R.L. KALATHIA & CO. versus STATE OF GUJARAT

Citation: [2011] 1 S.C.R. 391 · Decided: 14-01-2011 · Supreme Court of India · Bench: P. SATHASIVAM · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2011] 1 S.C.R. 391 
R.L. KALATHIA & CO. 
A 
v. 
STATE OF GUJARAT 
(Civil Appeal No. 3245 of 2003) 
JANUARY 14, 2011 
8 
[P. SATHASIVAM AND DR. 8.5. CHAUHAN, JJ.] 
1-
CONTRACT: 
Construction contract - Claim for additional work carried c 
out - Refused on the ground that the claim was laid after 
receiving final payment -Held : If there is accepted claim, the 
court cannot reject the same merely because the contractor 
has issued "No Due Certificate" - Principles as regards claims 
after acceptance· of final bill, enumerated - In the instant case, 
D 
..._ 
the contractor accepted the amount of the final bill under 
protest - The contractor had performed additional work and 
had a genuine claim which was considered in detail and was 
rightly allowed by trial court - High Court without adverting to 
factual details e"ed in reversing the judgment and decree of E 
trial court on the ground of estoppel - Instead of remitting the 
matter to High Court, claim examined on merits - Judgment 
of High Court set aside and judgment and decree of trial court 
---
restored - Estoppel. 
The appellant-contractor, a partnership firm, engaged 
F 
in the construction business, was awarded a contract by 
the respondent-State Government for construction of a 
Dam. During the execution of the said work, the 
· Executive Engineer in-charge of the project, made certain 
.+ 
additions, alterations and variations in respect of certain G 
items of work and directed the appellant to carry out the 
same also. The appellant filed a consolidated statement 
of claims for the additional/altered works, but in vain. 
Ultimately, the contractor filed a suit for recovery of a sum 
391 
H 
392 
SUPREME COURT REPORTS 
[2011] 1 S~C.R. 
A of Rs.3,66,538/- with running interest. The trial court 
decreed the suit for Rs. 2,27,758/- with proportionate 
costs and interest at the rate of 6% p.a. from the date of 
the suit till realization. However, the Division Bench of the 
High Court allowed the appeal of the employer~state 
B Government and dismissed the suit mainly on the ground 
that the plaintiff-contractor had accepted the amount as 
per final bill "under protest" without disclosing any real 
grievance on merits and it amounted to accepting the final 
bill without any valid objection and. grievance. It further 
c held that the conduct of the contractor in accepting the 
final bill and thereafter sending statutory notice and filing 
the suit for recovery of the differential amount was barred 
by the principle of estoppel. Aggrieved, the plaintiff. 
contractor filed the appeal. 
D 
. . 
Allowing the appeal, the Court 
HELD: 1.1 From various decisions of this Court, the 
following principles emerge: (i) Merely because the 
contractor has issued "No Due Certificate", if there is 
E acceptable claim, the court cannot reject the same on the 
ground of issuance of "No Due Certificate"; (ii) Inasmuch 
as it is common that unless a discharge certificate is 
given in advance by the contractor, payment of bills are 
generally delayed, therefore, such a clause in the contract 
F would not be an absolute bar to a contractor raising 
claims which are genuine at a later date even after 
submission of such "No-claim Certificate".; (iii) even after 
execution of full and final discharge voucher/receipt by 
one of the parties, if the said party is able to establish that 
G he is entitled to further amount for which he is having 
adequate materials, he is not barred from claiming such 
amount merely because of acceptance of the final bill by 
mentioning "without prejudice" or by issuing 'No Due 
Certificate'. [para 9) (402-8-E] 
H 
R.L. KALATHIA & CO. v. STATE OF GUJARAT 
393 
\ 
Chairman and MD, NTPC Ltd. vs. Reshmi Constructions, A 
Builders & Contractors, 2004 (1) SCR 62 = (2004) 2 SCC 
663; Ambica Construction vs. Union of India, 2006 (9) Suppl. 
SCR 188 = (2006) 13 SCC 475; National Insurance 
Company Limited vs. Boghara Polyfab Private Ltd., 2008 (13) 
SCR 638 = (2009) 1 SCC 267 - relied on 
B 
1.2 In the instant case, it is true that when the final 
bill was submitted, the plaintiff had accepted the amount 
as mentioned in the final bill but "under protest". It is also 
the specific claim of the plaintiff that on the direction of 
the Department, it had performed additional work and, !C 
therefore, was entitled to additional amount/damages as 
per the terms of agreement. Merely because the plaintiff 
had accepted the final bill, it cannot be deprived of its right 
to

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