STATE OF MANIPUR Vs. SHANGREIHAN MUIVAH

JUDGEMENT

(1.) The appellants entered into an agreement with the respondent on 10/04/1975 whereunder respondent-herein undertook the execution of construction work in respect of the "water Supply Scheme for Ukhrul Town". It appears that on 17/06/1980, the respondent submitted 9th running bill amounting to Rs. 2,10,151. 00. Since the amount was not paid, the respondent sent a notice under section 80 of the Code of Civil Procedure on 5/06/1983. The said notice was received by the appellants on 10/06/1983. On 6/08/1983, the respondent filed a suit for recovery of money. It appears that when the summons of the said suit were served on the appellants, the appellants paid the entire principal money Rs 2,10,151. 00 as demanded under the running bill. However, the respondent proceeded with the suit and claimed interest on the delayed payment of the principal amount. The trial court was of the view that the amount due under the running bill was a debt and, therefore, the appellants are liable to pay interest at the rate of 9%. Consequently, the suit was decreed. The first appeal preferred by the appellants was dismissed by the High court. It is in this way the appellants have filed this appeal.

(2.) Ms. S. Janani, learned counsel appearing for the appellants, urged that the trial Court as well as the High Court have committed serious error in holding that the amount covered by the running bill was a debt. She further argued that the amount payable under the running bill was in the nature of advance and was not a debt on which any interest could be claimed by the plaintiff. On the other hand, learned counsel for the respondent contended that the running bill was for the work done and, therefore, it was an amount due and debt on which the defendants were required to pay the interest. Clause 7 of the agreement runs as under :

(3.) A perusal of clause 7 shows that no payment is required to be made for the work estimated to cost more than Rs. 5000. 00 till after the whole of the work is completed and certificate of completion is given. The aforesaid clause further stipulates that intermediate payment so made shall be regarded as payment by way of advance against the final payment only and that will be subject to the final payment. It is, therefore, clear that whatever is paid at intermediary stage is not a final payment for the work done, and it has to be treated only as advance paid against the running bill. Once it is held that the nature of payment is an advance, such advance, therefore, is not a debt under the Interest Act. We are, therefore, of the opinion that no interest was payable on such delayed advance.