The Tata Iron & Steel Co. Ltd. vs Union Of India
2001 Latest Caselaw 825 Del

ORDER

A. K. Sikri, J.

1. The plaintiff has filled the suit for recovery of Rs.32,40,235/- comprising a sum of Rs.24.70 lacs as principal amount and a sum of Rs.7,70,235/- towards interest accrued thereon. Pendentelite and future interest at the rate of 21 per cent per annum and cost is also claimed.

2. The material averments as made in the plaint, and which deserve mention, are that the plaintiff company, sometime in early 1984 was given the facility of a private railway siding at Harrawala Railway Station for the plaintiff's loading of limestone for dispatch to its works at Jamshedpur. In this regard, an agreement was also executed between the plaintiff and the Railways through the President of India on 21st January, 1984. It was expected that the volume of traffic for the company's loading of limestone from Harrawala Railway Station increased and had already reached 14000 tonnes per month and as such it was apprehended that the dispatches will increase to 30000 tonnes per month by the year 1990-91. In order to handle the traffic of his magnitude, the plaintiff had requested the defendant Railways for an additional siding at the complex proposed to be constructed for the U.P. Irrigation Department, which complex was under the active consideration of the defendant by that time. It is also averred that in view of the demands of both the plaintiff and SAIL, the defendant railways proposed re-casting their plan for the proposed U.P. Irrigation Department' siding complex in order to accommodate the requirements of the plaintiff company and SAIL. The revised plan of the existing complex was prepared by the defendant and the plaintiff and SAIL were asked to deposit Rs.1,49,49,130/- and Rs.1,32,47,302/- respectively towards the entire cost of construction of the siding. It was further stated that the plaintiff company paid a sum of Rs.37.50 lacs, as demanded by the defendant Railways representing 25 per cent of the estimated cost as part-advance against the cost of its siding. However, SAIL never made any payment and continued to default though they also continued to exhibit their interest in the new siding. The plaint further states that in the meanwhile, in view of the judgment of the Supreme Court on quarrying of limestone in the case of the Rural Entitlement Kendra, Dehradun Vs. The State of U.P. & Ors., the additional requirement of the plaintiff company underwent a sea change inasmuch as the Supreme Court in the said judgment permitted only four existing limestone mines to operate. In these changed circumstances, the plaintiff company brought the said fact to the notice of the defendant Railways during the meeting on 15th November, 1988 and requested the Railways not to go-ahead with the construction of proposed siding. Subsequently the plaintiff made a request for the refund of the amount deposited as part advance for additional private sidings. Correspondence was exchanged between the parties. Meetings were also held. Ultimately the defendant paid a sum of Rs.12.80 lacs in full and final settlement of this claim. It deducted a sum of Rs.24.70 lacs from the advance on the ground that this amount was spent by the defendant in the venture by the time instructions were received to stop further work. The plaintiff accepted this amount without prejudice. The case of the plaintiff is that no amount whatsoever was spent by the defendant and it had no right to withhold the amount of Rs.24.70 lacs. Therefore it demanded this amount. As the defendant did not make the payment, the present suit is filed for the recovery of this amount along with interest as already mentioned.

3. In the written statement filed on behalf of the defendant, main defense taken is that the defendant in fact started the work at site and continued the activities for the construction of siding for the plaintiff in the complex of Irrigation Department at Harrawala. However, in the meeting held on 15th November, 1988 representative of the plaintiff stated that the plaintiff was no longer interested in the sidings in the proposed complex in view of the judgment of the Apex Court and requested for the refund of the money deposited by them partly for the sidings after making deduction of the amount of expenditure already incurred. It was made clear to the plaintiff vide letter dated 29th December, 1988 that the details were being worked out and after making proper recoveries, the balance amount,if any left, would only be refunded. The details were worked out as per which Rs.24.70 lacs had been spent by the defendant which amount was adjusted and balance amount of Rs.12.80 lacs was paid to the plaintiff in full and final satisfaction and no further amount was payable.

4. The plaintiff filed replication reiterating the averments made in the plaint. Following issues were framed:

1. Whether the defendant true that it is justified in deducting the amount of Rs.24.70 lacs. ?

2. Whether the plaintiff is entitled to get a decree for recovery of Rs.24.70 lacs against the defendant. ?

3. Whether the plaintiff is entitled to claim and get Rs.7,70,235/- by way of interest @ 21% on the said amount of Rs.24.70 lacs.?

4. Whether anything is found due to the plaintiff from the defendant?

5. Whether the plaintiff is entitled to get interest @ 21% from the date of the suit on the amount found due to it from the defendant?

6. What order and decree?

5. In support of its case, the plaintiff examined Mr. J.P. Sinha, PW-1 and defendant examined Mr. Pawan Kumar Garg as DW-1 and thereafter counsel for both the parties advanced their arguments.

6. The controversy which revolves around the core issue is whether, the defendant has spent any money on the construction of the sidings and if so, how much amount has been spent? The case of the plaintiff is that no work was started at all, and therefore, no amount was spent. The defendant claims that the work was started inasmuch as dismantling of the lines for making space had been done by the Railways. The case of the plaintiff is also that in case no details of expenses allegedly incurred were given by the defendant. Let us therefore examine this aspect of the matter on which would rest the conclusion of most of the issues framed in this case.

7. It was contended by Mr. S. K. Kaul, learned senior counsel appearing for the plaintiff that no work could have been started by the defendant as would be clear from the various documents placed on record, which would demonstrate that the defendant had been demanding full amount from the plaintiff as well as SAIL. The plaintiff had paid only 25 per cent of the amount and SAIL did not pay any amount. The Railways, in these circumstances, had written repeatedly demanding the full amount before the work could start and also making it clear that no work would start till full amount as demanded by the Railways is paid. Therefore, it could not be said that the defendant started the work. In order to bring home this aspect, reliance was placed on various documents proved on record. It was also submitted that in any case admittedly no details were given regarding the alleged expenditure, and therefore, without proving this expenditure, the defendant could not withhold a sum of Rs.24.70 lacs. The summary of the plaintiff's argument is somewhat as under:

a) There was no formal agreement between the parties.

b) Project was for two sidings with UP Irrigation Department i.e. that of Plaintiff and SAIL. The plaintiff had paid only 25 per cent of the estimated cost and SAIL did not pay any amount at all in the absence of which the defendant did not start the work.

c) No documentary proof was given by the defendant to show that work was done or that the amount in question was spent.

d) No basis for calculating the figure of Rs.24.70 lacs was given.

8. On the other hand, learned counsel for the defendant submitted that the work involved demolition of old structure and construction of new structure. Plans for this purpose had been prepared and Railways had started demolishing the old structure. Various letters written by the Railways demanding full payment and in the absence thereof stating that the work would not start were interpreted suggesting that what Railways meant was that no new construction could be started. However, demolition work had started after the advance was paid by the plaintiff. As far as non payment of money by SAIL is concerned, it was contended that the correspondence would show that SAIL was clearly informed that if the advance is not paid, there would not be any question of construction of siding for them and in the absence of SAIL not making the payment as far as their contract was concerned, it was shelved. It was further submitted that in the meeting dated 15th November, 1988 the plaintiff had itself admitted that they should be refunded the amount after deducting the amount already spent by the Railways which not only implied that the Railways had incurred some expenditure but also that the plaintiff had agreed for adjustment of this amount. The plaintiff however started raising the dispute only after receiving the cheque of Rs.12.80 lacs and before that no such dispute was raised. It was also submitted that no details were ever demanded earlier and now details could not be given as the record was not available. It was also submitted that PW-1 in this statement had admitted joint inspection having been conducted on 23rd April, 1989 which factor would show that the defendant had done some work and incurred the expenditure. It was therefore submitted that the plaintiff was not entitled to any amount.

9. I have considered the submissions of the learned counsel for both the parties and have also gone through the record. Various documents show that defendants had been making demands upon the plaintiff as well SAIL for deposit of the entire amount so that the work could start. Such a demand was made in the meeting held on 4th December, 1987 as is clear from the minutes of the meeting Ex.P-1, letter dated 4th December, 1987 (P-2), letters dated 13th January, 1988 and 20th January, 1988(Ex.P-3 & P-4). In Ex. P-3 no doubt the defendant had stated that it would accept approx.25 per cent of the cost for time being, it was also stressed that balance 75 per cent of the amount may be deposited as early as possible. By another letter dated 8th February, 1988 (Ex.P-5) it was specifically mentioned that as neither of the two parties i.e. plaintiff and SAIL had deposited the amount, no physical work as per the revised lay out could be taken. To the same effect is the letter dated 15th February, 1988 (Ex. P-6) as well as letters dated 7th April, 1988 (Ex.P-9) and 25th April, 1988 (Ex.P-10). Significantly, in Ex.P-10, the defendant had stated that for non-payment of the entire amount, the defendant was 'not able to even start the work on the proposed siding'. By letter dated 4th May, 1988 (Ex.-11) the plaintiff requested the defendant to send the detailed revised estimate as in the absence thereof it was difficult to obtain the board's approval and send the balance payment. This request was reiterated by letter dated 19th May, 1988 (Ex.P-13). On the other hand, the defendant took the stand, as is clear from letter dated 10th May, 1988 (Ex.P-12), that the estimates would be given only when the entire payment is made. Thus this correspondence shows that the defendant was not ready to go-ahead with the work unless full amount was paid. On the other hand, the plaintiff was requesting the defendant to give the estimates so that sanction for total amount could be obtained, meaning thereby that the plaintiff could not even obtain the sanction for want of estimates. When this was state of affair, in the meeting dated 15th November, 1988, the plaintiff informed the defendant the due to the judgment of the Apex Court banning quarrying limestone in Dehradun District, they were no longer interested in the additional siding and requested for refund of money. Para 2 of the minutes of meeting dated 15th November, 1988 (Ex.P-14) reads as under:

"In view of the above confirmation, the TISCO representatives requested for the refund of money deposited by them partly for the additional siding after making deduction on account of expenditure incurred and other liabilities of the railways".

10. Therefore, it cannot be disputed that no work was started by the Railways as full money was not forthcoming from the plaintiff. This even the defendant admits but argues that the "work" mentioned in various communications refers to construction work i.e. construction of the siding.

11. The case of the defendant is that the work of dismantling of existing siding had started and further work of reconstruction could not be carried out because of non-payment of the balance amount by the plaintiff. Although the documents do not bring forth this aspect with any clarity, there may be interference to this effect in para 2 of the minutes of meeting dated 15th November, 1988 extracted above. Therein the plaintiff had agreed for refund of this amount "after making deductions on account of expenditure incurred and other liabilities of the Railways". The plaintiff did not object to the alleged deduction on this account at that time. May be the plaintiff was agreeable to the deduction if the defendant had carried out some work and incurred expenditure thereon. Thereafter in reply to the demand of the plaintiff, the defendant even wrote letter dated 29th December, 1988 (Ex.P-18) informing the defendant that details were being worked out and after making proper recoveries, the balance amount if any left would only be refunded. In another letter dated 8th November, 1989 the defendant has mentioned that when the plaintiff had made request for exclusive siding, the work of provision of new siding was slewed to make space available for the plaintiff's siding as per revised plan. This led to dismantling of many works already done for U.P. Irrigation siding and re-executing the same at another location. Besides it involved additional earth work and extension of bridges. However, from the documents on record or the evidence led by the defendant, it does not stand conclusively established that the defendant had done the dismantling work of this magnitude and incurred so much of expenditure. Only a lurking doubt remains on this score.

12. Even if it is presumed that the defendant had done some dismantling work and incurred some expenditure, it has failed to prove or show on record as to on what basis a sum of Rs.24.70 lacs has been claimed. No documents are produced to show as to how much work was done. No calculations are produced on record in support of figure of Rs.24.70 lacs. PW-1 in his cross-examination while admitting joint inspection at the site on 23rd April, 1989 has stated as under:

"We had a joint inspection at the site on 23rd April, 1989 after the withdrawal of our request for additional siding. I was personally present when the inspection was done. There was no construction work founded at the site. No formal minutes were made out for this inspection."

13. In his cross-examination, he further stated as under:

"It is wrong to suggest that the work done by the railways for plaintiff was in dismantling of works already done for U.P. Irrigation. No siding was laid for U.P. Irrigation Department. As such question of shifting or additional earth work and extension of projects which costs Rs.25 lacs to Railways does not arise."

14. Therefore, even if the plaintiff had agreed that they may be refunded the balance amount from the initial deposit after deduction on account of expenditure incurred and other liabilities of the Railways, that does not mean that defendant could deduct any amount as per its whims. The defendant could deduct the amount only after the work was done and the actual expenditure incurred thereon, particularly when the plaintiff disputed the work done as well as the amounts spent. It was for the dependant to give the details of Rs. 24.70 lacs allegedly spent. No such details are forthcoming. In the absence of such details, the defendant has not been able to prove that it validly deducted Rs.24.70 lacs. The aforesaid discussion leads to the findings in respect of each issue as under:

Issue No.1:

The defendant has not been able to prove that it was justified in deducting the amount of Rs. 24.70 lacs.

Issues No.2 and 4:

The plaintiff is entitled to get a decree for recovery of Rs.24.70 lacs against the defendant.

Issues No.3 & 5:

Keeping in view the peculiar facts of this case and the circumstances raising doubt about doing some work by the Railways and also that there was no stipulation/agreement regarding interest, it would not be appropriate to allow the pre-suit interest to the plaintiff. The plaintiff shall be entitled to interest from the date of filing of the suit i.e. pendentelite and future interest on Rs.24.70 lacs. It would be appropriate to allow this interest at the rate or 9 per cent per annum.

Issue No.6:

A decree in the sum of Rs.24.70 lacs along with pendentelite and future interest at the rate of 9 per cent per annum and cost is passed in favor of the plaintiff and against the defendant.

Decree sheet be drawn accordingly. The suit stands disposed of.