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Pushpakunj Cooperative Housing … vs H.S.B. Construction By Sole … on 31 January, 2008

Bombay High Court
Pushpakunj Cooperative Housing … vs H.S.B. Construction By Sole … on 31 January, 2008
Author: B Dharmadhikari
Bench: B Dharmadhikari


JUDGMENT

B.P. Dharmadhikari, J.

1. This Appeal under Section 96 of Civil Procedure Code challenges Judgment and Decree dated 19/1/2001 delivered by Civil Judge (Senior Division), Yavatmal in Special Civil Suit 113/1987. Said suit was filed by present Respondent for recovery of amount of Rs. 6,12,130.93/- claiming the same towards unpaid price for work of construction carried out by it for present Appellant/original Defendant -Cooperative Housing Society. Though the Appeal is of year 2001 only, earlier bench has on 22/11/2007 passed order that the appeal shall be finally heard on 28/11/2007 by dispensing with paper book. Thus the Appeal is listed for hearing before me. In my order dated 12/12/2007 I pointed out how hearing of matter was rendered difficult as complete records were not available and also as Exhibits on record of Lower Court were not arranged in sequence. It also became apparent that some of the Exhibits were not at all available on original record & though both learned Counsel declared that it would not be necessary to adjourn hearing on that account, ultimately on 12/12/2007 hearing was required to the adjourned. I had at that time imposed nominal costs of Rs. 1000/– each on both sides. Thereafter, the Respondent/Plaintiff has filed the Xerox copies of several Exhibits on record & matter is again taken for further hearing. Trial Court directed present Appellant to pay to present Respondent Rs. 612130.93/– (in words: Six lakh Twelve thousand One hundred thirty Rs. and Ninety three N.P.) This Court on 7/12/2005 granted stay to the execution of this decree subject to Appellant depositing some of Rs. 6 lakhs within 15 days and observed that Appellant should come up with proposal as to how its members proposed to liquidate the decree within a month. Liberty was given to Respondent to move for vacating the stay after one month. Accordingly amount of Rs. 6 lakhs has been deposited with Trial Court on 20/12/2005.

2. Status of Plaintiff as partnership firm duly registered under the Partnership Act and status of Defendant as cooperative Housing Society registered under the provisions of Maharashtra Cooperative Society’s Act is not in dispute at all. Managing partner of Plaintiff firm Shri Hariom Stayanarayan Bhoot owned field survey number 5 at mouza Wadgaon, Tahsil and district Yavatmal. The Defendant society purchased 11 acres and 34 gunthas therefrom by registered sale deed dated 3/5/1981 and converted it to nonagricultural use. A layout was prepared and society allotted plots to its members. The Defendant society thereafter decided to construct 119 houses on different plots and called tenders for carrying out that construction. Tender of Plaintiff (present Respondent) was accepted by Defendant. Three types of houses were agreed to be constructed. “A” type houses with plinth area of 852 square feet for Rs. 52,000/–, “B” type houses with plinth area of 568 square feet for Rs. 37,000/– and “C.” type houses with plinth area of 484 square feet for Rs. 31,000/– were agreed to be constructed. Defendant agreed to supply cement for this construction at control rates prevailing on 20/3/1981. In case of increase in price of cement or iron, society was to pay to Plaintiff for such increase. The payment schedule was linked with stage of construction. The said schedule can be briefly indicated below:

     Stage of construction.                                  Amount payable.
  I) construction of plinth and septic tank      -- 25% of tender value to be paid. 
 II) windowsill level or the brickwork with door
     frame                                       -- 10% of tender value
III) slab level with RCC lintel loft and window
     frames                                      -- 20% of tender value.
 IV) RCC slab with Finnish top                   -- 20% of tender value.
  V) Ceiling and finishing of walls              -- 10% of tender value.
 VI) Plain tile flooring and finishing of walls
     from outside.                               --  7% of tender value. 
VII) shutters of doors and windows, sanitary
     fittings, electrical fittings etc.          --  8% of tender value.
 

3(A) In this background, Plaintiff states that the bill was to be paid within seven days and for delay damages at the rate of Rs. 200/- per day were to be paid. It was placed in exclusive position of all plots and it started construction. Defendant society did not supply cement or steel but then Plaintiff did not suspend the construction work though under the terms of agreement it could have done so. Plaintiff states that prices were rising and hence suspension would have prejudicially affected the members of society. In June 1981, Defendant applied for permit for purchase of cement and approximately 25116 bags were required for construction of 119 houses. But Defendant could not get cement quota. Similarly teak wood for making of doors and windows could not become available due to policy of Forest Department. Plaintiff states that society (Defendant) passed resolution and authorised Plaintiff to procure cement and iron from open market and to recover the difference from Defendant. It also authorised Plaintiff to use other type of wood in place of teak wood. According to Plaintiff there were 43 “A” type houses for completing essential concrete work of which minimum 8342 bags of cement were required. 8911 bags were required for constructing 67 “B” type of houses and 1017 cement bags were required for constructing 9 “C” type houses. Plaintiff states that as Defendant did not supply cement and steel within time, construction could not be completed within two years. By June 1982, plinth of all 119 houses was complete with lime, sand and seagold. To proceed further with construction of coping and pointing, cement was essential. It is pointed out that cement in open market was costlier by Rs. 38 per bag and Defendant agreed to pay said difference to Plaintiff on 11/9/1982 vide resolution No. 2. The bills of Plaintiff were however not paid within time as per agreement and in full. As Plaintiff was under the impression that his bills would be cleared as per agreement, he continued with construction work. After general body meeting held on 5/12/1982, some members namely Shri T.O. Abraham & Hepat started obstruction with the help of some other members and it became difficult for Plaintiff to continue with further construction. On 14/2/1983, Plaintiff issued notice pointing out that due to internal dispute in Defendant society it had no hope of getting its bills and therefore had to stop work. The society was also informed that damages at the rate of Rs. 200/- per day for nonpayment within time were not received by Plaintiff. Grievance was also made about not supplying cement and steel and Defendant was called upon to make the payment for work done within 8 days. On 27/2/1983, general body meeting was held and Defendant agreed to pay running bill to Plaintiff and it also approved payment of Rs. 60,000/- to it. Hence Plaintiff withdrew notice dated 14/2/1983 and continued further with construction though obstruction by above referred two members continued. On 20/3/1983 Plaintiff wrote to Defendant to increase contractual rates by 20% because of market rise. Society was also called upon to make cement available at control rates prevailing on 20/3/1981 or to pay difference between market rate and that rate. Same demand was also made in relation to iron. On 25/4/1983 there was meeting of managing committee in which this letter of Plaintiff was considered and Society agreed to grant 20% increase in the rate. It also resolved to pay 24 percent interest per annum if running bill of Plaintiff was not paid within time. Plaintiff claims that it accordingly completed the work before submission of final bill Exh. 141. It claimed interest at 24 percent as per this resolution because Plaintiff was required to take loan from Indian Overseas Bank for this construction and it was paying interest at 22 percent per annum with quarterly rests. Said bank filed suit against firm for recovery of Rs. 13,00,000/-. By 8/12/1983, Plaintiff spent amount of Rs. 14,25,561/- for this construction. Meeting was held on 22/1/1984 in which managing partner of Plaintiff as also his father attended. Father Satyanarayan Bhoot was chief guest and he gave several important instructions for completion of work and for regular payment of bills. Plaintiff states that though no resolution was passed in that meeting about not paying interest at 24% per annum to it, on 5/4/1984 Secretary of society Suresh Joshi, President T.O. Abraham, Ex. secretary Mr. Pande & engineer Shri Gopal published a pamphlet calling members not to pay such interest as resolution dated 25/4/1983 was cancelled. Plaintiff claims that said resolution was manipulated and fabricated and he filed Criminal cases against these persons in that respect. On 1/3/1984 after deducting the amounts received, Plaintiff was to receive Rs. 1,48,648/-, and hence it issued notice dated 7/3/1984 informing that work has been discontinued from 6/3/1984. Defendant then called urgent general body meeting on 11/3/1984 and in it cancelled the agreement with Plaintiff from 21/3/1984. Plaintiff claims said resolution to be illegal as breach was on part of Defendant and hence option to terminate the agreement was only available to it and not to Defendant. About 18 members of Defendant approached Plaintiff with request to carry on and complete the construction of their houses and also agreed to pay the difference between the rate prevailing on 20/3/1981 and current market rate. Hence plaintiff constructed houses of those persons and Defendant society did not raise any objection to it. Plaintiff alleges that the resolution of cancellation of agreement thus remained only on paper.

(B) As there was dispute about the amount of bill, Plaintiff issued later on 26/3/1984 for referring it to arbitrator. Defendant appointed Shri S. Rathod while Plaintiff appointed Mr. Jalal Dhamani to arbitrate and these arbitrators directed Defendant to pay amount of Plaintiff as per agreement. Society did not pay the amount. On 7/10/1984 there was meeting and on 8/10/1994 Plaintiff gave new schedule of rates after giving concession on various terms. Managing committee of Defendant and also its engineer Mr Deepak Lachke approved it. Bills were then prepared as per this new schedule and submitted to managing committee on 26/10/1984 and construction work done was valued at Rs. 47,47,243/-. Managing committee then informed Plaintiff that near about Rs. 2,53,427/- was due from it but exact figure was not given. Managing committee also informed that sanction to this amount would be taken in general meeting of the society. Resolution of managing committee dated 18/11/1984 was not acceptable to Plaintiff because it did not consider interest rate of 24% per annum. On said date only Plaintiff firm submitted its separate bill in relation to interest amount. On 2/12/1984 there was general meeting but amount due to Plaintiff was not considered and attitude was to avoid payment. Plaintiff claimed that he had to receive amount of Rs. 6,12,130.16 from Defendant as per final bill and he also claimed interest at 18% per annum on this amount. Plaintiff served notice under Section 164 of Maharashtra Cooperative Society’s Act and then filed the suit.

4. Defendant society stated that out of 11 promoters of society majority were belonging to the family of managing partner of Plaintiff firm and therefore agreement between Plaintiff and Defendant was one-sided and not in the interest of Society. The agreement as also development work was got done without calling tenders without any resolution or permission of general body. The steel used by contractor/Plaintiff was not of agreed quality and thickness of cement concrete slab was also less. Work carried out was not as per specifications agreed between parties. Defendant denied that prices of cement and steel increased during period of contract and it further stated that teak wood was not used either for door or for windows by Plaintiff. There was no obstruction in construction work & Plaintiff itself failed to perform his part. Plaintiff therefore had no right to claim compensation or interest from Defendant. Defendant denied that Plaintiff was entitled to receive amount of Rs. 180679/– for work and and additional amount of Rs. 1,48,448/- towards interest. Society passed resolution cancelling agreement and deciding to do the remaining work departmentally. By notice dated 22/3/1984, Plaintiff was called to deliver possession of site and to remove all its material by 31/3/1984 and to submit its account till 1/4/1984. But Plaintiff did not abide by this notice. Defendant also pointed out that valuation certificate of Shri Lachke was not correct and was not binding on society. Defendant therefore was not required to pay bills submitted by Plaintiff accordingly. Defendant claimed that society has paid more to Plaintiff than work executed and it was necessary for Plaintiff to give quantitative measurement of each house separately. They also claimed that work carried out by Plaintiff was of poor quality and not in accordance with specifications of Public Works Department. Defendant therefore prayed for dismissal of suit with costs.

5. Court below framed issues and answered them as under:

1. Does the Plaintiff prove that it is registered firm? Answer: — affirmative.

2. Does the Plaintiff prove that the Defendant society assigned the contract of construction of 119 houses of different types on 20/3/1981 subject to the terms and conditions mentioned therein? Answer: — affirmative.

3. Does the Plaintiff prove that in view of the alleged contract started the construction work ? Answer: — affirmative.

4. Does the Plaintiff prove that Defendant society failed to perform its part of contract? Answer: — affirmative.

5. Does the Plaintiff prove that it is entitled to receive the amount of Rs. 1,80,679/- for the work done? Answer: — affirmative.

6. Does the Plaintiff further prove that it is entitled to interest to the tune of Rs. 1,48,648/- at the rate of 24% per annum? Answer: — affirmative.

7. Does the Plaintiff prove its claim of Rs. 6,12,130/ against the Defendant society? Answer: — affirmative.

8. Does the Defendant society prove that suit is bad for want of notice under Section 164 of Maharashtra Cooperative Society’s Act? Answer: — negative.

9. Whether the suit his tenable in law? Answer: — affirmative.

10. What relief and order? Answer: — as per final order.

In this background, I have heard Advocate Gordey for Appellant/original Defendant and Advocate Dhobe for Respondent/original Plaintiff.

6. Before referring to arguments of respective Learned Advocates, one important development needs to be pointed out. Filing of paper book has been dispensed with on 22/11/2007 and after matter was listed before me, as observed by me in order dated 12/12/2007, it was found that some original exhibits were missing from the records of Trial Court. Because of considerable time spent in hearing prior to that, for reasons recorded in said order I imposed costs and as requested by parties adjourned the matter initially to 19/12/2007 and thereafter to 7/1/2008 i.e. after winter vacation. Bunch of documents was then filed by Plaintiff and parties argued the matter on 7 and 8 January on the basis of those documents. All these documents are Xerox copies and hence vide stamp number 181/2008 they filed joint Pursis accepting the Xerox copies to be true copies of exhibits as mentioned in said Pursis. The list of documents as also Pursis is signed by president of Appellant society with its advocate, managing partner of Respondent/Plaintiff and its Counsel. 15 documents thus accepted as part of record of Trial Court are Exhibit 66, 67, 80, 81, 82, 84, 85, 86, 87, 89, 90, 97,134,135 and Exhibit 141.

7.(A) Learned Counsel Shri Gordey has raised following contentions:

a——-What is exact liability of Appellant Defendant?

b——-Whether Defendant is liable for work done by Plaintiff after termination of contract?

c——-Whether it was not necessary for Plaintiff to point out work done privately for members individually distinctively from the work done for Defendant society?

d——-Whether work done by Respondent was as per specifications?

e——-What is effect of 22/1/1984 resolution no. 7 on rate of interest payable to Plaintiff?

f——–Whether Defendant agreed to pay 24% interest per annum to Plaintiff?

g——-Whether rate of future interest is correctly arrived at by Trial Court?

h——-Whether Trial Court would have decreed claim for refund of Rs. 53,500/– allegedly advanced by Respondent Plaintiff to Defendant Appellant?

From very pleadings of Plaintiff it is pointed out that it discontinued work ultimately from 6/3/1984 and Defendant Society also by resolution terminated agreement with it with effect from 21/3/1984. From paragraph 27 of Plaint it is attempted to show that its claim up to 1/3/1984 was Rs. 1,80,679/- for work and Rs. 1,48,448/- towards interest. Plaintiff claims to have continued the work even thereafter but because of request made to it by individuals as pleaded in paragraph 29 of plaint. It is argued that there cannot be any tacit consent by Defendant society and Plaintiff has not established any fresh contract between parties thereafter. Final bill raised by Plaintiff pertains to period subsequent to 6/3/1984 and therefore is not binding on Defendant. Learned Advocate argues that resolution dated 25/4/1983 allegedly passed in meeting of executive committee of Defendant whereby said committee agreed to pay 24% interest on all bills in arrears submitted by Plaintiff is not binding on Defendant. Said resolution is at Exhibit 89 while its intimation to Plaintiff dated 27/4/1983 is at Exhibit 90. From written statement filed by Society it is being pointed out that Defendant has denied any such resolution and letter also, and these documents are not at all proved on record by Plaintiff. It is pointed out that issue is considered by General Body of Defendant on 22/1/1984 and it decided not to pay such interest to Plaintiff.

B. Attention is invited to evidence of Defendant Witness No. 2 Shri Abraham for pointing out that he became President in March 1984 and before that one Gite was managing all affairs as Secretary of Society. Gite was founder member and an employee of Plaintiff. All records of society were with Plaintiff and affairs of Society were dominated by family of its managing partner. Even loan amount released by Maharashtra State Housing Finance Corporation was being received directly by Plaintiff and not through Society. Though houses were not complete warranting payment of such loan installments, 80% to 90% of loan was released and received by Plaintiff. Attention is invited to paragraph 8, 10 & other paragraphs of deposition of this witness to point out how Plaintiff managed to get the bills cleared earlier from Society because of their influence. I find it appropriate to consider this evidence while dealing with relevant challenge.

C. Deposition of Plaintiff Witness No. 1 Shri Hariom Bhoot, managing partner of Plaintiff is also pointed out to show how Agreement Exhibit 66 between parties was entered into and how letter dated 20/3/1983 for increase of rates was processed when records of Defendant were with managing partner only. It is pointed out that document Exhibit 90 proved by him is not original but only a copy and till December 1983 work done was of Rs. 14,25,000/- only. His deposition, particularly paragraph 3 is pointed out to show that claim up to 1/3/1984 was Rs. 1,80,679/ for work and and Rs. 1,48,448/- towards interest. Attention is being invited to paragraph 15 to show that he accepted cancellation of Agreement Exhibit 66 and then vide Exhibit 102 to Exhibit 132 obtained individual authorisations from interested members and thus a separate or private contract between such members and Plaintiff came into being. Exhibit 138-certified by Shri Lachke and Exhibit 141, alleged final bill again certified by Shri Lachke is being assailed by pointing out paragraph 23 of deposition on the ground that Shri Lachke was not authorised by Society for said purpose. By pointing out paragraph 20 of deposition of this witness, it is stated that original accounts verified by Shri Pandey and Shri Joshi were not produced. More emphasis is given on his cross examination, paragraph 21, to point out that he did not produce any map or item wise rate, absence of measurement book and absence of record to corelate construction stage of house with date 7/3/1984. He accepted amount of Rs. 1,47,142/- as due on 24/2/1984 and also accepted that he did no work for Society after 7/3/1984. Final bill Exhibit 141 is argued to be merely on the basis of surmises in absence of this record. It is stated that talks for settlement began after 7/10/1984 and 2 payments made after 24/2/1984 were for settlement only. It is pointed out that there is no record of any cement arranged and supplied for by Defendant to Plaintiff and on 23/2/1984 work was not complete as also there was no record of any excess price paid towards cement purchase from open market. By inviting attention to paragraph 27 of deposition, it is sought to be demonstrated that though payment was collected towards cement from members by Plaintiff or cement was supplied by such members to Plaintiff, still Plaintiff charged Defendant for the same and tried to obtain double advantage. There is no proof or certificate of purchase of any iron or steel from open market. Though Plaintiff used lime as substitute for cement, rate was not changed and all this could be done because Defendant Society was having its office at residence of this witness till then. It is pointed out that there was no agreement to substitute teak wood with any other type of wood. Attention is invited to paragraph 29 to point out admission that bill submitted by him included claim against Society as also against member. It is pointed out that if member has not paid amount to Plaintiff as per private agreement between them for construction after 6/3/1984, said amount cannot be recovered from Defendant. Much capital is sought to be made of admission given by Plaintiff in paragraph 30 that he received amount of Rs. 46,30,176/- from Defendant and also its reduction by Rs. 12,650/- by him. By inviting attention to paragraph 31, it is sought to be demonstrated that claim for Rs. 53,500/- against Society was without any pleading and also without any document/receipt. With reference to paragraph 40, it is pointed out that Plaintiff did not deposit cash payments in loan account with Indian Overseas Bank and balance amount of Rs. 20 lakh therein has not been explained.

D. Evidence of Plaintiff Witness 3 Shri Nagrale, Exhibit 209, Branch Manager of Indian Overseas Bank, is pointed out to show that loan obtained was not only for construction of Defendant Society & it is argued that as nexus between said loan & construction work of Defendant is not established, Plaintiff is not entitled to claim any compensatory interest. Evidence of Plaintiff Witness 3 Shri Lachke, Exhibit 161 being relied upon to point out bill Exhibit 138 dated 26/10/1984 certified by him to contend that on that basis Society offered Rs. 46,18,831.00 to Plaintiff. His appointment letter Exhibit 163 and Exhibit 138 are being pointed out to show that he was not authorised to verify the Exhibit 141. Original Exhibit 141 is not on record. From its copy produced by Plaintiff before me by Advocate Dhobe, it is pointed out that it is composite one i.e. for work of Society & of individuals also. It is pointed out that on last page of this Exhibit 141 amount received is only mentioned as Rs. 41,48,684.07 and in cross of Plaintiff Witness No. 1 in paragraph 30 there is admission of receipt of amount of Rs. 46,30,176/-. It is further pointed out that total amount of Rs. 47,40,143.00 shown as outstanding on last but one-page of this bill Exhibit 141 is inclusive of amount of Rs. 53,500/- only alleged to the temporary advance loan to Society. Attention is also invited to prayer clause made in its Suit by Plaintiff where interest claimed is only on part of amount while Lower Court has granted interest on excess/entire amount. Attention is invited to Section 34 CPC and it is stated that basic principal amount is Rs. 1,80,679/- for work.

E. After the documents were produced as mentioned above, while replying to arguments of Advocate Dhobe for Respondent/Plaintiff, Advocate Gordey has argued that last page of bill Exhibit 138 is one which has endorsement of PW 3 and page being put forth as last page of Exhibit 138 is not its last page but it is last page of Exhibit 141. He argues that suit is based on Exhibit 141 and not on bill Exhibit 138 and in any case Exhibit 138 is not even approved by PW 3. It is argued that if arguments of Plaintiff/Respondent accepted, the bill amount cannot go beyond one mentioned in Exhibit 138. He invites attention to paragraph 26 of written statement of Defendant Society which replies paragraph 29 of plaint and points out that specific defence of Society that after 22/3/1984 there was no contract between it & Plaintiff or that Plaintiff was called upon to handover possession of sight to Society & submitted accounts till 1/4/1984 has not been considered by Trial Court. He reiterates that vide Exhibit 102 to 132 Plaintiff has entered into individual and private contracts which are not binding on Society. He further states that documents at Exhibit 89 & Exhibit 90 are not proved as required by Evidence Act. He further states that demand of sanctioning amount of Rs. 200/– per day as per resolution of Society for delay in payment of bills is misconceived and is being made for the first time. He relies on provisions of Order 2 Rule 2 CPC to state that such demand is now not available.

8—————-

A————-Learned Advocate Shri Dhobe has argued that entire grievance about record of Society being in custody of Plaintiff or its managing partner is by way of afterthought and without any pleading or even proof. He states that Defendant invited tenders and as offer dated 8/3/1981 Exhibit 67 of Plaintiff was found to be the lowest, on 20/3/1981 there was agreement as per law between parties vide Exhibit 66. He also points out that agreement did not contemplate supervision of several engineers and architects by Defendant, many of them watched and interfered with working of Plaintiff. He further states that agreement Exhibit 66 did not contemplate use of cement or teak and did not prohibit use of lime or any other type of wood. He argues that this was on account of shortage of cement and steel/iron and control by Government on these commodities. He invites attention to Exhibit 70 to show that use of lime was accepted by Defendant vide resolution No. 2 dated 16/8/1991. Similarly vide resolution No. 3 at Exhibit 76 substitute for teak wood was also accepted. Exhibit 69 dated 20/8/1981 is also pointed out by him to show that Defendant asked him to proceed further as per resolution No. 2 dated 16/8/1981. He also points out later Exhibit 77 dated 5/4/1982 to show that Plaintiff had written to Defendant demanding difference of Rs. 80/ per cubic feet for use of teak wood as at the time of submission of tender rate quoted was Rs. 90/ per CFT and at the relevant time market rate was Rs. 170/ per CFT. He also invites attention to copy of resolution at Exhibit 78 produced by him as original Exhibit 78 is not available on record to show that Defendant permitted use of MP teak wood on 11/9/1982 after noticing that there would be no change in budget. Letter Exhibit 79 then came to be issued in pursuance of this resolution. He also invites attention to resolution No. 4 at Exhibit 71 by which Defendant after noticing failure or difficulties in procuring control cement decided to permit Plaintiff to procure cement at market rate for urgent work of coping and pointing.

B———He also invites attention to various documents i.e. letters and resolutions like Exhibits 80 to 82, 84, 87 to 90 to state how at each & every step Defendant society was taken into confidence and legal formalities like taking decision through resolution were complied with by the society. Exhibit 89 is the resolution No. 2 passed in managing committee of Defendant Appellant on 25/4/1983 which resolved to pay amount of bills to Plaintiff by 31/5/1983 and otherwise to pay on amount in arrears 24 percent interest annually. Communication dated 27/4/1983 issued by Society in terms of this resolution is at Exhibit 90. By pointing out communication dated 30/4/1984 vide Exh. 92 to secretary Shri Joshi & manager Shri Pande and Exh. 91, copy of inland letter dated 5/4/1984 he urges that there was interpolation in proceedings of meeting dated 22/1/1984 by adding resolution No. 7 in it. He wants to read said proceeding and it is objected to by Advocate Gordey by pointing out that it is not a proved document. He further points out that Plaintiff filed Case No. 12/1985 for this tampering and from Impugned Judgment he points out that no such resolution No. 7 has been found to be passed by Trial Court. He also invites attention to communication at Exhibit 133 dated 26/3/1984 by which Plaintiff informed Society to clear his accounts by 31/3/1984 and states that Society did not send any reply to it. He further states that even after this date, Plaintiff continued to construct houses and on 17/9/1984 managing committee or executive committee of Defendant was to consider question of extending time for completion of said construction. He states that accordingly said committee has extended the time and he wanted to invites attention to copy of said resolution but Appellant pointed out that said copy has not been proved and exhibited. Advocate Dhobe invites attention to Exhibit 135 which is proceeding of joint meeting of advisory committee and managing committee and according to him entire dispute between parties was then compromised and indirectly work done by Plaintiff after 7/3/1984 was also accepted. As a part of this settlement, PW 2 Shri Lachke was appointed by Defendant on 17/10/1984 vide Exhibit 163 to verify the claim of Plaintiff and PW 2 then submitted his report as per Exhibit 165. He also invites attention of Court to verification by PW 2 in the light of Exhibit 136 and bill Exhibit 138 accordingly submitted by Plaintiff with letter Exhibit 137. He argues that the outstanding amount of Rs. 2,53,427.63 only shown on disputed last page of Exhibit 138 is in fact accepted by Society and it was to be sanctioned by its general body. He invites attention to one document marked as Article “C” in which Shri Pandey, Manager of society has accepted his entire claim. Learned Advocate states that Plaintiff submitted separate bill of interest due at Exhibit 140 with forwarding letter Exhibit 139 and as Society did not desire to pay it, entire dispute started. He argues that rejection of his bill by general body on 2/12/1984 is also not proved and in any case it is illegal. According to him therefore as per actual work done final bill Exhibit 141 was prepared and submitted to Society. He urges that there is no material difference between bill Exhibit 138 and this final bill, and in fact amount subsequently deposited by members has been also shown in final bill which shows bona fides of Plaintiff. And he further states that some work which was done latter on by Plaintiff has also been shown and charged in final bill. In this background, he states that notice to produce documents at Exhibit 50 was served upon Defendant and accordingly Defendant produced documents before Lower Court. He also invites attention to service of suit notice under Section 164 of Maharashtra Cooperative Society’s Act upon Defendant. He points out that there is no complaint on record by any member of society about inferior quality of work or about incomplete work.

C. He has also invited attention to averments contained in plaint and in written statement paragraph 31 and 32 to point out how efforts of compromise were going on and how general body rejected the compromise bill. 24 percent interest is sought to be justified by him by pointing out evidence of PW 3 and period of loan disclosed by him. He states that there is no cross examination of PW 1 to show that Plaintiff had borrowed loan for any other purpose. He also cites 3 judgments to support such grant. Judgment are Shiv Builders v. State Bank of India –ONGC v. Association of natural Gas and —Aditya Mass Communication v. A.P.S.R.T.C. He further states that in any case, if 24 percent interest cannot be granted to Plaintiff, it is eligible to claim damages of Rs. 200/- per day as per resolution of Society. He also invites attention to cross examination of auditor Shri Yende DW 1 and Shri Dhule DW 2 to point out how said reports are incorrect and alleged excess payment by Society to the Plaintiff. He further states that as per evidence of DW 1, State Housing Finance Corporation could not have released loan installment to Defendant unless and until the particular stage of construction relevant for release of that installment was over and certified accordingly by its architect. He further states that there is no counter claim for alleged excess payment by Defendant in its written statement. He also invites attention to evidence of Shri Abraham (Exhibit 152) to point out that he even did not knew address of Plaintiff and still stated that office of Defendant society was at the residence of managing partner of Plaintiff. This witness accepted that there were no funds with Society & did not depose about alleged individual or private contracts by Plaintiff with members. He also points out that as per directions of Lower Court certificate issued by Shri Gopalan Exhibit 153 in original was produced by him to show completion of slab as per specification.

D. He points out that there is no plea of any private contracts between Plaintiff and individual members in written statement of Defendant before Lower court and Plaintiff has not been cross-examined about work of members done by it and evidence in that respect appearing in paragraph 15 of examination in chief of its managing partner. He states that such a ground being raised for the first time in appeal by Defendant cannot be looked into. He further states that Plaintiff has not contended that any member has not paid firm for work done by it for such member. Lastly he contended that there are no efforts by Appellant to demonstrate how and why any finding of fact recorded on any issue by Trial Court is perverse. He therefore prays for dismissal of Appeal.

9. In view of these arguments, following questions arise for determination before me.

1. Whether Plaintiff can recover cost of construction effected by it after 6/3/1984 from Defendant Society?

2. Whether Plaintiff has proved its entitlement to recover any amount towards construction from Defendant/Appellant ?

3. Whether Plaintiff proves its entitlement to 24 percent compensatory interest or penalty of Rs. 200/- per day?

4. Whether Defendant proved that construction of Plaintiff was not as per specifications?

5. Whether Plaintiff is entitled to recover amount of Rs. 53,500/- advanced allegedly to Defendant as loan?

6. Whether Court below acted without jurisdiction in awarding interest on entire decretal amount ?

10. I will now proceed to consider question No. 1 above. Few more facets of very same question are :-Whether after Defendant terminated contract on 21/3/1984, a legal contract was again established or restored between parties? Whether settlement bills like Exhibit 138 or Exhibit 141 were approved by competent body of Defendant so as to bind it?

A. Plaintiff’s witness no. 1 admits that on 7/3/1984 vide Exh. 97 he wrote to Defendant and pointed out that it has suspended work from 6/3/1984. It also states that on 11/3/1984, Defendant called urgent general body meeting and in it by resolution cancelled agreement with it from 21/3/1984. Plaint thereafter proceeds to state how 18 members individually approached him with request to complete the work and how some of them also agreed to pay the difference in rate because of hike in construction cost. Accordingly Plaintiff claims to have completed construction of these members. Oral evidence of its managing partner shows that vide Exhibit 102 to Exhibit 132 Plaintiff obtained individual authorisations from interested members and thus a separate or private contract between such members and Plaintiff came into being. Plaintiff also points out the dispute about bill, its reference to arbitrators, meeting held on 7/10/1984 by Defendant and submission of new schedule of rates by him on 8/10/1984. These bills were submitted to managing committee and to Defendant society on 20/10/1984. Defendant informed him that sanction to said amount would be accorded in the general body meeting of the Society. Plaintiff itself states that resolution of managing committee dated 18/10/1984 was not acceptable to him. On 2/12/1984, there was general meeting but again amount due to Plaintiff from Defendant was not considered in it and was not sanctioned. He thereafter gave legal notice and filed suit. Thus this story by Plaintiff itself shows that after 21/3/1984, there was no resolution to the contrary by general body of Defendant society. Therefore legally, insofar as Defendant is concerned present Plaintiff has not carried out any work for it after 6/3/1984. In cross examination, PW 1 also accepted that he has not carried out any work for society after 7/3/1984. In view of this material, it is clear that Plaintiff terminated the agreement with Defendant on 7/3/1984 and in any case Defendant terminated it with effect from 21/3/1984 by passing resolution in its general body. As there is no subsequent action or resolution of general body ratifying the construction carried out by Plaintiff privately for individuals, such construction cannot be treated as at the instance of Defendant society merely because Defendant did not object to it. Plaintiff carried out said construction only for willing 18 members by entering into private arrangement with them and Exhibit 102 to Exhibit 132 are not binding upon Defendant. Plaintiff cannot reach Defendant society through these individual contracts. These individual contracts are on printed proforma obviously prepared by Plaintiff.

B. Exhibit 102 to Exhibit 132 are of different dates. Exhibit 132 is undated while others are dated 12/3/1984, 8/3/1984, 7/3/1984, 5/3/1984, 15/3/1984 etc. Exhibit 127 dated 5/3/1984, Exhibit 121 dated 6/3/1984 assume importance because Plaintiff stopped the work on 6/3/1984 itself and his intimation Exhibit 97 to Defendant is dated 7/3/1984. All these Exhibits are printed and address to Plaintiff firm with blank space to fill in plot No and space for signing at the bottom. Plot No. of member signing this document is to be filled in first paragraph at space provided for it. First paragraph mentions that signatory is member of Defendant society with particular plot alloted to him and society is doing construction work through Plaintiff on his plot as per agreement dated 20/3/1981. He had given special power of attorney to President of society for such construction. Second paragraph thereafter mentions that signatory would himself thereafter undertake construction and financial transactions and he was canceling all powers given to president of society through above-mentioned special power attorney. It is further mentioned that Plaintiff should explain to him accounts of construction of his house till then and he was ready to enter into transaction for further construction with Plaintiff and he would directly pay necessary funds therefore to it. It ends with request to Plaintiff to complete the work and to handover position directly to him. In Exhibits 114, 118 to 125, 127 to 131 words “president of society” appearing in both paragraphs are scored of and on these Exhibits as also on certain other Exhibits, there is a endorsement in handwriting addressed to PW 1 that said plot was allotted to signatory and as requested by signatory, Plaintiff should recover its dues from him, complete the construction and handover possession to him. Below this endorsement there are two signatures and below signatures word “president” and “vice president” are written in handwriting. These endorsements are not spoken about by PW 1 and are not put to witness of Defendant. Any executant member of these documents is not examined and his/her signature and identity is not proved, but there is no objection raised to marking these documents as exhibit by Defendant before Trial Court. But it is apparent that the proforma was got printed by Plaintiff. Language therein clearly shows that signatory had after that date severed his relationship with Defendant and direct contract came into existence between Plaintiff & Defendant. It also terminates power of Defendant to undertake construction on plot of allotee member. As the document is produced by Plaintiff and if endorsement of President or Vice president upon it is presumed to be true for the sake of argument, as per said endorsement, Plaintiff was advised to explain all accounts and accept the amount from such signatory/allotee. In other words, Plaintiff was aware that he has to recover the amount from allotee. In view of this position emerging on record & subsequent resolution of Society dated 11/3/1984 canceling the contract with Plaintiff, it is apparent that Plaintiff has to recover his amount from such signatory or member at least for construction undertaken by him after 6/3/1984. It has therefore to point out separately the amount due to it for construction of such allotee/member as effected till 6/3/1984 and seek recovery of only that amount from Defendant. It cannot recover any amount from Defendant for construction undertaken by it at the request of individual allotee after 6/3/1984. Endorsement appearing in handwriting on Exhibit 102 to 131 are not proved by PW 1 and are not even put to DW 2 Abraham who deposed on behalf of Defendant society as its President. DW 2 Abraham has signed and verified written statement of Society and he is stated that communication of cancellation dated 7/3/1984 was issued to him by Plaintiff. Even the fact that in spite of resolution of cancellation of contract with Plaintiff, Society permitted Plaintiff to carry on construction work has not been put to this person in his cross examination. Though PW 1 stated that he obtained these writings at Exhibit 102 to 132 from members & it was decided that amount paid by members was to be deducted in case Plaintiffs’ charges were paid by society, no such suggestion is given to DW 2. The burden to prove all these facts conclusively was upon Plaintiff and it has failed to discharge it. Though PW 1 has not been cross-examined by Society in relation to these documents of private or individual contracts, dates thereof itself reveal collusion between Plaintiff and persons signing as president or Vice president of society. Exhibit 132 is dated 27/2/1984 and on its reverse is the remark or endorsement as mentioned above with perhaps signature of Shri Bhise. This date and some other dates on these individual documents mentioned above are clearly prior to notice of stoppage of work given by Plaintiff to Defendant. Exhibit 125 and 126 pertain to same member and same plot. Exhibit 115 though bears date 7/3/1984 at its top, below the signature of alleged member date mentioned is “2/4/84”. Endorsement allegedly made by president and vice president of society on all documents is in black ink except upon Exhibit 132 where it is in blue ink. It is also to be noted that Exhibit 102 is dated 9/6/84 but it does not have any endorsement upon it. As per evidence available on record, Shri Bhise had ceased to be President or Chairman in March 1984. Therefore, it is apparent that though Plaintiff may be in position to use these documents against individual members, same cannot be used against Defendant society.

C. Trial Court in paragraph 35 found that in general meeting held June 1984, advisory committee was appointed by Defendant to solve the problem. Joint meeting of this advisory committee and managing committee of Defendant was held on 7/10/1984 and its proceedings are at Exhibit 135. Two engineers Shri Kare & Shri Misal named therein were appointed for valuation. The exercise mentioned therein was to be completed by 10/10/1984. Plaintiff accepted to complete slab work of Shri Mehare & Shri Wanjari by 11/10/1984. What is proved on record as Exh. 135 by Plaintiff is carbon copy with signatures in original. Statutory sanction behind this meeting is not established and Plaintiff has stated that after arbitrators submitted their award in May, 1984; members called a general meeting in June,1984 in which advisory committee was appointed to resolve controversy. PW1 has not used the words indicating that Defendant called general body meeting of society or its proceedings were written. The business transacted in said meeting is not proved. In this case, Arbitrators have not delivered any operative or executable award warranting holding of any general body meeting of Society. Exh. 135 by itself therefore can not over-rule general body resolution dated 11/3/1984. This Exh. is not even put to witness Shri Abraham by Plaintiff. Legally it is difficult to treat these proceedings as of Defendant Society or, in any case as superseding its’ general body resolution dated 11/3/1984. Also Plaintiff has not proved on record any valuation report of these two persons.

D. Plaintiff has not filed any proceeding for making the award of arbitrators rule of Court. In its written statement, Defendant i.e. present Appellant has not pointed out any arbitration clause or proceedings. Plaintiff has also not pointed out how and in what manner Defendant appointed Shri S. Rathod while it appointed Mr. Jalal Dhamani to arbitrate and why these arbitrators directed Defendant to pay amount of Plaintiff as per agreement. It is therefore apparent that holding of arbitration proceedings is of no consequence & Plaintiff was under obligation to prove his entire claim afresh. Records also demonstrate that such an exercise only was undertaken by him. Evidence of PW 2 Lachke is also of no assistance to him because Defendant has demonstrated absence of authority in Lachke to verify and certify bill Exhibit 141. Exhibit 163 –appointment letter of Shri Lachke also shows that his appointment by Defendant was only for specific and limited purpose. It is obvious that Shri Lachke went out of way to help Plaintiff. Plaintiff miserably failed to show that agreement Exhibit 66 was either restored or any fresh agreement was entered into between it & Defendant after 21/3/1984. Effort of Plaintiff therefore to recover amounts allegedly spent by him on work of construction of houses after 21/3/1984 from Defendant cannot succeed. Not only this, Plaintiff has not given any bifurcation about the expenditure incurred by it prior to 1/3/1984 and after that date. Hence such a suit based upon composite accounts could not remain decreed by Court below.

E. Section 72 of Maharashtra Co-operative Societies Act lays down supremacy of General body. In “M.I. Builders Pvt. Ltd. v. Radhey Shyam Sahu“, Hon’ble Apex Court observes:

64. In Myurdhwaj Co-operative Group Housing Society Ltd. v. Presiding Officer, Delhi Co-operative Tribunal , the appellant was a Housing Co-operative Society registered under the Delhi Co-operative Societies Act, 1972 and Delhi Co-operative Societies Rules, 1973. In the meeting of the general body of the society, it was decided that only those who have deposited minimum amount specified by the general meeting would be allotted flats and others would be accommodated on the flats to be constructed on the additional land in Phase-II construction. Respondent No. 3 who was one of the original members of the society challenged the decision of the general meeting. One of the contention raised was that decision of the general body which relegated her and other such members to Phase-II was not on the agenda.

This Court said a general body can always with the approval of the house in the meeting of its members take up any other matter not covered by the agenda, on that account, no illegality could be held. This Court also observed that Section 28 of the Delhi Co-operative Societies Act, 1972 vests final authority in the general body of a co-operative society. It has wide powers including residuary power except those not delegated to any other authority under the Act, the rules and its byelaws. In other words, its power, if any, is only restricted by the Act, the rules, the bye-laws and any order having force of law. This decision is of no help to the appellant as in the present case we are considering the statutory provisions for holding of the meetings of the Mahapalika and the Executive Committee which have been violated.

In “Myurdhwaj Co-op. Group Hsg. Socy. Ltd. v. P.O., Delhi Co-op. Tribunal” = Hon’ble Apex Court says:

11. We find Section 28 of the Act vests final authority in the general body of a Co-operative Society. It has wide powers including residuary power except those not delegated to any other authority under the Act, the Rules and its bye-laws. In other words, its power, if any, is only restricted by the Act, the Rules, the bye-laws and any order having force of law. This exercise of power by the general body which is in issue cannot be said to be excluded by Rule 36.

In —Shubh Shanti Services Ltd. v. Manjula S. Agarwalla, while reversing judgment of this Court, Hon. Apex Court observed:

18. Section 291 of the Companies Act authorizes the Board of Directors of the Company to exercise such powers or of such acts or things as the company is authorized to exercise and do such acts or things, except in the matter where the power is to be exercised by the company in general meeting. The exercise of the powers by the Board shall be subject to the provisions contained in the Companies Act or any other Act or in the Memorandum or Articles of the company. Therefore, under Section 291 of the Companies Act, the action of the Board of Directors should be in conformity with the provisions of the Company Law or any other enactment or in conformity with the memorandum or articles of association of the company. It is the specific case of the respondents which has been found correct by the Courts that they are holding possession of the company’s flat at Sonmarg on the oral assurance given by Shri Goenka, Chairman of the Board of Directors that they can continue to reside in the said flat until the possession of the flat at Blue Heaven Cooperative Society is given to them. Admittedly the flat at Sonmarg belongs to the Company. Shri S.C. Aggarwalla, husband of Respondent No. 1 and father of Respondent No. 2 was the ex employee of the Company. He expired when he was in the employment of the company and respondents 1 and 2 were residing in the flat after the demise of Shri Aggarwalla as his heirs. Thus it is for Respondents 1 and 2 to show the authority of Shri Goenka to bind the company on the basis of the oral assurance given to them by him to retain the possession of the flat. The High Court has not referred to any evidence to that effect led by the respondents, nor there is any finding that the Board of Directors have authorized the Chairman Shri Goenka to give such an assurance for and on behalf of the company.

19. On 28th of December, 1993 a letter was sent by appellant requesting Respondent No. 1 to vacate the premises and handover peaceful possession of the premises within 45 days of the receipt of the letter. The contents of the letter are that Shri S.C. Agarwalla was occupying the premises as a facility granted to him by the company until he was in the employment of the company. On account of the demise of Shri Agarwalla, the company deferred the request for vacation of the said premises; that more than a year has lapsed since the demise of Shri Agarwalla, it is essential for the company to take possession of the same. The correspondence placed on record by parties also does not indicate that the Chairman of the Company Mr. Goenka gave an assurance on the basis that he has been authorized to do so by the Board of Directors. In the absence of any authority to the Chairman by the Board of Directors to act for and on behalf of the company, the assurance given by him to the respondents would not bind the company, nor it will create a binding agreement between the parties, namely, Respondents 1 and 2 and the company to permit the respondents to remain in possession even after the death of Shri Agarwalla, of the flat in Sonmarg. Apart from this, the Board of Directors itself could exercise the powers in accordance with the memorandum of association or the articles of the company. Any power exercised beyond the memorandum or the articles of the company would not bind the company. Any assurance given by the Board of Directors either should be authorised object of the company by the memorandum of association or the articles of the company or its purpose should be reasonably ancillary or incidental to carrying on the companies business.

F. Case law above lays down the final authority of general body. In view of discussion on question above to find out whether there existed any valid contract between Plaintiff & Defendant after 21/3/1984, it is apparent that bills at Exhibit 138 and 141 or even alleged concession given by Plaintiff has not been accepted by General Body. Plaintiff itself in plaint para 35 states that approval was to be given by general body and hence, in absence of such approval, these bills are not binding on Defendant. It is more than clear that Plaintiff can not recover anything towards cost of construction effected by him after 6/3/1984 and it has to recover that amount from members individually who approached it privately and got their work done through it. The Plaintiff firm has itself placed all relevant facts on record with plea that agreement subsisted in spite of its termination by the general body. It also obtained individual authorisations and armed itself for recovery from individuals. It however did not seek any relief of declaration about the general body resolution and also did not join individuals as party defendants. The point very much arose for determination before Trial Court and it failed to decide it. This is not a new point being raised and objection of Adv. Dhobe in this respect is without substance. In its. suit, Plaintiff has not specified amount due to it from Defendant for construction work done prior to 21/3/1984 and amount spent by it on construction after said date. Trial Court has lost sight of these cardinal aspects of the dispute between parties. Such break up is not given admittedly even during his evidence by managing partner of Plaintiff firm. During arguments before this Court for the first time Advocate for Plaintiff only stated that Plaintiff has received all amounts from members for work done by him after 6/3/1984. Unless and until such statement is supported by proper evidence, which has been subjected to cross examination, it cannot be relied upon. Cross- examination of witness for Plaintiff shows that questions in this respect were put to him and thus he was given opportunity which he utilised & in para 29 of his evidence, he stated that he was not in position to give such break-up of recovery.

The question no. 1 needs to be answered in negative & in favour of Appellant.

11. Allied questions with question No. 2 are-Whether it was necessary to prove such entitlement in view of various resolutions of Defendant ? What is the effect of admission of Plaintiff that he received amount of Rs. 46,30,176/- from Defendant? Whether Plaintiff proved open market purchases of cement? Whether Defendant proved that managing partner of Plaintiff and his relatives influenced the working of Defendant Society to its prejudice?

A. Plaintiff has not filed its audited accounts as such to support their stand when the burden to prove its entitlement is upon Plaintiff. When oral & documentary evidence on record is compared certain facts become apparent which cast serious doubt on the bonafides of claim of Plaintiff. It should be mentioned here that resolutions of Society passed prior to March, 1984 can at the most justify the actions of Plaintiff in using lime as substitute for cement or using other wood instead of Teakwood etc. and stating that still cost of construction was to remain the same. It can also point out such resolutions as basis of its’ demand of 24% interest or Rs. 200/- as late payment charges per day. But these resolutions can not support the claim for actual amount shown as spent on construction and demanded as such in bills at Exh.141. Said claim needs to be established by actually showing that construction mentioned therein has actually been done & Defendant is legally obliged to pay for it. After these two aspects are proved, the rate or fact emerging from such resolutions becomes relevant to check correctness or otherwise of demand. Resolutions subsequent to stoppage of work are 11/3/1984 by which Defendant cancelled the contract with Plaintiff, alleged general body meeting of June,1984 after arbitration award, joint meeting dated 7/10/1984 and executive meeting dated 18/11/1984. In its written statement, in paragraph 21 Defendant society has stated that it has got Xerox copies of the proceeding of general body meeting dated 22/1/1984. Similarly in relation to resolution dated 7/10/1984 it is stated in paragraph 31 that as per proceeding book of Society no meeting was held on that day. Resolution of managing committee dated 18/11/1984 was not acceptable to Plaintiff itself because it did not consider interest rate of 24% per annum. I, therefore find it proper to consider various bills placed on record by Plaintiff first.

B. Amount mentioned in bill Exhibit 138 dated 26/10/1984 is Rs. 46,18,831.00 while amount mentioned in bill Exhibit 141 dated 27/9/1985 is Rs. 47,40,143.00. This amount is inclusive of amount of Rs. 53,500/- alleged to have been advanced as temporary loan by Plaintiff to Defendant. In this document amount received by Plaintiff is shown as Rs. 41,48,684.07. As per this bill Exhibit 141, net amount recoverable by Plaintiff is Rs. 9,87,038.93. All these bills or amounts do not show any interest component except in Exhibit 141 where amount of Rs. 1,48,648.00 is claimed as per resolution No. 2 dated 25/4/1983 of executive body. As per Exhibit 141, amount of Rs. 5,44,643.00 is shown to have been received from members and hence balance amount still receivable by Plaintiff is mentioned as Rs. 4,42,395.93. Interest has been calculated at 18 percent on this amount for period from 27/9/1985 to 15/11/1987 and interest amount claimed is Rs. 1,69,734.23/-. This total claim amount I shown to be Rs. 6,12,130.16. Suit is filed for recovery of Rs. 6,12,130.93 only. He has issued notice vide Exh. 142 under Section 164 of Maharashtra Cooperative Society’s Act vide Exhibit 142 on 27/11/1985. The notice is for amount of Rs. 1,80,679/-+ Rs. 1,48,648/-= Rs. 3,29,327/-. Suit filed by him is for recovery of Rs. 1,80,679/- for cost of construction and additional amount of Rs. 1,48,448/- towards interest. In alleged last page of Exhibit 138, certain amounts including amount of Rs. 53,500/- is added to amount of Rs. 46,18,831.00 to make the total to amount to Rs. 47,47,243.00, total amount received from Society is shown as Rs. 40,70,408.07 and amount received from members is shown as Rs. 3,55,491.30. Total amount received from Defendant is shown as Rs. 44,93,815.37. Net amount payable to Plaintiff is therefore worked out as Rs. 2,53,427.63. He in paragraph 29 of his cross examination stated that till date of compromise i.e. 7/10/1984, he had received amount of Rs. 5 lakh from members. Thus amount received from members is shown less by him in Exhibit 138. It is obvious that even in Exhibit 138 & Exhibit 141 there is material difference. Admitted receipt of amount of Rs. 46,30,176/- from Defendant by Plaintiff therefore upsets the entire working and calculations in both the above bills. Plaintiff has also not established by any other evidence purchase of cement or steel by it from open market. As already stated above both these bills are not approved by general body of Defendant.

C. In Exh. 138 amount of Rs. 3,55,491.30 & in Exh. 141 Rs. 5,44,643.00 is shown as receipt from members. Thus in Exh. 138 this amount is shown less by Rs. 1,89,152.30. Plaintiff has not shown that he completed any work after 7/10/1984 by producing any measurement book or photographs or joint inspection. Recovery of Rs. 53,500/- is under different head and not towards construction. Hence, this total amount of Rs. 2,42,652.30/ (Rs. 1,89,152.30 + Rs. 53,500/-) can be subtracted from Rs. 2,53,427.63 shown as outstanding in Exh. 138. In that case, balance amount recoverable by Plaintiff would be about Rs. 10,000/- in Exh. 138. If page no. 4 of Exh. 138 on which remarks of Shri Lachke appear is treated as last page then bill amount mentioned there is Rs. 46,18,831.00. If amount received from Society of Rs. 44,93,815.37 is deducted from it, then amount due to Plaintiff works out to Rs. 1,25,015.63 only. If Rs. 1,89,152.30 i.e. payment recovered directly from members by Plaintiff but not shown in Exh.138 is adjusted here, it is evident that Plaintiff has received excess payment of Rs. 64,136.63.

D. Bill at Exhibit 138 is forwarded by Defendant to Shri Lachke on 27/10/1984 vide Exh. 164 & it mentions amount of Rs. 46,18,831/-. Bill Exhibit 138 bears endorsement and certification by said Shri Lachke but the same is without any date. This endorsement is not on alleged last page of Exhibit 138. Even on Bill dated 27/9/1985 at Exhibit 141 there is an undated endorsement by Shri Lachke. This endorsement expressly mentions earlier certification by the Exhibit 138. In this certificate he has mentioned that contractor (Plaintiff) had completed the work & accordingly he had certified it. He further mentions that contractor has submitted this bill (meaning thereby Exhibit 141) and he verified it and said bill is correct. It is to be noted that Shri Lachke has been examined as its witness by Plaintiff and it has been demonstrated in his cross-examination that he was not appointed to verify Exhibit 141. It is therefore obvious that this person has helped Plaintiff. Bill Exhibit 138 mentions amount of Rs. 31,59,104.00 as grand total of old layout. In Bill Exhibit 141 said total is shown as Rs. 31,06,555.00. Exhibit 138 mentions grand total of new layout to be Rs. 16,79,577.00 while in Exhibit 141 it is mentioned as Rs. 16,33,588.00. As per agreement Exhibit 66, amount of Rs. 20,000/- is supposed to be in deposit with Defendant. In both these bills no refund of this amount is being claimed.

E. In his cross-examination in paragraph 34, PW 1 states that till 2/10/1984 he had done work worth Rs. 45,99,531/- of Society. In paragraph 25 of his cross examination, PW 1 has stated that he was unable to disclose what quantity of cement was required for work completed after 23/2/1984. He stated that he was not in position to state whether blocks were without slab on 23/2/1984 without seeing the records. It appears that PW 1 was thereafter permitted to peruse records and he stated that feeling of about 40 to 45 slabs of the blocks out of total 119 blocks was done by him and plasterwork, both from inside and outside of about 35 to 40 blocks was complete. Learned Trial Court then put him a question about quantity of cement bags purchased by him from open market for the work of society and he stated that he purchased about 10000 bags from market by paying amount of Rs. 70 per bag. If Exhibit 153 a forwarding letter dated 23/2/1984 for bill worth Rs. 2,42,400.00 only towards slab of six quarters (Rs. 62,400/-) and plaster bill for 45 quarters (Rs. 1,80,000/-) is used as basis to understand the effect of this position, for alleged 45 slabs Plaintiff becomes entitled to claim Rs. 4,68,000/– and for plasterwork of 40 blocks it can claim Rs. 1,60,000/-. Total entitlement of plaintiff, if this position is presumed to be correct, works out to Rs. 6,28,000/-. It is therefore apparent that as per this version, only one-third of total work was completed by Plaintiff before it discontinued it as per communication dated 7/3/1984. Thus about two third work is done by Plaintiff after Society terminated its contract. This position and position emerging from Bill Exhibit 138 therefore create a picture as if entire work has been completed by 7/10/1984.

F. This evidence can also be appreciated in the light of Exh. 141- a final bill on the basis of which Plaintiff filed his suit. In para 9 of his examination-in-chief, PW1 has stated that till December,1983 he did work worth Rs. 14,25,000/-. Only one bill vide Exh. 153 appears to have been raised thereafter. Even if that bill amount is added to this figure, total comes to Rs. 16,67,400/-. This figure also includes the charges for 45 slabs & plasterwork of 40 blocks i.e. Rs. 6,28,000/- mentioned above. However, even if this amount is added to the said figure, Plaintiff at the most completed work worth Rs. 22,95,400/- till he stopped work in March,1984. Even if it is presumed that total cost of construction done by Plaintiff was Rs. 51,35,723.00 as shown by him in Exhibit 141, it is apparent from this deposition that work worth Rs 29 lakh has been completed allegedly by Plaintiff after its agreement was terminated. It can not be believed that Plaintiff completed it & in return got Rs. 5 lakh from members directly. Even if suit claim is deducted from this balance or deficit of Rs. 24 lakh (i.e. 29 05=24), still huge figure of Rs. 22 lakhs still remains unexplained.

G. Suit filed by him is for recovery of Rs. 1,80,679/ towards cost of construction and additional amount of Rs. 1,48,448/- towards interest with further interest upon total amount. Thus as per plaint, entire amount except Rs. 1,80,679/ for cost of construction was received by Plaintiff. If the basic suit amount i.e. Rs. 1,80,679/- i.e. cost of construction and interest amount of Rs. 1,48,448/- is deducted from this figure of Rs. 29 lakh, still Plaintiff can safely be presumed to have received amount above Rs. 25 lakhs after stoppage in March,1984. In his cross-examination, in paragraph 29, PW 1 admits that no work was done by Plaintiff on account of society after 7/3/1984. Claim due from Society & members individually was included in his suit and he was unable to state the exact amount due from Society independently. He also stated that till 7/10/1984, he had received amount of Rs. 5 lakh from members. In paragraph 30 stated that he received amount of Rs. 46,30,176/- only till 26/10/1984 both from Society & members. As he also accepts that he received amount of about Rs. 5 lakhs directly from members, it can be gathered that he ought to have received amount of about Rs. 20 lakhs from Defendant after March,1984. However that is not its’ case at all and that is not the defence of Defendant also. On the contrary in Exh. 97 i.e. notice 0f stoppage dated 7/3/84 Plaintiff states that as on said date it had to receive only Rs. 1,47,000/ from Society towards its bills & further claims interest amount calculated at 24%. Thus total outstanding pointed out then is Rs. 3.50 lakhs. All this is required to be looked into only to show how case of Plaintiff is either unbelievable or legally unacceptable.

H. Plaintiff claims to have completed 64 slabs & 79 plastering jobs after March,1984. If rate used by Plaintiff in Exh. 153 is applied to this work, its worth works out to Rs. 9,72,000/-. Hence even if above logic or calculation is ignored, still, it is difficult to digest that Plaintiff completed slabs of remaining houses or plastering & other work only for Rs. 5 lakhs directly received by him from members. Exhibit 153 is forwarding letter dated 23/2/1984 for bill worth Rs. 2,42,400.00 only towards slab of six quarters (Rs. 62,400/-) and plaster bill for 45 quarters (Rs. 1,80,000/-). This letter itself mentions at one place Rs. 2,44,400/- as bill amount and little below Rs. 2,42,400/- as net amount. Amount of Rs. 1,82,000/- is perhaps corrected as Rs. 1,80,000/- in hand writing and against head “total”, amount of Rs. 2,44,400/- is similarly corrected as Rs. 2,42,400/-. It needs to be noted that rate per slab applied as per this document is Rs. 10,400/- & for plaster work of each block it works out to Rs. 4,000/-.

I. Business dated 7/10/1984 is marked as Exh. 135 in evidence of PW1. But then parties/Plaintiffs have not produced any valuation report prepared by Shri Kare or Shri Misal as required by its clause one. Neither the bills nor certificate of Shri Lachke show any bifurcation in relation to demand from Defendant for period prior to 21/3/1984 and from members individually for subsequent period. It is not even possible to find out what quantity of cement or steel was purchased from open market or point of time at which such purchases were made. Question whether such purchases were made for effecting construction before 21/3/1984 or thereafter assumes importance in present facts. Merely by showing that Defendant authorised open market purchases or agreed to pay the corresponding difference in price, Plaintiff cannot claim any amount on that account. It cannot be forgotten that he was permitted to use lime and mortar also. So quantity of cement supplied by Society and quantity acquired by him by open purchases therefore ought to have been disclosed by him by production of measurement book, bills & payments. The way in which Exhibit 138 is drawn or Exhibit 141 is drawn does not enable anyone to find out what quantity of cement or steel or metal was used for any particular house on project. Even mentioning total amount received by Plaintiff directly from any member does not mean that after 21/3/1984, Plaintiff has completed work only worth that amount. Plaintiff has not co-related work carried out by him for these members after 21/3/1984 with payment he got privately. Hence logically Plaintiff cannot give credit for that amount to Defendant Appellant. It has to establish stage of each house at which its construction was discontinued on 6/3/1984 with proportionate expenditure incurred on each such house till then. Plaintiff can recover only that amount by which his expenditure exceeds the amount paid to him by Society till then as per agreement Exhibit 66. Neither Plaintiff has pleaded necessary facts for this purpose nor it has adduced any evidence to prove it before Trial Court. Non application of mind by Trial Court to this vital issue is also apparent. J. It is also important to note two facts emerging on record here. In paragraph 27 of his evidence, PW 1 denied that one member by name P.M. Brahmanacharya had supplied him 50 bags of cement. However, immediately he accepted said supply and also accepted that he charged amount of Rs. 38/- as price difference to the society. When bags were supplied to it by member, it is apparent that it was not open market purchase and as such, Plaintiff could not have asked for any price difference. Similarly, Exhibit 97 is the intimation by Plaintiff to Defendant that because of non-payment of bills, it discontinued the work from 6/3/1984. In this communication, Plaintiff mentions that as per amount of Rs. 1,47,000/- was due to it from Defendant with 24 percent interest. It is mentioned that if said amount was not paid within 10 days, it would be recovered through property of society (houses) in possession of Plaintiff. In legal notice dated 27/11/1985 at Exhibit 142, in paragraph 19 Plaintiff mentions that as on 1/3/1984 it had to receive amount to the tune of Rs. 1,80,679/- from Defendant. It also mentions that in addition it was entitled to receive amount of Rs. 1,48,648/- on account of old dues and thus total amount mentioned is Rs. 3,29,527/- plus interest upon it. Thus there is difference of Rs. 33,679/- in said claim for period up to 1/3/1984 itself. This definitely cast serious doubt on entire claim raised by Plaintiff and the same cannot be accepted without thorough scrutiny.

K. Plaintiff has produced on record the copy of its’ accounts maintained by Defendant as per Exh. 146 & 147. Exh. 146 is the forwarding letter 10/9/1984 addressed to Plaintiff by manager of Defendant & it mentions that Extract of accounts as demanded vide letter dated 10/9/1984 was being supplied with it. Paper, white in colour, used for this letter & next three pages on which accounts from 15/6/1981 till 30/6/1983 are written is same & all are written with black ball-pen. On first white page year 80-81 is mentioned at top & there are entries from 15/6/1981 to 12/6/1982 on it. Remaining 2 white papers carry entries for year 82-83, first page has entries from 1/7/82 to 19/1/83 while last page bearing Sr. no. 2 has entries from 11/2/83 to 30/6/83. These three papers are given Exh. No. 147. It is not clear from record whether latter two green pages thereafter form part of Exh. 147. These two again contain accounts for period from 1/4/1983 up to 1/3/1984. Each white sheet is signed & sealed by said manager while first green sheet with entries from 1/4/1983 till 15/10/1983 do not bear such sign or seal. It appears only on second sheet where after seal & sign some date is written. Date on first white paper is ” 10/9″ while on last or third white page it is “11/9/1984”. No date is mentioned on middle page. Date on last green page is “30/?/84”. I have put “?” as figure denoting month is not very clear. If document containing accounts and written on green pages was issued simultaneously with white papers, entries for period from 1/4/83 to 30/6/83 need not have been repeated. Last or second green page shows entries from 15/10/83 till 1/3/84 in chronology and last 3 debit entries thereafter are for earlier dates i.e. 22/2/84, 23/2/84 & 24/2/84. This entry dated 23/2/84 appears to be for Rs. 1,70,000/ corrected as 100000/-. Entry at top of this page is of Rs. 5,45,562/- brought forward from previous green page. Figures appearing in total on credit side are overwritten credit amount is also overwritten. At bottom “DR Bal” appears to be corrected as “CR Bal” even to naked eye. Credit amount after overwriting is shown as “1,47,142/-”. It is therefore difficult to act upon this statement of account which is certified by Shri Joshi. Contents of this statement of accounts are not proved because said Shri Joshi has not been examined by Plaintiff. Moreover Plaintiff has brought on record fact that account books of Defendant society were not being maintained as per Rule 65 in cross examination of auditor D. W. 2. L. Auditor Shri Dhule D.W. 2 (Exhibit 183) has proved the audit report of Defendant society at Exhibit 185. He has stated that Defendant has made excess payment of Rs. 1,63,753/ to Plaintiff. He has been cross-examined and in cross he states that he was not aware of Suit records and Defendant has not maintained all account books as per Rule 65. He accepted that members of Defendant paid some amount directly to Plaintiff and such amount was not shown by him in balance sheet which was for period up to 30/6/1990. He further stated that he has not seen final bill prepared by Plaintiff in 1985. Obviously reference is to bill at exhibit 141. Thus nothing material has been brought on record to doubt the correctness or otherwise of his audit report. Even if amount paid directly by members is accounted for, it will only men that Defendant has to recover more amount than mentioned by this witness from Defendant. Non mention of such excess payment in W.S. by society does not derogate the value of this audit conducted by auditor of cooperative department of State government. Shri Yende, D. W. 1 is another auditor who only pointed out certain defects and stated that up to 30th of June 1983, loan amount of Rs. 23,38,000/- was taken from MSHFC but he could not point out how much out of it was actually given to Plaintiff by Defendant. Plaintiff has through him brought on record the procedure of MSHFC about release of loan installment. However in view of discussion above, I find this evidence not helpful to the cause of Plaintiff.

M. DW2 Abraham in para 5 of his in-chief stated that till date of his deposition about 19 houses were incomplete. He deposed in para 6 that not a single house was complete in March, 1984. Some members completed their structures at their own costs. In para 8, he stated that till 1984, M.S.H.F.C. released 80% to 90% of loan which was made over to Plaintiff though houses were not complete. As per stage wise schedule of payment agreed between parties, after completion of slab, 75% payment has to be complete. PW1 after perusing records stated that on 23/2/1984 feeling of about 40 to 45 slabs of the blocks out of total 119 blocks was done by him and plasterwork, both from inside and outside of about 35 to 40 blocks was complete. In view of position emerging from discussion above, I find merit in evidence of DW2. It is difficult to give any importance to alleged loan installment release procedure of M.S.H.F.C.

N. Next facet to be considered is whether Defendant proved that managing partner of Plaintiff and his relatives influenced the working of Defendant Society to its prejudice? The first and foremost point to be considered is whether Agreement Exhibit 66 shows a transaction between two principals. Exhibit 66 shows that rate mentioned is between Rs. 61/- to Rs. 65/- per square foot by Plaintiff. It does not specify whether it was exclusive or inclusive of cement or steel. Its Clause No. 7 mentions that cement and steel required is to be supplied by Defendant at controlled rates prevailing on 20/3/1981. It also mentions that Plaintiff would not be responsible for any increase in price of these commodities. As per its Clause No. 5 work was to be completed within two years but it was subject to cement and steel becoming available in required quantity within time. Agreement mentions rate for each house without giving breakup by item wise or any particular specifications. Original agreement is not produced and is stated to be in custody of Defendant. Plaintiff has produced its copy but the same is without any map and estimate. Shri Gite has signed it as president of society and in hand writing above the seal of Secretary of society it is mentioned that its period is increased up to 31/3/1984 as per resolution No. 2 of managing committee dated 21/2/1983. DW 2 Abraham has become president of Defendant society in March 1984 and he has deposed that founder of society Shri Gite was in fact in employment of Plaintiff firm. He has also stated that office of Society was at the residence of managing partner of Plaintiff and all records of society were also at residence of said managing partner. Perusal of paragraph 7 of his deposition shows that all earlier members of society were in fact yes men of partners of Plaintiff firm. He has also deposed that housing finance Corporation was releasing loan directly in favour of firm though work of construction had not reached particular stage relevant for its release. His evidence in paragraph 7, 8 and 10 is important and it definitely shows the upper hand which partners of Plaintiff firm enjoyed in the affairs of Defendant. It is to be noted that there is no cross-examination by Plaintiff of this witness on these points. Even deposition of PW 1 Hariom, managing partner of Plaintiff shows that he attended several meetings of society and even his father was called in some meetings. PW 1 in paragraph 10 of its examination in chief states that his father was called in meeting of society held on 22/1/1984 for giving guidance and at that time said was Shri Bhise Chairman while one Joshi was Secretary. How services of Shri Lachke engaged by Defendant for particular purpose are attempted to be utilised for his own benefit by Plaintiff has also come on record. PW 1 has himself stated that there was no stipulation in Exhibit 66 about use of cement or teak wood. He has tried to state that there was no prohibition to use of lime and mortar or to use any other type of wood. This type of agreement itself demonstrates that it contained material omissions and from facts which have come on record it can safely be gathered that these omissions are to the advantage of Plaintiff and therefore, at its instance. The way in which managing committee agreed to pay 24% interest to Plaintiff without verifying records again shows that Trial Court ought to have exercised more caution while considering the controversy. Perusal of lists of documents filed by Plaintiff before Lower Court is itself sufficient to show that Plaintiff had all documents of Defendant society with it. O. In paragraph 36 of his cross-examination, PW 1 accepts that the office of the society was in his courtyard. He denied that his relations with Pandey were friendly. He further denied that at that time Shri Bhise was president of society. He stated that he was not aware whether this Bhise was serving his family. He accepted that whereabouts of Pandey were not known & Bhise had expired. This denial of employment of Shri Bhise for want of knowledge is itself sufficient to expose guilty conscience of PW 1. Emphasis of learned Advocate Shri Dhobe upon admission given by DW 2 Abraham in his cross examination about not knowing the address of PW 1 is rendered meaningless in view of these admissions of PW 1. It is to be noted that DW 2 Abraham specifically deposed that when he took over as President of society, office of society was at the house of PW 1 at Gandhinagar in Yavatmal at a distance of about 6 km. He stated that he could not take over because of obstruction of PW 1. He has also pointed out that Society/he thought records prove assistance of Sub Divisional Officer Yavatmal and police. The statement has not been questioned in cross examination in any manner. He has pointed out that before him Shri Bhise was President but he did not hand over the records in spite of letters to him. As already stated above documents of private contract at Exhibit 102 to 132 appear to have been signed on various dates by said Shri Bhise and those dates and endorsement made create doubt of collusion between Plaintiff and said Shri Bhise.

P. Conclusions reached above show unsatisfactory nature of bills Exhibit 138 and 141 raised by Plaintiff. There is no direct resolution of general body of society accepting the liability emerging from Exh. 138. On the contrary, Plaintiff itself has gone back on Exh. 138 by submitting additional bill on account of interest. Then thereafter Plaintiff has further given other bill vide Exh. 141. Not only this Plaintiff’s influence over Defendant society is also apparent. This state of affairs therefore necessitated filing of all relevant records and also accounts by Plaintiff to show its entitlement to the items included or charged for in bills. Mere production of these bills with some resolutions of managing committee of society therefore is not sufficient to hold that this claim stands proved in court of law. It is also to be noted that for reasons best known to eat, Plaintiff did not produce its accounts or measurement books and on the contrary chose to rely upon extract of its accounts maintained allegedly by Defendant and produced as Exhibit 147 by it.

Hence, question no. 2 needs to be answered in negative & in favour of Appellant.

12. Next question to be gone into is whether Plaintiff proves its entitlement to 24 percent compensatory interest? Plaintiff claimed such rate of interest only because of its contention that said loan was incurred for the purposes of construction work of Defendant society. Cross-examination of PW 1 in paragraph 40 shows that he had availed of loan facility for the purposes of construction work of Defendant but he did not file any document for that purpose on record. Though he examined witness from bank Shri Nagrale at Exhibit 209, Plaintiff’s loan application has not been brought on record. PW 1 accepted that it was cash credit facility and checks issued by Defendant society were credited by him into this loan account. He accepted that cash amount paid by Society was not credited into this account by him. He could not assigning reason as to why he did not deposit cash receipts in this account. It is obvious that cash amount received from members is also not therefore deposited by him in this loan account. Bank had therefore, continued to levy interest on it even though amount was received by by Plaintiff. Said amount therefore obviously was utilised for its business by Plaintiff without paying any interest itself and at the cost of members or society, as the case may be, who paid said amount to it. Evidence of PW-3 i.e. bank witness Shri Nagrale does not show that loan was for construction work of Defendant only. And it cannot be forgotten that PW 1 managing partner of Plaintiff did not find it necessary to give account of balance amount of Rs. 20 lakh and the reason as to why this amount was not deposited with Bank. Justification given by him for demanding such rate rate of interest has not been substantiated but on the contrary is found to be incorrect. In view of this position, Plaintiff is not entitled to rate of 24 percent as compensatory interest. Plaintiff has not pointed out as to exactly what amount was not deposited by it with Bank. Bank therefore charged interest on account of fault of Plaintiff & Plaintiff cannot be allowed to pass it over to Defendant. It appears that there is resolution by which managing committee of Defendant resolved to pay Rs. 200/- per day as late payment charges if bills of Plaintiff were not cleared within 7 days. However for that purpose, Plaintiff ought to have brought on record evidence bill wise or demand wise indicating the date on which demand was made and date on which it was fulfilled or period during which it remained unfulfilled. No bill on record i.e. either Exhibit 138 or 141 furnishes these details. It is therefore obvious that in present matter, Plaintiff has not proved even that claim.

Hence question No. 3 needs to be answered in negative & in favour of Appellant.

13. Question whether Defendant proved that construction of Plaintiff was not as per specifications needs to be answered in negative as except for showing one line that steel used for casting of slab was not of requisite gauge and thickness of slab was less, no other material has been brought on record by Defendant to substantiate the stand. DW 2 Abraham deposed that one engineer Shri Bade resigned because of substandard construction made by Plaintiff and one Mr Gopalan after verification submitted his opinion on same lines. These persons are not examined as witnesses by Defendant and there written opinions, if any are not brought on record. I therefore do not find any material on record to hold that whatever construction Plaintiff did was not as per specifications. The question No. 4, therefore, needs to be answered in negative & against Appellant.

14. Whether Plaintiff is entitled to recover amount advanced allegedly to Defendant as loan is the next question. This amount of Rs. 53,500/- is shown in bills at Exhibit 138 at its disputed last page or Exhibit 141 as advance to Defendant. There is no pleading of any such advance by Plaintiff to Defendant in entire Plaint and also there is no documentary evidence produced to show any such advance or loan by Plaintiff to Defendant. This appears to be not even an adjustment of any expenditure in relation to contract Exhibit 66 between parties. It may therefore be an independent transaction between Plaintiff & Defendant which has got no bearing on construction work. In absence of opportunity to Defendant to meet such story of loan or advance, Trial Court could not have decreed this claim only because the amount appeared to it to be reflected in these two bills. This question No. 5 needs to be answered in negative in favour of Appellant.

15. Court below has allowed interest to Plaintiff on entire amount i.e. as found due by it. Plaint prayer (a) is to grant decree for Rs 6,12,130.16-while by prayer (b) Plaintiff is seeking 18% on Rs. 4,42,395.33 only. But then there is prayer (c) also by which future interest is prayed for on decretal amount till its realisation. There is also a residuary prayer to grant any other relief as may be deemed just. Trial Court has found Rs. 6,12,130.16 to be due to Plaintiff & awarded interest at 18% on it from the date of institution of suit till realisation. When all prayers are seen together, it becomes clear grant of interest is supported by prayer .c. & is not in excess of prayers in Plaint. Section 34 CPC permitted the court to do so and even in the absence of specific prayer covering complete amount, Trial Court was justified in awarding interest on total amount for which suit was filed. Suit filed by Plaintiff was money suit and transaction between parties is commercial one. Court below therefore could have granted future interest on entire amount. The contention that no future interest would have been awarded on interest component involved in the suit is without any merit in view of judgment of Hon’ble Apex Court in case of Central Bank of India v. Ravindra reported at , wherein Hon’ble Apex Court observes:

44. We are of the opinion that the meaning assigned to the expression ‘the principal sum adjudged’ should continue to be assigned to “principal sum” at such other places in Section 34(1) where the expression has been used qualified by the adjective “such”, that is to say, as “such principal sum”. Recognition of the method of capitalisation of interest so as to make it a part of the principal consistently with the contract between the parties or established banking practice does not offend the sense of reason, justice and equity. As we have noticed such a system has a long established practice and a series of judicial precedents upholding the same. Secondly, the underlying principle as noticed in several decided cases is that when interest is debited to the account of the borrower on periodical rests, it is debited because of its having fallen due on that day. Nothing prevents the borrower from paying the amount of interest on the date it falls due. If the amount of interest is paid there will be no occasion for capitalising the amount of interest and converting it into principal. If the interest is not paid on the date due, from that date the creditor is deprived of such use of the money which it would have made if the debtor had paid the amount of interest on the date due. The creditor needs to be compensated for deprivation. As held in Pazhaniappa Mudaliar v. Narayana Ayyar (supra), the fact situation is analogous to one as if the creditor has advanced money to the borrower equivalent to the amount of interest debited. We are, therefore, of the opinion that the expression “the principal sum adjudged” may include the amount of interest, charged on periodical rests, and capitalised with the principal sum actually advanced, so as to become an amalgam of principal in such cases where it is permissible or obligatory for the Court to hold so. Where the principal sum (on the date of suit) has been so adjudged, the same shall be treated as “principal sum” for the purpose of “such principal sum” -the expression employed later in Section 34 of C.P.C. The expression “principal sum” cannot be given different meanings at different places in the language of same section, i.e. Section 34 of C.P.C”.

In view of prayer clauses and the law on point, the question No. 6 needs to be answered in negative & against Appellant.

16.(A). Issue Nos. 1 and 2 as framed & considered by Trial Court have not been debated before me in this Appeal. Similarly though in appeal contention about absence of proper Statutory notice under Section 164 of Maharashtra Cooperative Society’s Act has been raised and argued, record shows that such notice was in fact forwarded on 27/11/1985 vide Exhibit 142 by Plaintiff to Deputy Registrar of Cooperative Society’s and its postal acknowledgment is also produced on record as Exhibit 143. Plaint also contains a statement to that effect. Trial Court has thus answered issue No. 8 in this respect correctly. No arguments are raised about finding of maintainability of suit recorded against issue No. 9 by Court below. It is therefore clear that findings of Trial Court only on issues 3 to 7 are only questioned in this Appeal.

B. Trial Court has concluded that construction was undertaken as per agreement Exhibit 66. It has also recorded a finding that Defendant vide resolution Exhibit 71 dated 11/7/1982 permitted Plaintiff to purchase cement from open market and agreed to pay difference on that account. There cannot be any dispute about this position. In paragraph 23 of its judgment, Trial Court has found that delay of about one-year was caused as cement was not supplied immediately by Defendant. It found that during said period price of teak-wood increased and hence Plaintiff could not use it. Trial Court found that vide Exhibit 77, society permitted Plaintiff to use the MP teak wood. Society had resolved that budget would not change because of use of cheaper material. In paragraph 24, Trial Court has found need of 1800 bags of cement for essential construction work to be “admitted position”. It has also recorded that this cement was purchased by Plaintiff in open market and difference in price worked out to Rs. 38 per bag. Resolution Exhibit 79 has been relied upon in support. Exhibit 79 is copy of resolution No. 9 in meeting of executive committee by which committee authorised use of Salwood in place of teak wood without any change in budget. There is no document on record to show need of 1800 bags of cement or its purchase from open market or the alleged difference of Rs. 38 per bag. As already observed above resolution cannot support a finding of fact of purchase of cement bags from open market. In paragraph 25 of its judgment Trial Court has only mentioned resolution Exhibit 80 as self-explanatory and supporting the contention of Plaintiff. Exhibit 80 is resolution No. 2 dated 30/1/1983 which only points out what was decided in general body meeting on 8/11/1981. It only mentions that cost of construction would be reduced if cement was not used, if MP teak wood was used and by reducing one door. It was resolved that saving thus achieved should be made over to Plaintiff. This resolution does not support such demand of Plaintiff at all. Trial Court has thereafter mentioned legal notice dated 14/2/1982 (Exhibit 81) issued by Plaintiff and proceedings of meeting of general body dated 27/2/1983. Trial Court has relied upon resolution Exhibit 83 to again conclude that it supports Plaintiff. Proceedings of special general body meeting dated 27/2/1983 are at Exhibit 82. It shows that proceedings of earlier special general body meeting conducted on 30/1/1983 were not recorded in proceeding book and those proceedings were read out by one Shri Hepat. Insofar as resolution No. 2 passed on 30/1/1983 is concerned, it has not been approved and treated as cancelled. Resolution No. 8 passed in meeting of managing committee on 119-1982 has been restored. It is therefore clear that Trial Court has in paragraph 25 of its judgment relied upon resolution which was not in force.

C. It may be true that on 30/1/1983 vide resolution No. 3 at Exhibit 84 certain business came to be transacted. However its copy is not Exhibit 83. Resolution No. 2 dated 30/1/1983 appears to have been wrongly mentioned by Trial Court in paragraph 26 of its judgment as Exhibit 83. Vide Exhibit 84 questions raised by 9 members were answered and it does not speak of amount of Rs. 60,000/- at all. It appears that vide resolution at Exhibit 85 dated 27/2/1983, Defendant accepted to pay Rs. 60,076.07 to Plaintiff. Managing partner of Plaintiff appears to have attended said meeting and in view of said resolution,, Plaintiff withdrew notice of stoppage of work. Exhibit 86 is copy of resolution No. 8 passed in meeting dated 27/2/1983 by which society resolved to submit bills certified by its engineer to Indian Overseas Bank and Yavatmal District Central Cooperative Bank with authorisation to directly transfer amount in deposit in account of society in the account of Plaintiff. The Defendant Society also resolved that this arrangement would continue till the agreement lasts and would be binding on all future general body meetings. In paragraph 27, Trial Court has found that vide Exhibit 89 –a resolution dated 25/4/1983 and Exhibit 90 –a letter dated 27/4/1983, Defendant society undertook to pay interest at 24 percent per annum on amount due to Plaintiff in view of his letter Exhibit 88. It appears that contents of Resolution exhibit 89 are not formally proved but then Trial Court has found that Defendant has produced original proceeding book and the same can therefore be read into evidence. It is also apparent that no objection to the marking of this document as Exhibit was raised by Defendant before Trial Court. In paragraph 28, it has considered the contention of manipulations in said resolution on 13/12/1983. It found that by such effort of tampering was made to show that resolution permitted recovery of damages from Plaintiff. In paragraph 31, Trial Court has considered story of Plaintiff that till December 1983 work done was to the tune of Rs. 14,25,000/- and it was done by Plaintiff by raising fund from outside because of assurance given by Defendant to pay 24 percent interest. It has considered meeting of society dated 22/1/1984 in which managing partner as also his father were invited. Letter of society Exhibit 91 is also considered and as per this letter, Defendant pointed out to its members that on 22/1/1984 it was resolved not to pay interest to Plaintiff. It has found in paragraph 31 that vide Exhibit 92 Chairman of meeting Shri Bhise and one Shri Amin wrote on 30/4/1984 but there was no specific mention about not passing such resolution on 22/1/1984. In view of this discussion, Trial Court has concluded that Plaintiff proved issue No. 3 and 4 framed by it conclusively. Entire discussion by Trial Court above does not reveal any non-cooperation from Defendant. Plaintiff has not produced on record any document to show that he demanded either cement or steel and it was not made available by Defendant. In fact when suit was for recovery of money spent by Plaintiff on construction for Defendant, entire discussion above is hardly relevant.

D. From paragraph 33 onwards, Trial Court has considered issue Nos. 5 to 7 together. It is sufficient to mention that Trial Court has not considered the question of entitlement of Plaintiff to recover the amount allegedly due to him on account of construction undertaken by him after 21/3/1984. It has also not considered expressly the effect of resolution of general body of Defendant canceling the agreement Exhibit 66 with Plaintiff. Trial Court appears to have only mentioned arguments of Plaintiff that Defendant was not justified in canceling the agreement. It has not recorded any finding on it in paragraph 33. Without recording any finding, it has indirectly set aside the resolution of general body not challenged by Plaintiff and restored the contract between parties. It has considered writings or letters Exhibit 102 to 132 in paragraph 34. It found that Defendant did not raise any objection to construction resumed by Plaintiff. It also found that vide Exhibit 133 Plaintiff issued letter on 26/3/1984 for settlement of his accounts and threatening with court action in default. It found that arbitrators delivered their award on 6/5/1984 vide Exhibit 134. By overruling objection of Defendant that said award has not been proved, Trial Court has proceeded further to consider subsequent events. Perusal of alleged award Exhibit 134 only shows direction of arbitrators that valuation of each house be got done through engineer and to arrange payment accordingly. This appears to have been objected to by managing partner PW 1 of Plaintiff. Trial Court in paragraph 35 found that in general meeting held June 1984, advisory committee was appointed by Defendant to solve the problem. This position & Exh. 135 is already considered by me above & I have concluded that Exh. 135 by itself therefore can not over-rule general body resolution dated 11/3/1984. Legally it is difficult to treat these proceedings as of Defendant or, in any case as superseding general body resolution dated 11/3/1984. Exhibit 136 written on 8/10/1984 and signed by Shri Lachke, by President and Secretary of Defendant, partner of Plaintiff is not actual valuation. It only appears to be a yardstick prepared to evaluate the work and its due application to various houses standing at different stages then is not established on record. Trial Court has not noticed this & found that bill then prepared was for Rs. 47,47,000/-. Letter given to Secretary of Defendant accordingly on 26/10/1984 vide Exhibit 137 and bill Exhibit 138 are then mentioned by Trial Court and it found that Plaintiff was informed that amount of Rs. 2,53,000/- was due to it from society. It also found that Plaintiff was informed that bill was to be sanctioned in annual general meeting and payment would be made after sanction. This payment of Rs. 2,53,000/- was not acceptable to Plaintiff as full & final settlement because it did not contain interest amount at 24 percent and hence on 18/11/1984, Plaintiff gave bill vide Exhibit 139 towards said interest. Said bill Exhibit 140 is for Rs. 148648.70/– on account of interest from 1/6/1983 to 31/3/1984. Here it should have observed that as Plaintiff backed away from Exh. 138, the alleged arbitration or Exh. 135 were all rendered useless. For Defendant approval of general body was must as contract was terminated by resolution of general body. Trial Court also observes that general body meeting was held in December 1984 but amount was not paid to Plaintiff nor was his claim denied by Defendant. It failed to note that Plaintiff backed out even before this meeting.

E. It found that thereafter final bill was sent by Plaintiff to Defendant vide Exhibit 141 and this was also certified by Shri Lachke. In paragraph 36, Trial Court has considered loan advanced by Housing Finance Corporation and procedure therefor. It found that after construction was completed, Plaintiff submitted bill to Defendant which Defendant submitted to Housing Finance Corporation for getting loan installment and as said Corporation released loan, it was definitely after inspection by its architect. It found that this procedure of loan release was admitted by DW 2 Abraham as also DW 1 Yende. It found from the evidence that Housing Finance Corporation could not have released loan without construction being complete and without inspection by its architect. It therefore found that Plaintiff completed the construction, Defendant society received the loan installment but did not pay it to Plaintiff. It is obvious that Trial Court overlooked Exhibit 86 resolution No. 8 passed in meeting dated 27/2/1983 of Society by which loan installment was to be directly deposited in the account of Plaintiff with Indian Overseas Bank. In paragraph 37, Trial Court has found that accounts at Exhibit 146 and 147 were prepared by Ex secretary of Defendant Shri Joshi and according to these accounts, as per running bill submitted by Plaintiff, Plaintiff was entitled to recover amount of Rs. 1,80,679/- only for work done till 1/3/1984. It found that compromise bill was then drawn on 26/10/1984. In view of this discussion in paragraph 38, Trial Court has concluded that Defendant was liable to pay amount of Rs. 6,12,130.93 to Plaintiff. Thereafter it has considered in brief oral evidence of DW 1 and DW 2. However there is nothing material in it insofar as exercises undertaken by Trial court to arrive at this figure is concerned. Trial Court has obviously not correctly construed document Exhibit 147 and I have already commented upon it at length in earlier part of this judgment. It is obvious that trial Court has erroneously held Exhibit 146 and 147 as proved and relied upon it. Trial Court has not considered correctness or otherwise of the amount demanded by Plaintiff. It has not considered the impact of adjustment of alleged subsequent cash payments by individual members to Plaintiff for the purposes of calculating entitlement of Plaintiff or amount due to it up to 1/3/1984. Private nature of arrangement between Plaintiff and these individuals or effect of resolution of general body dated 11/3/1984 terminating the contract with Plaintiff is also overlooked. As there was no subsequent approval by General Body, resolution dated 11/3/1984 held the field and in absence of challenge thereto, Court below could not have considered subsequent bills at Exhibit 138 or 141 as compromise did not materialize. In fact there is no resolution of either general body or of managing committee of Defendant authorising the initiation of exercise of alleged compromise. The arbitrators did not deliver any effective award and in any case, Plaintiff itself did not accept suggestion of arbitrators. Latter on also Plaintiff turned around and submitted bill Exhibit 140 separately claiming interest. Alleged accounts certified by Shri Joshi at Exhibit 146 and 147 were apparently wrong. Report of auditor of cooperative department also shows it to be wrong. In short it can be stated that all angles relevant for determination of controversy are not looked into by Trial Court and its findings are therefore not based upon relevant material and evidence as also law on the point.

17. In view of this discussion and answers to questions above, it is more than clear that the judgment & decree of Trial Court is liable to be quashed and set aside and the Appeal needs to be allowed. Accordingly the Judgment & Decree dated delivered by Civil Judge, Senior Division, Amravati in Special Civil Suit No. 113 of 1987 is hereby set aside and said suit is dismissed with costs.

18. Present Appeal is accordingly allowed with costs throughout. Amount of Rs. Six Lakh, if withdrawn as per order of this Court dated 7.12.2005 by Respondent/Plaintiff, be returned back to Defendant/ Appellant, with 8% interest from the date of withdrawal till its refund. Time of two months is given to Respondent to refund the amount along with interest. Decree be drawn accordingly.

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