IMPORTANT POINT
The court affirmed that a contractor's claims for delays caused by defendants were valid, and it has the discretion to adjust interest rates based on economic conditions.

JUDGMENT :

V. Gopala Krishna Rao, J.

1. This Appeal, under Section 96 of the Code of Civil Procedure [for short 'the C.P.C.'], is filed by the Appellants/defendants challenging the Decree and Judgment, dated 24.04.2006, in O.S. No. 156 of 2001 passed by the Additional Senior Civil Judge, Ongole [for short 'the trial Court']. The Respondent herein is the plaintiff in the said Suit.

2. The Plaintiff filed the above said suit against the defendants for adjudication of claims and pass an award/decree for an amount of Rs. 4,73,256/- with interest at 36% p.a. from the date of respective claims in accordance with the arbitration act in the capacity of arbitrator, failing which a retired Chief Engineer to be appointed to decide the disputes arising out of the agreement No. 14/SE/88-89 with a direction to pass an award/decree and for costs of the petition.

3. Both the parties in the Appeal will be referred to as they are arrayed before the trial Court.

4. The brief averments of the plaint, in O.S. No. 156 of 2001, are as under:

The plaintiff pleads that he is a special class contractor doing contract works for the last several years. He was the lowest tenderer for the work of "excavation of supply channel from k.m.4.94 to k.m.8 and construction of CM & CD works under Musi anicut scheme" near Thalamalla village, Podili Mandal, Prakasam District. He entered into an agreement with the second defendant on 08.04.1988. The value of the work was Rs. 3,19,765/-. As per the terms and conditions of the agreement he has to complete the work within 6 months from the date of handing over the site to him. The site was handed over to him on 25.07.1988. Ever since the site was handed over to him, he made all arrangements necessary to start the work immediately and to complete the same within the stipulated time by mobilizing the necessary machinery, equipment and labour. He paid advances to the labour contractors and to the suppliers of machinery and equipment. He also appointed required staff to execute the work in time. He constructed sheds to store the materials and for stay of labour and other establishments. Though the tender was accepted on 29.02.1988 the agreement was concluded on 08.04.1988 and the site was handed over to him on 25.07.1988. Thus, there was a delay of 5 months in handing over the site. The site was not in work-worthy condition when it was handed over to him. The land was not acquired by paying compensation to the owners. The owners therefore, objected and caused obstruction to the work. After putting special efforts and convincing some of the owners, he started the work in a small length after a long time. There were instances of land owners filling up the excavated land. During all these days, the labour, machinery and equipment etc., had to be kept idle for several spells and hence the full turnout could not be achieved. Thus, he was forced to prolong the work well beyond the agreement period. Even after completing some portion of the work depending upon the possibility, execution of balance work became impossible as the land owners became stubborn and did not permit him to enter into their lands, therefore, he requested the defendants to finalize his contract by paying the amounts due to him for the work done. But the defendants finalized the contract only on 21.09.1990. The plaintiff pleads that in the course of execution of work when disputes arose between him and the defendants, he put forth his legitimate claims from time to time to the defendants for consideration. But the defendants rejected his claims without any valid reason.

5. The third defendant filed a written statement, which was adopted by the defendants 1 and 2, by denying the averments mentioned in the plaint and further contended as under: -

The plaintiff received final payment on 31.03.1990 under protest. As the plaintiff did not approach the Court in time, the suit is liable to be dismissed on point of limitation. The plaintiff completed 65% of value of work, for