The suit was within limitation as the cause of action accrued upon the non-payment of the final bill, and not completing the price escalation calculations per the contract terms invalidated the defendants' claims.

JUDGMENT :

ARUN R. PEDNEKER, J.

1. The present Commercial Appeal is filed by the original defendants, who are aggrieved by and dissatisfied with the judgment and decree dated 09/08/2019, passed by the learned District Judge-1, Jalna, in Commercial Suit No. 08 of 2019, whereby the suit for recovery of an amount of Rs.5,76,25,112/- along with interest at the rate of 15% per annum from the date of filing of the suit till realisation is decreed.

2. Heard the learned Counsel Mr. S.G. Bhalerao for the appellants, the learned Counsel Mr. A.P. Bhandari for respondent No.1 and the learned AGP Mr. A.R. Kale for respondent No.2-State.

FACTS :

3. The case of the plaintiff, as pleaded in the plaint, in brief, is as follows :

The original defendants invited tenders for the construction work of “Nimna Dudhana Project – Earthen Dam, Chainages 580 to 2810 meters” situated in Jalna District. The plaintiff emerged as the lowest bidder and was awarded the contract by Defendant No.5 on 16/03/1995. The stipulated period for completion of the work was 24 calendar months, i.e. up to 15/03/1997.

4. The estimated cost of the work was Rs.2,09,92,740/-, whereas the accepted contract value was Rs.2,80,25,309/-. The plaintiff furnished an advance security deposit of Rs.2,80,253/- by way of bank guarantee as per the contractual conditions.

5. Although the contractual period was initially 24 months, extensions of time were granted from time to time, ultimately extending the period up to 30/06/2003. During execution, additional work relating to excavation and masonry dam from Chainage 2810 meters to 3040 meters was attached to the original work, and the time for completion was correspondingly extended.

6. It is the plaintiff’s case that the site was not made available in its entirety within a reasonable time, owing to which further extensions became necessary. The plaintiff relies upon the Price Variation Clause (Clause No.56 at Page 80 of the Tender), which permits escalation or deduction in the contract price on account of variation in labour, material, and fuel costs during the operative period of the contract, as calculated in accordance with the prescribed formula.

7. The plaintiff asserts that the work was completed on 30/06/2013, and the final measurements were recorded and the last Running Account (R.A.) Bill was drawn on 12/04/2016. According to the plaintiff, excess quantities had to be executed due to erroneous and inadequate assumptions at the time of floating the tender.

8. Despite repeated requests since 2016, the defendants allegedly failed to release the balance amount. The total outstanding amount payable under the tender terms was claimed to be Rs.10,02,91,108/- whereas the defendants paid only Rs.4,26,65,996/- by cheque in the year 2016 . According to the plaintiff, the defendants failed to pay the correct escalation amount as per Clause 56, leaving a balance of Rs.5,76,25,112/-, which compelled the plaintiff to institute the suit. Thus Commercial Civil Suit was filed by the respondents (original plaintiffs) seeking recovery of compensation amounting to Rs.5,76,25,112/-, together with interest at the rate of 24% per annum from the last date of payment, i.e. 12/04/2016.

9. The suit is contested by the defendants/present appellants by filing a written statement. It is the case of the defendants that the department granted extensions of time solely with the intention of enabling completion of the tender work, as the progress of the work was not as expeditious as agreed.

10. It is stated that after issuance of the work order and upon completion of the work by the plaintiff, the defendants, after recording measurements, mad