Delhi District Court
Aggarwal Associates vs Municipal Corporation Of Delhi on 28 April, 2025
DLCT010176902024
IN THE COURT OF SH. M. K. NAGPAL, DISTRICT
JUDGE (COMMERCIAL COURT)-13, CENTRAL
DISTRICT, TIS HAZARI COURTS, DELHI
CS (COMM.) No. 1240/2024
CNR NO. DLCT01-017690-2024
M/S AGGARWAL ASSOCIATES
Through its Sole Proprietor
Sh. Neeraj Aggarwal
C-6, B/177, Janakpuri,
New Delhi-110058.
........Plaintiff
VERSUS
Municipal Corporation of Delhi
Through its Commissioner,
Civic Centre, Minto Road,
New Delhi-110002.
.......Defendant
Date of Institution : 12.11.2024
Date on which judgment was reserved : 25.04.2025
Date on which judgment pronounced : 28.04.2025
JUDGMENT
1. The plaintiff has filed the present suit seeking recovery of a sum of Rs. 12,61,314/-, along with pendente-lite and future interest, from the defendant.
CASE OF PLAINTIFF
2. The case of plaintiff is that he is a registered contractor of defendant vide registration No. 179/280/IV/Civil dated 04.04.2022 and he has been executing work orders, civil in nature, for the defendant/MCD since long. It has been claimed CS (Comm.) No. 1240/2024 1/23 DLCT010176902024 by plaintiff that the following work orders were awarded to him by defendant for the nature of works as mentioned in the said work orders:-
a) EE M-1 KBZ/SYS/2020-21/56 dated 10.02.2021; and
b) EE M-1 KBZ/SYS/ 2022-23/23 dated 01.03.2023
3. It is the case of plaintiff that he had completed and executed the above work orders to the satisfaction of officials of defendant and no negative remarks were given. It has also been averred by him that officials of the defendant had conducted measurements of the said works done by him and had passed the following final bills in respect to the said work orders:-
Sl. Work Order Nos. andDate of BillsAmount of Bill No. dates passed
1. EE M-1 KBZ/SYS/ 2020-21/56 dated 31.03.2022 4,05,928/- 10.02.2021
2. EE M-1 KBZ/SYS/ 2022-23/23 dated 16.05.2023 7,16,203/-
01.03.2023
Total 11,22,131/-
4. It is further averred by plaintiff that despite passing of the aforesaid bills for a total amount of Rs. 11,22,131/-, neither any payment was released to him by defendant nor he was informed about the reasons for withholding of said amount. It has also been averred that apart from the amounts of final bills, the defendant is also liable to pay to him interest on the above said CS (Comm.) No. 1240/2024 2/23 DLCT010176902024 bill amounts and thus, the defendant is liable to pay him the following amounts in respect to the above said work orders:-
Sl. Work OrderDate ofAmount ofInterest Interest Total No. Nos. andBills passed Bill for period dates
1. EE M-1 31.03.2022 4,05,928/- 01.10.22 79,500/- 4,85,428/-
KBZ/SYS/ to
2020-21/56 16.09.24
dated
10.02.2021
2. EE M-1
KBZ/SYS/ 16.05.2023 7,16,203/- 17.11.23 59,683/- 7,75,886/-
2022-23/23 to
dated 20.09.24
01.03.2023
Total 12,61,314/-
5. It has been averred by plaintiff that he had even got issued a legal notice dated 24.04.2024 and sent it to defendant on 27.04.2024 through speed post, but despite receipt thereof, the defendant did not make any payment to him.
6. It is also averred by plaintiff that cause of action for filing of the present suit arose in his favour and against the defendant firstly on dates when the above work orders were awarded to him and it also arose on various other dates being the dates of passing of final bills and service of legal notice etc. and the same is still continuing and subsisting as his outstanding payment with interest has yet not been made by the defendant.
He has also claimed that present suit is a commercial suit in CS (Comm.) No. 1240/2024 3/23 DLCT010176902024 terms of Section 2 of the Commercial Courts Act; this court has the territorial jurisdiction to try the suit; that he had resorted to the Pre-Institution Mediation Proceedings before filing of the present suit, as per mandatory provisions of the Commercial Courts Act, but the same had failed and further that the suit filed by him is within the period of limitation.
CASE OF DEFENDANT
7. The defendant Corporation in its written statement has taken some vague and general preliminary objections regarding maintainability of the present suit on grounds that the same is liable to be dismissed for want of a cause of action; the plaintiff has not come to the court with clean hands and also that the present suit is pre-mature.
8. However, on merits of the case, the defendant has not disputed the facts that plaintiff was awarded the work of above two work orders and the said works stand already executed by him, though it is the submission of defendant that the said works were not executed upto their satisfaction and there was also a delay of more than two months in execution of the work of one work order dated 10.02.2021. It is also the case of defendant that in the Notices Inviting Tender (NITs) of the above said works, it was specifically stipulated in Clause (iv) thereof that the Circular No. D/EE(P)-III/27/2006-07 dated 19.05.2006 shall be applicable to the extent only which makes modification with respect to Clause 7, 9 & 9A (regarding payment of bills to the CS (Comm.) No. 1240/2024 4/23 DLCT010176902024 contractors). It is also their submission that in terms of the said Circular and the provisions contained Clauses 7, 9 & 9A of the General Conditions of Contract (GCC), the payment of passed bills of a contractor will depend upon availability of funds in a particular head of account from time to time in MCD and the payments of bills are also to be made strictly on queue basis i.e. first the past liabilities have to be cleared and after that, the release of payment for passed bills will be in order of the demand received at HQ under that particular head of account.
9. It is further the case of defendant that the plaintiff being a Class-1 contractor of defendant and having executed many works was well aware of the above Circular and provisions of the above said Clauses of GCC and he was also aware that payment of his bills will take considerable time due to shortage of funds with the defendant. Hence, it is the submission of defendant that the present suit of plaintiff is pre-mature and the same is liable to be dismissed under Order 7 Rule 11 CPC.
10. However, it is also found stated in the written statement filed by defendant that they have already passed the bills of plaintiff in respect to the above said works and the same have been sent to the HQ for payment, but payments could not be made since funds are not available. It is also the submission of defendant that payments would be made to plaintiff on queue basis on availability of funds and plaintiff is well aware of this fact. It is further the submission of defendant that the averment CS (Comm.) No. 1240/2024 5/23 DLCT010176902024 of plaintiff regarding passing of his bills for an amount of Rs. 11,22,131/- by them are wrong averments and they had passed the bills in respect to said works only for an amount of Rs. 9,76,261/-, as per the following details:-
S. Wo. No. &Cont. Amt. Gross Amt. Security+ Recovery Net Amount No. Date EM 1 56 dated 405928 405928 40315 52311 353417 10.02.2024 2 23 dated 716203 716203 58299 93359 622844 01.03.2023 Total payable amount Rs.9,76,261/-
REPLICATION
11. Plaintiff has filed his replication to the written statement of defendant, wherein he reiterated the contents of plaint and denied the contrary averments of written statement. It is also averred by plaintiff that the above Circular dated 19.05.2006 issued unilaterally by the defendant is not binding upon him. He has also specifically averred that the above delay in execution of work of the work order Ex.PW1/2 was only due to the fact that defendant had not handed over to him the site of work in time and hence, extension of time was given by the defendant. ISSUES
12. On the basis of above pleadings of parties, the following issues are found to have been framed by this court vide order dated 27.01.2025:-
(i) Whether plaintiff is entitled to recover the suit amount from defendant? OPP
(ii) Whether plaintiff is entitled for pendente-lite and future interest and if so, at what rate and for which period?OPP CS (Comm.) No. 1240/2024 6/23 DLCT010176902024
(iii) Relief PLAINTIFF'S EVIDENCE
13. The plaintiff Sh. Neeraj Aggarwal being the sole proprietor of his firm named Aggarwal Associates has himself stepped into the witness box as PW1 and he tendered his evidence by way of an affidavit Ex.PW1/A. Besides this, he also tendered in evidence and relied upon the following documents during his statement recorded before the court on 24.02.2025:-
1) Registration Certificate of his firm as Ex. PW1/1 (OSR);
2) Copy of work order No. 56 dated 10.02.2021 as Ex.PW1/2 (admitted by defendant);
3) Copy of work order No. 23 dated 01.03.2023 as Ex.PW1/3 (admitted by defendant);
4) Copies of vouchers/bills passed by the defendant as Ex.PW1/4 & Ex.PW1/5 (admitted by defendant);
5) Copy of the legal notice dated 24.04.2024 as Ex.PW1/6;
6) Postal receipt of the above legal notice as Ex.PW1/7;
7) Tracking report in respect to said notice as Ex.PW1/8;
8) Non-starter report of Mediation Centre, THC as Ex.PW1/9 and
9) Certificate under Section 65B of the Indian Evidence Act regarding authenticity of the above tracking report as Ex. PW1/10.CS (Comm.) No. 1240/2024 7/23
DLCT010176902024
14. Thereafter, on an application under Section 151 CPC moved on behalf of the plaintiff, this court vide its order dated 11.03.2025 had allowed re-opening of his evidence and had also taken on record a fresh certificate under Section 63 of the BSA, 2003 issued by plaintiff regarding authenticity of the above tracking report as it was submitted that the earlier certificate Ex.PW1/10 was furnished under the old or erstwhile Act and on the same date, PW1/plaintiff had also been examined further and the additional affidavit of plaintiff as well as the above fresh certificate came to be tendered in evidence as Ex. PW1/B and Ex.PW1/11 respectively.
EVIDENCE OF DEFENDANT
15. The defendant Corporation had also examined on record only one witness in its defence and to counter the claim of plaintiff and Sh. Atul Kumar, an Assistant Engineer (M)-I of the defendant, is found to have stepped into the witness box as DW1. He had also tendered on record his examination-in-chief by way of an affidavit Ex.DW1/1 containing depositions on the lines of submissions and averments made in the written statement. He further tendered in evidence and relied upon a copy of the provisions contained in Clauses 7, 9 and 9(A) of the GCC as Mark-DA.
16. I have heard and considered the arguments addressed by Sh. Pankaj Roy Kotra, Ld. Counsel for plaintiff and Sh. Apoorv CS (Comm.) No. 1240/2024 8/23 DLCT010176902024 Sisodia, Ld. Counsel for defendant. I have also gone through the case record, as well as the written arguments filed on behalf of defendant.
APPRECIATION OF EVIDENCE AND ISSUE-WISE FINDINGS ISSUE NOs (i) & (ii)
17. Since issue nos. (i) & (ii) are interconnected, for the sake of convenience and to avoid repetition of facts, these issues are being taken up for disposal together.
18. As stated above, the claim of plaintiff raised in this suit is in respect to the work done by him against two work orders and he has also brought on record the copies of said work orders and exhibited the same during his evidence as Ex.PW1/2 & Ex.PW1/3 respectively. These documents have not been disputed from the side of defendant in the affidavit of admission/denial filed by the concerned officer of defendant or even during the course of examination of plaintiff before this court. It is also not in dispute from the side of defendant that the plaintiff has already executed the works of these two work orders Ex.PW1/2 & Ex. PW1/3.
19. Though the defendant Corporation in its written statement has vaguely denied the claim of plaintiff regarding execution of the said works upto their satisfaction, but the above objection is CS (Comm.) No. 1240/2024 9/23 DLCT010176902024 found to have been taken by defendant only for the sake of objections and in a vague manner. There is nothing on record of this case to show or suggest that the defendant had ever pointed out any defect or deficiency in the above said works executed by plaintiff against these work orders nor it is the case of defendant that they had ever sent any letter, e-mail or other communication through any mode through the plaintiff pointing out any such deficiency or defect in the said orders or stating that works in question were not executed by plaintiff as per the given specifications or norms. Moreover, DW1 in his cross examination is also found to have admitted specifically that the plaintiff had completed the work to the satisfaction of defendant.
20. As already discussed, the defendant Corporation in its written statement had taken a specific plea that the work executed by plaintiff against the work order dated 10.02.2021, which is Ex.PW1/2 on record, was delayed for a period of two months. Though the plaintiff in his examination before this court has tried to maintain that he had executed the above works in time, but on a perusal of the first & final bill Ex.PW1/4 prepared and passed by defendant in respect to the said work order, which again is an admitted document of the parties, it is observed that the above submission of defendant is correct. It is so because as per the work order Ex.PW1/2, the given time for completion of the said work was two months and as per the first CS (Comm.) No. 1240/2024 10/23 DLCT010176902024 & final bill Ex.PW1/4 prepared with regard to the same, the schedule date for start of said work was the date of work order itself i.e. 10.02.2021 and it was to be completed by 09.05.2021. This document further shows that the said work actually began on 08.04.2021 and it was completed on 16.07.2021 and thus, it was completed after about two months of the scheduled date of its completion.
21. However, it is also observed on perusal of record that the plaintiff in his replication and while denying the submission of defendant about above delay had specifically claimed that the above delay was due to the fact that the work site was made available to him by defendant after delay and hence, the said delay was condoned by defendant. Despite the above specific claim of plaintiff regarding delayed handing over of the work site to him, DW1 has not thought it proper to bring on record any document or register showing the actual reasons which resulted in above delay and since the defendant has failed produce on record or to rebut the above claim of plaintiff regarding the delay being due to the own conduct of defendant's officials, a legitimate inference can be drawn by this court that the delay was attributable to the officials of defendant and even if the same was not so attributable, it stood condoned as the delayed execution of the said work was accepted by them.
CS (Comm.) No. 1240/2024 11/23DLCT010176902024
22. Moreover, even otherwise, the above delay of around two months in completion of the work of one of the above two work orders i.e. Ex.PW1/2 cannot be considered as fatal to the claim of plaintiff to the extent of denying or rejecting the said claim or his due amount in respect to execution of the said work and at the most, some sort of penalty for the above delay could have been imposed upon plaintiff by the defendant. However, no such penalty is found to have been imposed by defendant upon plaintiff on account of delayed execution of the work of said work order Ex.PW1/2, as no such penalty is being shown to have been deducted from the gross amount of final fill Ex.PW1/4 prepared with regard to the said work order.
23. As already discussed, the defendant Corporation has not denied the claim of plaintiff in respect to execution of the work of above two work orders Ex.PW1/2 & Ex.PW1/3. Further, they have also not denied that they have already approved and passed the bills Ex.PW1/4 & Ex.PW1/5 in respect to the said work orders, but it is their submission that the bills have been passed for the net amounts of Rs. 3,53,417/- & Rs. 6,22,844/- respectively and totaling to an amount of Rs. 9,76,261/- and not for a total amount of Rs. 11,22,131/-, as is being claimed by the plaintiff. It has also been specifically submitted by defendant in its written statement that the said bills have been forwarded to their HQ for payment, but the payment could not be made as the funds therefor are not available and it has to be made to plaintiff CS (Comm.) No. 1240/2024 12/23 DLCT010176902024 on queue basis, as provided in the above Circular dated 19.05.2006 and the provisions of Clauses 7, 9 & 9A of the GCC.
24. Again, even DW1 in his evidence affidavit Ex.DW1/1 and also during his cross examination has made some depositions to the same effect and he stated specifically that the above bills Ex.PW1/4 & Ex.PW1/5 were prepared by their Accounts Department on recommendations of the Executive Engineer (Ex. EN) and he/DW1 had even produced original file in respect to said work orders and containing the above bills before the court during his above examination.
25. Thus, the defendant Corporation in its written statement as well as in its evidence led before the court has not disputed or denied its liability to pay for the amounts of above said two work orders to the plaintiff, though it has disputed the net amounts payable to plaintiff and has also taken a stand that the payment of said amounts to plaintiff has to be on queue basis and it is also subject to availability of funds with them. Further, it is also the stand of defendant that no interest is payable to plaintiff on the above bill amounts.
26. As far as the deductions to be made by defendant of the statutory and other amounts from the above bills, Ld. Counsel for plaintiff has fairly stated that the same may be made and rest of the outstanding amounts of said bills be directed to be paid to him, along with interest in terms of judgment dated 22.03.2018 CS (Comm.) No. 1240/2024 13/23 DLCT010176902024 of the Hon'ble High Court in case of North Delhi Municipal Corporation Vs. Sanjeev Kumar (RFA 430/2017).
27. In the case of North Delhi Municipal Corporation Vs. Sanjeev Kumar (Supra), the Hon'ble High Court of Delhi while disposing of a bunch of appeals arising out of disputes between contractors and different Municipal Corporations in Delhi came to deal with the various issues relating to non-submission of bills by the contractors in relation to such works executed by them, non-payment of amounts of the said bills due to non- availability of funds and the queue basis system being followed by them, release of earnest money or security deposits and payment of interest on the claimed amount etc., in light of provisions contained in Clauses no. 7, 9 & 9A as well as Clauses 17 & 45 of the GCC, by framing the following questions:-
(i) Whether payment of the principal amount can be de-
layed in view of Clause- 7 & 9 of the General Conditions of Contract read with the amendments?
(ii) Whether the refunds of earnest money/security deposit can be delayed in view of Clause 17 & 45 of the General Conditions of Contract?
(iii) Whether interest is payable on delayed payments/re- funds and if so, for which period?
28. After dealing with all the issues extensively, the Hon'ble Court summarized its conclusions and findings in paras 77 to 81 of the judgment in case North Delhi Municipal Corporation Vs. Sanjeev Kumar (Supra) and the same are reproduced as under:-
"77. The General Conditions of Contract i.e., clauses 7 CS (Comm.) No. 1240/2024 14/23 DLCT010176902024 and 9 which are admittedly part of the work orders issued by both the NDMC and the EDMC are being tested in these batch of cases. A contract which stipulates that the consideration would be paid in an unforeseen time in the future based on certain factors which are indeterminable, would in effect be a contract without consideration. Even if the contract is held to be a valid contract, then the concept of 'reasonableness' has to be read into the same. Section46 of the Contract Act and the explanation thereto is clear that "what is a reasonable time is a question off act in each case." A Corporation which gets works executed cannot therefore include terms in the contract which are per se unconscionable and unreasonable as-
a) There is no fixed time period as to when the funds would be available;
b) There is also no fixed mechanism to determine as to when and in what manner the head of account is to be determined and as to how the Contractor would acquire knowledge of these two facts;
c) There is also no certainty as to how many persons are in the queue prior to the Contractor and for what amounts;
d) There is enormous ambiguity in the receipt under the particular heads of accounts
78. These clauses in effect say that the Contractor is left with no remedy if the Corporation does not pay for the work that has been executed. Such a Clause would be illegal and contrary to law. Such clauses, even in commercial contracts, would be contrary to Section 25read with Section 46 of the Contract Act.
79. The clauses do not specify an outer time limit for payment. The expression reasonable time has to be 'a time'. The concept of time itself is ensconced with specificity and precision. Clause 9 is the opposite of being precise. It is as vague and ambiguous as it could be because it depends on factors which are totally extraneous to the contract, namely -
.Allotment of funds to the Corporation by the Government; . Allotment of funds in a particular head; . Allotment of funds for payments who are in queue prior to the contractor;
80. Thus, these factors, which are beyond the control of the Contractor and which would govern the payment of consideration, make the said clauses of the contract completely unreasonable. The clauses have to thus, be read or interpreted in a manner so as to instill reasonableness in them.
CS (Comm.) No. 1240/2024 15/23DLCT010176902024
81. By applying the above said principles, in respect of final bills raised by Contractors for works executed,that have been approved by the Engineer-in-Charge, the Clauses have to be read in the following manner:
a) Reasonable time for making of payments of final bills in respect of work orders up to Rs.5 lakhs shall be 6 months and work orders exceeding Rs.5 lakhs shall be 9 months from the date when the bill is passed by the Engineer-in-Charge.
b) The queue basis can be applicable for the payments to be made in chronology. However, the outer limit of 6 months and 9 months cannot be exceeded, while applying the queue system.
c) The payments are held to become due and payable immediately upon the expiry of 6 months and 9 months and any non-payment would attract payment of interest for the delayed periods.
d) A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable. The amendment does not, however, have a condition that no interest is payable for delayed payment. Such a condition exists only in Clause 7.
Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months and 9 months to be the reasonable periods for which the payments of the final bills can beheld back. Obviously, therefore, if payments are made,whether on a queue basis or otherwise, beyond the period of 6 months and 9 months, interest is payable.
e) To the extent that queue basis is applied only for clearing of payments which do not extend beyond the period of 6 months and 9 months period, it is reasonable. However, if the queue basis is applied in order to make Contractors wait for indefinite periods for receiving payments, then the same would be unreasonable and would have to therefore be read down.
f) The Security amount/Earnest money deposited would be refundable upon the fulfilment of the conditions contained in Clauses 17 and 45 of the General Conditions of Contract. Interest would be payable on delayed payments."
(emphasis supplied)
29. Further, while making the above observations, the Hon'ble High Court had also laid down the following guidelines CS (Comm.) No. 1240/2024 16/23 DLCT010176902024 to be followed by the contractors and the Corporations in such matters:-
"1. Along with the Work Order, all the Clauses of the General Conditions of Contract should be attached;
2. On the award of the Work Order, periodic inspections of the work being carried out should be done by the Engineer-in- Charge;
3. If possible, photographs of the works at different stages should be taken and maintained on the record;
4. Interim bills should be submitted by the Contractor - duly certifying the work which has been carried out;
5. Final bills should be submitted by the Contractor - duly certifying the work carried out along with photographs;
6. The Bill should be scrutinised by the Engineer-in-Charge, works should be recorded in the measurement book and thereafter, the bill should be passed;
7. Once the Bill is passed, the payment schedule of 6 months and 9 months should be adhered to. Delay in payments would result in Interest being levied;
8. For refunds of Security deposit and Earnest Money deposit, the Contractor should unscrupulously comply with the conditions in Clauses 17 and 45. For refunds to be made, payment of final bill need not be awaited. Once the conditions of Clauses 17 and 45 are complied with and the final bill is passed, refunds ought to be made;
9. In suits relating to recovery of Contractor s dues, all the evidence including the NIT, General Conditions of Contract, periodic inspection reports, Final bill as submitted, Final bill as passed, Measurements carried out, Photographs etc., should be produced and duly exhibited.
10. It infrastructure ought to be created to maintain records of the Work Orders, inspection reports, final bills, photographs etc., digitally, as it is noticed that the trial court record does not contain all the relevant documents and in several cases, different CS (Comm.) No. 1240/2024 17/23 DLCT010176902024 versions of clauses are relied upon by both sides, bills are not properly understandable and there is no evidence of actual inspections or measurements having been taken. Maintenance of digital records will make it more transparent and easily accessible for the officials and for production in the Court in case of future litigation."
30. The above propositions of law also laid down in one of the connected cases titled as North Delhi Municipal Corporation Vs. Vipin Gupta, RFA-160/2017 disposed of on the same date by the Hon'ble High Court through a separate judgment again came to be reiterated by the Hon'ble High Court in case North Delhi Municipal Corporation Vs. M/S Barahi Construction, RFA (Comm) 6/2021 and CM Appls. 10185-10188/2021 decided on 15.03.2021.
31. Coming back to facts of the present case, it has already been held above that the plaintiff had executed the works in question to the satisfaction of defendant and also within a time acceptable to defendant. It is also the admitted case of defendant Corporation that it had even passed the bills Ex. PW1/4 & Ex. PW1/5 in respect to the said works executed by plaintiff and though the net amount of these bills i.e. the amounts meant to be paid to plaintiff after deductions, are shown as Rs. 3,53,417/- & Rs. 6,07,844/- in the bills, but in written statement of defendant, it has been stated that the amount payable to plaintiff against the work order Ex.PW1/5 is Rs. 6,22,844/- and thus, a total net amount of Rs. 9,76,261/- is payable to plaintiff. It is also the admitted case of defendant that they had already sought the CS (Comm.) No. 1240/2024 18/23 DLCT010176902024 approval from their HQ for payment of the above said amount(s) to plaintiff and the same could not be paid to him only because of the fact that funds therefor are not available and the amount shall be paid as per the queue basis system.
32. When the above oral and documentary evidence on record is tested in the light of directions given and guidelines laid down by the Hon'ble High Court in the above said case, it is found that both the parties have been guilty of not following the said guidelines or not complying with the said directions of the Hon'ble High Court and the defendant and contractors are still continuing with the same practice, where the defendant/MCD is preparing the bills in respect to such work orders on their own and without asking or insisting for submission of bills by the contractors. However, this court is of considered opinion that in such a case, it will be highly unjustified to punish or penalize the plaintiff by not allowing his claim against the above work orders, when he has already executed the said works for defendant at his own costs and the same are even found to have been executed without any defect or deficiency and the execution thereof stands accepted by defendant.
33. Hence, once the defendant has admitted its liability to pay the amounts of above said bills passed by it against the above work orders awarded to the plaintiff and the works stand already executed by plaintiff and the defendant had even initiated the CS (Comm.) No. 1240/2024 19/23 DLCT010176902024 process for arranging funds to pay the said amounts to plaintiff, it will also be unjust on the part of defendant to withhold the amounts of such bills for an indefinite period on the pretext of queue basis or non-availability of funds, as per the terms contained in above Clauses of GCC, a copy of which has also been tendered in evidence by DW1 as Mark-DA, and the Circular dated 19.05.2006. It is observed that in the above said case, the Hon'ble High Court had even considered the effect of above Circular and the above directions/guidelines have been given while considering the above issues as a whole in light of the said Circular and the relevant provisions of GCC.
34. As already discussed, the Hon'ble High Court in above said case has condemned the system of payment on queue basis by the Corporations to contractors while holding that any Clause or stipulation in a contract, which defers the payment for consideration of a contract for an unforeseen time in future or makes it dependent on certain indeterminable factors, would render such a contract to be without consideration and will term it to be an illegal contract. The Hon'ble High Court was further of the view that the above queue system can be followed by the Corporations only for the limited period of 6 months or 9 months, as provided in Clause 9 of the GCC and as depending upon value of the bills, and after that period, the Corporations shall be liable to pay interest on the bill amounts to contractors.
CS (Comm.) No. 1240/2024 20/23DLCT010176902024
35. Thus, in view of the above factual and legal discussion, the plaintiff is being held entitled to recover the amounts of Rs. 3,53,417/- & Rs. 6,22,844/- i.e. total amount of Rs. 9,76,261/- from defendant for the works executed by him against the above two work orders Ex.PW1/2 & Ex.PW1/3. Further, in view of the propositions of law laid down by the Hon'ble High Court in above said case, the plaintiff is also being held entitled to simple interest on the net payable amounts of the above said bills @ 8% pa from the date of expiry of a period of 6/9 months, as the case may be, from the respective dates of passing of the said bills by defendant till the said amounts are recovered or realized from defendant.
36. As far as the release of security and earnest money amounts of plaintiff are concerned, it is observed that no prayer or relief to this effect has been made by plaintiff in the prayer clause nor even the said amounts have been stated in the plaint. Hence, on this aspect, it is being observed that the plaintiff may submit the requisite documents to defendant in terms of provisions contained in Clauses 17 & 45 of the GCC and the guidelines/directions given by the Hon'ble High Court in the above said case regarding release of the said amounts or the balance thereof and on submission of the same, the defendant shall process the claim of plaintiff for release of these amounts without any unnecessary delay.
CS (Comm.) No. 1240/2024 21/23DLCT010176902024 Issues Nos. (i) & (ii) are, therefore, accordingly decided in favour of the plaintiff and against the defendant.
37. It has not been disputed on behalf of defendant that the present suit is in respect to a commercial dispute as defined by Section 2(1)(c) of the Commercial Courts Act, 2015 and also that this court has the territorial as well as pecuniary jurisdiction to entertain and try the present suit. Further, it is also not in dispute that the plaintiff had resorted to Pre-Institution Mediation Process before filing of the present suit, in terms of Section 12A of the above said Act, but the same had failed. The non-starter report dated 07.09.2024 Ex.PW1/9 given by the Mediation Centre, DLSA, Central District is also found to have been placed on record by plaintiff and it shows that though a notice upon defendant was duly served, but none on behalf of defendant had joined the said proceedings. Further, the above work orders Ex.PW1/2 & Ex.PW1/3 have been issued on 10.02.2021 & 01.03.2023 and the limitation for filing of the present suit has to commence from the respective dates of completion of the said works, which stood completed on 16.07.2021 & 30.04.2023 respectively. The present suit has been filed by plaintiff on 12.11.2024 and when the plaintiff is given benefit of exclusion of Covid affected period from 17.07.2021 till 28.02.2022 in terms of the guidelines laid down by the Hon'ble Supreme Court vide judgment/order dated 10.01.2022 passed in case of Re: Cognizance for Extension of Limitation, CS (Comm.) No. 1240/2024 22/23 DLCT010176902024 bearing Suo Motu Writ Petition No. 3 of 2020 and also of the period from 05.06.2024 to 07.09.2024 spent in Pre-Institution Mediation qua the first work order Ex.PW1/2, the present suit filed by him is held to be within the prescribed limitation period of three years in respect to both the work orders.
ISSUE NO. (iii) RELIEF
38. In view of the above discussion, the present suit filed by plaintiff is being allowed and he is held entitled to recover the following amounts from defendant:-
(i) An amount of Rs. 9,76,261/- being the gross amount of the amounts payable to plaintiff against the work orders Ex.PW1/2 & Ex.PW1/3 and of the final bills Ex.PW1/4 & Ex.PW1/5 prepared and passed by defendant in respect to the said work orders.
(ii) Simple interest on the above amount of the above said two bills @ 8% pa from the date of expiry of a period of 6/9 months, as the case may be, from the respective dates of passing of the said bills by defendant till the said amounts are recovered or realized from defendant.
39. Besides the above amounts, the plaintiff is also being awarded costs of the present suit as well as the Pleader Fee as per Rules framed by the Hon'ble High Court.
40. Decree sheet be drawn accordingly and file be consigned to the Record Room after due compliance.
Digitally signedAnnounced in the open court MK by M K NAGPAL
Date:
NAGPAL 2025.04.28
Dated: 28.04.2025 16:07:24 +0530
(M. K. Nagpal)
District Judge, Commercial Court-13
Central District, Tis Hazari Courts,
Delhi/28.04.2025
CS (Comm.) No. 1240/2024 23/23