- (1.) These appeals by special leave arise from the judgment of the division bench of the A. P. High court in Memo of Crossobjection in CMA No. 191 of 1975 dated 23/4/1975. The appellant had entered into a contract on 16/3/1965 to construct foodgrains godown at Karimnagar. In execution thereof, a dispute had arisen whether the appellant had executed the work as per the contract and is entitled to certain sums of money withheld by the engineer and also to the interest payable thereon at 12% etc. The dispute has been referred to the Arbitrator, a retired Chief Engineer, who in his Award dated 12/4/1972 awarded a sum of Rs. 27,776. 00 with interest at 12% on the amounts wrongfully withheld by the engineer. We are concerned in these appeals only with the entitlement of interest on the amounts withheld by the engineer. The division bench concluded, while negativing the claim for interest, thus: "We are, however, inclined to agree with the first ground given by the court below in negativing the claim for interest. Under clause 69 of MDSS which has to be treated as part of the contract, it is provided 'nor shall the contractor be entitled to interest upon any guarantee fund or payments in arrears, nor upon any balance which may, on the final settlement of his accounts, be found to be due to him'. Even if it is assumed that the recoveries from the bills were wrongfully made, such sums would be sums which would be found due to the contractors on the final settlement of accounts. "
(2.) We are not concerned with the correctness of the views expressed on other issues as the State did not file appeals. Shri Kanta Rao, the learned counsel for the appellant contended that when the appellant had executed the work within the period, in terms of the contract, and the officials of the respondent had wrongfully withheld the due payment, on the respective dates, the appellant is entitled to the interest on the amounts wrongfully withheld. He further contends that clause 69 of the MDSS is inapplicable to the facts of this situation. In support thereof, he places reliance on the judgment of a learned Single Judge of that court reported in APSRTC v, P. Ramanareddi.
(3.) The question, therefore, is whether the appellant is entitled to payment of interest from the respective dates on which the amounts were withheld by the concerned engineer and the dispute is arbitrable Clause 69 of MDSS reads thus: "69.Interest on money due to the contractor. (a) No omission by the Executive Engineer or the Sub-Divisional Officer to pay the amount a due upon certificates shall vitiate or make void the contract, nor shall the contractor be entitled to interest upon any guarantee found or payments in arrear, nor upon any balance which may, on the final settlement of his accounts, be found to be due to him. " A reading of this clause gives an indication that interest on money due to the contractor was negatived in the following circumstances: (1 The omission by the Executive Engineer or Sub-Divisional Officer to pay the amount due upon certificates shall not vitiate or make the contract void; (2 The contractor shall not be entitled to interest upon: (A) any guarantee found; (B) payments in arrears; and (C) upon any balance which may on final settlement of his account to be found to be due to him. The question is whether the contractor is entitled to the payment of interest on the amounts wrongfully withheld from the respective dates. Clause (c) of the second part of clause 69 of the MDSS would indicate that there should be a final settlement of the account and upon its settlement, if it is found to be due and payable to the contractor, on such amount also the contractor is not entitled to the payment of interest as contracted under clause 69 of the MDSS. When such is the position, whether the contractor is entitled to payment of interest on mere making a claim and reference made to the arbitrator and whether the arbitrator gets jurisdiction to award interest on the amount due from the respective dates on which the payments were withheld by the engineer concerned ;