STATE OF BIHAR Vs. SHAKTI TUBES LTD.

JUDGEMENT

(1.) THIS First Appeal has been preferred against the judgment dated 28th June, 1997 and decree dated 8th July, 1997 passed in Money Suit No. 97. of 1996 by Sri Suvesha Nand Jha, Sub Judge I, Patna whereby he has been pleased to grant money decree amounting to Rs. 38,13,480/ - in favour of the plaintiff and thereby decreed the plaintiffs suit in part on contest with cost.

(2.) THE case of the plaintiff, in short, is that the plaintiff is a company registered under the Indian Companies Act and it is also registered under the Industries Departmet, Government of Bihar as small scale industries engaged in manufacturing M.S. Black Pipes in the name of M/s Shakti Tubes Limited. Vide Memo No. CeMT (Cell) Pur (Pipe) 01/90 Part II No. 49 dated 10th February 1992, defendant no.6 Chief Engineer, Minor Irrigation Department, Government of Bihar, Patna issued notice inviting tender for supply of ERW MS Black Pipes 100 mm N.B. light class. The tender was published in the leading newspapers and opening date of tender was notified as 21st March, 1992. On 21st March, 1992 the plaintiff submitted tender in compliance of the tender notice. The plaintiff stipulated this fact in the tender that 90% of the total value of the materials supplied including all the taxes and levies must be paid within seven days of delivery of materials and balance 10% be paid within one month of the delivery of materials. The tender was submitted for supply of eleven lakhs metres of M.S. pipes of 4 diameter. Other firms also submitted their tender in compliance of the tender notice. As per schedule, all the tenders were opened on 21st March, 1992 at the office of the Chief Engineer, Minor Irrigation, Government of Bihar (defendant no.6) now appellant no.7. The plaintiff has quoted the rate of supply of M.S. pipe at the rate of Rs. 178.88 per meter inclusive of all taxes and charges subject to Rate Variation Clause if the basic price of raw materials, H.R. Coils/Skelp increased by the Steel Authority of India Limited during the continuity of supply order then the price will be altered according to the price rise with immediate effect. After opening of the tender the lowest rate quoted in the tender by other manufacturers was found at Rs. 174.95 per meter but keeping in view the terms and conditions offered by the plaintiff, the defendants asked the plaintiff for rate negotiation vide letter No. CEMT/ (CELL/ PUR/ (PDPE)/01/90 Part -II 1583 dated 9.4.1992 and after negotiations with the defendants, the plaintiff accepted to supply the pipes at the lowest offered rate i.e. Rs. 174.95 per meter subject to the terms and conditions mentioned in the tender paper of the plaintiff vide letter dated 16.4.1992. The plaintiffs offer was accepted by defendant no.6 vide his Memo No. 3956 dated 16.7.1992 and then the defendant no.6 placed the order for supply and directed to execute an agreement on Agreement Form "H" with the Executive Engineer, Investigation Division, Water Resources (Minor Irrigation) Department, Patna within 15 days of issue of the order vide abovementioned memo. It was incorporated in the memo that 90% of the payment of the total value of the material will be made on receipt of the material and balance 10% will be paid after full verification of the same within one month of the receipt of the materials. Further case of the plaintiff is that the Steel Authority of India Limited increased the price of H.R. Coils on 19.5.1992 and accordingly, the plaintiff informed the Department by writing a letter dated 18.6.1992 about the increase of the price and requested that the plaintiff be allowed to make the supply on the escalated rates. After several reminders the Department replied vide Memo No. 4444 dated 4.8.1992 that the matter was under consideration and the escalated rates would be communicated after decision. It has been stated that the agreement for the abovementioned tender was executed as per directions contained in the letter dated 8.8.1992 in which the terms of the payment was also incorporated. The clause, was added in the agreement that in the event of variation of total cost of steel, the payment would be made at the escalated rate applicable for the quantity of pipes supplied after such escalation. It is further stated that after execution of the agreement on 8.8.1992 the plaintiff started supply of pipes. After escalation of the price by the Steel Authority of India Limited on 19.5.1992, the defendants revised the rate and fixed the same at Rs. 190.48 per meter vide letter no. 6287 dated 4.11.1992 issued by the defendant no.6 but according to the plaintiff, this was an apparent calculation mistake and on the basisof the escalation of price of materials, the revised rates should have been fixed at Rs. 199.04 per metre with effect from 16.7.1992 as per the terms of the agreement. The plaintiff made several request to calculate and consider the actual escalation in price but the defendants did not consider the plea and inspite of the protest, payments were made at the rate of Rs. 190.48 per meter instead of escalated rate of Rs. 199.04 as a result of which the plaintiff suffered loss of Rs. 8.56 as price of per metre pipe and in this way, total sum of Rs. 38,13,480/ - become payable to the plaintiff towards escalation price as per the agreement arrived at with the defendants. It is further stated that when on repeated demands the defendants failed to make payment at the escalated rate, as mentioned above, the plaintiff though letter 4.1.1993 asked the defendants to pay the abovementioned amount failing which the plaintiff will be entitled to charge interest over the said amount as per the Interest on Delayed Payment to Small Scale and Ancillary industrial Undertaking Act i.e. 5% over and above the bank interest rate, it is further stated that the plaintiff has supplied 4,45,500/ - metres of pipes to the concerned authorities as per the terms of the agreement. The balance escalated amount at the rate of 8.56 per metre which comes to Rs. 38,13,480/ and the interest payable over the said amount as per S.S.I. Unit Acts at the rate 24% per annum since 1.6.1993 till 15.6.1996 which comes to Rs. 27,83,839/ - remained unpaid and as such, the plaintiff filed money suit for recovery of total amount of Rs. 65,97,319/ -. However, by the impugned judgment the plaintiffs suit was decreed in part and decree for Rs. 38,13,480/ - was awarded in favour of the plaintiff.

(3.) FROM perusal of the impugned judgment, it appears that the trial court framed as many as four issues for adjudication which are as follows: -