Delhi District Court
M/S Bhandari Engineers And Builders Pvt ... vs . M/S D. S. Constructions Ltd. & Anr. on 27 September, 2018
M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
IN THE COURT OF DR. AJAY GULATI, ADDL. DISTRICT JUDGE,
SAKET COURTS, SOUTH DISTRICT, NEW DELHI
In the matter of
CS No.207707/2016
Filing No.15718/2008
CNR No. DLST010000532008
M/s Bhandari Engineers and Builders Pvt Ltd.,
a company incorporated under the
Companies Act 1956, having its
Registered Office at Bhandari House,
91, Nehru Place, New Delhi
................Plaintiff
Versus
1. M/s D. S. Construction Ltd.
Having its Registered Office at
C66, South ExtensionII,
New Delhi110 049
2. N. D. Mehra
Director
M/s D. S. Construction Ltd.
C66, South ExtensionII,
New Delhi110 049
.............Defendants
Date of Institution : 07.05.2008
Date of reserving the judgment: 27.09.2018
Date of pronouncement : 27.9.2018
Decision : Dismissed
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M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
SUIT FOR RECOVERY OF RS.69,00,000/ ALONGWITH
INTEREST, PENDENTELITE AND FUTURE
JUDGMENT
1. The present suit has been filed for seeking recovery of Rs.69,00,000/ (along with interest @ 18%) from defendant no. 1 as unpaid dues of a work contract which was executed by the plaintiff and due execution of which was acknowledged by defendant no. 1. However, defendant no.1 has refuted the liability to pay the suit amount on the ground that plaintiff and defendant no.1, vide a tripartite agreement, had foreclosed the execution of all the pending works (vide a Foreclosure and Settlement Agreement dt. 05.03.2005) and also finally settled all the claims of the plaintiff qua defendant no.1 for a total sum of Rs. 55 lacs which amount was admittedly received by the plaintiff. However, plaintiff contended that the Foreclosure and Settlement Agreement dt. 05.03.2005 was in respect of 2 specific contracts: package contracts S1 and S2 for construction of 2 flyovers on Delhi - Gurgaon expressway, and not in respect of the work contract for which the suit had been instituted i.e. contract for the construction of storm drains and box culverts along the Delhi - Guragon expressway. A further detailing of certain facts would be necessary to comprehend CS No.207707/2016 Page No. 2 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
the entire scope of the dispute raised in the present suit.
2. Plaintiff, which is a limited company and engaged in high end construction projects, was a subcontractor for carrying out a part of the work of 8 laning of access controlled Delhi - Gurgaon National Highway from 14.30 km to 42.00 km. The main contract was awarded by the National Highway Authority of India (NHAI) to JPDSC Ventures Ltd. In turn, JPDSC Ltd. had engaged Jayprakash Industries Limited (JIL) for the said contract which had further sub contracted a part of the main project i.e. construction of flyovers at Rao Tula Ram marg and at Palam junction to the plaintiff. The subcontracts were awarded to the plaintiff vide letters dt. 27.1.2003 issued by Jayprakash Industries Limited. Subsequently, vide a multiparty agreement which included the plaintiff and defendant no. 1, defendant no. 1 i.e. DSC Ltd. stepped into the shoes of Jayprakash Industries Limited for all intents and purposes.
3. It appears from the pleadings and documents on record (especially Ex. Pw1/7) that the sub - contract awarded to the plaintiff did not gather much progress due to procedural CS No.207707/2016 Page No. 3 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
delays, in particular due to the change of design of the flyovers by NHAI. Since the machinery and material procured by the plaintiff at the construction site was lying idle, plaintiff agreed to and consequently, was awarded the work of construction of storm drains and box culverts along the same highway (New Delhi - Gurgaon 8 laning expressway) for which the sub contract of construction of flyovers had been awarded to it. This work was awarded vide a separate letter dt. 10.6.2004 and was successfully completed by 31.8.2004. Possession of the completed work was also taken over by defendant no.1. There is no dispute regarding this aspect. It is also not in dispute that the said work was taken up by the plaintiff to mitigate the losses accumulating on account of subcontract of flyovers getting delayed/frustrated. In respect of the work of construction of drains and culverts, plaintiff claims to have submitted 2 bills which were cleared by defendant no. 1. The final bill however (and which is a very relevant fact) was submitted on 9.5.2005 i.e. after the signing of Foreclosure and Settlement agreement dt. 05.03.2005 and almost 8 months after the work of construction of drains and culverts was completed on 31.8.2004 (and handed over to the defendant no. 1).
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4. Subsequently, due to further delays from the side of NHAI and taking into account the losses being suffered by the plaintiff on account of idle machinery and material, liability of which (losses) would have had to be borne by defendant no.1 being the main contractor, defendant no.1 entered into a tripartite Foreclosure and Settlement Agreement which has already been referred to at the outset.
5. It is not in dispute that the plaintiff was required to be paid separately for the work of construction of storm drains and box culverts. Infact, the whole purpose for the plaintiff to take up this extra work was to make some money so as to mitigate the losses being suffered by it on account of delay in the execution of main sub contract of construction of flyovers. Defendant itself has highlighted this aspect in its written statement. The dispute however is in regard to the scope of the Foreclosure and Settlement Agreement. The plaintiff maintains that since the work of construction of drains and culverts on the Delhi - Gurgaon highway/expressway was granted vide a separate contract letter (dt. 10.6.2004), it did not form a part of the main sub contracts S1 (for construction of flyover at Rao CS No.207707/2016 Page No. 5 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
Tula Ram Marg) and S2 (for construction of flyover at Palam Junction) and consequently, the Foreclosure and Settlement Agreement (F & S A) did not encompass within its scope, the final bill which was raised by the plaintiff in respect of the work of drains and culverts. The whole argument raised by the plaintiff is that the F & S A was only in respect of the package contracts S1 and S2 whereas the contract for drains and culverts was an independent contract which was neither contemplated nor included in the scope of the final settlement which was entered into between the Plaintiff and Defendant no.1 in respect of contracts S1 and S2. On the other hand, defendants asserted that the plaintiff agreed to do the work of drains and culverts as an extra work but as a part of the main sub contract of construction of flyover at Palam junction. Defendants emphasized that the language of the F & S A was very wide in scope and took into account all possible claims which the plaintiff had and might have had against defendant no.1 in relation to all the work orders given to the plaintiff. Thus, all existing and future claims of the plaintiff against defendant no.1 stood settled by way of final payment for Rs. 55 lacs which was duly received by the plaintiff. Defendants underscored the submission that the work of drains and CS No.207707/2016 Page No. 6 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
culverts was an extra work as a part of the main sub contacts of construction of flyovers and hence the F & S A, by necessary implication, included all claims which the plaintiff had against defendant no. 1 in respect of the work awarded to it by defendant no.1 including the work of drains and culverts.
6. There is no denial of the fact that plaintiff had to be paid for the extra work of drains and culverts. Infact, in the entire written statement, defendants consistently maintained that the entire claim of the plaintiff against the defendant no. 1 has already been settled vide the F & S A. Thus the core issue which requires adjudication is the scope of F & S A. However, the respective pleadings necessitated the framing of issues which were framed as follows.
ISSUES
7. Vide order dated 19.04.2010 the Hon'ble High Court of Delhi had framed the following issues:
1. Is the suit timebarred? OPD
2. Does the plaintiff prove that the contract dated CS No.207707/2016 Page No. 7 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
10.05.2004 awarded by the defendants, for construction of drains and culverts was duly performed and is, therefore, entitled to the amount claimed, i.e. Rs.50,57,658/, or any part thereof ? OPP
3. Do the defendants prove that the claim is barred, on account of satisfaction pertaining to works executed for drains and culverts, by view of the Settlement Agreement dated 05.03.2005, and other circumstances, as alleged by them? OPD
4. Do the defendants prove that the plaintiff waived, abandoned, or surrendered all its claims against it under the Work Order for drains and culverts, as alleged? OPD
5. Is the plaintiff entitled to interest on any amount decreed; if so, at what rate and for what period?
6. Relief EVIDENCE ADDUCED On behalf of the plaintiff
8. Plaintiff company, in order to prove its claim, examined CS No.207707/2016 Page No. 8 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
its authorized attorney Sh. S. P. Soni as PW1 who led his evidence by way of affidavit Ex.PW1/A. PW1 relied on the following documents:
1. Photocopy of the Special Power of Attorney in favour of PW1 as Ex.PW1/1;
2. Photocopy of letter of intent No. JIL/S 1/6/2003 dated 27.01.2003 from Jaiprakash Industries Ltd to the plaintiff as Ex.PW1/2;
3. Copy of letter of intent No. JIL/S1/6 dated 26.05.2003 from Jaiprakash Industries to the plaintiff as Ex.PW1/3;
4. Original Work Order No.1 vide letter No. JIL/S 1/6 dated 26.05.2003 from Jaiprakash Industries to the plaintiff as Ex.PW1/4;
5. Original Work Order No.2 vide letter No. JIL/S 1/15/26 dated 14.07.2003 from Jaiprakash Industries to the plaintiff as Ex.PW1/5;
6. Copy of the Agreement dated 03.02.2004 as Ex.PW1/6;
7. Original letter no. DD/927 dated 28.06.2004 from the plaintiff to defendant no.1 as Ex.PW1/7;
8. Copies of running bills of packages S1 to S2 as CS No.207707/2016 Page No. 9 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
Ex.PW1/8 (colly.);
9. Copy of TDS certificate dated 31.03.2004 issued by defendant no.1 as Ex.PW1/9;
10. Copy of TDS certificate dated 31.05.2004 issued by defendant no.1 as Ex.PW1/10;
11. Copy of TDS certificate dated 30.04.2005 issued by defendant no.1 as Ex.PW1/11;
12. Original letter No. DSC/PALAM/GEN/659 dated 29.07.2004 from defendant no.1 to the plaintiff as Ex.PW1/12;
13. Original letter No. BEBPL/PLMRTR/2004 2005/020 dated 02.09.2004 from the plaintiff to defendant no.1 and 20042005/1116 dated 11.01.2005 from the plaintiff to defendant no.1 as Ex.PW1/12A;
14. Copy of Foreclosure & Settlement Agreement dated 05.03.2005 as Ex.PW1/13;
15. Copy of letter No. DCL/Drains/Culverts/45 (2004) dated 10.05.2004 as Ex.PW1/14;
16. Original letter No. BEBPL/JPDC/0104/973 dated 02.07.2004 from the plaintiff to the defendants as Ex.PW1/15;CS No.207707/2016 Page No. 10 of 36
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17. Original letter No. BEBPL/JPDC/0104/941 dated 03.07.2004 from the plaintiff to the defendants as Ex.PW1/16;
18. Original of Variation Order No.1 issued vide letter No. DSC/549 dated 05.07.2004 from the defendants to the plaintiff as Ex.PW1/17;
19. Copies of R/A bills dated 16.07.2004 and 05.08.2004 of the defendant company as Ex.PW1/18 (colly.);
20. Copy of Final Bill for C/o Drains & Culverts for Delhi Gurgaon Section of NH8 (KM 14.49515.037) from the plaintiff to defendant dated 09.05.2005 as Ex.PW1/19 (colly.);
21. Original letter dated 26.05.2005 from defendants to plaintiff and original letter No. BEBPL/DSC/200506/1317 dated 06.06.2005 from the plaintiff to the defendants as Ex. PW1/20 (colly.);
22. Minutes of meeting dated 20.08.2004 at DSC camp office, Gurgaon as Ex.PW1/21;
23. Copy of Bill dated 10.06.2004 from the plaintiff to Jaiprakash Industries Ltd. alongwith covering letter dated 10.06.2004 as Ex. PW1/22;
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24. Original letter No. BEBPL/DSC/200506/1371 dated 05.07.2005 from the plaintiff to the defendants as Ex.PW1/23;
25. Original letter No. BEBPL/DSC/200506/1491 dated 21.09.2005 from the plaintiff to the defendant and legal notice dated 24.12.2005 as Ex.PW1/24 (colly.);
26. Copy of reply dated 14.03.2006 to the legal notice dated 24.12.2005 along with postal receipts and A/D as Ex.PW1/25; and
27. Copy of rejoinder dated 28.03.2006 alongwith postal receipt along with copy of the legal notice dated 23.04.2007 along with postal receipts as Ex.PW1/26 (colly.).
(Ex.PW1/1 to Ex.PW1/3, Ex.PW1/6, Ex.PW1/8 to Ex.PW1/11, Ex.PW1/13, Ex.PW1/14, Ex.PW1/18, Ex.PW1/19, Ex.PW1/22, Ex.PW1/25 & Ex.PW1/26 were objected to by the Learned counsel for the defendants on account of admissibility and mode of proof.) CS No.207707/2016 Page No. 12 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
9. PW1, in his evidence by way of affidavit, deposed on the lines of the plaint. During his cross examination, PW1 deposed that the suit was based on the works completed on 31.08.2004 but denied that the claim is time barred. He admitted that the payments were due on the defendants by 30.09.2004 for the work of construction of storm drains and box culverts which was completed on 31.08.2004 as mentioned in para 16 of his affidavit; that the suit is based on a breach by defendant No.1 of the contract entered into with the plaintiff; and that there were no other contracts except S1 & S2 dated 27.01.2003, and award of work under letter dated 10.05.2004. He further submitted that there was no independent contract by defendant No. 2 to discharge the liability of defendant No.
1. He denied that work of construction of storm drain and box culverts was being done as an 'extra item' to the contract for Palam Junction flyover. Significantly, witness also deposed that the plaintiff had requested that the work of storm drain and box culverts be treated as extra item to the original contract; however, defendant No.1 refused and prepared separate bills for the work done; that there was no separate letter by which defendant No. 1 refused to treat the work of construction of storm drain and box culverts as extra items; and CS No.207707/2016 Page No. 13 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
that preparation of separate bills by defendant No. 1 indicated that it treated the request of the plaintiff as refused.
10. PW1 denied the suggestions that defendant No.1 would never have awarded the contract for construction of storm drain and box culverts if it had not already been awarded the original contracts under Packages S1 and S2; and that the construction of the drains and culverts was integral to the main contract and hence, only an extension.
11. PW1 further denied that the phrases 'other works' mentioned in the 'No Claims Certificate' at page 175 of Ex.PW1/13 referred only to the works done for construction of drains and culverts; that all the claims of the plaintiff have been settled vide settlement agreement Ex.PW1/13 and no claim certificate, both dated 05.03.2005; that bills for drains and culverts were raised alongwith bills for construction of flyover under S1 and S2; that raising bills for drains and culverts in May, 2005 i.e. 8 months after completion of work, was an afterthought to extract more money from the defendant; and that plaintiff was not entitled to recover any amount from defendant No.1.
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12. In response to a specific question as to what prevented the plaintiff from stating in the 'settlement agreement' Ex.PW1/3 that its claim pertaining to drains and culverts was not included as a part of the settlement, PW1 answered that the settlement agreement dated 05.03.2005 Ex.PW1/13 was with regard to package S1 and S2 only and not for contract of drains and culverts. He further submitted that bills for construction of drains and culverts were raised as the work done for extra items along with the bill of contract package S 1 & S 2, as there was no work order on that day for drain and culverts.
No other witness was examined on behalf of the plaintiff.
On behalf of the defendants
13. On the other hand, defendants in order to controvert the claim of the plaintiff, examined Sh. M. S. Narula as DW1 who led his evidence by way of affidavit Ex.DW1/A. DW1 relied on the following documents:
1. The Board Resolution dated 07.03.2016 as Ex.D1/1;CS No.207707/2016 Page No. 15 of 36
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2. Covering letter dated 10.06.2004 from the plaintiff to Jaiprakash Industries along with RA Bill no. 6, as Ex.D1;
3. The RA Bill No.6 as Ex.D2;
4. Copy of Foreclosure & Settlement Agreement dated 05.03.2005, already exhibited as Ex.PW1/13;
5. Copy of letter No. DCL/Drains/Culverts/45 (2004) dated 10.05.2004, already exhibited as Ex.PW1/14;
6. Original letter No. BEBPL/JPDC/0104/973 dated 02.07.2004 from the plaintiff to the defendants, already exhibited as Ex.PW1/15;
7. Original letter No. BEBPL/JPDC/0104/941 dated 03.07.2004 from the plaintiff to the defendants, already exhibited as Ex.PW1/16;
8. Original of Variation Order No.1 issued vide letter No. DSC/549 dated 05.07.2004 from the defendants to the plaintiff, already exhibited as Ex.PW1/17; and
9. Original letter dated 26.05.2005 from defendants to plaintiff and original letter No. BEBPL/DSC/200506/1317 dated 06.06.2005 from CS No.207707/2016 Page No. 16 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
the plaintiff to the defendants, already exhibited as Ex.PW1/20 (colly.).
14. DW1 in his examinationinchief by way of affidavit, deposed on the lines of the written statement.
15. During his cross examination, DW1 submitted that running bill No. 6 was duly checked by the defendants and all the bills were taken into consideration while making the final 'settlement agreement' and therefore, he had stated that bill No. 6 had been paid; that defendant No.1 had prepared and certified 2 running bills Ex.PW1/18 but the same were objected to by the plaintiff vide its letters which was finally settled in the settlement agreement; that the defendant company had issued TDS certificate to the plaintiff showing payment of TDS in accordance with law; that it was incorrect that the number of contract award dated 10.05.2004 Ex.PW1/4, referred to as No. DSCL/Drains/Culverts/45 (2004) dated 10.05.2004, was to be quoted in future correspondence between the parties since the letter of award was not accepted by the plaintiff; that 2 letters dated 02.07.2004 & 03.07.2004 of the plaintiff confirmed that the CS No.207707/2016 Page No. 17 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
work of drain and box culverts were extra items and the same would be included in the contract of Palam Junction flyover, namely S2; and that he was not sure about the contents of the bills. Witness also denied that defendants were liable to pay any bills or claims etc. after the settlement agreement of 05.03.2005 & simultaneous issuance of NOC from the plaintiff on payment of settlement amount after signing of the settlement agreement. In regard to the question about mention of contract No. DSCL/Drains/Culverts/45 (2004) dated 10.05.2004 in the settlement agreement and no claim certificate, he replied that he had already said that contract No. DSCL/Drains/Culverts/45(2004) dated 10.05.2004 was not accepted by the plaintiff and instead they wrote letters on 2nd July 2004 and 3rd July 2004 wherein they had confirmed that the drain and culvert works would be treated as extra work and included in their contract of Palam Junction flyover namely S2.
No other witness was examined on behalf of the defendants.
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FINAL SUBMISSIONS
16. I have heard the arguments advanced by the Learned counsel for the parties and have carefully gone through the record and the evidence adduced by the parties.
FINDINGS
17. The issuewise findings are as under:
ISSUE NO.3 & 43. Do the defendants prove that the claim is barred, on account of satisfaction pertaining to works executed for drains and culverts, by view of the Settlement Agreement dated 05.03.2005, and other circumstances, as alleged by them? OPD
4. Do the defendants prove that the plaintiff waived, abandoned, or surrendered all its claims against it under the Work Order for drains and culverts, as alleged? OPD CS No.207707/2016 Page No. 19 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
18. Since the claim of the plaintiff hinges entirely on the interpretation of the F & S A and the respective no objections/claim certificates issued by both the parties after signing of the F & S A, the oral evidence led by the parties is not of much relevance. Infact, even during the course of final submissions, ld. Counsel for the parties argued purely on the interpretation of the F & S A on the basis of the documents on record. Only sparing reference was made to the oral testimonies of the witnesses.
19. In order to understand the scope of Foreclosure and Settlement Agreement (F & S A), it needs to be understood that there are 2 parts of the said agreement i.e. (1) foreclosure of the unexecuted pending contracts, and (2) settlement agreement. In so far as the foreclosure part of the agreement is concerned, there is no dispute regarding its scope since, vide the foreclosure clause, the contracts which were yet to be performed by the plaintiff were foreclosed and plaintiff was discharged from the performance of all works under all work orders and LOA's issued to it. However, the second part of the agreement which refers to the monetary settlement between CS No.207707/2016 Page No. 20 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
the plaintiff and the defendant, is very broadly worded which takes within its fold, all possible claims of the plaintiff against the defendants.
20. The crucial issue which requires detailed discussion is whether the work of drains and culverts was an 'extra work' but as a part of the main sub contracts, or whether the said 'extra work' was a completely independent contract and thus beyond the scope of F & S A? The plaintiff contends that the 'extra work' was an independent contract having no corelation to the contracts S 1 and S 2 whereas the defendants have argued the reversed. It is important to answer this question first since this has a bearing on determining the intent of the parties while entering into F & S A. In order to answer this question and before discussing the terms of the 'settlement agreement', it is imperative to briefly reproduce certain principles of interpretation of contract.
21. The most basic principle is the '4 corner test' which means that the court will simply look at the contract and if the meaning is clear, will proceed to enforce it without going into the question of whether the bargain was a wise or imprudent CS No.207707/2016 Page No. 21 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
one from the perspective of the complaining party. The second principle is that the contract should be read and interpreted as a whole. This means the court will consider all the provisions of the contract and not just any one specific provision to resolve an ambiguity.
Third principle is to construe the contract in a reasonable manner. If the court finds an ambiguity, the law states the court should reject an interpretation that would lead to an absurd or harsh result.
Another important principle of contract interpretation is that specific terms in a contract will override general inconsistent language.
22. Reverting to the terms of the F & S A, the reason for entering into the said agreement was to 'foreclose' all pending work contacts which had been awarded to the plaintiff but which could not be executed due to delays, and to settle the monetary claims of the plaintiff with regard to the work awarded to it. Since the 'settlement' part of the F & S A does not refer to any specific contract but to all present and future claims of the plaintiff against the defendants in respect of all work awarded to the plaintiff under LOA's and work CS No.207707/2016 Page No. 22 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
contracts, a plain reading of the said 'Agreement' makes it clear that the scope of the settlement included 'any' claim which could have been raised against defendant no. 1. As a corollary, it would also include any pending dues in respect of the work of drains and culverts. A detailed discussion in this regard would be necessary to conclusively prove the intent of the parties at the time of entering into the F & S A.
23. A perusal of the letter of contract dt. 10.6.2004 vide which the work of drains and culverts was allotted to the defendant conveys the impression that the defendant no. 1 intended to treat it as a separate contract. However, it was the plaintiff which in clear terms wrote back to defendant no. 1 vide letter dt. 2.7.2004 and 3.7.2004 conveying it to defendant no. 1 that the extra work of drain and culverts was an extra item of the main contract of construction of flyover at Palam junction. Infact, in the letter dt. 3.7.2004, plaintiff repeatedly refers to the terms of contract pertaining to Palam flyover and asserted that the terms of the original contact will be applicable to the work of construction of drains and culverts. The relevant references in the letter dt. 3.7.2004 (Ex.PW1/16) are reproduced below:
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"2. Your Point No.2 We categorically and vehemently deny the contents of point No. 2 of your letter under reference. At no point of time have ever we accepted the rates as mentioned by you.
We have executed the works of storm drain & culverts as extra item in addition to the works of flyovers, which are being executed by us. Please note that the terms and conditions of our contract with you for Palam Junction Flyover will be applicable for executing the extra items of storm drain and box culverts.
(a) Works Contract Tax (VAT) and other taxes/levies/royalties etc., will be applicable as per our contract with you for Palam flyover.
(c) The terms and conditions laid in the contract provisions of Palam Junction Flyover contract would be applicable and the same rates would be applicable for fixing of barricades etc. if required.
(g) The terms and conditions of our contract for Palam flyover for excavation would be applicable for this work. However rate of excavation would have to be derived from our contract, as the cost of mass excavation is cheaper than the cost of trench excavation.CS No.207707/2016 Page No. 24 of 36
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4. Your Point No.4 Specification laid down in our contract of Palam flyover will be followed.
7. Your Point No.7 Performance Security:
No such security shall be retained from our bills for carrying out extra items and hence no applicable. The condition of Palam flyover contract will be applicable.
8. Your Point No.8 With regard to Point No.8 of your letter under reference, terms and conditions of our contract of Palam Flyover would be applicable for this work also.
11. Your Point No.11 Retention money will be as per our contract of Palam flyover agreement.
12. Your Point No.12 As the work of drain & box culverts are an extra item the same would be included as an extra item in our contract of Palam Junction flyover work.
13. Your Point No.13 CS No.207707/2016 Page No. 25 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
Step in Right of NHAI The terms and conditions as per contract of Palam flyover with you would be applicable.
14. Your Point No.14 As we have a contract for Palam Junction Flyover and we are executing the storm drain and box culverts as an extra item, hence your Point No.14 is not applicable."
Perusal of reply given by plaintiff in response to item no. 12 makes it patent that plaintiff was clear that the work of drains and culverts was to be treated as an extra work but as a part of the work of construction of flyover at Palam junction.
24. Not only this, in the letter dated 2.7.2004, plaintiff categorically admits (rather asserts) that the extra work of construction of drains and culverts was a part of the main contract. The relevant part of the letter dt. 2.7.2004 is reproduced below:
"To avoid some of our manpower from remaining idle you had requested us to execute the item of storm drain and box culverts as part of our contract, till the work of the flyover resumes.CS No.207707/2016 Page No. 26 of 36
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......
We would also like to inform and confirm to you that as these are extra items the terms and conditions of our original contract with you would be applicable and no new terms and conditions are applicable or acceptable."
25. It is thus clear that plaintiff itself treated the extra work of drains and culverts to be a part of the main contract of construction of flyover at Palam junction. That being so, it can be safely assumed that the while entering into F & S A, there was clear intent on both the sides, and more so from the side of the plaintiff that the settlement is being entered into in respect of all its claims including the work of construction of drains and culverts. Any doubt in this regard is set to rest by looking at the no claim/ satisfaction certificate issued by the plaintiff which was executed on the same day as the F & S A was signed. The opening para of this certificate makes it amply clear that plaintiff had clear intent of settling all the matters with defendant no. 1 and settlement was not just restricted to contract packages S 1 and S 2. The relevant part of the said certificate is reproduced below :
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"This is to certify that we the undersigned have amicably settled all our disputes, differences and claims of any nature whatsoever, in present or future, whether or not claimed as yet, against (i) M/s D. S. Constructions Ltd (DSC for brevity), (ii) M/s Jaypee DSC Ventures Limited (JPDSC for brevity) and (iii) M/s Jaiprakash Industries ltd (JIL for brevity) arising out of and in respect of the Work for Package No.S1 & S2, various Work Orders issued in our favour and other works done, relating to the conversion of DelhiGurgaon Section of NH8 (from KM 14.30 to KM 42.00) into Access Controlled 8/6 Lane Highway. The mutually agreed terms thereof have been reduced in writing under the Settlement Agreement dated 05 th March 2005."
26. Use of expansive language in the 'settlement' part of the F&SA could only have been a result of the clear contemplation in the mind of plaintiff and defendant no.1 that after settling the matter, plaintiff should not be able to/ permitted to come up with any residuary claim in respect of the contacts S1 & S 2 CS No.207707/2016 Page No. 28 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
or any other claim in respect of any other work awarded to it. To put it in textbook manner, the parties were ad idem in respect of settling all their pending claims including the work of construction of drains and culverts.
27. Merely because a separate contract number was awarded to the work of drains and culverts which was to be referred to in all future communications between the parties, is no ground to hold that it was an independent contract especially keeping in mind the plaintiff's own conduct in asserting and admitting that the work of drains and culverts was a part of the main contract of construction of Palam flyover. There is no document to show that after the plaintiff wrote the letters dt. 2.7.2004 and 3.7.2004 to defendant no. 1, there was any revert from defendant no. 1 which could prove that the work of drains and culverts was to be treated as an independent contract.
28. Ld. Counsel for the plaintiff appears to have misconstrued the true intent and scope of the 'Settlement Agreement'. Ld. Counsel highlighted the initial paras of the said 'Agreement' wherein reference has been made to contract CS No.207707/2016 Page No. 29 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
S1 and S2. A careful perusal of the 'Agreement' would show that the abovesaid reference to contract S1 and S2 was merely to give a factual background to the 'Agreement' which was being entered into so that the relationship status amongst the parties was clear. Subsequent paragraphs of the 'Agreement' make it clear that the scope of the 'Agreement' stretched beyond the contracts S1 & S2 and covered all works which were awarded to the plaintiff.
29. A supplementary argument was raised on behalf of the plaintiff contending that since defendant no.1 had issued separate TDS certificates in respect of the bills raised for the work of construction of drains and culverts, the said work was treated as a separate contract by defendant no.1. The Court is unable to be persuaded with this contention. First, there is no dispute that plaintiff had to be paid additionally for this extra work. Consequently, for bills raised in respect of this extra work, defendant no.1 issued separate TDS certificates in accordance with the bills raised. Second, in the RA bill no. 6, plaintiff did not raise any separate Bill for the work of drains and culverts and submitted it as a part of the bill for the work of flyovers which shows that previous raising of separate bills CS No.207707/2016 Page No. 30 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
was nothing significant, with the plaintiff itself merging the bills for the work of construction of flyovers and work of construction of drains and culverts in a single Bill.
30. On behalf of defendants, another relevant fact has been highlighted. Plaintiff had included the claim of this 'extra work' along with the claim of contracts S1 and S2 for certain bills. The said bills were exhibited as Ex.D 2 (colly.). These running bills also show that plaintiff treated this extra work as a part of the work of construction of flyover at Palam which is clear from the heading on each page of the running Bill. While including the claim for this 'extra work', plaintiff has not referred to the separate contract number which was allotted vide Award letter dt. 10.6.2004 and which the plaintiff claimed was to be quoted in all future correspondences between the parties. It is reasonable to assume that a separate number was given to the contract for construction of storm drains and box culverts which appears to be only for the purpose of identification that a specific work was allotted to the plaintiff. Nothing more can be read into this, especially in view of the detailed discussion above. As a corollary to the above discussion, it is held that Plaintiff had no cause of action CS No.207707/2016 Page No. 31 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
to submit the bill dt. 9.5.2005 after the signing of F & S A with defendant no. 1. Consequently, both these issues are decided in favour of the defendants and against the plaintiff.
ISSUE NO.2 Does the plaintiff prove that the contract dated 10.05.2004 awarded by the defendants, for construction of drains and culverts was duly performed and is, therefore, entitled to the amount claimed, i.e. Rs.50,57,658/, or any part thereof? OPP
31. There is no dispute regarding the completion of the work of drains and culverts by the plaintiff. The only dispute is whether plaintiff is entitled to recover the suit amount which it claims to be pending in respect of the contract letter dt. 10.5.2004. In view of the findings returned under issue no 3 and 4, it is held that plaintiff is not entitled to recover the suit amount from the defendants.
ISSUE NO.1 CS No.207707/2016 Page No. 32 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
Is the suit timebarred? OPD
32. In view of the finding returned on issues no. 2 to 4, this issue does not really require a finding since it has been held that plaintiff had no cause of action to file the present suit. However, even assuming that plaintiff did have a cause of action, the suit claim was barred by limitation, for the following reasons. It is not in dispute that the work of constructions of storm drains & box culverts was completed and handed over to the NHAI by 30.8.2004. Prior to this, plaintiff had raised 2 running bills which were purportedly cleared by the defendants. The 3rd and final bill however, was submitted on 09.05.2005. Perusal of the cross examination of PW 1 (which has been highlighted above while discussing evidence of the plaintiff) reveals a clear admission by the witness to the effect that the amount payable for the work of drains and culverts which was completed on 30.8.2004, became due on 30.9.2004. The period of limitation to seek recovery on the basis of a contractual obligation for a work done is 3 years from the date on which the work is done i.e. as per article 18 of the Schedule of the Limitation Act. Since the work was handed over to defendant no. 1 by 30.8.2004, the cause of action for the plaintiff to seek its dues naturally arose on CS No.207707/2016 Page No. 33 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
30.8.2004 itself. Even going by the testimony of PW1, the amount recoverable from defendant no.1 for the work of constructing drain and culverts became due on 30.9.2004. Thus, at best, the period of limitation to enforce the monetary liability against defendant no. 1 started to run from the following day i.e. 1.10.2004. There is no explanation forthcoming from the side of the plaintiff with regard to the delay in submitting the final bill after a gap of almost 8 months from the date of handing over the possession of the completed work to defendant no. 1. Plaintiff has computed the date of accrual of cause of action from the date that the final bill was submitted but which computation is incorrect. The plaintiff could not have possibly extended the period for limitation by late submission of the bill in question. Period of limitation, which once begins to run, does not stop for any reason except in case of legal disability. That is the most basic principle of the law of limitation. There is thus nothing to show that the terms of the allotted work gave the liberty to the plaintiff to seek recovery of its dues after expiry of an uncertain period irrespective of the commencement of period of limitation i.e. as worked out from the date of accrual of cause of action, as per statutory law. It is thus clear that even CS No.207707/2016 Page No. 34 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
going by the testimony of PW 1, the cause of action for the plaintiff to seek recovery of its dues arose on 30.9.2004 and consequently, the period of limitation to enforce the monetary liability against the defendants started to run from 1.10.2004. Period of 3 years expired on 30.9.2007 whereas the present suit was filed on 23.5.2008, making the institution of the suit clearly barred due to expiry of limitation period. This issue is thus decided against the plaintiff.
ISSUE NO.5 Is the plaintiff entitled to interest on any amount decreed; if so, at what rate and for what period?
33. Since the plaintiff has been held to be 'not entitled' to recover the suit amount, there is no question of computing the rate of interest. This issue thus does not require to be adjudicated.
RELIEF
34. In view of the findings returned under issue no. 1 to 4, CS No.207707/2016 Page No. 35 of 36 M/s Bhandari Engineers and Builders Pvt Ltd. vs. M/s D. S. Constructions Ltd. & Anr.
the suit of the plaintiff is dismissed. Parties are left to bear their own costs. Decree sheet be prepared accordingly. Thereafter, file be consigned to the record room.
ANNOUNCED IN THE OPEN (AJAY GULATI)
COURT ON 27.10.2018 ADDL. DISTRICT JUDGE02
SOUTH, SAKET COURTS, NEW DELHI
CS No.207707/2016 Page No. 36 of 36