Full Judgment Text
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PETITIONER:
M/S GAUTAM CONSTRUCTIONS AND FISHERIES LTD.
Vs.
RESPONDENT:
NATIONAL BANK FOR AGRICULTURE & RURAL DEVELOPMENT & ANR.
DATE OF JUDGMENT: 28/07/2000
BENCH:
M. Jagannadha Rao. & Doriswamy Raju.
JUDGMENT:
Raju, J.
The controversy involved for consideration in these appeals is in
a very narrow compass. The appellant M/s Gautam Construction &
Fisheries Ltd., and the 1st respondent National Bank for
Agriculture and Rural Development, Bombay, entered into an
agreement for the sale and purchase of office accommodation
admeasuring 48,000 square feet of built up area together with the
land at the rate of Rs.400/- per square feet of built up area.
The transaction is governed by two agreements and whereas under
the principal agreement, the total amount payable is
1,20,00,000/- at the rate of Rs.250/- per sq. ft. for 48,000
sq. ft. Under the subsidiary agreement, provision was made for
amenities, extra works, fittings etc. in a payment of Rs.150/-
per sq. ft. and that is how the total rate constituted Rs.400/-
per sq. ft. Though originally there was a provision for
construction of stilt for parking cars, subsequently what was
desired and constructed was a basement for car parking. It
appears that the conveyance of the buildings was to be after the
construction of all floors and as further agreed upon between the
parties and that it was a specific term of agreement between the
parties also that no separate consideration shall be payable at
the time of conveyance other than that which was agreed to
between the parties under the agreements.
Disputes arose between the parties as to the actual amounts to be
JJ
paid, though the building has been completed and handed over and
payments have been made. As against the claim of the appellant
for an additional cost of Rs.48,36,000/-, the 1st respondent made
certain counter claims in a sum of Rs.85,63,781/- with interest
also claimed by both the parties on the amounts respectively
claimed by them. The matter was referred to the 2nd
respondent-Arbitrator and he passed an Award on 24.5.1990. It
may be stated at this stage that the dispute in the present
proceedings pertains to only the amount claimed and awarded by
the Arbitrator and the courts below in respect of 12090 sq. ft.
of the basement portion provided for car parking in lieu of the
earlier agreed stilt, and the rate, if at all to be allowed in
respect of the same. So far as the Arbitrator is concerned, he
allowed for the basement portion also at the rate of Rs.400/- per
sq. ft. with interest at 18% p.a. from the date of submission
of the final bill, viz. 21.12.1987, till date of payment. There
is no dispute with reference to the payment of an extra sum for
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the extra area of 870.30 sq. ft. and costs of extra items and
deposit made by the appellant with the Electricity Board. The
Arbitrator totally rejected all counter claims made by the 1st
respondent-Bank.
The appellant filed O.P. No.216 of 1990 for a direction to the
Arbitrator to file the Award into Court and make it a Rule of
Court by passing a decree in terms of the Award for a sum of
Rs.78,02,247.15 with interest due thereon. The 1st
respondent-Bank filed O.P. No.483 of 1990 for setting aside the
Award dated 24.5.90. The learned Single Judge of the Madras High
Court by a judgment dated 4.1.1991 sustained the claim of the
appellant for the basement area of 12090 sq. ft. at the rate of
Rs.400/- per sq. ft. though the interest was allowed only from
the date of the judgment at 18% p.a. on the sum of Rs.48,36,000,
in question. The 1st respondents counter claims were allowed in
part only and there is no need to go into the details of the
same. Aggrieved, the 1st respondent filed O.S.A. Nos. 75 & 76
of 1991 before a Division Bench. As found stated in the judgment
of the Division Bench dated 1.8.1996, under challenge in this
Court, the contest in the appeals before the Division Bench was
only with reference to the additional cost of construction
relating to the basement area for car parking and the rate of
interest claimed at 18% p.a. as against the agreed rate of
Rs.12% p.a. in the contract. The learned Judges of the Division
Bench held that the 1st respondent was bound to pay the cost of
construction for the basement but it should be only at the rate
of Rs.150/- for the extent of 12090 sq. ft. and not at the rate
of Rs.400/- per sq. ft. as allowed by the Arbitrator and
affirmed by the learned Single Judge. So far as the rate of
interest is concerned, it was held to be at 12% p.a. only and
not at 18% p.a. since the agreed and contractual rate was only
of 12% p.a. and the same was ordered from the date of judgment
of the learned Single Judge, viz. 4.1.91. The Division Bench
had also noticed the fact that the entire decree amount deposited
in Court was allowed to be withdrawn under orders of Court - half
without furnishing security and the other half on furnishing
security and it was further made clear that pursuant to the
judgment of the Division Bench the appellants will repay and the
1st respondent is entitled to the refund of the excess amount
drawn by them. Hence, the above appeals against the judgment of
the Division Bench.
Heard Mr. T.L. Viswanatha Iyer for the appellant in the appeals
and Mr. Dushyant Dave for the 1st respondent-Bank. On a careful
consideration of the respective submissions of the learned senior
counsel appearing on either side, we are of the view that though
no exception could be taken to the decision directing payment by
the 1st respondent-Bank for the area of 12090 sq. ft. of
basement portion of the building for car parking, the award of
the sum at the rate of Rs.150/- seem to us to be unwarranted and
unjustified, having regard to the very terms of the contract
which provided for payment at the rate of Rs.250/- per sq. ft.
and an additional sum of Rs.150/- for amenities of the nature
mentioned therein. The basement portion meant only for car
parking cannot be equated to the regular office portion of the
ground and other floors agreed to be constructed with all
stipulated amenities and though the claim of Rs.400/- on behalf
of the appellant seem to be far fetched and unwarranted on the
terms of the contract, the reasonable rate at which the appellant
could claim for reimbursement in respect of the basement area for
car parking constructed in lieu of the initially agreed stilt
portion for the very same purpose of car parking only, at the
rate of Rs.250/- and nothing more since for the said portion, if
at all the rate agreed under the principal agreement at Rs.250-/
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will apply and could alone be allowed. Viewed in the context of
the principle of quantum meruit also we feel that the said rate
is reasonable and both the claims made for the appellant at the
rate of Rs.400/- per sq. ft. as well that made by the 1st
respondent at Rs.150/- appears to be on the other extremes, and
without any rationale or just and reasonable basis of law as well
the terms of the contract. We, therefore, partly allow the
appeals by awarding the rate of Rs.250/- per sq. ft. for the
extent of 12090 sq. ft.
So far as the interest is concerned, no exception could be taken
to the award at the rate of 12% p.a. The grant of interest at
18% p.a. is directly opposed to the specific terms in the
contract and it is not permissible for the Arbitrator or the
Court dealing with the validity of the award to award a higher
rate than the mutually agreed rate, which is binding on parties.
The challenge to the judgment of the Division Bench in this
connection fails and shall stand rejected.
Mr. Dushyant Dave reiterated that this Court should order
restitution of the excess sum drawn by the appellant under orders
of the High Court out of the sum deposited in the Court with
interest at 18% p.a. We find even the Division Bench has
indicated about the right of the 1st respondent to get refund of
the excess drawn from the Court deposit and the liability of the
appellant to return the same. Since, interest at 12% p.a. has
been allowed in favour of the appellant for the amounts due to
the appellant, it is just and necessary and reasonable too, to
only order for restitution by the appellant of the excess amount
withdrawn, with interest due thereon also at 12% p.a. from the
date of such excess withdrawal till date of repayment.
The appeals are ordered on the above terms. The parties will
bear their respective costs.