to pay the court fee for the counter-

claim. Since no counterclaim was made, the defendant's demand for the

refund of Rs.3,29,184/- can be considered vague and unsupported.

16. DW.1, E. Ravindra Babu, the Project Officer representing the 3 rd

defendant, contended that the plaintiff enterprises managed the then

Project Officer to approve the rates for the supply of 275 sets of wooden

dining tables and benches. According to the proceedings of the Commis-

sioner, Industries Department, Andhra Pradesh (Ex.B.16), the MDC was

formed for joint inspection of the materials purchased during the period

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from April 2001 to October 2002. During the inspection process, DW.1 vi-

sited the location where the materials were supplied. In his observation, he

noticed that the suppliers, including the plaintiff enterprises, were not reg-

istered contractors under A.P.G.S.T. (Andhra Pradesh General Sales Tax)

and had unlawfully fabricated bills to acquire Government funds.

17. As per the registration certificate filed, the plaintiff is categorized

as a Class-III contractor, eligible to participate in supplying materials up to

the value of Rs. 10,00,000/-. Despite this classification, the 3rd defendant

placed a supply order for materials based on the rates provided by the

plaintiff.

18. Additionally, the tender schedule in Exhibit B.1 does not require

mandatory registration for participation. As per the trial court's observa-

tion, the invited quotations did not contain any condition that par-

ties/suppliers should be registered firms. The only condition mentioned

was regarding the delivery of the stock at the specified places within the

given timeframe. The documents Exs.A.2 to A.16 also include a direction

for the Accounts Officer to deduct and remit the A.P.G.S.T. amount to the

Government account.

19. During cross-examination, DW.1 confirmed that while making

payments to the supplier, the tax payable to the Government is deducted

at the source, implying no tax evasion issue. Therefore, the defendants

cannot now argue that the plaintiff is not a registered contractor, especial-

ly after accepting the quotation and placing an order for supply.

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

20. According to DW.1's testimony, the Multi-Disciplinary Committee

(MDC) assessed the actual price of the supplied materials by consulting

authorized suppliers. The MDC arrived at Rs.6,84,298/-, including sales

tax, for the above-supplied materials. DW.1 also stated that the MDC vi-

sited eight to ten schools across four districts from March 2005 to May

2005. The visits took place six years after the plaintiff supplied materials.

21. Based on the minutes of the Review Committee, it is evident that a

Purchase Committee was constituted for the procurement of materials for

Ashram Schools. This committee included the Project Officer, I.T.D.A., as

Chairman, along with the Divisional Manager, G.C.C Ltd., Asst. Project Of-

ficer (E.D.N.), I.T.D.A and Asst. Project Officer (G), I.T.D.A., and Srisailam

are the members. DW.1 confirmed that before obtaining sanction and ap-

proval from the Government for material purchase, the Purchase Commit-

tee was involved in entering into contracts with suppliers. Ex.B.14 lists the

names of members of the Purchase Committee. It is undisputed that the

Purchase Committee participated in receiving quotations and finalizing

rates for the material supply. Only after this process was completed did

the then Project Officer place supply orders with the plaintiff enterprises.

Moreover, the same type of Dining tables and benches were ordered for

supply from the plaintiff enterprises, Sainatha Enterprises and Sree-

lakshmi Enterprises, at the same rates.

22. During cross-examination, DW.1 clearly admitted that the sanction

order, Ex.A.1, did not specify the type of wood to be used for making the

Dining tables and benches. The materials were received from June 2002 to

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

September 2002, but DW.1 stated that the schools did not use them due

to the payment dispute between the plaintiff and the 3rd defendant. How-

ever, the defendants did not present any evidence from the Headmasters or

Correspondents of the respective schools to support their claim. DW.1 did

not provide evidence to show that the materials were of poor or substan-

dard quality, and it is not the defendants' case that the Headmasters and

Correspondents complained about the quality of the materials.

23. According to DW.1's evidence, the defence is based on the claim

that the plaintiff supplied materials made with 'Tumma and Neem', as

stated in paragraph No.5 of Exhibit B.20 letter to the Project Officer,

I.T.D.A. However, the defendants have not provided the names of the Car-

penters who supposedly assessed the furniture value. Additionally, no

statements from these Carpenters were recorded, and no quotations were

obtained from Furniture shop owners to assess the value of the supplied

materials. The MDC team maintained inspection notes, but DW.1 admitted

that they had not filed these inspection notes in Court.

24. From DW.1's evidence, it becomes evident that no statements were

recorded from the Carpenters or any individuals with expertise in assess-

ing wood quality to support the MDC's contention. Had these statements

been recorded, the plaintiff would have had an opportunity to cross-

examine them to establish their case. It is surprising that the defendants

also failed to provide the names of the Furniture shop owners consulted to

assess the prevailing market rate of a particular type of wood.

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

25. DW.2, B. Naveen Kumar, who served as Deputy Director of Indus-

tries, testified that he participated in the MDC's enquiry conducted to in-

spect purchases made by I.T.D.A., Srisailam, from April 2001 to October

2002. The purpose of the inspection was to investigate certain irregulari-

ties committed by the then officials of I.T.D.A. DW.2 was appointed as a

member of the MDC by the General Manager of District Industries, who

was appointed by the Commission of Industries. In the cross-examination,

DW.2 revealed that the inspection took place one year and four months af-

ter the MDC's formation. The plaintiff was not issued any notice or in-

formed about the inspection, and the inspection did not take place in the

presence of the plaintiff. During the inspection, some of the supplied ma-

terial was being used by the schools, while some were not in use. However,

DW.2 admitted that his report, Exhibit B.20, did not mention that some of

the wooden material was not under use, and he did not provide a specific

reason for this omission.

26. Furthermore, DW.2 acknowledged that neither he nor any members

of the MDC possessed expert knowledge about assessing the quality of

wood materials. DW.2 did not record the statements from carpenters or

suppliers to assess the material value. When asked, he could not provide

the names of the carpenters or suppliers who were consulted to determine

the value of the wood material. The inspection notes prepared by DW.2

were not filed in Court. DW.2 was uncertain about whether the wooden

furniture carried the 'I.S.I.' brand, which raised questions about the quali-

ty and standard of the supplied materials. Moreover, DW.2 admitted that

suppliers tend to quote lower rates for bulk orders and higher rates for

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

smaller quantities, indicating the influence of quantity on pricing. The fail-

ure to seek assistance from experts to assess the quality of wood when

they lacked such expertise is also notable.

27. DW.2's testimony reveals that he did not examine the then Project

Officer and the members of the Purchasing Committee during his inspec-

tion. This lack of examination raises concerns about the fairness and tho-

roughness of the inspection process. The DW.2's evidence clearly indicates

that no opportunity was provided to the plaintiff and the members of the

Purchasing Committee to explain their stand or defend against the serious

allegations made against them. The defendants accused the Project Direc-

tor, I.T.D.A., and the members of the Purchasing Committee of colluding

with the plaintiff and other firms. However, no substantial evidence or ma-

terial was produced to establish such collusion. Mere allegations without

cogent and convincing evidence are insufficient to prove such serious ac-

cusations. Notably, there is no document or proof on the record to indicate

that any disciplinary action was initiated against the alleged erring offi-

cials. DW.1 testified that the then Project Officer and Superintendent were

suspended from services, and others were called for an explanation. How-

ever, no supporting documentary evidence was filed to support this claim.

Moreover, DW.2 admitted that he does not know whether any departmen-

tal action was initiated against the members of the Purchasing Committee.

The evidence on record supports the contention made by the plaintiff's

counsel that the I.T.D.A. Project Director and Superintendent received

promotions, whereas the other members are working in their respective

departments. The absence of any documentation or evidence regarding the

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

initiation of departmental proceedings against the I.T.D.A. Project Director

and other members of the Purchasing Committee raises doubts about the

credibility of the defendant's claims. The lack of proper examination of key

individuals and the absence of supporting evidence of severe allegations

cast doubts on the fairness and validity of the defendant's contentions

against the plaintiff and the Purchasing Committee members.

28. According to the evidence placed, there is no implied warranty or

condition regarding the quality or fitness of the materials supplied by the

plaintiff. The defendants took the materials without protest, and DW.2

admitted that he did not know whether the wooden furniture carried the

I.S.I. brand. The defendants did not claim that the materials supplied by

the plaintiff did not meet the required measurements. However, the defen-

dants failed to provide any material before the Court on which the MDC

assessed the value of the supplied materials. They did not examine any

witnesses to establish that the dining tables were made with inferior and

substandard quality material. Despite the availability of the materials in

the Ashram Schools, the defendants did not return them, even though

there was a direction in Exhibit B.18 letter from the Commissioner of Tri-

bal Welfare to do so. DW.1 did not issue any written intimation to the

plaintiff asking for the return of the goods, nor did he explain the reason

for not providing written notice. The defendants also did not take any steps

to file an appropriate application before the Court to examine the material

through experts with expertise in assessing its quality. Although the De-

partment received the materials between June 2002 and September 2002,

and despite the plaintiff's statutory notice (Ex.A.17) under Section 80 of

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

the C.P.C. dated 03.08.2005, the defendants did not pay the amount for

the supplied materials. The evidence of DWs.1 and 2 shows that they

lacked knowledge in assessing the quality of wooden furniture and its val-

ue, and none of the members of the MDC possessed expert knowledge in

this regard. The MDC concluded that the plaintiff supplied substandard

material without making any independent enquiry with experts in furni-

ture shops or seeking the assistance of individuals with expertise in the

field.

29. Furthermore, it is observed from Ex.A.2 to Ex.A.16 orders that the

stock was received in good condition. Therefore, it is not clear how the de-

fendants are entitled to reduce the contract rate offered, especially after

accepting the goods without any protest and continuing to use them. The

Court views that the defendants are not entitled to raise a dispute about

the quality of the material three years after using the goods, mainly when

the plaintiff demanded payment according to the agreed-upon terms. The

defendants' clear admission shows non-payment of the amount for 144

wooden tables at the agreed rate of the contract. Given the defendants'

failure to establish that the plaintiff supplied substandard material, the

plaintiff is entitled to the value of the costs of 144 sets of wooden dining

tables and benches, amounting to Rs.14,68,800/-. This point is therefore

answered in favour of the plaintiff.

POINT NO.II:

30. According to Ex.A.1 proceedings, the payment to the plaintiff was

supposed to be made within two months after the supply of the material,

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

subject to budget availability. The record indicates that the plaintiff sup-

plied the material between June 2002 and September 2002. However, the

defendants have not claimed that the budget allocations were not made

within two months after the plaintiff's supply. Furthermore, they have not

asserted that the payment could not be made due to a lack of budget allo-

cation. Instead, the defendants' defence is based on the allegation of the

plaintiff supplying substandard material, deemed unacceptable by the

Court. The Court rejected the defendant's plea regarding the substandard

material, and therefore, it is established that the defendants were liable to

pay the amount owed by the end of November 2002. However, they failed

to make the payment, despite their unsupported defence.

31. Regarding the issue of interest, the trial court did not allow interest

because there was no agreement between the parties to pay interest.

32. The Hon'ble Supreme Court, in the case of the Indian Council for

Enviro-legal Action V. Union of India and others1 discussed different case

laws. A few of the paragraphs, i.e., para Nos.152, 153, 154, 155 & 156, are

reproduced herein below:

152. Unjust enrichment has been defined by the Court as the unjust retention of a benefit to the loss of another or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which, in justice and equity, belong to another.

153. Unjust enrichment is "the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good

1 (2011) 8 SCC 161

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

conscience." A defendant may be liable "even when the defendant retaining the benefit is not a wrongdoer" and "even though he may have received [it] honestly in the first instance."

154. Unjust enrichment occurs when the defendant wrongfully secures a benefit or passively receives a benefit which would be unconscionable to retain. In the leading case of Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. [1942] 2 All ER 122, Lord Wright stated the principle thus :

"....(A)ny civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution."

155. Lord Denning also stated in Nelson v. Larholt, [1947] 2 All ER 751 as under:-

"......It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular frame- work. The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the court orders restitution, if the justice of the case so requires."

156. The above principle has been accepted in India. This Court, in several cases, has applied the doctrine of unjust enrichment.

33. In Ganuga Ranganath Vs. Hotel Garudadri (Private) Limited2, the

composite High Court of Andhra Pradesh at Hyderabad held that:

56. The question as to whether the interest can be awarded in the absence of any stipulation contained in the contract came up for consideration before a Division Bench of this Court to which one of us (V.R.S.J.) was a party, reported in Apollo Health and Lifestyle Limited v. Anupam Saraogi of Indian Inhabitant, 2017 (3) ALT 602. After a detailed consideration of the origin and evolution of the Interest Act of 1978, this Court held in paragraph 80 of its Judgment that both in England and in India, Courts have treated interest as a payment

2 2018 3 A.L.D. 40

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

which becomes due as compensation for the deprivation. This Court also took note of the decision of the Constitution Bench in Central Bank of India v. Ravindra, (2002) 1 SCC 367 and held that the Court is entitled to award interest on such a rate as the Court considers reasonable unless the Court is satisfied that there are special reasons why interest should not be allowed.

57. We are of the considered view that the defendant should be directed to pay interest at 9% p.a.

34. In Block Development Officer, Panchayat Samithi, Prathipadu, Gun-

tur District and another V. M.Sambaiah3, the Composite High Court of

Andhra Pradesh at Hyderabad observed that:

8.(a). .........Courts have held that the interest can also be awarded by a court on equity. In order to invoke the doctrine of equity, it is necessary for the first instance to establish the existence of circumstances which attract equitable jurisdiction, such as non- performance of control of which equity requires specific performance or whether the owner is deprived of his property without paying the price thereof, or where money has been improperly detained and not paid to the person who is entitled to it or, where an employer withholds terminal benefits of an employee even after retirement without any valid reason etc.

35. In Aditya Mass Communications (P) Ltd., V. A.P.S.R.T.C. 4, the Hon'ble

Apex Court observed that:

8..........If a court comes to the conclusion on a given set of facts, a party has been wrongly denied the use of its own money, it is the duty of the Court to see that the said party is appropriately compensated. In the instant case, we are of the opinion that the respondent has deprived the appellant of its rightful use of the money...

36. Following the settled legal position and considering the money

held by the appellants/defendants, this Court deems it appropriate to

grant an interest rate of 9% per annum from 1st December 2002 until the

3 2003 (4) ALD 396 (DB) 4 (2003) 11 S.C.C. 17

AS No.73 OF 2009 IN/AND IA No.4 OF 2009 (XOBJ 12416 OF 2009)

date of filing the suit while allowing the cross objections in part. As for the

pendent lite and post-lite interest, it is at the judicial discretion of the

Court. The Trial Court exercised its jurisdiction. No sufficient grounds

were made out to alter the interest rate. However, the plaintiff's request for

interest at the rate of 12% per annum from the date of the suit until the

date of realization is not granted.

37. In conclusion, the Appeal is dismissed without costs, and the