Chander Singh vs. State Of Haryana And Others

Facts

The petitioner, Chander Singh, filed a writ petition seeking release of payment for work executed under work orders issued by the Executive Engineer, Public Health Engineering Division No.1, Rohtak. The petitioner claimed that despite completing the work to the satisfaction of the respondents, payment for several bills totaling ₹2,62,444.00, along with GST and 18% interest, remained pending. The petitioner had served a legal notice on November 21, 2019. The respondents, in their written statement, admitted that payments were released, albeit with delay, but contended that the work orders did not contain any provision for payment of interest on delayed payments, thus making it not payable.

Held

The Court held that the petitioner is entitled to interest on the delayed payment. It reasoned that Section 3 of the Interest Act, 1978, empowers courts to allow interest on debts wrongly withheld, unless there is an express prohibition in the contract. The absence of an interest clause in the work orders cannot be construed as an express prohibition. The Court cited Supreme Court precedents in Thazhathe Purayil Sarabi, Union of India Vs. Tata Chemicals Ltd., and Manalal Prabhudayal Vs. Oriental Insurance Company, which establish that interest is a compensation for the wrongful retention of money and that the grant of interest should not be ordinarily interfered with unless ex-facie bad in law. The Court found that the respondents failed to refer to any provision showing an express prohibition against the award of interest or that the statute would not be applicable. Therefore, the Court directed respondent No.3 to pay interest at the rate of 6% per annum on the delayed payment from the date of the legal notice until actual realization, to be paid within six weeks.

Key Issues

1. Whether the petitioner is entitled to interest on the delayed payment of bills for work executed, despite the absence of an express clause for interest in the work orders, under the provisions of the Interest Act, 1978? The petitioner argued that the Interest Act, 1978, specifically Section 3, allows for the award of interest where a debt has been wrongly withheld, and the absence of an interest clause in the contract does not amount to an express prohibition against its award. The petitioner relied on Supreme Court judgments emphasizing that interest is a compensation for the denial of the right to utilize money. The respondents contended that since the work orders did not stipulate payment of interest, and there was no express provision for it, the petitioner was not entitled to claim interest. They argued that the absence of a clause for interest meant it was not payable.