Gujarat High Court
State Of Gujarat vs Shashi R Shah on 10 September, 2025
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 563 of 2000
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK Sd/-
==========================================================
Approved for Reporting Yes No
✓
==========================================================
STATE OF GUJARAT & ANR.
Versus
SHASHI R SHAH
==========================================================
Appearance:
MS ROSHNI PATEL AGP for the Appellant(s) No. 1,2
MR SHAIVANG D MEHTA(5623) for the Defendant(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
Date : 10/09/2025
ORAL JUDGMENT
1. The appellants State Authorities have preferred
present appeal under Section 96 of the Civil Procedure
Code read with section 41 of Civil Procedure Code
against the judgment and decree dated 30.10.1999
passed by the Civil Judge (S.D.) Bharuch (hereinafter be
referred to as the "trial Court") in Special Civil Suit No.
149 of 1991, whereby the suit was partly allowed an
amount of Rs. 9,72,582/- along with 12% simple interest
was awarded in favour of the present respondent-original
plaintiff.
FACTS OF THE CASE
2. The facts giving rise to present appeal are that the
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
respondent herein-original plaintiff (hereinafter be
referred to as the "plaintiff") is an Engineer and
Contractor, duly registered as a P.W.D. contractor and
with other departments. The present appellant No.2-
original defendant No.2, Executive Engineer, Roads and
Buildings Division, Bharuch, on behalf of original
defendant No.1, had invited tenders for construction of
an Administrative Block and Workshop Building for Muni
I.T.I. at Jhagadia in Bharuch District.
2.1 The plaintiff had submitted his tender, which was
found to be competitive and was accepted by defendant
No.2. The plaintiff was called upon to deposit an initial
security of Rs.23,000/- and upon payment of the same, a
regular agreement bearing No. B-1/31 of 1987-88 was
executed between the plaintiff and defendant No.2. As
per the agreement, the work valued at Rs.12,93,120.80
ps. was to commence from 11.08.1987 and was to be
completed within 18 months, i.e., on or before
10.02.1989. After issuance of the work order, the plaintiff
commenced the work by mobilising materials and labour,
but only one set of plans was given.
2.2 The plaintiff by letter dated 01.11.1987 requested
details of doors, windows, trusses, reinforcement etc. and
further informed on 27.12.1987 that the foundation
excavation was completed in the first week of December
1987, but concreting could not be done as the foundation
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
details were not clear. He also requested soil testing and
further drawings. The plaintiff further intimated by letter
dated 20.02.1988 that he had excavated one metre below
the estimated depth but the foundations were not
approved, and by letter dated 25.03.1988 he pointed out
that as the strata consisted of black cotton soil, it was
essential to excavate with 1:1:15 slope and that
measurement should be paid accordingly. On 06.04.1988,
he informed that the Deputy Executive Engineer had
directed stoppage of work till final decision on the
foundation strata was taken, and by letter dated
12.06.1988 stated that final plans and drawings were not
supplied and the design was not finalised, which resulted
in repeated removal of executed work. On 17.08.1988 and
30.08.1988, the plaintiff again pointed out that the design
was still not finalised and that though initially a load-
bearing design was given, the defendants later ordered
continuation with partly load-bearing and partly frame
structure, due to which he had to dismantle some work.
By letter dated 10.09.1988, the plaintiff stated that he
had incurred heavy losses due to indecision of the
authorities and that he would submit a separate claim,
and also raised the issue of overhead expenses, loss of
interest on unpaid work and additional expenditure due
to delay. By letter dated 02.10.1988, he informed that the
drawings supplied by the Deputy Engineer were
incomplete and, since the design was changed, he
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
demanded new rates and costs for dismantled work,
which he reiterated on 18.12.1988 after discussions with
the Executive Engineer. At one stage, the plaintiff even
expressed willingness to continue the work at tender
rates subject to arbitration for the difference in rates, but
the defendants did not accept this proposal. The plaintiff
submitted his claims for losses and damages by letter
dated 06.03.1988 and also forwarded item-wise revised
rates on 13.03.1988. He called upon the defendants to
accept his demands within 30 days, failing which the
contract would automatically stand terminated, and as
the demands were not accepted, the contract stood
terminated on 05.07.1989. Due to the above reasons, the
plaintiff could not complete the work within the stipulated
time and suffered losses, damages and expenses. He,
therefore, issued a notice dated 29.09.1989 through his
advocate calling upon the defendants to pay the claimed
amount, but as they failed to make the payment, the
plaintiff has filed the suit being Special Civil Suit No.149
of 1991 before the Civil Court, Bharuch to recover
Rs.15,58,796/- along with interest at 12% per annum from
the date of the suit till realisation.
2.3 After hearing both the parties and after framing of
issues and evaluating the evidence placed on record, the
Reference Court vide judgment and order dated
30.10.1999 passed in Special Civil Suit No. 149 of 1991,
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
partly allowed the suit and awarded an amount of
Rs. 9,72,582/- along with 12% simple interest in favour of
appellant.
2.4 Being aggrieved and dissatisfied with the said
judgment and decree passed by the Reference Court, the
appellants - original defendants have preferred present
appeal.
3. Heard Ms. Roshni, Patel, learned AGP for the
appellants and Mr. Shivang D. Mehta, learned counsel
appearing for the respondent.
SUBMISSIONS ON BEHALF OF THE APPELLANTS.
3.1 Ms. Patel, learned AGP for the appellants, has
submitted that the amount awarded by the trial court is
erroneous and unsustainable in law as it has been
awarded without properly considering the relevant facts,
materials and documentary evidence produced before the
court.
3.2 Ms. Patel, learned AGP for the appellants has
submitted that while awarding damages under different
heads as mentioned in Issue No.4, paragraph No.7 of the
judgment, the trial court has failed to appreciate the
evidence on record and has granted an excessive amount
without assigning cogent reasons.
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
3.3 Ms. Patel, learned AGP for the appellants has further
submitted that even the interest awarded at the rate of
12% per annum is on the higher side, as in the year 1991
the prevailing rate of interest was not as high as 12%,
and therefore awarding such a high rate of interest is
unjust and unreasonable. Thus, the impugned judgment
and decree passed by the trial court is erroneous, illegal,
unjust and without proper appreciation of the material on
record, and therefore the same deserves to be quashed
and set aside.
3.4 Ms. Patel, learned AGP for the appellants, has further
submitted that the trial court has erred in deciding Issue
Nos. 2 and 4 without properly appreciating the
documentary evidence produced on record, and has
arbitrarily awarded the amount in favour of the present
respondent without assigning cogent reasons. She has
submitted that as per the decree passed by the trial
Court, an amount of Rs.17,17,002/- has already been
deposited before the concerned Court after deducting
income tax at the rate of 20% and surcharge at 10%.
3.5 Ms. Patel, learned AGP, has clarified that there is no
dispute with regard to the principal amount of
Rs.9,72,582/-, however, the grievance of the appellants is
limited to the interest part. It is submitted that the trial
Court has awarded interest at the rate of 12% per annum,
which is on the higher side and not justified. She has
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
urged that this Court may consider reducing the rate of
interest, more particularly when this Court has already
taken a similar view in First Appeal No.1319 of 2001 vide
order dated 09.07.2025, wherein in an identical case the
rate of interest was reduced. It is therefore submitted
that the impugned judgment and decree passed by the
trial court be appropriately modified to that extent.
SUBMISSIONS ON BEHALF OF THE RESPONDENT.
4. On the other hand, Mr. Shivang Mehta, learned
counsel appearing on behalf of the respondent, has
submitted that the decree passed by the learned trial
court is just, proper and in consonance with the facts of
the case as well as the documentary and oral evidence
produced on record.
4.1 Mr. Shivang Mehta, learned counsel for the
respondent has submitted that the trial court has rightly
appreciated the evidence while passing the impugned
judgment and decree and there is no infirmity, illegality
or perversity in the findings recorded by the trial court.
Therefore, according to him, the present appeal being
devoid of any substance deserves to be dismissed.
4.2 However, Mr. Mehta, learned counsel for the
respondent, has fairly submitted that he is not in a
position to controvert the submission of the learned AGP
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
with regard to the rate of interest, which has been
reduced by this Court in similar matter, and therefore, he
has submitted that this Court may pass appropriate
orders regarding the rate of interest in view of the earlier
order passed in similar set of facts.
CONCLUSION
5. I have considered the facts of the case and relevant
material produced on record. I have also gone through
the record and proceedings vis a vis the impugned
judgment and order passed by the trial Court.
6. It is appropriate to note herein that today, Ms. Patel,
learned AGP, has produced a detailed report received
from the concerned authority, indicating that the
appellants have already deposited an amount of
Rs.17,17,002/- inclusive of interest calculated at the rate
of 12% along with the relevant documents, which are
taken on record. The said report specifically mentions the
details of the amount deposited by the appellants, which
read as under:--
Particular Claim Interest Total
amount (Rs.) amount
Rs.9,72,582/- Rs.9,54,385/- Rs.19,26,967/-
Income tax 20% - Rs.1,90,887/- Rs.1,90,877/-
deduction
Surcharge 10% - Rs.19,088/- Rs.19,088/-
Net payable Rs.9,72,582/- Rs.7,44,420/- Rs.17,17,002/
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
amount -
7. So far as the amount of damages awarded by the
trial court under different heads, which comes to
Rs.9,72,582/-, is concerned, the same has been rightly
assessed by the trial court after due appreciation of the
evidence on record and by rightly applying the provisions
of the Indian Contract Act, 1872, particularly Section 73
thereof, as well as the settled legal principles laid down
by the Hon'ble Apex Court in the case of Mohd.
Salamatullah and others vs. Government of Andhra
Pradesh reported in AIR 1977 SC 1481 and M/s. A.T.
Brij Paul Singh and Bros. vs. State of Gujarat
reported in AIR 1984 SC 1703. Therefore, I am of the
opinion that there is no infirmity or illegality in the
assessment of damages made by the trial Court, and
hence, the same is not required to be interfered with and
the same is hereby upheld.
8. However, so far as the rate of interest awarded by the
trial court is concerned, the interest at the rate of 12%
per annum awarded on the decreetal amount appears to
be on the higher side. It is required to be noted herein
that when there is no stipulation with regard to awarding
interest at a particular rate, in absence of that, it cannot
be said that it is to be awarded at the commercial rate
and it is a discretion on the part of the learned Judge but,
discretion cannot be shown unless and until there is any
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
cogent and material reason assigned at the time of
awarding any interest and therefore, I am of the opinion
that the 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%. Having regard to the settled principles
laid down by the Hon'ble Apex Court that interest must
be just, reasonable and compensatory in nature and
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. Accordingly, the present appeal is allowed in part to
the limited extent of reducing the rate of interest from
12% to 9% per annum. The impugned judgment and
decree dated 30.10.1999 passed by the trial court in
Special Civil Suit No. 149 of 1991 is modified to that
extent. The rest of the findings recorded by the trial court
are not interfered with and are hereby upheld.
10. The concerned Court shall now recalculate the
amount of interest at the rate of 9% per annum from the
date of filing of the suit till realisation. After adjusting the
amounts already deposited, any excess amount shall be
refunded to the appellant-State after verifying its bank
details through RTGS/NEFT within a period of four weeks
from the date of receipt of a copy of this order. The
remaining amount, as recalculated on the basis of 9%
NEUTRAL CITATION
C/FA/563/2000 JUDGMENT DATED: 10/09/2025
undefined
interest, shall be disbursed in favour of the respondent-
claimant after verifying his bank details through
RTGS/NEFT within a period of eight weeks from the date
of receipt of a copy of this order. The record and
proceedings, if received, shall be transmitted back to the
concerned trial Court forthwith. Interim relief, if any,
stands vacated forthwith.
Sd/-
(HEMANT M. PRACHCHHAK,J)
SURESH SOLANKI
