Delays from 1988, a suit in 1996, a decree in 2005 and interest finally awarded in 2026

Justice Mohammed Nias C.P. allows a contractor's appeal against the rejection of his claims, awarding interest at twelve per cent on four separate periods of delay in payment, with a further twelve per cent from the date of suit until realisation.

An engineering contractor did work for the Kerala State Electricity Board on an augmentation scheme and was paid late — in instalments whose delays ran from early 1988 into 1989. He sued in 1996. He got a decree in 2005 that rejected several of his claims. Both sides appealed in 2006. On 7 October 2026 the Kerala High Court allowed his appeal, dismissed the Board's, and awarded him interest on each of four delayed payments plus twelve per cent on those sums from the date of the suit until they are realised.

Two appeals from one decree

The appeals arose out of the judgment and decree of 5 September 2005 of the First Additional Sub Court, Thiruvananthapuram in a suit of 1996. The first appeal was filed by the plaintiff-contractor, aggrieved by the rejection of several of his claims. The second was filed by the Board and its officials, and was confined to a single head — the grant of Relief 'A', escalation on de-watering charges, which the trial court had allowed in the contractor's favour. Both arising from the same decree, they were disposed of together.

The dispute had its origin in tenders invited by the Board for an augmentation scheme. The reliefs claimed in the suit were lettered A to L, and the appeal turned on which of them the trial court should have granted.

A no-interest clause, strictly construed

The Board's defence to the interest claims rested on a clause of the contract, and the way the Court read it is the legal substance of the judgment.

The starting point is restitutionary: a person kept out of money legitimately due to him “has a right to be compensated for that deprivation, whatever name is given to the compensation”, and a clause purporting to take that right away is to be strictly construed for precisely that reason.

On the authorities — Reliance Cellulose Products Ltd. v. Oil and Natural Gas Corporation Ltd., (2018) 9 SCC 266, Ferro Concrete Construction (India) Pvt. Ltd. v. State of Rajasthan, 2025 INSC 429, and Oil and Natural Gas Corporation Ltd. v. G and T Beckfield Drilling Services Pvt. Ltd., 2025 INSC 1066 — a clause of this kind “will not be read as an express bar unless its language clearly and specifically covers the very contingency relied upon”, and a bar on interest for delayed payment is not, without more, to be inferred as covering every kind of default.

So construed, the clause could protect the Board only where there was in fact a genuine and continuing “dispute, difference or misunderstanding” between its Engineer and the contractor. “It cannot be invoked to shield the Board's own unilateral doubt, particularly one that persists after the very doubt has been authoritatively resolved.” A decision the Board pressed for the proposition that a clearly worded clause denying interest must be given full effect was distinguished on that basis.

What the money looks like

The operative part is a table of delays, and it repays reading as a record of how a public body paid its contractor.

On one sum of Rs 26,37,982.53, interest at twelve per cent per annum was awarded for the period of delay ending 16 March 1988, amounting to Rs 7,94,121.90. On Rs 16,34,524, interest at the same rate for the delay ending 22 August 1988 came to Rs 4,19,437. On Rs 10,23,241, the delay ending 27 February 1989 produced Rs 1,56,193.75. And on Rs 32,97,978.92, interest for the period from 1 June 1988 to 9 August 1989 came to Rs 4,71,656.16. Each of those four sums carries a further twelve per cent per annum from the date of the suit — 23 September 1996 — until realisation. A separate relief gave the contractor a refund of Rs 3,00,000 with twelve per cent interest from 6 June 1990 until realisation.

The escalation on de-watering charges granted by the trial court was upheld, which disposes of the Board's appeal. The decree in all other respects, including the reliefs not in appeal, stands undisturbed.

Order

The contractor's appeal was allowed, with costs. The Board's appeal was dismissed.

The judgment carries at its foot an unusual record of its own progress: reserved on 11 August 2026, dictated on 20 August, the draft placed on 21 August, corrected on 6 October and uploaded on 7 October. Few judgments show their working that way, and it is a small act of accountability about the one kind of delay a court can account for.

The arithmetic of the rest is harder to look at. The payments were late in 1988 and 1989. The suit was filed in 1996, seven years on; decreed in 2005, nine years after that; and the appeals took a further twenty-one years to decide. The interest now awarded runs from the date of suit, so the thirty years since have not gone uncompensated — but the contractor who did the de-watering is being paid for it thirty-eight years later.