M/S Balaji Motor Parts Crasher Market Billowa Nakta Patha Through Proprietor Satish Prajapat vs. The State Of Madhya Pradesh

Held

The Court held that the petitioner is entitled to claim simple interest on the admitted principal amount due to the inordinate delay in payment. The Court reasoned that once the work executed by the petitioner was accepted by the respondents and the payment remained withheld for a considerable period without any justifiable reason, the petitioner could not be deprived of compensation by way of interest. The Court noted that the respondents, being a public authority, were expected to discharge their contractual obligations within a reasonable time. The Court directed the respondents to pay simple interest at the rate of 6% per annum on the admitted amount of Rs. 8,24,500/- for the period commencing from 04.10.2024 (date of invoice) till 19.05.2026 (date of actual payment). The interest amount is to be calculated and paid within four weeks of receiving a certified copy of the order. No other claims were adjudicated.

Facts

The petitioner, M/s Balaji Motor Parts, undertook repair work on a Fire Brigade Vehicle for the State of Madhya Pradesh, as per a tender dated 14.05.2024 and work order dated 31.07.2024. The work was completed and the vehicle handed over on 01.10.2024. An invoice for Rs. 8,24,500/- was raised on 04.10.2024. Despite acceptance of the work and repeated requests, payment was delayed. The principal amount of Rs. 8,24,500/- was eventually paid on 19.05.2026, after statutory deductions including GST, Income Tax, and Labour Tax. The petitioner's grievance was confined to the claim for interest on the delayed payment, as the principal amount had been released.

Key Issues

1. Whether the petitioner is entitled to claim interest on the delayed payment of the principal amount for the repair work carried out on the Fire Brigade Vehicle, under Article 226 of the Constitution of India? The petitioner argued that the principal amount of Rs. 8,24,500/- was paid after an inordinate delay of approximately one and a half years from the invoice date. They contended that since the work was accepted and the payment was withheld without justifiable reason, they are entitled to compensation in the form of interest for the delayed release of their admitted dues. The petitioner relied on the principle that public authorities are expected to discharge their contractual obligations within a reasonable time. The respondents did not dispute that the principal amount had been paid after statutory deductions. They did not raise any specific arguments against the claim for interest.