The court upheld the plaintiff's claims for withheld payments under the contract, establishing entitlement based on completed work despite defendants' claims of substandard quality and modified the interest rate award.

JUDGMENT :

VENUTHURUMALLI 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 challenging the decree and judgment, dated 17.12.2004 in O.S. No. 7 of 2001 passed by the Senior Civil Judge, Nandikotkur [for short “the trial Court”].

2. The appellants herein are the defendants and Respondent herein is the plaintiff in O.S. No. 7 of 2001.

3. The respondent/plaintiff filed the suit for recovery of Rs.3,85,371/- payable by the defendants/Government for the security deposit amount of Rs.1,85,317/- already deducted by the 3rd defendant in final bill on 10.10.2000 and Rs.1,00,000/- to be paid for the additional work completed by the plaintiff, Rs.50,000/- towards earnest money deposit deposited on 28.04.1997 and Rs.50,000/- deposited by the defendant in package No. 3 B.T. Road from Parumanchala to Tudicherla with future interest at 18% per annum from the date of filing of the suit till realization and with costs.

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

5. The brief averments of the plaint, in O.S. No. 7 of 2001, are as under:

The plaintiff is a registered contractor. He was awarded execution of work that is providing B.T. Road from Parumanchala to Tudicherla under agreement No. 11/96-97, dated 28.04.1997. As per terms of the contract, the plaintiff has to complete the work by 04.04.1998 and he has completed the work under the above agreement by 16.03.1998. The plaintiff further contended that while execution of work under the above agreement is going on, the 3rd defendant addressed a letter to 2nd defendant stating that additional work of the widening the road was also taken up and completed as per the guidelines of NABARD through the letter No. AE-2 NABARD/98, dated 28.08.1998 and excess amount of the additional work which was spent by the plaintiff was not yet paid even after completion of check measurement and finalization of bill. With regard to the above said works there was a correspondence between the defendant Nos.2 and 3 and from it, it is clear that the plaintiff completed the work by August, 1998 as per the terms and conditions of the original agreement. The maintenance period was also ended by 03.04.1999. So, the final bill was pending and as already the execution of work was also completed prior to the supplemental agreement. The plaintiff further contended that towards the agreement, dated 28.04.1997, the defendants 2 and 3 deducted F.S.D. in the final bill to an extent of Rs.1,85,371/- on 10.10.2000 and he has to get Rs.1,00,000/- towards balance payment of additional work and also earnest money deposit of Rs.50,000/-deposited by him at the time of agreement. Without issuing notice to the plaintiff, the defendants 2 and 3 deducted Rs.50,000/- in September, 2000 in other work i.e. package No. 3 B.T. Road from Velgodu to Guntakandala and also an amount of Rs.1,00,000/- in the bills to be paid to the plaintiff in the agreement No. 11/96-97. After knowing the above said deductions, the plaintiff approached the defendants 2 and 3 about the deductions made by them, but they failed to do so. Hence the suit.

6. The 3rd defendant filed written statement which was adopted by the defendants 1, 2 and 4 by denying all the averments mentioned in the plaint and further contended as under:

The plaintiff origi