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2020 Supreme(Mad) 1594
IN THE HIGH COURT OF JUDICATURE AT MADRAS
C.V. KARTHIKEYAN, J.
M/s. Metec Design and Construction Engineers India Pvt. Ltd. – Plaintiff
Versus
M/s. East Coast Construction and Industrial Ltd. – Defendant
C.S. No. 31 of 2017, A. No. 289 of 2017
Decided On : 23-11-2020
Advocate Appeared:
For the Plaintiff : P. Vasu Devan.
For the Defendant : Ami Kataria.
The acknowledgment of liability by the defendant constituted an acknowledgment of debt under Section 18 of the Limitation Act, 1963, and the suit was not barred by limitation.
Headnote:
Acknowledgment - Payment Dispute - Limitation Act, 1963 - Section 18 - Summary of Acts and Sections: Limitation Act, 1963 - Section 18 - The court analyzed the plaintiff's claim for payment, acknowledgment of liability by the defendant, the point of limitation, and the establishment of the plaintiff's claim. The court also discussed the rate of interest and decreed the suit in favor of the plaintiff.
Fact of the Case:
The plaintiff, a company engaged in manufacturing and commissioning fire fighting systems, filed a suit against the defendant for non-payment of dues amounting to Rs. 2,04,45,480/-, along with interest at 18% per annum and costs of the suit. The defendant, despite acknowledging the debt, did not honor the payment terms in the contractual relationship.
Finding of the Court:
The court found that the plaintiff had established their claim for payment, and the defendant's acknowledgment of liability constituted an acknowledgment of debt under Section 18 of the Limitation Act, 1963. The court also held that the suit was not barred by limitation and decreed the suit in favor of the plaintiff.
Issues: The issues considered by the court included the plaintiff's burden of proof, acknowledgment of liability by the defendant, the point of limitation, and the establishment of the plaintiff's claim.
Ratio Decidendi: The court held that the acknowledgment of liability by the defendant constituted an acknowledgment of debt under Section 18 of the Limitation Act, 1963, and the suit was not barred by limitation. The court also emphasized the defendant's obligation to honor the payment terms in the contractual relationship.
Final Decision: The court decreed the suit in favor of the plaintiff, with costs, and granted interest at 18% per annum from the date of filing the suit till the date of realization.
JUDGMENT :
C.V. KARTHIKEYAN, J.
Prayer: This Civil Suit filed under Order IV Rule 1 O.S. Rules read with Order VII Rule 1 CPC, praying for a Judgment and Decree against the Defendant:
(a) directing the Defendant to pay Rs. 2,04,45,480/- to the Plaintiff which includes the sum of Rs. 23,23,257/- towards the dues against R.A. Bill No. 10 raised by the Plaintiff, a sum of Rs. 99,12,981/- towards testing and commissioning, retention amount and Final Bill R.A. Bill No. 11 and Rs. 82,09,242/- towards interest due for the delayed payment.
(b) directing the Defendant to pay further interest at the rate of 18% p.a. from the date of filing the suit till the date of realization.
(c) direct the defendant to pay the cost of the suit.
1. The Plaintiff, a company incorporated under the Companies Act, 1956, had filed the suit seeking Judgment and Decree against the Defendant, which is also a company incorporated under the Companies Act, 1956, for payment of a sum of Rs. 2,04,45,480/- together with future interest at the rate of 18% per annum and for costs of the suit.
2. In the plaint it had been stated that the Plaintiff is engaged in the business of manufacturing and commissioning of Fire Fighting System for all types of building and industries. They were awarded a Letter of Intent dated 30.04.2001 by the Defendant for supply and erection of Fire Protection works for the construction of Tamil Nadu Legislative Assembly Building at Omandhur Estate, Anna Salai, Chennai, by Purchase Orders dated 07.01.2010, 13.07.2010, 07.08.2010, 18.08.2010 and 08.03.2011. It had been stated that the Plaintiff commenced execution of the work and had also completed the works in terms of the contract. They had thereafter, raised R.A. Bills 1 to 10 for the works executed by them.
3. It was stated that in the contract the Defendant had agreed to make payments under the following mode:-
(a) 65% of the value of the work to be paid on prorata basis on receipt of equipment at site.
(b) 20% will be paid on prorata basis against progressive erection.
(c) 15% will be paid against further progressive erection.
4. It had been stated that however, the Defendant had not paid the amounts for the works executed and an amount of Rs. 23,23,257/- was due and payable against R.A Bill No. 10, which was certified by the Defendant. It was also stated that though it had been agreed that the Defendant would retain 5% of the bill amounts as retention amount and which would be released at the end of the defects liability period, the Defendant actually retained 15% of the bill amounts against testing, commissioning and retention amount. It was stated that a sum of Rs. 99,12,281/- is due and payable by the Defendant against the final bill, testing, commissioning and retention amounts.
5. It was stated that though the Purchase Order stipulated the time for completion of work within a period of three months, there were some delays and the Plaintiff completed the project on 11.05.2011. The final bill was also prepared and submitted to the Defendant on 04.07.2011. This was acknowledged but however, there was a delay in certifying the final bill. The Defendant wrote an E-mail dated 28.05.2012 that the final bill can be certified only after certification of the work done by their employer and held back a sum of Rs. 23,23,257/- against the R.A Bill No. 10 and Rs. 99,12,281/- against the final bill, testing, commissioning and retention amounts.
6. The Defendant sent an E-mail dated 29.03.2013 attaching a letter dated 29.03.2013 signed by their Senior Manager (Contracts), wherein, it was stated that the process of recording the measurement for the final bill is in progress and would be completed soon. It was stated that after the final measurement are submitted and certified by their employer, the payments would be released. The Plaintiff claimed that they co-operated for completing the measurement of the works done. The measurement of the works executed was completed on 15.05.2013. The Plaintiff by E-mail dated
