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PETITIONER: M/S GAUTAM CONSTRUCTIONS AND FISHERIES LTD.

       Vs.

RESPONDENT: NATIONAL BANK FOR AGRICULTURE & RURAL DEVELOPMENT & ANR.

DATE OF JUDGMENT:       28/07/2000

BENCH: M. Jagannadha Rao. & Doriswamy Raju.

JUDGMENT:

Raju, J.

The controversy involved for consideration in these appeals is in a  very narrow compass.  The appellant M/s Gautam Construction  & Fisheries  Ltd.,  and  the  1st   respondent  National  Bank  for Agriculture  and  Rural  Development,  Bombay,  entered  into  an agreement  for  the  sale and purchase  of  office  accommodation admeasuring 48,000 square feet of built up area together with the land  at  the rate of Rs.400/- per square feet of built up  area. The  transaction is governed by two agreements and whereas  under the   principal   agreement,   the   total  amount   payable   is 1,20,00,000/-  at  the rate of Rs.250/- per sq.  ft.  for  48,000 sq.   ft.  Under the subsidiary agreement, provision was made for amenities,  extra works, fittings etc.  in a payment of  Rs.150/- per sq.  ft.  and that is how the total rate constituted Rs.400/- per  sq.   ft.   Though  originally there  was  a  provision  for construction  of  stilt for parking cars, subsequently  what  was desired  and  constructed  was a basement for  car  parking.   It appears  that the conveyance of the buildings was to be after the construction of all floors and as further agreed upon between the parties  and that it was a specific term of agreement between the parties  also that no separate consideration shall be payable  at the  time  of  conveyance  other than that which  was  agreed  to between the parties under the agreements.

Disputes arose between the parties as to the actual amounts to be                                                                JJ paid,  though the building has been completed and handed over and payments  have been made.  As against the claim of the  appellant for an additional cost of Rs.48,36,000/-, the 1st respondent made certain  counter claims in a sum of Rs.85,63,781/- with  interest also  claimed  by  both the parties on the  amounts  respectively claimed   by   them.   The  matter   was  referred  to  the   2nd respondent-Arbitrator  and  he passed an Award on 24.5.1990.   It may  be  stated  at this stage that the dispute  in  the  present proceedings  pertains  to only the amount claimed and awarded  by the  Arbitrator and the courts below in respect of 12090 sq.  ft. of  the basement portion provided for car parking in lieu of  the earlier  agreed  stilt, and the rate, if at all to be allowed  in respect  of the same.  So far as the Arbitrator is concerned,  he allowed for the basement portion also at the rate of Rs.400/- per sq.   ft.  with interest at 18% p.a.  from the date of submission of the final bill, viz.  21.12.1987, till date of payment.  There is  no dispute with reference to the payment of an extra sum  for

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the  extra area of 870.30 sq.  ft.  and costs of extra items  and deposit  made  by the appellant with the Electricity Board.   The Arbitrator  totally  rejected all counter claims made by the  1st respondent-Bank.

The  appellant filed O.P.  No.216 of 1990 for a direction to  the Arbitrator  to  file the Award into Court and make it a  Rule  of Court  by  passing  a decree in terms of the Award for a  sum  of Rs.78,02,247.15   with   interest    due    thereon.    The   1st respondent-Bank  filed O.P.  No.483 of 1990 for setting aside the Award dated 24.5.90.  The learned Single Judge of the Madras High Court  by  a judgment dated 4.1.1991 sustained the claim  of  the appellant for the basement area of 12090 sq.  ft.  at the rate of Rs.400/-  per sq.  ft.  though the interest was allowed only from the date of the judgment at 18% p.a.  on the sum of Rs.48,36,000, in question.  The 1st respondents counter claims were allowed in part  only  and  there is no need to go into the details  of  the same.   Aggrieved, the 1st respondent filed O.S.A.  Nos.  75 & 76 of 1991 before a Division Bench.  As found stated in the judgment of  the  Division Bench dated 1.8.1996, under challenge  in  this Court,  the contest in the appeals before the Division Bench  was only  with  reference  to  the additional  cost  of  construction relating  to  the basement area for car parking and the  rate  of interest  claimed  at  18% p.a.  as against the  agreed  rate  of Rs.12% p.a.  in the contract.  The learned Judges of the Division Bench  held that the 1st respondent was bound to pay the cost  of construction  for the basement but it should be only at the  rate of Rs.150/- for the extent of 12090 sq.  ft.  and not at the rate of  Rs.400/-  per  sq.   ft.  as allowed by  the  Arbitrator  and affirmed  by  the  learned Single Judge.  So far as the  rate  of interest  is  concerned, it was held to be at 12% p.a.  only  and not  at 18% p.a.  since the agreed and contractual rate was  only of  12% p.a.  and the same was ordered from the date of  judgment of  the  learned Single Judge, viz.  4.1.91.  The Division  Bench had also noticed the fact that the entire decree amount deposited in Court was allowed to be withdrawn under orders of Court - half without  furnishing  security  and the other half  on  furnishing security  and  it  was further made clear that  pursuant  to  the judgment  of the Division Bench the appellants will repay and the 1st  respondent  is entitled to the refund of the  excess  amount drawn  by them.  Hence, the above appeals against the judgment of the Division Bench.

Heard Mr.  T.L.  Viswanatha Iyer for the appellant in the appeals and Mr.  Dushyant Dave for the 1st respondent-Bank.  On a careful consideration of the respective submissions of the learned senior counsel  appearing on either side, we are of the view that though no  exception could be taken to the decision directing payment by the  1st  respondent-Bank  for  the area of 12090  sq.   ft.   of basement  portion  of the building for car parking, the award  of the  sum at the rate of Rs.150/- seem to us to be unwarranted and unjustified,  having  regard  to the very terms of  the  contract which  provided for payment at the rate of Rs.250/- per sq.   ft. and  an  additional sum of Rs.150/- for amenities of  the  nature mentioned  therein.   The  basement portion meant  only  for  car parking  cannot  be equated to the regular office portion of  the ground  and  other  floors  agreed to  be  constructed  with  all stipulated  amenities and though the claim of Rs.400/- on  behalf of  the  appellant seem to be far fetched and unwarranted on  the terms of the contract, the reasonable rate at which the appellant could claim for reimbursement in respect of the basement area for car  parking  constructed in lieu of the initially  agreed  stilt portion  for  the very same purpose of car parking only,  at  the rate  of Rs.250/- and nothing more since for the said portion, if at  all the rate agreed under the principal agreement at Rs.250-/

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will  apply and could alone be allowed.  Viewed in the context of the  principle of quantum meruit also we feel that the said  rate is  reasonable and both the claims made for the appellant at  the rate  of  Rs.400/-  per sq.  ft.  as well that made  by  the  1st respondent  at Rs.150/- appears to be on the other extremes,  and without any rationale or just and reasonable basis of law as well the  terms  of  the contract.  We, therefore,  partly  allow  the appeals  by  awarding the rate of Rs.250/- per sq.  ft.  for  the extent of 12090 sq.  ft.

So  far as the interest is concerned, no exception could be taken to  the  award at the rate of 12% p.a.  The grant of interest  at 18%  p.a.   is  directly  opposed to the specific  terms  in  the contract  and  it  is not permissible for the Arbitrator  or  the Court  dealing  with the validity of the award to award a  higher rate  than the mutually agreed rate, which is binding on parties. The  challenge  to  the judgment of the Division  Bench  in  this connection fails and shall stand rejected.

Mr.   Dushyant  Dave  reiterated  that this  Court  should  order restitution of the excess sum drawn by the appellant under orders of  the  High  Court out of the sum deposited in the  Court  with interest  at  18%  p.a.   We find even  the  Division  Bench  has indicated  about the right of the 1st respondent to get refund of the  excess drawn from the Court deposit and the liability of the appellant  to return the same.  Since, interest at 12% p.a.   has been  allowed  in favour of the appellant for the amounts due  to the  appellant,  it is just and necessary and reasonable too,  to only  order for restitution by the appellant of the excess amount withdrawn,  with interest due thereon also at 12% p.a.  from  the date of such excess withdrawal till date of repayment.

The appeals are ordered on the above terms.  The parties will bear their respective costs.