STATE OF BIHAR Vs. SHAKTI TUBES LIMITED

JUDGEMENT

(1.) This appeal is directed against the judgment and decree dated 31.5.1999 passed by Shri Nritya Nand Sinha, Subordinate Judge 1st, Patna in Money Suit No. 153 of 1997 by which he has decreed the suit with costs in favour of the plaintiff-respondent and has ordered the defendants-appellants to pay interest compounding at monthly rests at the rate of 24%: per annum on the decreetal amount of Rs. 38,13,480/- of Money Suit No. 97 of 1996, with effect from 1.6.1993 till realisation.

(2.) The case of the respondent is that the plaintiff is a Company incorporated under the Indian Companies Act and is registered as a Small Scale Industry in the Industries Department Bihar. It manufactures Mild Steel Black Pipes. The defendant Chief Engineer, Minor Irrigation Department issued, notice inviting tenders for the supply of E.R.W. M.S. Black Pipes 100mm N.B. Light Class. The date of opening of the tenders was 21.3.1992. The plaintiff submitted its tender on 21.3.1992 for Supply of 11 lac metres of M.S. Black Pipes. Many other firms also submitted their tenders. All the tenders were opened and the tender of the plaintiff was accepted and after negotiation, the plaintiff offered to supply the pipes at the rate of Rs. 147.95P. per metre. The offer was accepted by the Chief Engineer vide his memo No. 3956 dated 16.7.1992 and by the same memo he also placed orders for the supply of pipes and directed to execute an agreement with the Executive Engineer, Investigation Division, Patna within 15 days of issue of the order. In the above letter it was clearly mentioned that 90% payment of the total value of the material supplied, would be made on receipt of the materials, and the balance would be paid after full verification of the same within one month of the receipt of the materials.

(3.) The Steel Authority of India Limited, in the meantime, increased price of H.R. coils on 19.5.1992. Accordingly, the plaintiff informed the defendants by letter dated 18.6.1992. about the increase and requested that it may be allowed to make supply on the escalated rates. After several reminders, the department informed through its letter. No. 4444 dated 4.8.1992 that the matter was under consideration and the escalated rates would be communicated after decision. According to the above direction of the Chief Engineer and the assurance given vide above letter dated 4.8.1992 the plaintiff on 8.8.1992 executed agreement with the Executive Engineer. The terms of payment was duly incorporated therein, It was stated in the agreement that event of variation in total cost of steel, the payment would be made at the escalated rate applicable for the quantity of pipes supplied after such escalation came into force. The other terms of the payment as enumerated in the above letter dated 16.7.1992 of the Chief Engineer remained un-changed.